[Mr Clive Betts in the Chair]
I beg to move,
That this House has considered energy costs in Wales.
On our first day back in Parliament this term, this debate on energy costs in Wales is hugely timely. We are facing a national emergency. People are scared, cold, and paying the ultimate price for the energy crisis. I am therefore grateful that the Minister is in his place to listen to us discuss the very real issues that people are facing across the country, but it would be remiss of me to start without calling out the recent incompetent actions from the UK Government. In just a few short weeks, this Tory Government have plummeted millions of people into hardship and misery—the choice between heating and eating, going to bed cold and hungry or giving their child their last tin of food. The shockingly mishandled emergency Budget was inexcusable. It has seen the pound plummet, energy costs spiral, mortgages pulled, interest rates shoot up—and for what? Unfunded tax cuts for the richest 1% in society and bigger bankers’ bonuses.
I thank the right hon. Member for his intervention, but providing that is the very least that could be done in the face of all this incompetence, quite frankly.
The result of this reckless decision will be felt by households across the country for years to come. It is always the most vulnerable who pay the highest price for the political choices made by this UK Government. In Wales, people are worried sick. Thankfully, our Welsh Labour Government have shielded so many from the very worst, but the crippling energy crisis is hard to undo when action from Westminster is worsening by the day. The human cost of such decisions cannot be overstated. At the launch of the Institute of Health Equity’s fuel poverty report last month, Professor Sinha said there is “no doubt” that children will die this winter. Damaged organs and respiratory illnesses are just some of the many long-term health impacts that people will face, and the trauma of going to bed cold and hungry will stay with someone for life.
I was speaking to the National Society for the Prevention of Cruelty to Children just this morning, and it told me how heartbreaking it is to receive calls through its helpline from children who really do not know what to do or how to help their parents, as they witness them struggle to make ends meet, often while living in cold, damp and mouldy conditions. I, too, receive heartbreaking calls from struggling parents just trying to do their best, and from distraught constituents torn between losing their home and losing their business. A pub in the heart of Cardiff North told me that it literally cannot afford to keep the lights on and is moving to using candlelight after receiving a £24,000 energy bill. My constituent Rebecca, a talented jeweller and silversmith, runs a small business on top of doing three other jobs. She faces a sixfold increase in her electricity bill. Her partner, Gareth, who contacted me worried sick, said, “What are we working for if not a better future?”
Well, that better future is being carved out by our Welsh Labour Government, with £51 million of targeted support for those who need it most. Measures include doubling the winter fuel support payment, cost of living support payments, £4 million for fuel vouchers, a heat fund to support those on prepayment meters, and the roll-out of universal free school meals. That is the difference that a Labour Government make. The Welsh Labour Government understand the human cost of this crisis. Perhaps the Prime Minister should pick up the phone to our First Minister for the first time after all.
I am extremely grateful to the hon. Lady for securing the debate and for the very important points that she is making. It is right that we debate this issue. One of the big issues that we face is that the UK is not particularly self-sufficient when it comes to electricity generation; we are the second largest net importer of electricity in Europe. Meanwhile, Wales produces double the electricity that it consumes. We are a superpower, in European terms; no other country is close to the generation and consumption levels of Wales. The question that occurs to me is: how can we use that strength to safeguard our own people in Wales from the fuel poverty that they face?
The hon. Member makes exactly the right point. We want to hear from the Minister as to why that challenge is not being addressed. This week is also Hospice Care Week, and the families supported by Tŷ Hafan and Tŷ Gobaith—the two children’s hospices in Wales—really are the ones on the frontline in this energy crisis. Tŷ Hafan is facing a sixfold increase in energy costs at a time when it is also facing rising demand for its services. It could never have foreseen what was to come, and it is the families who rely on its support that suffer. The Welsh Government have provided support to the hospice with the funding uplift. However, the Chancellor is yet even to respond to its letter. The Business Secretary’s response was to assure hospices that they would be prioritised for additional support. Will the Minister confirm whether that is the case? The evidence clearly suggests the opposite.
Let me explain to the Minister the human cost of continued inaction. My constituent Emma has a son called Jack, who has cerebral palsy. Emma does not have the option of not using energy. She relies on it for Jack’s lifesaving equipment. Emma sadly lost her son Tom, Jack’s twin, to the deadly disease. It is families such as Emma’s who face nearly £600 more a month in bills. The support that Tŷ Hafan provides to families is invaluable. Will the Minister tell those families whether they will get an emergency assistance payment, and when that specialist support will be given to the hospices on which they so heavily rely?
The chairman of the Conservative party, the right hon. Member for Rossendale and Darwen (Jake Berry), said that people should just get better jobs. Emma is Jack’s full-time carer, living off just £850 a month in universal credit, topped up with a carer’s allowance. How would she manage? Will the Minister tell Emma whether the Government intend to uprate benefits in line with current inflation rates, so that she and her family can live and not just barely survive?
The UK Government’s attitude towards hospices in Wales reflects their attitude towards Wales in general—our organisations and people alike. It is an attitude of disdain and neglect. The fact that the Government are planning for energy blackouts says it all. In short, it means that people will die. What action will the UK Government take to ensure that families of seriously ill children, who rely on that lifesaving equipment at home, have access to a secure and constant supply of energy—or will the Government have blood on their hands?
Support for energy bills only goes so far. Too many homes are poorly insulated and their bills will rise at a far higher rate. Since 2011, the Welsh Labour Government’s warm homes programme has invested more than £400 million in more than 67,000 homes to improve home energy efficiency across Wales. Under Labour’s warm homes plan, we aim to insulate 19 million homes in a decade across the whole of the UK.
In a display of utter incompetency, this Prime Minister has defied her own official advice and blocked plans for a public information campaign asking people to save energy over the winter. Apparently, she is ideologically opposed to that. Will the Minister confirm whether he is too? Is he ideologically opposed to urging people to keep an eye on usage, saving households £8.4 billion and avoiding blackouts?
Insulation measures are not just about cost. Old, poorly insulated homes are more likely to be cold, mouldy or damp, which can cause significant long-term physical and mental health problems. It is astounding that councils are now forced to open warm hubs. Just yesterday, our Labour-run Cardiff Council launched its warm welcome space; anyone who is struggling to heat their home can go to the local hub or library, to be greeted with a warm welcome and a free hot drink—but that is shocking.
