House of Commons
Thursday 22 September 2022
The House met at half-past Nine o’clock
[Mr Speaker in the Chair]
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I now invite remaining Members to swear the oath or make the solemn affirmation to His Majesty. We will suspend at about 9.55 am before starting our substantive business at approximately 10 am.
Let us now begin. I invite Members who have not yet sworn or affirmed.
Members present took and subscribed the Oath, or made and subscribed the Affirmation.
Energy Prices: Support for Business
Before I call the Secretary of State for Business, Energy and Industrial Strategy to answer the urgent question, I have to say how disappointed I am that the subject of an urgent question was extensively set out in the media yesterday before being presented to the House. I hope that, as a former Leader of the House who was very supportive of me in criticising Secretaries of State for not coming to the House, the right hon. Member will be especially aware—as I know he is—of Ministers’ duties to explain that important policies are first to be heard in this House.
I understand the importance of the matter and the need for our constituents to have the information as soon as possible and, for that reason, I would have been willing to allow a statement yesterday, if I had been asked. I am deeply concerned that I have to make another statement like this only a few sitting days into this new Administration’s existence. I ask the right hon. Member and all his colleagues to do their utmost to ensure that this is the last time I have to do so. I am not angry; I am so disappointed, and I hope that we will treat the House with the respect that it is due.
(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on Government support for businesses facing rising energy prices.
I am delighted to make a statement, Mr Speaker. As you know, I am a great believer that this House should be informed first. I was unaware of any precedent of a statement being made on a day set aside for taking the Oath, and therefore unaware that your generosity would have allowed such a statement to be made. I point out to the House that, in my membership of the House, a statement has not been made by the Government during the taking of the Oath days set aside, nor was any statement made in 1952 on the last occasion when the Oath was taken. I apologise to you, Mr Speaker.
That is why I am saying that I am very grateful, Mr Speaker. I always think it is important that this House gets to know, and your generosity in setting a precedent where statements can be made on the days set aside for taking the Oath is, I think, a good one.
It is vital that businesses have the support that they need to pay their energy bills this winter. His Majesty’s Government are determined to grow the economy. We cannot do that if business becomes insolvent thanks to what is tantamount to blackmail by a malevolent state actor. His Majesty’s Government announced yesterday that they will provide a discount on wholesale gas and electricity prices for all non-domestic customers, whose current gas and electricity prices have been significantly inflated by global energy prices. That includes all UK businesses and covers the voluntary sector, such as charities, and the public sector, such as schools and hospitals. The scheme will apply to fixed contracts that have been agreed on or after 1 April 2022, as well as to deemed variable and flexible tariffs and contracts. It will be applied to energy usage for six months from 1 October until 31 March next year.
As with the energy price guarantee for domestic customers, in order to benefit from the scheme, customers do not need to take action. The discount will automatically be applied to their energy bills from 1 October. In terms of real-world savings, non-domestic users will start to see the benefits of the scheme in their October energy bills, which are typically received in November. The level of price reduction for each business will vary depending on its contract type, the tariff and the volume used.
We will publish a review of the operation of the scheme in three months to inform decisions on future support after March 2023. The review will focus in particular on identifying the most vulnerable non-domestic customers and on how the Government will continue assisting them with energy costs beyond the initial six-month period.
A parallel scheme—based on the same criteria and offering comparable support, but recognising the different market fundamentals—will be established in Northern Ireland. For those who are not connected to the gas or electricity grid, equivalent support will be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. Further detail on this will be announced shortly.
I welcome the new ministerial team to their posts.
The energy crisis poses a severe challenge to businesses of every size, many of which have been desperate for clarity and reassurance. While the Conservative party spent much of the summer distracted by its own internal drama, the Opposition spent that time arguing that the crisis demands a response commensurate with the scale of the challenge, paid for by a windfall tax on the excess profits that have accrued because of Russia’s illegal invasion of Ukraine.
While I welcome the Government’s damascene conversion to freezing energy prices, we must all acknowledge that for too many companies the news will have come too late to save them. Businesses cannot plan on speculation and briefings. It is regrettable that a Minister who respects the role of Parliament chose to avoid parliamentary scrutiny, instead opting for a sparse press release and a short media interview. That is why the Opposition have tabled this urgent question: to get the much-needed clarity on these plans that businesses desperately need.
May I ask the Secretary of State what, specifically, the review after three months will be looking at and what the criteria will be for determining whether to extend the support? Secondly, how will the taxpayer be protected from energy traders inflating prices, knowing that the Government will be picking up a substantial slice of the costs come what may? Thirdly, what support will the Secretary of State be offering to businesses in the long term to protect themselves from rising energy costs through efficiency measures and the transition to renewable energy?
I also ask the Secretary of State to address the elephant in the room: who is paying for this? The Government say that they cannot cost this package, but it is clearly expensive. This Government say that they can cut taxes, increase spending, increase borrowing and magically pay for it through the higher growth that, after 12 years in office, has completely eluded them. This is fantasy economics. It is a threat to British businesses and to the financial stability of the country. What can the Secretary of State say to reassure the country that these plans are robust, responsible and fair, as well as being sufficient to get us through the crisis and better protect businesses in the long term?
Although we have been away for a few months and had a leadership election, the socialist record does not change. Tax, tax, tax and tax again—it is always the answer to every problem.
Let me come to the specifics of the hon. Gentleman’s question. The three-month review is taking place to work out who will need support, to ensure that support is properly targeted. What is being done at the moment is an immediate response to an extreme crisis, to benefit everybody, but not everybody necessarily needs the same level of support. What we will do in the review is work out who needs the support. If I can give some early indications, it seems to me that places such as care homes are likely to need longer-term support. That will be covered by the review.
The hon. Gentleman raises the important question of how taxpayers will be protected. I have asked the Public Sector Fraud Authority to look at all our plans, to ensure that whatever we are doing and our mechanisms for paying are as robust as they can be against the speed with which we need to act. It is really important to safe- guard taxpayers’ money.
We are doing a number of things to help in the futures market. The Bank of England and the Treasury will provide some underlying capital for the futures market so that there is a more reliable futures price, rather than the one set on very low liquidity at the moment. We will legislate in an expedited fashion to ensure that we protect against anybody who commits fraud against this measure.
The hon. Gentleman raises the issue of transition. Gas is a transition fuel. The Government’s commitment to net zero remains, but we will need gas to heat people’s boilers for the immediate future, and we need to get it as cheaply as we possibly can, using all our domestic resources. Beyond that, there are exciting plans for carbon capture and storage and for hydrogen, which I think present a very attractive future for this country.
The hon. Gentleman asks that the scheme be responsible, robust and fair. It is all those things. It is responsible to protect business; it is robust to ensure that it can be rolled out quickly; and it is fair to our economy as a whole.
I welcome my right hon. Friend’s package, which is already having an effect in North Yorkshire—Angus Fire, in the small town of Bentham, emailed this morning to thank him for this rapid intervention—but may I ask how quickly businesses in rural areas such as North Yorkshire will hear of the Government’s intervention for off-grid customers?
I am grateful to my right hon. Friend for his support, and I am glad that businesses in his constituency are already being helped. I also recognise the importance of support for those who are off grid and using fuel oil. That is a specific issue in Northern Ireland, of which my right hon. Friend, as a former Northern Ireland Secretary, has particular experience. We are looking at the comparables, because the heating oil price has not risen by as much as the gas price. We need to be fair to all users, and we are working on that currently.
Is it not great to see the Secretary of State in this House, rather than standing in the street filming a statement to the public, surrounded by boarded-up shops and rubbish? What an unedifying spectacle of a man who believes in the pre-eminence of this Parliament—but I am glad he is here, because he has some questions to answer, and it is about time that he did so.
