Energy Costs and Charges

Carla Lockhart Excerpts

Tuesday 21st November 2023 Westminster Hall

[Amanda Solloway]

I thank the hon. Gentleman for his intervention. Of course, the fact is that we had a cost of living crisis mainly, as I have pointed out, because of Putin’s illegal invasion of Ukraine. That was the situation we found ourselves in.

For households in fuel poverty, we have targeted support such as £150 directly off energy bills through the warm home discount, which last year we increased in value and extended to around 3 million households. We are also tackling the root problem through our energy efficiency schemes. We are looking at ways to make the warm home discount more flexible, and also to help respond to future increased pressures on consumers’ bills, and we continue to monitor energy bills and keep options under review.

[Carla Lockhart (Upper Bann) (DUP)]

Figures released by the utility regulator in Northern Ireland show that small and medium-sized enterprises in Northern Ireland are paying almost 10p per kW more than a typical EU price or that in the rest of the UK. Does the Minister agree that this places Northern Ireland businesses at a competitive disadvantage, particularly given the land border with the Republic of Ireland? Does she agree that further support measures need to be put in place, particularly for small to medium-sized businesses?

[Amanda Solloway]

I point out to the hon. Lady that I had a meeting yesterday with the Secretary of State for Northern Ireland, and we were discussing these very particular issues. She has my assurance that those discussions are always mindful and at the top of my thoughts.

I also encourage hon. Members to make their constituents aware of the Government’s “It All Adds Up” campaign, which shows simple measures to save people money on their energy bills this winter. I know that the hon. Member for East Lothian has a particular interest in standing charges, as he discussed them with me yesterday. Standing charges are a matter for Ofgem.

I am pleased to share that last week Ofgem published a call for input on standing charges to look at how they are applied to energy bills and what alternatives could be considered. The standing charge is used to recover the costs required to provide vital energy company services, including providing and maintaining the wires, pipes and cables that deliver power to a customer’s door. If the standing charge were scrapped, as the hon. Member for East Lothian suggests, suppliers would still have to recover reasonable costs in other ways, which would mean charging a higher price for every unit of power used. That could have significant consequences for some categories of vulnerable customers: for example, those with high energy use due to medical equipment. That is one of the reasons we are working through the matter very carefully.

The standing charge can also vary from region to region, as has been pointed out, because of the differing costs associated with the transmission and distribution of supplying energy to a particular area. Geographical factors mean it costs more to run the local electricity distribution network in the north of Scotland than elsewhere. To help protect consumers in the north of Scotland from those costs, a Government cross-subsidy scheme provides an annual cross-subsidy of some £112 million to that area. The scheme is funded by electricity suppliers from across Great Britain and reduces the electricity distribution charge for a typical household in the north of Scotland by more than £60 a year. The cost-reflective approach means that Scottish consumers actually pay lower charges for the high-voltage transmission network than most consumers in England and Wales.

I am also aware that the hon. Member for East Lothian is interested in the benefits available for communities located near transmission network infrastructure, especially those in Scotland near offshore wind facilities. Offshore wind farm developers already provide a range of community benefit packages developed in consultation with local communities. For projects based in Scotland, developers follow the Scottish Government’s offshore energy good practice principles when creating a community benefit package. However, we want to ensure communities hosting transmission network infrastructure can benefit from supporting the delivery of cheaper, secure and low carbon energy for all of Great Britain. We have therefore consulted on proposals for community benefits. The consultation proposed to introduce voluntary guidance on the appropriate levels and forms of benefits to give communities the knowledge, power and flexibility to decide what benefits they want in consultation with the project developer. The consultation has now closed and we intend to publish a response as soon as we can.

I now want to come on to prepayment meters. Historically, customers on prepayment meters have paid higher standing charges than direct debit customers, reflecting the higher cost of serving those customers. The Government subsidises prepayment meter customers through the energy price guarantee to ensure they pay no more for their energy than direct debit customers. That seems to be the fair thing to do. The support is due to end at the end of March 2024 when the energy price guarantee ends, but Ofgem is due to announce shortly how it will create an enduring replacement for that scheme so that prepayment meter customers will have that unfair premium they were paying removed from their bills once and for all. Furthermore, the Government have worked with Ofgem and the industry to see that the rules extending protections with regard to prepayment meter installations for the most vulnerable consumers have come into effect.

I wish to close by reminding all hon. Members that they should encourage their constituents to contact their energy suppliers if they are concerned about their energy bills or their ability to pay. Energy suppliers have an obligation to their customers and Ofgem has also introduced further rules on customer services for this winter. Once again, I sincerely thank the hon. Member for East Lothian for securing this incredibly important debate.