We must remember that this crisis is caused by a dependency on oil and gas. It will not be solved by increasing dependency. Gas costs nine times more than renewables. This Tory Government are intent on locking us into a fossil fuel era, with high bills and an ever worsening climate crisis. The Prime Minister refuses to understand that the climate crisis and energy crisis go hand in hand. The Government cannot tackle one without tackling the other. I know well that the Minister agrees, and I would like to hear him say so today.
Rising seas and extreme weather events are costing lives. Our younger generations are being robbed of their future. Climate change presents an opportunity to change the way we live. Labour is committed to a great British energy company that will deliver clean power by 2030, saving UK households £93 billion over the rest of the decade. What was the UK Government’s answer? To lift the ban on fracking—yet another broken manifesto pledge to deliver the most ambitious environmental programme of any country on earth.
Rest assured, the ban on fracking in Wales is still firmly in place, and the Welsh Government will do everything in their power to pick up the pieces where the Tory Government have fallen woefully short, whether that is for businesses at the heart of our community that risk closing their doors for good due to spiralling, unaffordable energy prices; for people like my constituent, who tragically told me that his elderly mother felt she would be better off dead than forced to pay such astronomical energy prices; or for those who are cutting back on their essential groceries or relying on food banks just to get by.
In an earlier comment, my hon. Friend mentioned prepayment meters. For those who use prepayment meters, £3.50 of every £10 that they top up goes on charges, and South Wales has one of highest rates in the UK. Does she agree that we really need to address that issue?
Absolutely. It is an area we need to focus on, and I hope the Minister will have an answer to that issue today.
The examples I have given show the real human cost of the energy crisis. I hope that this Conservative Government for once bear that in mind, instead of fighting one another like cats and dogs. The people paying the true cost of the energy crisis in Wales must not be forgotten or sidelined.
It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Cardiff North (Anna McMorrin) on securing this important debate. I look forward to the contributions of all Members, because this is a serious issue that needs addressing in a serious way. In the spirit in which I congratulated the hon. Lady on securing the debate, I am bit disappointed by the party political tone that it has taken. These are genuine, serious issues that need addressing. Constituents are looking to politicians to find the best response to a genuine energy supply crisis and its sources, which we will come to in a moment. I am disappointed that the debate has been so party political so far, but I will try to move it on in a way that might be helpful to constituents who listen.
I think the right hon. Gentleman failed to hear what I actually said. I was clarifying what the different Governments provide and setting out the human cost of what is happening because of the political choices made by the UK Government and this Prime Minister. I sincerely hope he can understand that.
I will respond to some of the points that have been made, but we need to recognise that the absolute cause of the challenge is the war in Ukraine and Putin’s aggression. Anyone who seeks to weaponise the increase in energy prices for political ends is undermining the war effort and Ukraine’s right to defend its nation. It is a serious issue, but that does not mean that we do not need to react.
The Government are reacting. We need to recognise some of the things they are doing and congratulate them, but there will be other areas where we want to press for further support. That is an intelligent way to pursue a debate, rather than saying that everything politicians in Cardiff Bay are doing is right and everything those in Whitehall are doing is wrong. That is simply not credible and it is not the case. I am disappointed that the war in Ukraine is being weaponised in this way.
Just weeks ago, we saw the explosions at Nord Stream 1 and Nord Stream 2, which were clearly attacks, although we have no certainty about the reasons for them or their source. They have had an impact on supplies across Europe, but thankfully supplies to the UK do not come from Nord Stream 1 and Nord Stream 2, and are therefore much more secure. I underline my interest as chairman of the all-party parliamentary group for energy security. It would be helpful for us all to recognise that energy is traded at a multi-national, if not a global, level. That is part of the complexity of the situation, rather than the simplicity that has been described.
Constituents want to know exactly what support they will get. Everyone will get a grant of £400 in addition to a council tax rebate of £150 for properties in bands A to D. There are also additional payments, including a cost of living payment of £650 for benefit claimants, a one-off payment of £300 for pensioners for heating, and a disability cost of living payment of £150. Those payments will alleviate the situation and make sure that some people are able to keep the fires burning. They may have formed the impression that they could end up in an extremely unfortunate situation, but they may well be able to avoid that, depending on their individual circumstances.
The energy price guarantee announced a couple of weeks ago is an extremely welcome measure, and it would be helpful for the Opposition to recognise that. I press the hon. Member for Cardiff North to acknowledge that it is the most generous package that has been offered across Europe. I am happy to be corrected if the hon. Lady wishes to intervene, but independent sources say it is the most generous package in Europe, which means that people in similar circumstances in Europe will find themselves worse off. I am not saying that is a good thing; it is not a good thing. More needs to be done to support everyone—not only across Europe, but well beyond—because the conflict in Ukraine has created a global challenge.
The energy consumption of an average property will cost £2,500. There is a lot of misunderstanding about that. People will pay depending on their energy consumption and that figure is an average cost, which is provided as a guide. It is a significant increase, but lower than it would otherwise have been without the energy price guarantee, and the additional payments will support people and allow them to cope with those increases.
I find it difficult to believe that everything the Welsh Government are doing is right and everything Whitehall is doing is wrong. On the one hand, the hon. Member for Cardiff North claimed that people were living in cold, damp and uninsulated homes—and many are and we need to recognise that—but then seemed to champion the insulating programme and schemes that the Welsh Government have been pursuing. It cannot be one or the other; we must recognise that it is a complex situation and that people are finding themselves in difficult circumstances.
I find it difficult that the wider public debate makes such an issue of a public information campaign. This debate could serve as a public information campaign in itself if it were conducted in a reasonable and intelligent way. We need to recognise that this issue is rightly dominating the news and people should be able to interpret that large increases in energy prices will mean consumption needs to be managed to prevent cost of living challenges. In addition, information is being made available by the Energy Saving Trust, Ofgem and so many other agencies and charitable organisations. I would much prefer that the money that would have been spent on a public information campaign is spent on supporting people to reduce their bills, rather than on duplicating and repeating what we could do and what is available freely on the internet.