How much does the Secretary of State estimate that this scheme will ultimately cost, including, of course, possible interest payments? Can he confirm that the likes of Amazon will benefit from a scheme that will be built on the back of public sector borrowing? Perhaps most important, can he explain to energy users in Scotland—energy-rich Scotland, where we produce more oil and gas than we can possibly consume and gas accounts for just 14.4% of electricity generation—why Westminster has failed us so terribly badly?
What was it that P.G. Wodehouse said about it not being too difficult to discern the difference between a Scotsman with a grievance and a ray of sunshine? So often SNP Members come here on Thursday mornings with a grievance. It is rather like old times, is it not, Mr Speaker, when I would have an hour on Thursday mornings to discourse with the Scottish nationalists about their general grumpiness. I see that that is one of the constants of British politics. The hon. Gentleman referred to rubbish in the streets of Westminster; let me point out to him that as soon as an administration turns from Conservative to socialist, the rubbish piles up in the streets—as I think it has also been doing under the SNP in Edinburgh.
This scheme is fair to taxpayers and will provide support across the country. As I said, there will be a review in three months to ensure that that support goes to the people who need it most.
I thank my right hon. Friend for the discussions that he and I have already had about steel. He clearly understands the industry extremely well, and I am very grateful to him. Can he confirm that energy-intensive industries will be at the forefront of the Government’s mind when we reach that point of review?
Following the question from the hon. Member for Scunthorpe (Holly Mumby-Croft) about steel, may I point out that the energy-intensive industries require co-investment and partnership with Government in order to make the transition to cleaner, greener ways of making steel? Can the Business Secretary confirm that he is committed to co-investing with Tata Steel and our other steel makers to enable that transition to take place, and will he agree to meet the all-party parliamentary group for steel and metal related industries—which I am proud to chair—to set out the Government’s plans for this vitally important foundation industry?
I am grateful to the hon. Gentleman, and I agree with what he says. We are in discussions—my officials are in discussions—with Tata Steel. I should be happy to meet the hon. Gentleman at any time, and I make the same offer to all right hon. and hon. Members. I think it proper for Secretaries of State to make themselves available in response to all reasonable requests for meetings from Members on both sides of the House.
May I press my right hon. Friend on the position of off-grid consumers? About 40% of my constituents are off the gas grid, as is the case for a similar number in the Prime Minister’s constituency, so this is very important. The factsheet updated yesterday suggested that only £100 was going to be provided to such consumers. That does not seem to provide a comparable level of support. Will he update us on when we will have more information? Secondly, do the electricity companies have an accurate database of exactly which customers are on the gas grid and which are not, so that they are able to make those payments?
On the second point, people either have a gas meter or they do not, so that is relatively straightforward. As regards the first point, the price of heating oil has not risen as much as the price of gas. The aim of Government policy is to ensure equivalence, and therefore, inevitably, the support given for those on heating oil will be a lower actual amount than that for those connected to the gas grid—but that will give them equivalence.
An aspect of this that has not really been talked about is the gas and energy consultancy companies. My constituency has a higher than average proportion of the energy consultancy companies based in the wider north-east region, and they are feeling the impact of the energy crisis really hard. Hundreds of energy consultant jobs have been lost in Gateshead in the past month alone, leading to an exodus of expertise and innovation, which will further harm business in the future. The Government’s announcement of a cap on energy prices for the next six months does nothing to promote market competition between suppliers, and leaves brokerage and consultancy companies sidelined. Businesses will ultimately need to return to the market to improve energy contracts, if they are to survive throughout 2023, unless of course the Government intend to change the market model. What plans do the Government have to repair the energy market in 2023 and, importantly, to support those businesses in the north-east in the meantime? Or is it going to be more a case of devil take the hindmost?
I wonder whether the hon. Gentleman might like to apply to the Backbench Business Committee for a debate on the subject.
The reason we are going for a cap on the wholesale price is so that the market should remain as open as possible, and therefore there should be opportunities for discussions with companies as to the right level of price at the retail level and all that goes between the wholesale and retail level for the non-domestic sector. I hope that is helpful to the hon. Gentleman.
May I ask the Secretary of State to clarify a point about park home owners in Winchester, who obviously live under one business owner—the park home owner—and people who live in homes of multiple occupation under one business owner? They were left wondering for a long time about the £400 rebate previously announced by the Government. Where do they stand in respect of this new energy price guarantee? Are they being treated as businesses? If so, they are being treated as business units, not domestic units, which is of course what they are.
I am grateful to my hon. Friend for asking an important question on something that constituents of all of us will be concerned about. We will legislate to ensure that the cut in prices is fed through to residents. Therefore, people running park homes or mansion blocks will have to pass on the benefit. That will be a legal requirement. As we look to the review, I think that it is very straightforward to assume that park homes and mansion blocks will be at the forefront of those who need continued support, because they are residential rather than business users.
Orkney and Shetland already have the highest levels of fuel poverty in the country. We have no access to the mains gas grid, which means that so many more of my constituents rely on heating oil. This morning my constituents are being quoted £1.22 per litre for heating oil. It is pretty clear that the market in heating oil has failed. Why are the Government not acting now to bring heating oil within the price cap mechanism?
The right hon. Gentleman says that the Government are not acting now, but that is not entirely accurate. The Government are acting now to include heating oil. As I have said, heating oil has not risen as much as gas. Obviously, we are working on the basis of the evidence available, and we are looking at the heating oil price.
I very much welcome this statement. Across my constituency there are many small businesses, such as play gyms, gyms and cafés, in former textile mills. Because they pay one fee for everything, all in, how can we make sure that their landlords pass on the benefit of this programme?
There is still a lack of clarity on the Government’s energy support package for non-domestic users. Businesses, faith groups and voluntary organisations in my constituency are especially worried about the potential cliff edge in April next year. It is not viable for those organisations to plan on six-month timelines, so they need more clarity and certainty about the scheme. Will the Secretary of State set out what criteria will be used for those organisations? Who will qualify for further additional support come next April?
Obviously, across the House we welcome this package. We have seen many similar packages across Europe, but there has been much further debate in Europe about how to constrain demand, particularly on the part of industrial users. We cannot subsidise consumption without also trying to reduce demand, because otherwise we will cause immense risk of blackouts come this winter.
To prevent households being locked into years of fuel poverty, Plaid Cymru is urging the Government to bring forward a street-by-street insulation programme, to be paid for by a higher windfall tax on oil and gas companies. Businesses also need support with energy efficiency measures so that they, too, can permanently reduce their energy bills. Will the Secretary of State meet me to discuss the proposal from the Federation of Small Businesses for “help to green” vouchers, which would support small and medium-sized businesses to afford energy-saving products and services?
This support will be very much welcomed by businesses in my constituency, and particularly by high-energy users such as the steel industry, which has suffered from uncompetitive energy prices for years. As welcome as this short-term help is, will my right hon. Friend confirm that he is looking at a long-term steel strategy to ensure that our UK manufacturers can compete in the long term?
It saddens me to remind the House that we now have a Secretary of State for Business, Energy and Industrial Strategy who has never worked in industry or business—[Interruption.] He is an investment banker.
May I tell the Secretary of State that small firms, and big firms, in Huddersfield will go bust due to the cost of energy this winter? Has he seen the front page of the Financial Times? This is a crisis for our country, especially in manufacturing. When will he do something and wake up to his responsibility to get out there in the country and talk to manufacturers?
For many businesses, including Jungle Kingdom in my constituency, solar panels are a way to make a significant, tangible difference in the long term, but they cannot secure the permission of their landlord. What measures can be considered to make it work for both parties?
