Energy Price Support: Northern Ireland

Jim Shannon Excerpts

Wednesday 16th November 2022 Westminster Hall

[Stephen Farry (North Down) (Alliance)]

I beg to move,

That this House has considered energy price support to households and businesses in Northern Ireland.

It is a pleasure to serve under your chairmanship. Sir Gary. I welcome the opportunity to have this debate and I am pleased that the Minister has joined us. The main purpose is to focus on energy cost support for households and businesses in Northern Ireland, with a focus on the urgent delivery of the £400 energy support scheme and the payments to those using home heating oil.

I am extremely concerned about the impact of delays in support for Northern Ireland households, and the ongoing lack of clarity around when that support will arise. The UK Government have yet to clarify whether the £400 energy support and the £100 in support for oil-reliant households will be made available to Northern Ireland.

I will give a few words on the broader context. I appreciate that the current energy cost crisis reflects a range of international and domestic factors. Beyond the short-term energy support interventions, there are clear imperatives around insulation and other energy-efficiency measures, and diversification of energy supply, especially in relation to renewables.

Northern Ireland has some of the most challenging rates of poverty and other social and economic indicators in the United Kingdom, including low productivity, high economic inactivity and reliance on benefits. It also has a different energy market from the rest of the UK, with different suppliers and a different profile of energy sources, and with its connectivity on the island of Ireland. Most notably, almost 70% of Northern Ireland households use home heating oil, compared with less than 5% in the rest of the UK.

Northern Ireland is already facing a series of unprecedented risks. Our political institutions have collapsed. There are huge challenges to consumer and business confidence, creating enhanced risks to the economic outlook.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for North Down (Stephen Farry) on securing this debate. It is a great subject for us back home. The welfare of our local businesses is extremely important. He will know that our family-run and smaller businesses are the backbone of our constituencies—his, mine and those of other Members here—making them unique.

A local Japanese restaurant in my constituency that has only been open for about six months has seen an increase in its electricity bills of £900 to £3,000 per month. Should this remain an issue, it is clear that jobs will be lost and the business forced to close. Does the hon. Member agree that more consideration must be given to the long term—not just the next four months, but beyond—because businesses are clearly on the brink of closing?

[Sir Gary Streeter (in the Chair)]

Order. Just a reminder that interventions should be brief, Jim.

[Jim Shannon]

I thought that was brief.

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[Stephen Farry]

I am grateful to the hon. Member for that intervention, which again highlights how the situation in Northern Ireland is different from the rest of the UK, and reinforces the importance of trying to tailor solutions to address our very particular circumstances.

It also emerged this week that the UK Government’s joint taskforce responsible for delivering the scheme into Northern Ireland has met only twice. While households across the rest of the UK are being insulated from the worst effects of the crisis, families in Northern Ireland are still waiting for this lifeline and have no clarity about when it will arrive. It is not tenable to argue that, because the money will be coming next year, Northern Ireland will not be missing out. There must be a real urgency for getting this resolved now.

Disposable incomes in Northern Ireland are being particularly eroded by rising energy costs. This represents a grave threat to the wellbeing of households. People in Northern Ireland are also being left behind in terms of their ability to access energy support and are suffering as a result. A survey by National Energy Action in Northern Ireland in June indicated that 45% of Northern Ireland households were already spending more than 10% of their total household income on energy costs. This will be even higher now. That has resulted in dangerous coping mechanisms. Some 80% of Northern Ireland homes admitted to rationing their use of central heating in an effort to reduce costs, and one in 10 households has resorted to skipping meals to ensure that they have enough money to pay for their energy.

[Jim Shannon]

The hon. Gentleman is being incredibly generous, and I thank him for that. Some figures I got from Northern Ireland today indicate that an estimated 12% of Northern Ireland families live in absolute poverty—it is even worse than normal poverty, if there could be such a thing. Does that not support his case for why we need urgent help in Northern Ireland now?

[Stephen Farry]

I am grateful again to the hon. Member for his intervention. Households are facing, in effect, destitution, which is taking poverty to the nth degree in terms of their ability to cope. Similarly, reliance on food banks has increased by 76% in Northern Ireland over the past three years, which is way in excess of the increase in any other UK region. We cannot afford to see households tipped into poverty, more children going hungry, or more pressure on the national health service due to worsening physical and mental health.

These behaviours put households at significantly increased risk of detrimental impacts on their health and wellbeing, and people in 75% of households admitted to being stressed, anxious or worried about paying for the cost of their energy, either at present or over the winter months ahead.

Fuel poverty organisations in Northern Ireland are already overwhelmed by demand. NEA in Northern Ireland has seen significant rises in the number of households seeking emergency support. Indeed, it was forced to suspend its referral system temporarily in October because of unsustainable levels of demand on the service, a trend that has now been replicated across other organisations in the sector.

There will also be a knock-on consequence for consumer spending. Potentially £300 million of spending power is at risk. This is particularly crucial in the run-up to Christmas, with many businesses, which are struggling themselves, depending on Christmas trade to survive. It is make or break time for them.

Northern Ireland is also suffering because we have a very different energy market from the rest of the UK, and the UK Government’s energy price guarantee does not reflect that. Although households using gas have been protected from price rises through the Government’s energy price cap, those who use oil are yet to receive the paltry £100 of support. That is a mere £100 in heating assistance, which applies to almost 70% of Northern Ireland households. Therefore, the vast majority of homes in Northern Ireland have not received a penny in support for heating cost pressures so far—that is, those households that do not use their electricity for heating.