I ask the Minister for guidance on two points. I have already highlighted the domestic levels of support that are available, and they are significant, but we need further clarity on park homes. It is not clear how they will be able to benefit, because of how their meters work compared with others. I recognise that this is the first day that Parliament is sitting and therefore it has not been easy to communicate all the messages that need to be communicated, but there are a number of park homes in my constituency and across the whole of the UK—Wales possibly has a disproportionate number of park homes—so further clarity would be helpful. Reassuring messages have been given, but it is helpful to have the mechanics of how it should work.
I am grateful that the right hon. Gentleman raised this point because I asked a written question on this issue and was referred to an answer to another Member. That answer was not particularly clear to me, so when my constituents ask me how they will receive the support I am unable to provide that answer. I am sure that, like me, the right hon. Gentleman would like the Minister to clarify that today.
I am grateful to the hon. Member for underlining that point. I recognise that it is a complex situation. There are so many facets, which is why, again, we need to have a reasonable debate to address these serious issues. Until now people in park homes will not have had much clarity from this debate, and I look to the Minister to provide it, but it is not a straightforward situation.
I seek greater clarity on the level of support and I press the Minister to look again at extending support for off-grid properties. Many residents in my constituency—I declare an interest as one of them—do not have the privileges or benefits of mains gas and therefore depend on either liquefied petroleum gas or oil. We need to recognise that there is a standard volatility in that marketplace, and off-grid properties may have benefited when oil prices were extremely low during the covid period, at less than $20 a barrel of oil—I ensured that I filled my tank up at that time—compared with the 85p, 86p or even 90p a litre that is available now. I was talking about $19 a barrel, but that was also 19p a litre at the time. It is now up to 90p per litre of oil, which people off-grid have to use, and LPG will have a similar volatility. I hope the Minister will give that greater consideration or at least provide some hope that there will be further support.
There is a final area of support to which I hope the Minister will be able to bring some clarity—not necessarily now, because it is quite a complex picture, but certainly by providing greater information or tables online. The Government website sets out examples of different sorts of businesses and how they will benefit, from the average corner shop or pub to larger organisations. It explains the types of approach and savings that they would make. I looked for specific examples of numbers to be provided according to the market rate. One grocery business in a rural area in my constituency was paying 21p per kWh; now, at the market rate, it is paying £1.26 per kWh. When a business seeks to negotiate through a broker for guarantees of the level of Government intervention and how much that will be, the broker makes the case—as do energy providers; I have spoken to some—that they do not know how much the Government discount is specifically until they accept the contract, as that is when they can confirm it. That does not seem to be the most reasonable position.
I am not saying the Government are to blame for that, but I suspect greater clarity over the numbers will help businesses in my constituency and elsewhere to understand what exactly the discount is. It is in the region of 40% in some cases, while it is less in others. It depends on use. Clarity is needed to provide scrutiny and ensure the most understanding. Although the discount is 40%, if someone happens to have come off a fixed-term contract and moved from 21p up to about 80p, that is still a significant increase.
It is a pleasure to serve under your chairmanship this afternoon, Mr Betts. I am grateful for the opportunity to speak briefly today. I congratulate my near constituency neighbour, my hon. Friend the Member for Cardiff North (Anna McMorrin), on calling this important debate.
Although we have seen a new Prime Minister appointed in recent weeks, when it comes to this 12-year-old Tory Government it is the same old story. Like people throughout Wales and the United Kingdom, the people of Newport West are looking for proper action to support them as they face rising energy costs. There is nothing new about the Tory fantasy of trickle-down economics, and there is nothing new about a Tory who, when asked “Who pays?”, answers “You: the working people of Britain.”
In her first Prime Minister’s questions, the Prime Minister said she was against a windfall tax, as she did during her leadership campaign, during that wasteful summer of inward-looking Tory politics. My constituents want to know why the Prime Minister remains so committed to protecting the £170 billion of excess profits of the oil and gas giants—profits that they did not expect and that the companies have actually suggested should be used to mitigate the effects of this energy and cost of living crisis. Because of the Prime Minister’s decision, the people of Newport West and others throughout the country will now have to pay the bill for this Tory cost of living crisis.
It is worth remembering what the former Chancellor, Mr Osborne, said in 2008: that profligate borrowing could provoke a run on sterling, or require a rise in interest rates that would plunge Britain deeper into recession. I think some chickens are coming home to roost now.
I recently had a call from a constituent—a retired colliery worker—in Bassaleg. Like so many in Newport West, he has paid his taxes and never missed a bill. However, as we approach winter, the rising cost of energy is putting a serious strain on his finances. He told my team that it is simply not fair that ordinary people are being forced to foot the bill while the energy companies laugh all the way to the bank, saying:
“My monthly direct debit has just gone from £166 to £320. We are a two adult, two children family on average wages and are not able to handle such huge hikes in bills. Would appreciate it if you could look to address or mitigate this for us as a community.”
That is why I am here today.
If the average family in Newport West are seeing a doubling of utility bills, our country and our economy are in for some very difficult months ahead. That sits at the door of this Government. Rather than taking real action to pay for proper support, they have simply shifted the bill on to working people. When families and public services need every penny they can get, our Prime Minister, with the same old agenda, seems to think that now is the right time to protect Shell’s excess profits and give Amazon a tax cut. I say to the Minister: it is not. It is time for the Government to lead, to act and to properly support those most in need.
Over recent months, I have worked with local people on the issue of energy payment rebates for park home residents, as mentioned by the right hon. Member for Vale of Glamorgan (Alun Cairns). I have received a significant amount of correspondence from residents in Lighthouse caravan park in Newport West, and have worked with local people to clarify whether people in park homes would be able to benefit from any UK Government support schemes. My concern was and remains that there is no comprehensive and co-ordinated approach for all who need help to heat their homes and pay their bills. I have just been sitting in the Chamber listening to the Chancellor answer a question on that very subject, but sadly his answer was more confusion and uncertainty, and I am no better off now.
That confusion stands in stark contrast to the action of the Welsh Government. I welcome the Welsh Government fuel support scheme, and many people in Newport West do too. Eligible households can claim a one-off £200 cash payment from their local authority to provide support towards paying fuel bills. Importantly, that is in addition to the winter fuel payment offered by the UK Government. The payment will be available to all eligible energy customers, regardless of how they pay for fuel. That includes those who make payments on a prepayment meter by direct debit, those who pay quarterly and those who use off-grid fuel.