My hon. Friend raises an important point. Landlords and tenants need to work together to try to ensure that efficient sources of energy are achieved. Normally it will be in the interests of a landlord to have solar panels applied, particularly if the tenant is volunteering to pay for them, so I think this is something where the market can probably find an answer.
Many small businesses in the Lune valley and Over Wyresdale in my constituency use heating oil. Although the price has not increased as much or as fast as the gas price, it has still increased exponentially and many small businesses are really struggling to know how they will make ends meet. How soon will these businesses get any clarification from this Government about whether they will still be in business at Christmas?
Many businesses in my constituency very much welcome these measures. As a number of Members have said, energy-intensive industries, in particular, have borne the brunt of many of the issues we have faced with energy cost rises. So will my right hon. Friend look in particular at industries such as ceramics, at longer-term support and at how we can support them to invest in more efficient and energy-saving technologies?
This is a very important point for ceramics, steel and other energy-intensive industries: they want to move to more efficient means of production, and that may require some investment. It is important that the Government help to work on the schemes to ensure that we have vibrant, efficient, profitable and, most importantly of all, globally competitive industries.
The Secretary of State’s announcements may have finally put a temporary brake on further terrifying price hikes, but they leave huge questions unanswered, including: what is the Government’s exit strategy? We need a proper solution to get us out of this crisis, by reducing our dependence on gas and upgrading buildings for the long term. Just yesterday, more than 100 top businesses wrote to the Government begging them for support for energy-efficiency and large-scale industrial decarbonisation. Can he explain why these businesses were so conspicuous by their absence in the measures he announced today, and will he remedy that now?
The businesses that write can implement their own energy-efficiency measures—that is what businesses do. It is a sensible investment for them, because if they become more energy-efficient, they will save cash on their energy bills. We also need more secure and cheaper supplies of gas, which is why we are going to issue more licences and why we are looking at shale gas. It is really important that people have confidence that gas will flow through the pipes and into their boilers so that they can heat their homes during this and succeeding winters.
At a time when they are facing substantial increases in a key cost of operating, businesses across the UK have welcomed the measures and, in particular, the speed with which the Government have responded. Did the Secretary of State see the remarks made by Kate Nicholls of UKHospitality, who praised the inclusiveness of this scheme, with it bringing in both small and large companies, and drew attention to how this is going to secure jobs in the long term?
I am grateful to my hon. Friend for his question. It is fundamentally important that we have a rapid scheme that protects as many businesses as possible, because the increase is so extreme that, on an immediate view of it, it was hard to see any business that would find conditions easy. Therefore, we had to act quickly and universally, and I am grateful for his support and that of the hospitality industry.
Will the small charities that are not registered with the Charity Commission be eligible for this assistance? I am thinking of those with an income of less than £5,000 a year that cannot register voluntarily and are not required to do so. Will they get help as well?
I welcome this package, which will provide support to businesses and safeguard jobs in my constituency. The current situation is exacerbated by an energy market that does not work and the need for further investment in nuclear and renewables—I am glad that the Government are consulting on the former and investing in the latter. Does my right hon. Friend agree that public and private investment is needed, along with a functioning energy market, to ensure that we never have to face this situation again?
Yes, my hon. Friend is absolutely right; we need a better functioning energy market. There are real difficulties with the liquidity in the futures market at the moment. He is also right to say that we need a further and faster roll-out of nuclear energy, which is being worked on, and that offshore wind, which is going at a rapid pace, continues to be a major and growing source of energy within this country.
The Secretary of State has mentioned Northern Ireland several times, highlighting the fact that he is aware that a large number of small businesses there rely on oil for heating their premises. Will he go further than just a throwaway line and confirm that the inadequate and insignificant £100 being offered to households for oil will be reviewed and that the same figure will not be offered to businesses reliant on oil?
Two thirds of Northern Ireland households are not on gas. Therefore, it is fundamental to ensure that Northern Ireland is treated fairly and as a full part—as it is—of the United Kingdom. That is an absolute priority for the United Kingdom. Northern Ireland does not have the price cap that applies in Great Britain, therefore we will need to bring forward legislation to deal with the issues in Northern Ireland. We will do that as a matter of absolute priority to ensure that a scheme is up and running rapidly. We are very conscious of the fuel oil issue, which other Members have raised.
On heating oil, two thirds of my constituents live off the gas grid. I note what the Secretary of State says about being fair to all bill payers, but I urge him not to fall into the trap of thinking that rural areas are wealthy areas. Fuel poverty in my constituency is a serious problem, and so far the only support that has been announced is £100, which will provide heating oil for just 10 days—it will not touch the sides. I urge the Government to rethink on rural areas and heating oil.
I am grateful to my hon. Friend. Representing a rural constituency, I am well aware that there are areas of our countryside that suffer from fuel poverty. It is all a matter of proportionality; that is what we are striving to achieve, to get the balance right.
A businessman recently contacted my office extremely distressed about the future of his business—he does engineering, and he was talking about closing his doors for good and laying off 50 people. I hope the Minister accepts that the delay in hearing something from the Government has not only caused emotional distress but had an impact on the local economy. Companies are not making decisions on future investment in their workforce or their business because they are not sure that they have a future. Bearing that in mind, will the Minister offer greater reassurance by giving businesses long-term support to improve their energy efficiency?
I very much welcome this package of support for business, as I welcomed the support for domestic users. However, I was contacted yesterday by Alan, a resident of Orwell Quay, who said he had experienced a 300% increase in the service charge for heating the communal areas. He wanted to know whether the Government have a plan to support leaseholders in places such as Orwell Quay in Ipswich.
Calder Millerfield in my constituency has been quoted a 345% increase in its electricity costs alone. Although I appreciate the Secretary of State’s plans to help in the next six months, what can he offer Calder Millerfield after the end of that six months? A 345% increase just in electricity costs could put this business under.
The hon. Lady raises the issue of these extraordinary, large rises, which concern MPs on both sides of the House. That is why we have brought forward this package. I am trying to give as much reassurance as I can without pre-empting the review. As I said, we have introduced this measure on a completely broadbrush basis because it is the right thing to do at the moment—it is needed urgently. However, we need to examine in a review exactly who should benefit, and then announce that in plenty of time for 1 April. In that way, we can see what support is needed for the longer term.
Many businesses in East Devon have already welcomed the support outlined by my right hon. Friend. However, as he well knows, the hospitality industry in particular will need targeted support after that six-month period. Will he commit to continue to work with the industry and the all-party parliamentary group for hospitality and tourism, which I chair, on a wider package that will help pubs and cafés survive after six months?
The trouble with announcing a measure that only lasts six months is that local authorities are, quite responsibly, putting together their budgets for next year now. My local authority has said to me that, because it runs swimming pools, leisure centres, care homes, schools and so on, not renewing this for next year would be the single biggest blow to its finances in 50 years and it would have to start laying people off pretty sharp. Will the Secretary of State make sure that local authorities are given plenty of advance notice of how their budgets can be protected for the next financial year?
I thank my right hon. Friend for his statement, which I know will be welcomed across Newcastle-under-Lyme both in our hospitality industry and at the brickworks in Chesterton, which is energy intensive. Does he agree that we must not be in this position again in the future—indeed, western Europe must not be in this position again—and that that will require investment not only in diversifying our energy but in storage? What will his Department do to work on energy storage?
My hon. Friend is right: we must not be in this position again. That is why we want to ensure that we maximise our own domestic sources of energy and look at long-term contracts with friendly nations across the world that are fundamentally more reliable. Yes, there is a great deal more to do, and storage is something that we are looking at.