We know that oil prices have not risen as much as gas prices. Nevertheless, £100 is simply not enough, particularly given the up-front costs of filling an oil tank. The Consumer Council for Northern Ireland estimates that it now costs £460 to fill a typical 500-litre tank, compared to £269 this time last year. In practice, as the hon. Member for Belfast South (Claire Hanna) has already mentioned, there is not a supplier in Northern Ireland that will provide a tank fill for less than 200 litres, meaning that households need to find an additional £150 before they can even avail themselves of support. Orders for oil need to be larger in order to access those economies of scale.

We also still do not know when or how this £100 will materialise in Northern Ireland. Not only is the assistance for Northern Ireland households late, but it is lower than the assistance provided to those in the rest of the UK, if we make that comparison between oil and gas costs.

There are also problems and distortions that come from the use of electricity bills to help oil customers. It is likely either that those people will end up with a credit on their electricity bill that they cannot access at this time of greater stress, or that this will lead to people switching from oil heating to using electric fires, which are potentially more expensive, pose greater health and safety risks, and put further strain on the electricity grid.

Finally, I am also worried about the looming cliff edge that is faced not only by households but by businesses next April. Recent research by Danske Bank indicates that energy prices rank highly among the key concerns for businesses in Northern Ireland. The latest data from the Office for National Statistics shows that 58% of businesses in the food and drink sector say that their energy prices were their main concern in November, up from 39% in October. Businesses are also extremely concerned about the risks associated with consumer spending, and the current impasse on the energy assistance for Northern Ireland puts local businesses at a direct disadvantage in that respect. I urge the Government to acknowledge that most businesses will likely need continued support, and to confirm that they will cast the net widely in that regard.

In summary, the human costs of this energy crisis are very real. I suspect that the ongoing uncertainty about post-April assistance will only serve to fuel the economic costs, as consumer spending and business investment will be constrained as a result. I urge the Government to provide assistance and greater clarity as a matter of extreme urgency, for the good of the people of Northern Ireland, the business community and indeed the broader economy, all of which will ultimately have fiscal consequences for the UK Government if conditions further deteriorate.

I am grateful to the Minister for his presence today. I will focus on the most pressing questions that I hope he will respond to, among other comments that he may wish to make. When and how will households receive the £400 of energy support? Will the Government review their calculation and the level of home heating oil support, and how is that support to be delivered?

--- Later in debate ---

[Kevin Hollinrake]

The hon. Gentleman makes a very good point, and I heard his comments earlier about the increased price of oil in Northern Ireland. The hon. Member for North Down spoke of the very high number of households in Northern Ireland that are off-grid, and that is extremely important. I will try to cover that point in my remarks.

The announcements made by the Government in September demonstrated our commitment to protecting UK households and businesses through the energy price guarantee, the energy bill relief scheme and the energy bills support scheme, which is the key matter under discussion. Under the plans, households, businesses and public sector organisations across Northern Ireland will be protected from significant rises in energy bills, thanks to the Government’s support. As well as outlining the support that still needs to be delivered, I will set out what the UK Government are already delivering in Northern Ireland, and what is to follow shortly.

The energy price guarantee in Northern Ireland launched on 1 November, offering equivalent support to that provided in Great Britain for domestic households. The scheme reduces the price that energy suppliers charge customers for units of gas and electricity, providing money off energy bills. Households will receive backdated support to cover October 2022 through a higher discounted rate. Through the EPG scheme, a typical household in Great Britain with both gas and electricity contracts will save around £700 this winter, based on current prices. Equivalent support will be provided for households in Northern Ireland.

Government support will also be provided for households that use alternative fuels for heating, such as heating oil or liquified petroleum gas instead of mains gas. The alternative fuel payment scheme will provide a one-off payment of £100 to ensure that all households that do not benefit through the energy price guarantee receive support for the cost of the fuel they use. The £100 payment has been calculated with reference to increases in the cost of heating oil between September 2021 and September 2022. The aim is to ensure that a typical customer using heating oil will be offered support that is broadly in line with that offered by the energy price guarantee for those using mains gas to heat their homes. However, I hear what hon. Members say, and we are monitoring the price of heating oil and other alternative fuels very closely, now and in the months ahead, to see whether further payments are required at a future point in time.

Households in Great Britain that are eligible for the payments will receive £100 credit on their electricity bills this winter. For Northern Ireland, the Government are working with electricity suppliers to explore how the payment could be delivered via electricity bills under a similar delivery model. Details of when the payment will be made will be confirmed shortly—we have heard that word a number of times from Ministers at the Dispatch Box—so I cannot give the hon. Member for North Down a firm date, but we are very keen to deliver it as quickly as possible.

[Jim Shannon]

I thank the Minister for his response. In Northern Ireland, my understanding is that the proportion of those who are dependent on oil—I think the hon. Member for North Down (Stephen Farry) referred to this—is between 65% and 68%, so two thirds of the population in Northern Ireland need the payments. I hope he does not mind, but I am going to press the Minister on this. He says the payment is imminent or will be made shortly, or whatever. The people back home in my constituency—indeed, all our constituents—want it, and they want it now. The people have it here on the mainland, and we want the same.

[Kevin Hollinrake]

I totally understand that. We have to get this right. There are some complications in terms of timing, which I will set out. I wish I could give the hon. Gentleman a firm date. I get frustrated, too, in debates like this. I am slightly sitting on the fence in not giving a firm date, but I guarantee to him and other Members that the measure will be implemented as quickly as possible. I had meetings with officials earlier today. They are fully cognisant of the issue and keen to deliver quickly.

There are a number of complications. There is no central register either in Great Britain or in Northern Ireland for people who do not use the gas grid for their heating. We are working rapidly with stakeholders on the best way to identify those who merit support. Households that are eligible but do not receive alternative fuel payments because they do not have a relationship with an electricity supplier will receive the £100 via the alternative fuel payment alternative fund, which will be provided by a designated body.