The scheme is part of the Welsh Labour Government’s £90 million support package to address immediate pressures on living costs. The fuel support scheme was launched with the explicit aim of reducing the impact of the rising cost of energy and the cost of living crisis. It is targeted at low-income households, and the number of households that are eligible and in need of help is to be extended.
We know that the winter months can be the most difficult time of the year. Like the Welsh Labour Government, I do not believe that families in Newport West or any other part of the United Kingdom should have to choose between heating and eating.
Can I take the hon. Lady back to the windfall tax? I do not think a windfall tax would pay for all the energy schemes, but it would definitely make a significant contribution to the public intervention that will be required. The reality is that even the oil executives are mildly in favour of it: BP announced a few months ago that a windfall tax would not make any difference to its investment plans over the next 10, 15 and 20 years.
The hon. Gentleman puts it far more eloquently than me. Absolutely—these people are actively saying, “These are excess profits that we did not expect, so they should be used to mitigate the problem.”
I say to residents in Newport West and across Wales that the Welsh Government’s scheme is open to households in which the applicant or their partner is in receipt of one of the qualifying benefits at any time between 1 September 2022 and 31 January 2023. Folks in Newport West can get in touch with my office if they want or need support with the application process.
If we are expecting working people out in the country to tighten their belts, I urge Ministers to wake up and make sure the oil and gas companies pay their share too. That is what we are here to do, and if the Government do not want to do that, they should make way for a Labour Government who will.
It is a pleasure to serve under your chairmanship, Mr Betts, and to speak in this important debate. I congratulate the hon. Member for Cardiff North (Anna McMorrin) on securing it. It is a pleasure to follow the hon. Member for Newport West (Ruth Jones). I join her and the right hon. Member for Vale of Glamorgan (Alun Cairns) in urging the Minister to bring forward greater clarity on park homes.
I will concentrate my remarks on a particular aspect of the energy crisis: off-grid homes. The right hon. Gentleman rightly said that we need to go further in the support that is offered to them. I appreciate that, on a UK-wide basis, the proportion of domestic properties that are not connected to the mains gas grid may seem immaterial or quite modest, but in certain areas of the country the concentration of such properties is significant. Across Wales, 19% of domestic households are not connected to the mains gas grid, but in more rural constituencies such as Gwynedd that rises to 49% of the housing stock. In my Ceredigion constituency it rises to 74%, so it is a pressing concern for many of my constituents. Although the energy price guarantee offers some Welsh Government support for those who are connected to the mains gas grid, people often read the bulletins and announcements and realise that it does not apply to them, or at least not to their gas or heating bills.
It is important to put on the record that, despite the volatility in the heating oil and LPG markets, there has been a steady increase in the prices that consumers have had to pay. It is always a bit dangerous to quote average heating oil prices, given the vicissitudes of that market, but the average price per 1,000 litres of heating oil increased from £351 in August 2020 to £491 in August 2021 and then £896 in August 2022. I note the great volatility in that market and also the fact that prices peaked at £1,108 back in June, at the beginning of the summer, when some people look to buy and fill their tanks, but the trend has been of considerable increases in heating oil prices, which is having a serious impact on many of my constituents.
I have sadly received many messages from constituents who are having to resort to quite drastic measures to reduce their consumption of heating oil. I have lost count of the number of people who have told me that they have taken to having cold showers in the morning. I have also come across many people who have tried to keep down the cost of electricity by resorting to investing in solar-powered garden lights to help a little in the evenings. These are very drastic measures. People are looking at every way possible to reduce their bills but are still finding it impossible to keep the heating on as we enter the winter months.
Much has been made of the impact of the energy crisis and rising costs on businesses, and it is important to highlight the added impact on businesses that are not connected to the mains gas grid. For example, I have been contacted by quite a few hospitality businesses in Ceredigion that have quoted increases to their average fuel costs of 200% to 300%, while a cheesemaker in my constituency has seen the price of running his business double over the last 12 months. Sadly, such increases are forcing these businesses to make very difficult staffing decisions; indeed, I know of a few that have closed their doors for the winter. One hopes that these will just be temporary and not permanent closures, but it is important to stress that a number of viable businesses are struggling to absorb the spike in heating oil and LPG prices.
One suggestion, made by counterparts from Northern Ireland, is for the Government to offer greater support to off-grid homes and businesses by introducing a voucher scheme. I thank Social Democratic and Labour party Members from Northern Ireland for pressing that as a potential solution, which has a lot to recommend it. They have suggested that the Government could introduce a voucher for 1,000 litres of heating oil or the equivalent volume of LPG. Some might ask, “Why 1,000 litres?” The answer is that Certas Energy has estimated that the average UK household uses around 27,000 kWh of energy per year, which roughly equates to 1,800 litres of oil. At current average prices, 1,000 litres would cost around £890, which I concede is not an insignificant amount of money, but it compares very favourably with the expected savings of around £1,000 to those households that will be eligible for both elements of the energy price guarantee—the electricity side and the mains gas side.
The Government have made statements previous to this week about ensuring a commensurate level of support, and we could explore further the idea of a voucher scheme for those in off-grid properties. It would offer a fair level of support for those on the gas grid and also those who are not connected to it. For the sake of clarity, if that were rolled out in Wales, for example, we would be talking about 275,000 properties. Again, that is not an insignificant number but, when considered in the larger scheme of things, it is something that the Government could do, and potentially with some speed.
In considering off-grid properties, I also wish to raise how this debate emphasises the need to bring forward not only immediate support to address the short-term pressures we face but mid-term to longer-term solutions. Energy-efficiency measures have already been mentioned; the Energy Saving Trust reports that it is typically far more expensive to heat an off-grid home, which creates a significant problem for the rural poor. Sadly, because of the nature of the housing stock in Wales, particularly in rural areas, the average energy performance certificate rating across the entire country is D. To reduce our vulnerability to further price shocks down the line, there should now be a real push in respect of the mid to long term to invest in energy-efficiency measures.
The hon. Gentleman is making an important point. There is a big role to play for the Welsh Government and, indeed, the partnership agreement between Plaid Cymru and the Welsh Government. My cursory reading of the agreement is that it contains nothing specifically on energy efficiency. Of course, the agreement was composed before the crisis. I hope there are mechanisms in the agreement whereby both parties can look again at the programme of government and focus on what we can do in Wales.