The Scottish Licensed Trade Association has said of the Government’s plans that
“when you look beyond the headlines it doesn’t live up to the hype, as this new scheme caps the wholesale price and pubs and bars could still be paying 200%-300% higher bills than normal.”
The newly and extensively restored Foundry pub in Inverness had to close its doors a few weeks ago, citing energy costs as a key reason, during the Tory leadership vacuum. Does the Secretary of State accept that what he is offering businesses is too little, too late and does not last long enough?
Anglesey is known as energy island. We have wind, wave, solar and hydrogen power and, hopefully, new nuclear at Wylfa, yet we have one of the lowest gross value added rates of any constituency across the UK. Can my right hon. Friend reassure my constituents that this package will help protect their jobs and bring much-needed new employment, investment and skilled jobs to Anglesey?
I want to follow up on the question of my hon. Friend the Member for Rhondda (Chris Bryant) about the position of local authorities. Come December, the Secretary of State for Levelling Up, Housing and Communities will make a spending announcement for local authorities for next year. Does the Secretary of State for Business, Energy and Industrial Strategy agree that his review of energy costs should be incorporated into that, so that local authorities get one presentation of what the future will look like rather than myriad different ones not joined up together?
The hon. Gentleman is rather looking a gift horse in the mouth. This is providing a very significant reduction in energy prices for the next six months and a review will take place to see what happens next. Local authorities would be in a very difficult financial situation if this were not being done. The Government cannot responsibly commit to unending expenditure; it has to be done in a sensible and prudent fashion.
I warmly welcome the package of measures that my right hon. Friend has set out. As the number of questions this morning has indicated, the one area that needs more detail and, dare I say it, polish is off-grid support. When he looks at the detail of that for businesses and households, I urge him not to treat it as one, but to look at the disparity in pricing between oil and liquefied petroleum gas, which have very different costs bases and need to be treated separately.
My hon. Friend is right: LPG and heating oil have not risen as much as natural gas. None the less, it is important to make sure that there is fairness for everybody, bearing in mind that some houses, and indeed some schools, still depend on coal for their heating.
Yesterday’s announcement provided very little certainty for schools and other public services; it simply pushed the cliff edge back by six months. Schools in my constituency are already facing difficult decisions about cutting support staff. They also need help cutting energy usage. This Government shut down the school energy efficiency loan scheme, which helped them to buy insulation, solar panels and so on. Is it not high time that the Secretary of State looked at reopening that scheme?
On the first point, we are providing considerably more certainty than would otherwise be provided in a fundamentally uncertain energy market. We encourage people to look at ways they can insulate themselves better and are in endless discussions to ensure that we can have the appropriate programmes.
Businesses across Grantham and Stamford will welcome the support announced this week. Lincolnshire’s farmers in particular face increasing pressure, owing to the rising costs of inputs such as fertiliser and energy. Can my right hon. Friend assure me that he will remain mindful of the particular circumstances farmers face in the design of any future support packages?
In times of crisis we turn to our civil society organisations to support us with vital services. Across the arts, we are expecting museums, galleries and theatres to provide the public with warm banks. Those critical community and cultural organisations tell me that they face the combined challenges of falling donations and income, rising costs and the continuing impact of covid. What can the Business Secretary tell us to reassure those essential organisations that support for energy costs will extend beyond six months for them?
I welcome the statement by the Secretary of State, on behalf of the thousands of businesses and charities and the 63 care homes and 30 schools in Southend West. When he comes to his review, will he assure me that he will keep in mind the particular needs of special schools? We have brilliant ones in Southend, particularly Kingsdown School; they look after the most seriously disabled children and their energy needs are much higher due to the feeding pumps and hoists. Will he agree to sit down with me and discuss their special needs when he comes to his review?
The Secretary of State has mentioned that there will be support for the voluntary and charitable sectors. In my constituency we have a number of food banks and food pantries that are struggling to keep their doors open as they provide essential services for people forced into poverty. Can the Secretary of State tell us what level of support beyond the six months will be available to that very important sector?
Businesses in Hinckley and Bosworth will be hugely grateful for the protection the Government have put in place. There is one problem, though: given world events, what is the Government’s assessment of the risk of energy blackouts, and should businesses prepare for them?
Parts of Blaenau Gwent are 1,200 feet above sea level and our winters can be bitter. Will there be any extra help for families facing higher bills in constituencies with much colder weather than most, and will the Government also look again at the cold weather payment criteria as part of their upcoming review?
Like many other MPs, I have spent the summer visiting small businesses and charities in my constituency. They all say that they need to be able to make forward plans. For example, Four Square, a charity in my constituency, runs a hostel for homeless young people and a women’s refuge, and fundraises through a large retail premises. Soaring energy bills may affect its ability to keep the homeless hostel and the women’s refuge open. It is simply not practical for Four Square to wait three months for a review; it needs action and information on the Government’s long-term plans before three months are up. Will the Secretary of State please seriously reconsider the timing here and listen to the voices across the House urging him to do that?
We have acted extremely swiftly to provide support, and it is proper that it should be reviewed to ensure that it goes to the right people. The timeline is completely reasonable. It seems to me that people are looking for things to harp on about in a package that they broadly welcome.
Many businesses are negotiating contracts with their energy suppliers now, so what does the Secretary of State have to say to those businesses? Should they negotiate just for six months? What will he do, in all urgency, to prevent the next six months from being a period in which businesses are run down and closed?
Many churches and charities in my constituency will expend more energy over the coming months because they are providing warm banks. What additional support will they be able to apply for so that they can provide the resilience our communities need?
The Secretary of State has provided the clarity that many companies in Northern Ireland now require, but legislation will now be required to assist businesses. Thousands of businesses in Northern Ireland are small and medium-sized enterprises, and they cannot wait for legislation, so will he commit to an emergency instrument or provision before December of this year?
This House, when called upon, can act remarkably swiftly. The intention is that we should introduce legislation in October, pass it by the end of October, and that it should take effect from 1 October, to ensure that non-domestic users in the whole of the United Kingdom are helped, and that everybody in Northern Ireland is helped. That is the broad timeframe, and I hope that the House will co-operate with it, because it is necessary for expedited legislation.
So many big energy companies have posted obscene profits while constituents, businesses, charities and schools across my Vauxhall constituency continue to suffer. As the Government were so reluctant to introduce the windfall tax, will the Secretary of State confirm how they will ensure that the energy companies are compelled to pass the subsidy on to businesses?
Of course, that depends on what the hon. Lady means by “energy companies”, because the domestic suppliers have not been making enormous amounts of money. Indeed, many of them have gone out of business over the last few months, so they have not been making vast amounts of money.
Some businesses have been making a lot of money; they pay very significant amounts of tax already. It is important that we do not assume that there is some honeypot of businesses that can be raided—there is not. We need long-term investment in this country to maximise the exploration and production of oil and gas to ensure that we have lower prices and sustainable businesses. That is not aided by putting taxes on at every opportunity, which the socialists always want to do.
The domestic scheme is based on a loan to be repaid out of future bills. If the business scheme is to be repaid in the same way, why would businesses not regard it as a deferred tax rise? If it is not, does the Secretary of State really expect it to be repaid out of general taxation by the rest of the taxpayers? “Tax, tax, tax” is what he is saying.
May I again raise the plight of the hospitality sector? The Secretary of State will know that it went through a tumultuous time during the pandemic, and many small hospitality outlets face extortionate increases in their bills. Those at Howard’s Neighbourhood Bar—a small 60-seat bar in Denton—face bill increases of £2,000 a month, which is just not sustainable for them. Although the support will take them six months down the road, they will be worried about what happens after that. The Secretary of State says that there will be a review, but can he offer a glimmer of hope to businesses such as Howard’s Neighbourhood Bar that they will not face a cliff-edge in six months’ time?