The hon. Gentleman makes an important point. There is an opportunity, through the co-operation agreement, for the Welsh Government and Plaid Cymru to focus their efforts on improving the energy efficiency of the Welsh housing stock. A year or so ago, Wales’s Future Generations Commissioner reported that it would take around £3.6 billion of investment over 10 years to bring the entire Welsh housing stock up to EPC band C. Were we able to achieve that—there is now an important case to be made for accelerating such an intervention—it would save Welsh households an average of £418 a year on their energy bills. Of course, those savings were estimated based on the energy prices a year and a half to two years ago; one wonders how much more of a saving could be realised were we to pursue energy-efficiency measures today.
The Energy Efficiency Infrastructure Group has added to the calls for energy efficiency, saying that to bring up the EPC level of all UK housing stock would provide significant annual energy-cost savings of £7.5 billion. I appreciate that such measures would not offer any solace in the short term, but it is now time that we consider how we can address some of these issues in the mid to long term to avoid falling into a similar situation—dare I say it?—next winter.
Finally, another aspect that bears repetition and further consideration is the recommendation from the Federation of Small Businesses to look again at support for renewable-energy installations for small businesses. The FSB has suggested that vouchers worth £5,000 could be made available to small and medium-sized businesses to spend on qualifying energy-saving products and services and renewable-energy installations. I look around the Chamber and recognise a few rural Members of Parliament; they may have been approached by farmers and agricultural businesses that have pointed out that they have a lot of roof space that might well be suitable for the installation of solar panels. Even if that cuts just the energy consumption and grid dependence of those farmers and businesses, it will still contribute to the wider effort to reduce our energy vulnerability to fossil fuels and the vicissitudes of the market.
There is an opportunity here. There needs to be further consideration of the short-term support for properties that are not connected to the mains gas grid. In looking at the example of homes such as those in Ceredigion, 74% of which are not connected to the mains gas grid, I also emphasise how important it is that we do not lose sight of the mid to long-term measures and the benefits of a properly invested energy-efficiency programme.
Beth Winter was not present for the beginning of the debate, but she gave advance notice to me, as Chair, that she would be late because she was in a Delegated Legislation Committee. Given that no others wish to catch my eye at this point, I now call Beth Winter.
Thank you for allowing me to speak, Mr Betts, and thank you to everyone present. As you explained, I came from a DLC as soon as possible, so diolch yn fawr. This issue is extremely close to my heart, which is why I really wanted to speak in the debate. In my constituency, we have been doing a lot of work on the cost of living crisis, which I will cover in my contribution.
With their intervention on the retail price for energy, the Government are clearly paying lip service to people’s concerns and failing to alleviate the misery they are causing. We have to be clear: the energy price cap is rising and bills are going up under the newly elected Prime Minister. Despite the Prime Minister and the Chancellor saying that they have intervened to reduce bills, what has really happened? Under the previous Tory Prime Minister, the price cap went up by £693 in April; under this new Conservative Prime Minister, it went up by another £529 last week. That is driving inflation to a 40-year high and creating extreme hardship in communities such as mine in the Cynon valley. Figures for Wales show that, in October 2020, 14% of households were living in fuel poverty. If we use those figures to model the impact of April’s price cap rise, up to 45%, or almost half, of all households are likely to be in fuel poverty.
I undertook a cost of living survey of constituents just before the summer. The stories they told me were truly harrowing, especially in terms of the mental health impact that the cost of living crisis is having, which cannot be overestimated. For example, one constituent said:
“It is affecting my sleep. I am worrying constantly. I keep watching my gas and electric meter.”
Most respondents said they were struggling to pay their energy bills, and almost three quarters said they would cut down significantly on heating in the next 12 months. That is unacceptable. That is a political choice.
As others have said, small businesses are struggling too. A local business owner told me recently that the combined gas and electric bill from the supplier was estimated to be in excess of £25,000. The owner was in floods of tears and had no idea how she was going to be able to continue running her business. That is the reality of the impact of the politically motivated cost of living crisis in this country.
The hon. Lady is making some interesting points about the real impact and cost for businesses, individuals and families, but I am not quite sure what she is asking for. Is she asking the Government to intervene for the entirety and to return the prices to what they were 12 months ago, say, bearing in mind that there is a global energy crisis as a result of the conflict in Ukraine?
I am about to offer some solutions to the crisis. If the right hon. Gentleman can bear with me, I will answer his question in my speech.
Briefly, the Welsh Government are doing everything they can to support people through the cost of living crisis. They have made an array of announcements to support people, including a £200 fuel support payment, in addition to the winter fuel payment offered by the UK Government; a £150 cost of living payment; £4 million to support people on prepayment meters—not on mains gas—who are facing hardship; and of course the discretionary assistance fund. However, fair funding from the UK Government to Wales is needed to meet people’s needs; it is Westminster that has to step up and support our communities.
No, I will not give way. The Chancellor has not yet responded to Welsh Finance Minister Rebecca Evans’s recent letter asking for a meeting. That shows that Wales is being treated with contempt.
Labour at Westminster is clear that, unlike the Tories, we would not have allowed the energy price cap to rise at all this autumn. Labour has proposed a fully costed and funded package of Government support. Our “Warm Homes for All” plan and investment in sustainable British energy, funded from our climate investment pledge, will tackle the climate crisis, strengthen our energy security, create good jobs in new industries and cut bills for good. There will be up-front costs to those measures but, as the Office for Budget Responsibility has stated, not acting will cost far more in damage to the climate and economic security.
We have wind farms on the mountains in my constituency. Who owns them? A Swedish company, Vattenfall. We need our own energy sources. The Welsh Government’s proposal to develop a publicly owned energy company, Ynni Cymru, has been followed by UK Labour’s proposal for GB Energy, a British publicly owned company that will help generate the clean power that will cut bills and provide energy security for the UK. Those measures will start to challenge the private market, but we need public ownership now so that the power we produce contributes to our national community prosperity, not the pockets of private companies, fossil fuel giants and shareholders. It is affordable, as the Trades Union Congress has already set out. Energy costs must be brought down, and to achieve that, we must have public ownership, which is in the interests of the people of the UK and the future of our planet.
The hon. Lady mentioned Ynni Cymru, which is something I have pushed for many a year, and I am glad that it is embedded in the partnership agreement. The Leader of the Opposition announced in his conference speech that there will be a GB Energy model based on Ynni Cymru. Can the hon. Lady explain how those two bodies will interact? There will be a Labour Government in a few years—there is no doubt about that now, and I of course welcome that—so there will be a GB Energy company. How is that company going to interact with the Welsh Government’s energy company?