The hon. Gentleman asks a fair question. I cannot pre-empt the review, but I think I can offer a glimmer of hope. In the review, we will have to see which companies and other non-domestic users need the greatest support—I have indicated some of them. Without going too far, it seems that the hospitality sector is at particular risk in this area. If he would like to make representations to the review, I will listen to them very carefully.
As well as businesses, a number of housing associations have concerns about energy prices. In my small Glasgow constituency I have more than 15 housing associations, many of which have the unique tenement-style properties, which are very difficult when it comes to energy efficiency. Would the Secretary of State be willing to come to Glasgow East and take part in a roundtable with local housing associations to understand the challenges that tenement properties, in particular, face as a result of the energy crisis?
The hon. Gentleman, as so often, raises a serious point. We are very conscious of the issues facing social housing landlords, particularly those with rather older housing stock that is the least energy efficient. There are important things to be done to help them make their housing more efficient, and there have been schemes available to do that. I am not sure I can promise a visit, but I would be delighted to discuss the matter with him further.
Care homes in my constituency are facing soaring energy costs, as I am sure the Secretary of State will be aware. Care homes look after frail and vulnerable people, and it is essential that they are kept warm. I note his comments thus far on care homes, but can he assure us that there will be a real focus on ensuring their ongoing financial viability?
I want to try again on local authorities, because I am not sure the Secretary of State understands that the review is simply too late. Too many councils already face budget holes—Luton Council faces a budget hole of £10 million this year—because of increasing energy costs, inflationary pressures and increasing demands. Has he had any conversations with the Secretary of State for Levelling Up, Housing and Communities about the budget planning process? Local authorities are required to produce medium-term budgets before April next year.
The degree of certainty that is being offered is greater than in a normal year. We are saying that what will happen will be announced after the three-month review has taken place, in plenty of time for 1 April. Normally, local authorities are dependent on the vicissitudes of the market.
Bars, butchers and other small businesses I have spoken to in Glasgow North are already operating on the tightest of margins. If they go out of business, that has a knock-on effect across the local economy, so the poverty rate spirals up rather than wealth trickling down. What assurances can the Secretary of State give these businesses, rather than simply pushing the cliff edge further down the road?
In recess, I met residents at Winton Court sheltered housing scheme in Winlaton, run by Housing 21, and they explained to me how angry they were that they were not benefiting from the domestic subsidy. Can the Secretary of State tell me how he proposes to make sure that those people, most of them pensioners, are not hit by increased energy costs and are in no worse a position than other residents?
I am grateful to the hon. Lady, who is such an assiduous campaigner for her constituents. She is absolutely right that we have to ensure that these wholesale price cuts feed through to the people they are meant to benefit, and that will be in our legislation.
Because of the Government’s failure to act quickly on energy costs, Smithy’s fish and chip shop, which had been trading for 38 years on Beverley Road in Hull, had to close its doors. That was not just because of energy cost increases, but because the price of fish has gone up 120% and the price of beef dripping 150%. I would like to know what more the Secretary of State will do to reassure one of the institutions at the heart of our communities—fish and chip shops.
Businesses in Glasgow North West can literally see the turbines that are producing Scotland’s renewable energy. They are not feeling supported at the moment. Can the Secretary of State confirm that the businesses that are being supported most through this crisis are the energy producers and the gas and oil companies?
Lots of SMEs in south Manchester are still worried. I make a particular plea for small and medium-sized bakeries, such as Martins and Barbakan in Chorlton in my constituency, which have been in touch with me and are really concerned. Can the Secretary of State assure us that he is in discussion with those kinds of energy intensive small businesses? Those discussions do not have to wait for three months; I hope they are going on now.
All businesses will benefit, but obviously, the more energy intensive the business, the more it will benefit from this reduction in wholesale prices. As I said, I am very open to receive representations from right hon. and hon. Members to the review that is taking place.
I am a member of the voluntary board of the Scottish Pantry Network, whose shops are significantly affected by rising energy costs. It exists for environmental reasons to stop food waste, but primarily, it exists to provide low- cost, fresh food for people who cannot afford supermarket prices. To keep the food fresh, our shops have walk-in fridges and freezers that cost a lot of money to run. Does the Secretary of State not see that some supermarkets, which my constituents cannot shop in and which are making massive profits, will be helped by this measure, while some of my pantry shops will not be, simply because they signed up to a contract prior to 1 April? Will he remove that date? If not, will he consider including all those non-domestics that signed up to contracts before 1 April in the three-month review?
For the last 12 years, Conservative Governments have had the chance to act on energy supply and infrastructure. Manufacturing businesses around the country have been saying to me that they are facing a 59% premium against the EU average for electricity. Why did Governments not act sooner, certainly before this energy spike, to ensure the security of UK businesses?
The energy package announced yesterday is fine—as light as it is and as far as it goes. The Secretary of State has heard widespread concerns about the cliff edge in the support in three or six months’ time. In view of those concerns, will he give further urgent consideration to additional support for energy intensive business sectors, such as manufacturing and hospitality, as well as longer-term support for investing in energy saving measures?
The Secretary of State admitted a few minutes ago that we have all known for at least six months that urgent and major Government intervention would be needed. Why has it taken so long? To call on his experience and knowledge of the way things work from his previous post as Leader of the House, who should the House demand come to the Dispatch Box to apologise to our constituents for six months of unnecessary delay?
In response to an earlier question, the Secretary of State acknowledged the importance of farming, but factories and those involved in food production are also important for food supply, as is certainly the case in North East Fife. Further food inflation will affect struggling families more. Although this short-term energy support is welcome, there are other issues for the sector, such as the cost of fertiliser, labour supply and so on. Will he commit to a cross-Government strategy involving the Department for Environment, Food and Rural Affairs, the Home Office, the Treasury and the Department for Business, Energy and Industrial Strategy to ensure our food supply for the future?
The hon. Lady is right to raise what is going on with the cost of living more generally. Energy is an important part of that, and helping to deal with the energy problem will have an effect on price rises throughout the economy. The Bank of England will say something later today, which is another part of dealing with inflation. I accept her analysis that inflation is a very difficult problem for an economy to face.
I thank the Secretary of State for his commitment and help for all the different sectors across my whole community. On Monday, I met a business owner in my community who employs more than 200 people. His is an energy intensive factory business and the cost of energy for a year is a large six-figure sum. He needs help right away to secure those jobs and ensure that the future is secure for him and his company. I ask the Secretary of State to clarify again whether that business owner will qualify for the 50% help toward energy costs, particularly for electricity.
I do not know the circumstances of any individual company, but if the company is on mains gas and electricity, it will benefit, and it will benefit from 1 October. In Northern Ireland, both gas and electricity will be almost identical—slightly different for technical differences, but the same in effect—to what is happening in GB.
Shale Gas Extraction
What a pleasure it is to be continuing on this theme—
I am very grateful to the right hon. Gentleman for asking his urgent question. I am glad to be able to announce that the moratorium on the extraction of shale gas is being lifted, and a statement about that has been laid before the House.
As I set out in the previous urgent question, it is important that we use all available sources of fuel within this country. It is more environmentally friendly to use our own sources of fuel than to extract them in other countries and transport them here at great cost, both financially and in terms of carbon. It is therefore something we need to revisit, and we need to revisit the seismic limits to ensure that shale gas extraction can be done in an effective and efficient way.