I think that point is under discussion. I am not in the fortunate position of being on the Front Bench at the moment, but I understand that those discussions are in train. Hopefully, my hon. Friend the Member for Cardiff North can expand on that.
To conclude, on the question of how this will be paid for, I am will be presenting a petition from the people of Cynon Valley in the Chamber tomorrow evening with key asks, including a wealth tax, a windfall tax and a cap on energy costs—an array of initiatives. We are the fifth richest nation in the world; we can, and must, afford this. We must change for the benefit of everybody in our country. Diolch yn fawr.
I will try to spend the time I have addressing myself to the excellent speeches we have heard this afternoon. I congratulate my hon. Friend the Member for Cardiff North (Anna McMorrin) on securing the debate. It is about Wales and how Wales is affected by the runaway rises we are seeing in energy costs and by the actions the Government have taken in relation to them. Those price rises are having devastating effects across Wales, and hon. Members have paid considerable attention this afternoon to what is happening to individual constituents across Wales. Of course, price rises are having devastating effects across the whole UK, but two things stand out in the case of Wales.
The first is the particular demography of Wales. As the hon. Member for Ceredigion (Ben Lake) mentioned, Wales has a different profile in terms of its households and energy costs, particularly from England, and from the UK in general. One in five households in Wales is off the grid; fewer than one in six are off the grid across the whole UK, and for England that figure is about one in eight. Those off-grid properties in Wales have suffered to a far greater extent than households in England and Scotland and in the United Kingdom generally. That is, among other things, because the heating fuels needed for off-grid properties were never under the price cap. Those properties suffered price rises of, for example, 250% in two years for heating oil before the crisis came upon us. They are in the crisis now, with further enormous increases, but they were suffering for a long time before that.
It is therefore wholly appropriate and deserves congratulation that the Welsh Government have instituted an additional £200, on top of the funding available in the UK generally, to meet the specific circumstances in Wales. Considering their other financial problems, the fact that they are able to carve out that amount to support people in these circumstances is something we can only stand back and applaud, and I would be first to add my applause.
The immediate response—well, the rather less than immediate response—of the UK Government, through the energy price support scheme, has been relatively generous and goes some considerable way to removing the worst aspects of the energy price rises for the general public, and is to be tremendously welcomed for that reason. However, I have one or two points to make about what the UK Government have done and what it means for the future and what we all have to face. This energy price crisis will not go away in a year’s time, with prices going back to normal.
The hon. Gentleman rightly says that the crisis may not necessarily go away quickly, so why is it Labour party policy to intervene for six months? The Government have come in with family support—I am delighted to hear his recognition of the extent and power of that intervention—for two years.
The support is for two years for domestic properties. For business and commercial properties, it is for six months. The proposal that the Government have put forward for two years’ support on price rises is completely unfunded. We might, for example, have introduced a windfall levy, to accurately reflect the difference between what is happening in the UK market and the reasons for the price increases, and the profits being made by the energy companies supplying the UK, particularly with gas. Those profits are not based on some amazing technical breakthrough in the delivery of gas to the UK; exactly the same companies are providing exactly the same service in bringing gas from the wholesale market to the retail market in the UK, but they are making nine times the profit they were previously, for no extra work at all. The idea that we should put forward a windfall levy to cover a good proportion of the cost of those arrangements seems a complete no-brainer. I was quite astonished when the Government decided that they were not going to draw on that resource at all for the next phase of the support arrangements. Not only were they not going to introduce an immediate levy, but they were not going to introduce any sort of continuing levy arrangement to keep prices at a reasonable level.
The Labour proposal took into account what we do in the first instance with the windfall levy and what we do over the next period. I want to come to that in a moment, but it is important to recognise that the Prime Minister was bang on guilty of misleading the public in her recent conference speech, and other speeches, by saying that people would pay not more than—
Of course, the Prime Minister was unintentionally misleading the British public in this instance by saying that they would not pay more than £2,500 on their energy bills. She did correct herself later, but she gave the unintentionally misleading impression that we are all okay and will not pay more than £2,500 for bills—essentially, however much energy we use, it would not cost us more than £2,500. That is completely wrong. This is a support scheme based on units consumed. Therefore, households with very few resources but higher than average energy use will pay far more than £2,500 for their fuel this winter.
The hon. Gentleman mentioned the generosity of the UK Government’s support scheme, but they have to be slightly careful about that, do they not? It is partially a result of electricity prices in the UK being the second highest in Europe—only the Czech Republic has higher. For the last five years, electricity prices in the UK have been far higher. Within the UK, electricity prices in south Wales and north Wales are far higher than the UK average. There is something drastically wrong with the system, is there not?
It is uncanny that the hon. Member has anticipated exactly what I was going to say next: one reason it was necessary for the UK Government to be relatively generous in their support is that the price rises in the UK are far higher than those across most of the rest of Europe. I will not go into the support that the French Government have put in place to support price rises, but French price rises are 4% or 5%. The rises are quite a considerable factor of how energy markets work in the UK as opposed to the arrangements elsewhere in Europe.
For a long time we had a Government pretty much asleep at the wheel on governing energy prices, thinking that an energy price cap would deal with the whole thing. But the energy price cap originally was supposed to deal with retail companies price gouging, not price rises coming from the wholesale market into the retail market in the UK as a whole. The fact is that UK energy prices are determined entirely by gas prices. We have done a lot over the years to start bringing renewable energy sources into the mix—indeed, 38% of our power is now supplied by renewable sources; if we take nuclear too, the majority of our energy supply is provided by low-carbon sources—but the UK retail market works as if it were supplied entirely by gas-fired power stations paying the price of gas to make electricity. That is because of the marginal effect of the way the UK energy market works, with auctions and how that all works. I do not think we will go into that this afternoon, but the fact is that the UK energy market is completely broken, in that it allows those really high prices to come through in a situation where we are—or should be—decreasingly reliant on gas.
Let me make a couple of suggestions. It is one thing to introduce price support for the immediate problem of energy price rises. By the way, that problem is not, as the right hon. Member for Vale of Glamorgan (Alun Cairns) said, exclusively about the Ukraine war. Prices were going through the roof well before the Russian invasion of Ukraine. They started increasing at a high and unsustainable rate from the middle of 2021. The Ukraine war has exacerbated that considerably, but it is by no means the only reason. One reason that prices increased considerably well before the Ukraine war started was the structure of energy markets in the UK, the extent to which they were completely prey to profiteering, and the fact that the UK Government were unable to do anything about the effect of increases in the international price of gas on the UK market.
If we have price support over the next period but we do nothing about that structural position, knowing that sky-high gas prices will be with us for probably—I am speculating—the next decade, or at least five to six years, and that the price will never come down to its level of three or four years ago, we will simply be here in two or three years’ time saying exactly the same thing under exactly the same circumstances. The price cap and the price support will have been and gone and we will be in exactly the same position as before.
Now is the time for the Government to fix the UK energy market rapidly, so that we do not find ourselves here again. That means getting us out of gas and on to renewables as quickly as possible. Without adding to what hon. Members have said, the Labour party’s commitment to a wholly renewable power system by 2030 is absolutely germane to ensuring we have an energy system that delivers us relatively low-priced energy that is not volatile, and is not subject to international power politics, with LPG vessels changing course halfway across the Atlantic because someone has bought their cargo at a higher price than they originally thought they were getting for it when they set out. All those issues would be resolved because the power would be UK-based and essentially free—once the capital cost of the renewables providing it had been taken away—and it would be entirely within the UK’s control to deal with prices in the UK. That is how to fix the particularly difficult energy market conditions.
By the way, a lot can be done in that direction before we get to that position by decoupling energy prices in the UK market from the gas market. That can be done by changing the way people receive their rewards, as far as energy is concerned, and renewable obligations and contracts for difference, as far as renewable energy is concerned. We could perhaps introduce a green power pool arrangement, whereby renewable power is traded in advance of gas, and the gas is placed on the margins without the ability to swamp the whole market. That means that we perhaps have to introduce a strategic reserve for gas-fired power stations outside the market as we move towards a wholly renewable energy market.
None of that will wait for the energy crisis to be over. If we do not do these things very quickly, we will just repeat ourselves. One of the key things—
The Opposition will look very closely at whether the Government are serious about moving our energy economy on to the sort of renewable basis that we have set out. One of the early indications that they are not is the recent shenanigans going on with solar farms and wind in this country. We will look on, and we hope the Government have success in moving the energy economy away from a reliance on gas. Certainly, introducing fracking and exploring more for gas in the North sea will not fix it; indeed, they will do the opposite. This is about getting renewables in place for our power system as soon as possible and ensuing we are proofed against crises in the future. That would be of great benefit for Wales and for UK customers as a whole, because their bills would assuredly come down in the future. It is a policy for the long term, not one just to fix the windows a bit while it is raining.
It is a great pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Cardiff North (Anna McMorrin) on securing the debate, although I share with my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) some disappointment at the tone that she and most Labour Members took. That does not reflect the seriousness of the debate, and by way of contrast I would point not only to my right hon. Friend’s typically thoughtful speech but to that of the hon. Member for Ceredigion (Ben Lake), who made his points perfectly clearly but constructively, as we wrestle with this unprecedented global rise in prices.
It was good to hear the hon. Member for Southampton, Test (Dr Whitehead)—this was not reflected by the more rabid Back-Bench contributions—recognising the scale and generosity of the intervention, which is the most generous in Europe. This Government have acted decisively to help families and the poorest in particular. A failure to acknowledge those basic facts suggests a lack, I would say, of moral seriousness in dealing with this issue, which is of great import and is having a great impact on families now. No one is well served by political game-playing when we are dealing with something so severe and serious.
The Government understand the scale of the challenge and are taking action to help support households and businesses facing these record energy prices. This includes those in all four of our nations. Wales, alongside the rest of the UK, is feeling the pain of this crisis, which has been driven by the illegal invasion of Ukraine and Putin holding gas supplies hostage, in addition to the global pressures of the recovery from the pandemic—a point that was set out by the hon. Member for Southampton, Test, who is a learned Gentleman in this area of energy policy.
The announcements made by the Prime Minister on 8 September and 21 September 2022 demonstrated the Government’s commitment to protecting UK households and businesses through the energy price guarantee and the energy bill relief scheme. Under the plans, households, businesses and public sector organisations across the country will be protected from significant rises in energy bills, thanks to the new Government support that took effect from the beginning of October.
Without Government action, average household energy bills under the energy price cap had been due to rise to around £3,500 in October, a rise of 80% on current bills. Next year, it was predicted they would increase to as high as £6,500 per family. Those are truly chilling numbers. From this month, the Government’s energy price guarantee will limit the price households pay per unit of gas and electricity they use. It means that a typical household in Great Britain will pay on average £2,500 a year. Those with lower energy bills will pay considerably less, because it is about the number of units that people use. An average family will save between £1,000 and perhaps as much as £4,000 a year because of this unprecedented, unparalleled intervention by the Government to look after the people of this country and help them through this challenge.
The intervention has had a significant wider impact. It is interesting to note today that the International Monetary Fund has now conceded that the mini Budget, of which this was the centrepiece, will boost economic growth. [Interruption.] The hon. Member for Cardiff North, who only wants facts that support her political viewpoint, may be disturbed to learn that according to the IMF in 2022 the UK is predicted now to have the highest economic growth in the G7. This comes at a time of record employment as well. This Government put the people first. One of the saddest things about Labour Governments over the years is that they always end with higher unemployment than at the beginning. I am sure they wish the best, but they never seem to be able to deliver it.
In addition, households will see the first instalment of the £400 energy bill support scheme in their October electricity bill. Families are seeing it in their bills already in some cases. In Great Britain, the discount will automatically be applied monthly in six instalments between October 2022 and March 2023. For the 8 million most vulnerable households across the country, that will form part of a £1,200 package of targeted support to help with the cost of living.
The Minister mentioned the IMF report. Did the same report not say that, actually, inflation in the UK will be among the highest in Europe? There is perhaps only one country—Slovakia, I think—with a higher inflation rate. People will be hit far harder here.
The growth plan and the Government’s intervention will have a significant impact on reducing inflation, protecting households, mortgages and the like. Households in Northern Ireland will also receive support through the energy price guarantee from November, with support for October bills backdated so that they see the same benefit overall.