This is obviously a case of “the dog ate my homework”, and it is hardly surprising. Let us start by taking the Secretary of State’s excuse for lifting the fracking ban—that it will make a difference to the energy bills crisis. It will not, because gas is sold on the international market. The current Chancellor said so in February of this year:
“No amount of shale gas…would be enough to lower the European price”
of gas. In an article published yesterday, even the founder of Cuadrilla said that the Secretary of State is wrong. First, why does he not admit the truth that anyone who knows anything about this subject says his claim that fracking will cut bills is nonsense?
Next, let us come to safety. The 2019 manifesto, on which the Secretary of State and every Conservative Member stood, said:
“We will not support fracking unless the science shows categorically that it can be done safely.”
They are lifting the ban, but they cannot supply the evidence, and the British Geological Survey report published today certainly does not do it. So in the absence of the evidence, his approach is to change the safety limits. He says in his written statement laid before this House that
“tolerating a higher degree of risk and disturbance appears to us to be in the national interest”.
I look forward to him and his colleagues explaining his charter for earthquakes to the people of Lancashire, Yorkshire, the midlands, Sussex, Dorset and, indeed, Somerset who will be part of his dangerous experiment. Let me tell the Conservatives that we will hang this broken promise round their necks in every part of the country between now and the next general election.
The Conservative manifesto also said:
“Having listened to local communities, we have ruled out changes to the planning system.”
Does the Secretary of State stand by that promise, and how will he abide by the Prime Minister’s commitment to local consent? The truth is that he does not understand that we cannot escape a fossil fuels crisis by doubling down on fossil fuels. Renewables are today nine times cheaper than gas. The only way to cut energy bills and have energy security is with zero-carbon home-grown power, including onshore wind and solar, which his wing of the Conservative party hates and he continues to block. For communities in every part of our country, today shows that they can never trust a word this Government say again, and he has shown he is willing to break his promises to support dangerous fringe ideas that put the interests of fossil fuel companies above those of the British people.
There was plenty of energy in that, Mr Speaker, but it was, I am afraid, more sound and fury that signifies nothing. We know that shale gas is safe. It is safe in the United States, where it has been one of the biggest contributors to the decline in carbon emissions of any activity that has gone on in that country. We know, even if Labour Members wish to ignore it, that seismic activity of 2.5 and below on the Richter scale takes place millions of times a year across the world. Our standards for ground-level movements for construction work are double those that have ever been achieved by any shale gas exploration in this country. There is a huge margin over what we allow for building work against what has actually happened in terms of shale gas. The right hon. Gentleman seeks to deny the ordinary rules of supply and demand. He ought to be aware that when we increase supply and demand remains steady, that has an effect on pricing, and pricing is always set at the margin. The price of any commodity is set by the final user who demands that commodity. If supply exceeds demand prices fall, and any increase in supply helps to reduce costs.
But there is another point. We have—all of us— constituents with gas boilers, and we are going to have them for many years to come. Do we really want them to be dependent on strange dictatorships that wage war in this world, or do we want to have our own security, and our own supplies? Do we want to maximise what we receive from the North sea and from underneath our feet? This seems to me to be just good common sense. It is safe, it is shown to be safe, and the scare stories have been disproved time and again. The hysteria about seismic activity fails to understand that the Richter scale is a logarithmic scale. It seems to think it is a straight arithmetic scale, which of course it is not. Bringing on the supply will bring us cheaper energy, which we need, and that will help our constituents. It secures our supply, which will ensure that our businesses can continue to operate whatever the weather. This is of such importance, and it is sheer Ludditery that opposes it.
There is nothing Luddite about the people of Lancashire or Fylde. I want to say how disappointed I am that Parliament was not informed about this issue before the media was, and that as a local Member of Parliament, I was not given that courtesy, despite having requested information for two weeks by contacting the right hon. Gentleman via his Parliamentary Private Secretary. I have sent letters, I have sent WhatsApps—nothing back. Can we be crystal clear on one thing? At the Manchester hustings—this is a matter of public record and people can find the clip—the Prime Minister made it crystal clear, no ifs, no buts, no caveats, that fracking would take place in the United Kingdom only where there was local consent. That was crystal clear. If the Prime Minister is to remain a woman of her word, and a woman in whom we can believe—and I believe she is—will the Secretary of State outline how that local consent will be given and demonstrated in my constituency of Fylde?
We obviously want to work with local communities, and it is really important that companies that seek to extract shale gas come up with packages that make what they are proposing to do welcome to local communities. That is of fundamental importance and is what the Prime Minister has set out.
There can be no doubt that this particular political earthquake is absolutely bonkers. The UK faces two problems when it comes to energy: energy prices and energy security. Let us be clear that when it comes to energy prices, producing shale gas will make absolutely no difference whatsoever. On energy security, this Government could and should be turbocharging renewables, and creating a contract for difference for hydrogen, to ensure that we have hydrogen boilers in future and are not reliant on the gas boilers of the past. But luckily, in Scotland there will be no change. There will be no fracking whatsoever. We, unlike the Tories, stick to our word. It is great to know that that will not change, but the one thing that will change is that we will be long gone from the shackles of this place by the time shale gas is produced in England.
It is amusing to think that the economics of independence were all dependent upon oil and gas, and now they are not going to have any, which does not seem to me to be entirely consistent. Using our national resources is a sensible and wise policy, and that is what this Government are looking to do.
Can the Secretary of State confirm what recoverable reserves of shale gas we have here in the UK? What percentage of global or even national demand would that shale gas be likely to meet, and what impact would that have on the global price of natural gas?
We need to get on with the exploration and the test drilling to see how realistic the forecasts are. A report in 2012 set out the potential for shale gas, which is very large, but the question that the hon. Member raises—how much of that will be realistically extractable?—is the right one, and it requires drilling to take place to find out.
Obviously, looking to these measures to increase security and supply is incredibly sensible in the long term, not only to get prices down but to deliver energy security. However, for the many constituents of mine still struggling with energy prices now, particularly those off grid, can the Secretary of State outline a few of those measures and say how he intends to go further in offering short-term support?
I must say that I am fascinated that the Secretary of State thinks that he knows more about the geology of the UK than the geologist who founded Cuadrilla, who said quite clearly that the UK is unsuited to widespread fracking.
My question comes back to the issue of consent. The Prime Minister said that fracking will go ahead only in places where there is support from the local community. That begs the question why on earth the Secretary of State is even pursuing this idea, as there is no support from local communities, but how is he going to measure that, particularly given that this terrible and deeply unpopular decision coincides with the Government’s draconian new anti-protest laws?
In relation to Cuadrilla, the gentleman in question I believe left the company 10 years ago, so he is somewhat out of date in terms of the company that he purports to represent. The current management of Cuadrilla are in favour of this.
I think local support is important, and one of the things that companies that want to drill for shale gas will have to do is come up with packages that are attractive to local communities. That will ensure that people get some financial reward from shale gas being extracted near them.
I would like to press my right hon. Friend further on how community support will be defined and measured, because I have many concerned constituents who want to know that they will have a genuine route to rejecting fracking applications that do not have local support, and I am still not clear what that would be.
The homes of people living near the proposed fracking site at Altcar Moss shook as a result of the tests that the Secretary of State referred to earlier. He said that shale gas was safe, but his Government paid compensation to residents living near fracking sites in Lancashire. The Government’s own report says that little progress has been made in reducing and predicting the risks. When is he finally going to admit that fracking is a non-starter in this country?
Despite what the Secretary of State said, is it not the case that forecasting the occurrence of seismic events as a result of fracking remains a challenge to the experts? Is it not therefore creating a risk of an unknown quantity to pursue shale gas exploration at the present time? Is he aware that the safety of the public is not a currency in which some of us choose to speculate?
Unusually, I disagree with my right hon. Friend. It is all a matter of proportionality. As I pointed out, the movement on ground level from construction is about double that we have had from any instance with shale gas. We know what has happened before. There are not limits on mining. There are not limits on ordinary oil extraction. It is only shale gas that has limits, and there is no evidence that shale gas is worse than any of those other activities. So, I think, on a balance of risks, my right hon. Friend is not coming to the right conclusion.
It is a bit rich of the self-styled Minister for the 19th century to think that the CEO of Cuadrilla is out of date. The Secretary of State’s manifesto said:
“We will not support fracking unless the science shows categorically that it can be done safely.”
The science has not proved categorically that it can be done safely, so he is reneging on his solemn promise, which all Conservative Members stood on, to the British people in 2019. This is not a legitimate thing for this Government to do, is it?
I must reiterate that the former chief executive of Cuadrilla resigned 10 years ago. He does not represent the company and that is important. The House would be put under a misapprehension if it were to think that he is currently involved. As regards the last manifesto, I happily stood on the last manifesto because I had read the 2012 report that went through most of the myths against shale gas and showed that they were wrong and that the extraction of shale gas is safe.
The Secretary of State will be aware of the strong objections many of my constituents have to fracking. The Prime Minister has been quite clear in saying that it will take place only if there is strong local support. However, that poses many questions. What is the local community and how do we define it? How do we ascertain whether it can command local support? What incentives, if any, will be provided to local communities that have fracking imposed upon them? My constituents are understandably anxious about fracking returning to the Fylde coast. When will they receive an answer to some of those questions?
My hon. Friend asks a very important question. It is important for the national interest that we have secure supplies of gas—that is important across the House to all constituents—but this will affect some residents much, much more than others. Therefore, it is only right that they are compensated and receive some financial benefit for the inconvenience. The majority of the inconvenience comes not from the extraction of shale gas, but from the building of the shale gas well in the first place and the associated lorry movements. It is important that people benefit and are rewarded for doing something that is in the national interest.
What studies has the Secretary of State undertaken of the effect on aquifers where fracking has taken place, which are deeply polluted and run well beyond the local communities he is seeking support from to reintroduce fracking to this country? Surely, he must understand that the dangers will be here for decades to come—long after whatever small amounts of gas have been extracted? It is future generations who will suffer because of this policy.
It is no surprise that I disagree with the right hon. Gentleman. I refer him to the 2012 report, which went through that and through what had happened in the United States for comparison purposes. First, it found the evidence on the pollution of aquifers was not actually any good: most of the stories were invented or were scare stories. In addition, the UK has a very good regulatory regime. The combination of ignoring the scare stories and decent regulation means that one can be confident that aquifers will not be damaged.
I welcome this announcement; it is one of the few from Front Benchers that will actually make us a lot richer, if we pursue it. It will also make us more resilient in a very difficult world. The key seems to be what advantage the communities that may be affected can get through financial support. Has the Secretary of State had any discussions with the Treasury? It seems to me that if local people give their consent, that is in the national interest.
I am very grateful: my hon. Friend makes exactly the right point, both ways around. This is in the national interest and will make the country richer, but it is absolutely right that those affected should be rewarded. To my mind, that means direct financial reward, not a theoretical one. The last time that we discussed fracking, the idea was that communities would be delighted if they got £10 for the village hall. I do not think that is the right way to do it. This needs to be direct, to the individuals who are affected. I have had preliminary discussions with my right hon. Friend the Chancellor, but I do not have a formal thing to announce.
Residents in the northern part of my constituency are rightly concerned about the impact of tremors on their often older buildings, and they are worried about the impact of the extraction of coal bed methane through fracking on their rural way of life. Will the Secretary of State explain in detail—he has not so far—exactly the mechanism through which communities will be able to refuse consent for coal bed extraction and shale gas fracking? Compensation is not consent.
Compensation and consent become two sides of the same coin. People will be able to negotiate the level of compensation and it will be a matter for the companies to try and ensure widespread consent by offering a compensation package that is attractive. [Interruption.] Opposition Members howl and wail about this because, actually, we are trying to use market forces. It is amazing—a Conservative Government using market forces!
The Government’s figures show that only 17% of the public support fracking. In Barnsley, 3,000 people signed a petition against it. There is no local consent in the area I represent. Given that the last round of fracking licences was for Yorkshire, how will the Secretary of State ensure that northern communities are not disproportionately affected by this outdated and dangerous way to create energy?
I am very grateful to my hon. Friend; that is an important and fundamental question. The answer is that we need to do the test drilling first to see whether the reserves can be achieved in the way that the 2012 report hoped, but I cannot give a firm commitment on that, because we have not done enough test drilling yet.
To come back to the 2019 Tory party manifesto, which each Government Member stood on, it states on page 55 that a moratorium on fracking would be lifted only if
“the science shows…it can be done safely.”
A change in Tory party leadership is not a change in scientific evidence. Will the Secretary of State enlighten the House as to why the Government think they are above both logic and science?
I have been quite shocked by the luddites on the Opposition Front Bench, who have been quite open in saying that they will weaponise the issue in a general election. For those who fear the unknown, may I tell my right hon. Friend that the 0.5 limit on the Richter scale is nothing compared with the 1.5 limit on the Richter scale that Lichfield is currently enduring from pile-driving for HS2? If we can live with that—though we do not really like living with it, Mr Speaker—we can certainly enjoy the benefits from fracking.
My hon. Friend makes an absolutely right and wise point: Opposition Members’ motto for the next election is, “Let’s be cold and poor.” That is really the prospectus that they are putting before the British people. As regards seismic activity, there are millions of seismic events of a magnitude of 2.5 or lower in the world every year. We should not assume that every seismic event is the San Francisco earthquake.
Lifting the cap on bankers’ bonuses while making it harder for working people to access benefits, and now lifting safety limits on seismic events, or earthquakes to you and me, while protecting and subsidising oil companies’ excessive profits and accelerating climate change— does not this decision really show whose side this Tory Government are on?
The Costa Coffee that I visited on Tuesday morning rivalled the House of Commons Chamber this morning for robustness of debate and strength of opinions expressed. I sought to reassure constituents that they would have the opportunity to have their say because local consent was required. I have been listening carefully to the Secretary of State this morning, but I have yet to hear any explanation of how local consent will be determined; indeed, any reference to local consent has been absent. Let me try once more: will my constituents be asked whether they want fracking, or not?
As I have said, and as the Prime Minister has said, we will be looking to have the support of local communities. That is important. There will be a responsibility on companies, when they bring forward proposals, to work out how they can get that local consent. It seems to me pretty clear that that will involve giving money to people to encourage them, because they will want to have the benefit locally while they are doing something that helps the country nationally.
In Wales, we know the cost of dangerous fossil fuel extraction so that others can profit remotely. It is particularly acute today on the anniversary of the Gresford mining disaster, in which 266 men and boys were killed, 200 women were widowed and 800 children were left fatherless. The coal mine was owned by the Westminster and United Collieries Group, which subsequently destroyed the safety records. The men killed remain 2,000 feet down—only 11 bodies were recovered—but Gresford was mooted as a fracking site. Will the Secretary of State confirm that he understands that powers on fracking remain with our Senedd, and that he has no intention of trying to return those powers to Westminster?
Even before Putin’s illegal war in Ukraine, fracking had advantages because of the benefits for jobs, for investment, for tax revenues and for the positivity of the balance of payments, which I would rather were accruing here in the UK instead of our sending tens of billions to Qatar and other places. Is my right hon. Friend aware of the carbon dioxide savings from domestic energy supply? It has been calculated that 5 million tonnes of CO2 are emitted just from the cooling, declassification and transport of liquefied natural gas. That has to be a moral outrage.