Like many in the Chamber, I represent a rural constituency with many people off grid. Those who live in an area of the UK that is not served by the gas grid—we have had a lot of conversation about that—and use alternative fuels, such as heating oil, to heat their homes will receive a £100 payment to support them with their energy bills. We are working at pace to work out how best to pay that money to those people. On 8 September, on the Floor of the House, the Prime Minister committed to supporting park homes. Residents will receive support equivalent to the EBSS and the EPG—apologies for the alphabet soup. More details on that will follow soon. It is important to note that households that use alternative fuels will get the £400 energy bills support scheme payment and the electricity component of the energy price guarantee as well as the £100 for alternative fuels.
With respect to the hon. Gentleman, I am going to press on. The Government’s package of interventions makes up the biggest proportion of the fiscal package set out in the growth plan.
Non-domestic energy consumers, including businesses, charities and public sector organisations, have also been experiencing significant increases in energy costs, with reports of increases of more than 500%. Those consumers will also be protected through the Government’s energy bill relief scheme from October, over the next six months. That support is equivalent to the energy price guarantee put in place for households, and similarly discounts the unit prices of gas and electricity, meaning that non-domestic energy consumers will pay wholesale energy costs well below half of the expected prices this winter. That will provide much-needed relief and certainty to non-domestic energy users who were facing significant energy costs, and it will enable them to plan ahead.
Forgive me; if I had been left anything like half the time that was available by the Opposition spokesman, I would have been able to accommodate the hon. Gentleman.
After that initial six-month scheme, the Government will provide ongoing focused support for vulnerable industries. There will be a review in three months’ time to consider where that should be targeted to ensure that those most in need continue to get support.
Non-domestic users that are eligible for support with energy bills include those on standard variable energy contracts, those whose fixed-price contracts are coming to an end and those businesses that have agreed a fixed-price contract in the last six months. We recognise that it is a challenging time for businesses, particularly those that are energy intensive, many of which are situated in Wales, as hon. Members will know.
The Government have provided more than £2 billion of support since 2013 to energy-intensive industries. We are continuing to ramp up the support, through measures such as the extension of the energy intensive industries compensation scheme. That is being extended for a further three years, and will double the relief available. We are also consulting on the energy intensive industries exemption scheme, with a view to increasing the aid intensity and reducing electricity prices for energy-intensive industries, thus supporting many jobs in Wales.
In parallel to those measures, the Government are taking decisive steps to tackle the root causes of the issues in the UK energy market, by boosting British energy supply and increasing independence to ensure that this does not happen again. The hon. Member for Southampton, Test is right that that is what we need to do. That includes the work of our energy supply taskforce, a new oil and gas licensing round, lifting the moratorium on UK shale gas production, and driving forward progress on nuclear and renewables.
It is important to remember that our energy needs this year are 75% dependent on fossil fuels. We are driving forward on the path to net zero, more than any other major economy in the world. However, the idea that the market could be entirely decarbonised by 2030 is mad. It is crazy. That is the official policy of His Majesty’s Opposition. The poverty, bankruptcies and ruin that the Opposition’s policy would cause this country—and the impact that it would have on families and businesses in Wales—are incalculable. We need to ensure that our energy system is working to shield consumers in Wales and the whole of the UK from the worst impacts of a volatile international energy market, and to reap the benefits of our increasing cheap renewable electricity generation while reducing our dependence on imported fossil fuels.
I will not take any lectures from Labour Members in this space. Today, renewables make up more than 40% of our electricity supply; just 12 years ago, in 2010, it was 7%. The Labour party talks but it does not deliver; it is the Conservatives who deliver. We have led the world. We have transformed the economics of offshore wind with our contracts for difference, which were brought about under a Conservative-led Government and are now being mimicked right around the world. Why? Because they recognise the high up-front capital cost of these projects, increase certainty for investors, lower the cost of capital, and have seen the price per megawatt-hour for offshore wind go from £120 in a 2015 auction to £38, I think, in the latest round. Not only that, but because of the CfDs brought in by a Conservative Administration, we are now seeing tens of millions of pounds paid back to reduce bills for taxpayers.
The Government are working with electricity generators to reform the outdated market structure where gas sets the price for all electricity. We have recently launched the review of electricity market arrangements, REMA—a major review of Britain’s electricity market design to ensure that it delivers an enduring framework that works for our businesses, industries and households—and we will introduce reform where necessary.
As issues of energy efficiency, fuel poverty and heat are devolved, Scotland, Wales and Northern Ireland have specific net zero strategies, and we work closely with our counterparts in the devolved authorities to ensure that our strategies align. Overall, the UK has a strong track record in making homes more energy-efficient, with 46% in England now achieving an energy performance certificate rating of C or better, compared with 14% in 2010. Again, it is the Conservatives who deliver and reduce energy costs, and it is Labour who produce hot air and nothing to help families with the cost of living. The energy performance of our buildings continues to improve, helping to reduce consumer bills and improve our energy security.
We are taking steps to encourage businesses to reduce their energy demand.
No—I will have to sit down very shortly.
We have long-term regulations to ensure that landlords are incentivised to improve the energy efficiency of buildings and to set a minimum standard. We are also providing tax incentives for less energy-intensive technologies by bringing forward an exemption on business rates for green technology, saving businesses an extra £35 million in 2022-23.
We are doing an awful lot, and my job, when the Prime Minister appointed me to this position, was to accelerate the uptake of all of these energies to move us to net zero, and to do so in a way that supports families and does not impoverish them, which is sadly what the policy of the Labour party would bring about.
Where to start? I do admire the fantasy being played out by the Government in trying to explain away the Chancellor’s horrific mini-Budget, while the IMF has today doubled down on its criticism of it in an unprecedented way. However, today’s debate was about energy costs in Wales. I set out in my speech, and we heard from Members present, how those costs have impacted constituents, people, businesses and organisations up and down Wales and, indeed, the whole country.
We need action from this Government, and we need it now. They have been in power for 12 years—12 years doing little bit by little bit. We need proper reform of the energy market, proper investment in renewables, and a proper plan and strategy for an energy efficiency scheme. That starts with the Prime Minister not ignoring official advice from the Climate Change Committee and not ruling out solar generation on farmland. The Government’s actions are pitiful, and they are not the way that we will see solutions across the country.
Motion lapsed (Standing Order No. 10(6)).