My hon. Friend is absolutely right, and he takes his argument through logically, unlike many Opposition Members. If we wish to reduce carbon emissions, we are better off using gas as a transition fuel that comes from our own resources, rather than importing it. That must be true: we have those resources, we need the transition fuel, and therefore we should try to extract it domestically.
Today’s panicking, Trumpian announcement has been brought about by the failure of successive Tory Governments who squandered the opportunity that coal, oil and gas—our indigenous resources—offered to transform our economy into a carbon-free economy. Will the Secretary of State confirm that on his target list for fracking are areas in Yorkshire and elsewhere in the north which are often described as “red wall”, and may I bring to his attention the fact that there is no local consent in those areas for what he is proposing this morning?
It will be important for the companies that wish to extract gas to ensure that there is local support, and to come up with packages that ensure that it is forthcoming. It is important for local communities to welcome the extraction of shale gas, and I think it very likely that they will.
When we are faced with a Russian leader who uses gas supplies as a tool of warfare, it is entirely prudent to examine again the viability of all our domestic energy resources, but may I encourage my right hon. Friend not to lose sight of some of the other big, exciting potential opportunities that are opening up—for example, floating offshore wind power in the Celtic sea? Will he meet me, and other colleagues with an interest in the Celtic sea, to discuss what further steps he and his Department can take to further those projects?
I should be absolutely delighted to meet my right hon. Friend to discuss that. It is something that the Government are looking at. We are very enthusiastic about examining all possible sources, and I think that floating offshore wind is potentially a very good one. We want to establish whether we can expedite offshore wind projects so that they happen faster and we have supplies coming in. We need to be considering—and we are considering and discussing with other countries—how we can expedite carbon capture and storage and move towards hydrogen. The long-term issues are ones that we are focusing on and dealing with, but we have many years of needing gas, which is why I welcome my right hon. Friend’s support for this announcement.
It is this Government who have made onshore wind less economical, it is this Government who have made solar power and panels less economical, it is this Government who blocked wave and tidal power in the Swansea bay, and it is this Government who have failed to invest; and now they are trying to cover it up with a fracking giveaway for which there will never be any local consent. Will the Secretary of State—and he has been asked this numerous times—confirm that people in local areas will have a say through a local referendum, and that the result will be binding?
This Government have only been in office for about a fortnight. I know that they have been busy and have not quite managed to do everything that the hon. Gentleman suggests. As regards local consent, I refer him to the answer that I gave some moments ago.
I have listened carefully to the Secretary of State, and I have to say that the local consent plans do not seem to wash. It seems to come back to communities’ being bought off rather than having a vote. Can the Secretary of State confirm once and for all that residents across Bolsover who are concerned about fracking will be given a vote to object to these schemes locally?
The people of Ellesmere Port have already signalled their opposition to fracking. A planning application was submitted a number of years ago, the local authority rejected it, there was an appeal, many residents gave evidence against the application and after three years it was finally decided that it would not be accepted. Chester zoo, a big employer in my constituency, said today that it was opposed to fracking, and many of my constituents are repeating their objections. There is no local consent in Ellesmere Port and Neston, so will the Secretary of State send the fracking companies the message that there is no point in their coming to ask, because they will not get our agreement?
Ask, and it shall be given; seek, and ye shall find. It is absolutely important that we try to get local consent, and that will require the drilling companies to be innovative in the packages that they come up with. We should not be ashamed of paying people who are going to be the ones who do not get the immediate benefit of the gas but have the disruption: that is a perfectly logical thing to do.
May I ask once again how the Secretary of State will measure local consent, because I have absolutely no confidence in Labour-run Kirklees listening to local wishes? It does not even distribute the section 106 payments from planning applications to local communities fairly. How would we ensure that those impacted by any fracking wells get any benefit?
My hon. Friend hits the nail on the head. It is fundamentally important that the cash benefits go not to some faceless bureaucracy but to the individuals affected. In the United States, that has made the extraction of shale gas enormously popular, because people quite like improving their standard of living, and I think that the same is true in this country.
Fracking is an outdated, dangerous and expensive way to produce energy, and it will not provide the clean, secure energy that our country needs. In my constituency, an exploratory fracking site at Barton Moss needed a police operation, which cost Greater Manchester police £1.7 million in 2014 and involved 150 police officers across five months. Fracking did not have community support, and Greater Manchester police had to pay the heavy price of policing the demonstrations against it. Why are the Government forcing it back on the community in my constituency?
I wonder if the Secretary of State could advise the House: what discussions will take place between his Department and the Scotland Office on enabling fracking in Scotland?
This cannot be justified on environmental or economic grounds. The investment allowance will give gas producers 91p in every pound invested in new frack pads. Warwick Business School calculates that fracking could produce 330 billion cubic metres at a maximum—about 100 billion therms. At today’s spot price, from about 20 minutes ago, that would be £289 billion. Given that the taxpayers are covering nine tenths of the investment, why should they not get nine tenths of the profit?
The hon. Gentleman is making the argument for fracking. If there is that amount that we can get out, we should get it out as quickly as possible, and then we should ensure that it is distributed properly so that the people who are affected benefit, so that the companies that have invested benefit, and, yes, so that the taxpayer benefits. The oil and gas we get out of the North sea has been an enormous benefit to the taxpayer and has helped us have energy security. It is a beneficial thing to do. As regards the economics, it is straightforward: private companies will not invest if it is not a good deal. That is the basis of economics, and it is the right basis of economics.
I do not know about you, Mr Speaker, but I am sensing some tremors of dissent on the Conservative Benches. Fracking is expensive and dangerous, but it is also a disaster for our climate. Does the Secretary of State recognise that, if every country matched his plans to extract every ounce of gas, the planet would warm by 3°, spelling climate disaster? Does he not understand that this is a plan born of climate denial and economic illiteracy?
Yesterday, the Business Secretary confirmed that his Department will review the level of seismic activity that is permitted to take place at new fracking installations. Meanwhile, the Government’s energy security strategy rules out lifting the draconian planning restrictions that were imposed on onshore wind by the Cameron Government. Onshore wind is one of the cheapest, most popular and fastest to roll out forms of energy production available. Meanwhile, fracking, as the Chancellor himself has said, is hugely costly, will do little to reduce domestic energy costs, and risks inflicting immense damage on local communities and our precious natural environment. Will the Secretary of State concede that the Government have got their priorities wrong?
The thing we are lacking at the moment, most acutely, is affordable gas. Gas is the fuel that provides electricity at the margins, so when the wind is not blowing and demand is high, it is gas that provides the marginal unit of electricity. Gas is therefore fundamentally important to our energy security.
The present Chancellor said only a few months ago that “No amount of shale gas” extracted across rural England would lower energy prices, and indeed, that private companies would not sell their shale gas to UK customers at a cost lower than the market price. Ruining our countryside—in Sussex, East Surrey and around Bath—is not the answer. Why in his first week in office has the Secretary of the State ended the moratorium on fracking but not lifted the de facto moratorium on onshore wind?
We need to get as much energy as possible. Fracking does not ruin the countryside; fracking sites are actually surprisingly small for what they do. We have been expanding offshore wind dramatically—that has been a very big component—and we are continuing with increasing renewables, but we still need the base supply that can be brought on when there is a surge in demand, and that is dependent on gas.
The public will see this decision as a deceit. There is no economic price advantage to it, as we have heard, while it is damaging to the environment. The claim that the public will have some say in consenting to the proposals will ring hollow in my community, where the district council opposed a 5G mast and that was overridden. Why does the Secretary of State think that there is any advantage to this policy, when we cannot even put in onshore wind in Warwickshire? I believe it is the only county in this country where there is no onshore wind.