Question put and agreed to.

Energy Support for Farms

Carla Lockhart Excerpts

Tuesday 21st March 2023 Westminster Hall

[Mr Laurence Robertson (in the Chair)]

I remind hon. Members that they need to stand and catch my eye if they wish to speak.

[Carla Lockhart (Upper Bann) (DUP)]

I beg to move,

That this House has considered energy support for farms.

As a matter of openness and transparency, I declare an interest: I come from a small, family-run farm. Thank you for chairing the debate, Mr Robertson; it is a pleasure to serve under your chairmanship. I thank the Minister for being here and for his prior engagement on the topic. I thank hon. Members from across the House for giving their time to attend this debate on this important issue.

In the constituency that I represent, the agriculture sector is vital to our economic wellbeing. In the wise words of my grandfather, if the farmer is not doing well, no other industry is or will; such is the importance of our agrifood industry. Across the wider Armagh, Banbridge and Craigavon area, we have 3,431 farms. They contribute approximately £376 million in goods value and farm support payments into the local economy. They provide employment in the agriculture sector and in the 265 local agrifood sector businesses that the industry supports. In Northern Ireland, we have 26,000 farming families. The agrifood sector is worth more than £5 billion to the economy, and we feed more than 10 million people with our top-quality produce.

As has been the case for all households and businesses, energy costs on these farms have spiralled since the outbreak of the war in Ukraine. Many farms are unavoidably energy intensive. Take dairy, for instance. Farmers who needed to renew their energy contract last autumn experienced increases of more than 400%. With an electricity price of 37p per kWh, the annual cost to an average-size dairy farm is now approximately £105 per cow. For a 250 cow herd, that adds up to £46,000 a year, which is up by £26,000.

[Wendy Chamberlain (North East Fife) (LD)]

I congratulate the hon. Lady on securing this important debate. I absolutely agree with her and want to give my own example. I represent a local seed potato farmer whose costs have increased from £10,000 to £30,000. He has a generator and thinks he may have to come off the grid entirely. He faces an increase not only in energy costs, but in standing charges. Does the hon. Lady agree that farmers face a cliff edge at the end of this month and are disappointed that the Government did not do more to support them through the Budget?

[Carla Lockhart]

I think the hon. Member has been reading my speech. A cliff edge certainly is coming for this important industry, which is the backbone of our economy.

Another example is poultry. There has been an increase of approximately £87 a day, which equates to about £32,000 a year. That is a phenomenal amount, and only so much of that can be passed on.

Ahead of the Chancellor’s spring statement last week, our farming unions, alongside Members from across the House, had been lobbying to bring about a change in mindset from the Government in relation to support for farmers with energy costs. The Government must recognise the key role of the agriculture sector in feeding the nation. The industry needs support in the face of energy price pressures.

The current support from the energy bill relief scheme is due to expire at the end of March. It will be replaced by the energy bills discount scheme, which will run for 12 months. That scheme offers far less protection and support to businesses, with the removal of the price cap and its being replaced by a token discount. A pre-defined selection of industries has been identified for additional support under the energy and trade-intensive industries scheme. However, farming sectors have been left off this scheme, leaving them literally out in the cold without support. In the face of that cliff edge, the ask of the Government was straightforward. Our farming unions, on behalf of their members, sought the extension of the energy and trade-intensive industry scheme to include energy-intensive sectors, such as horticulture, poultry and pig production. That was a reasonable ask that the Government should have listened to.

Poultry businesses are reliant on gas and electricity to rear poultry and store fresh produce safely. Without sufficient support, there is no doubt that those farmers will struggle to absorb the huge hikes in energy prices that they will face. The same can be said for pig producers.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate my hon. Friend on securing the debate. As I am sure is the case across the UK, small farm holdings in Northern Ireland have shown great adaptability and diversification over recent years, as times and legislation have changed. Does she agree that the campaign and the pressure she is applying to the Government, to which I hope they will respond positively, needs to get them over the hump of the next 12 months, after which we hope things will improve regarding prices and the war in Ukraine, so that a more normalised structure can return?

[Carla Lockhart]

I absolutely agree with my hon. Friend. The point is well made that there needs to be a short-term injection for those farmers, so that they can continue to produce at the same levels. We will see farming families and farms going out of business, which will not help the overall industry or the nation’s requirement for food produced locally.

Horticulture’s exposure is significantly greater not just for gas for glasshouse heating but for electricity used for lighting, chilling and storage. Without sufficient support, that sector will be under huge strain to remain viable. Yet the evidence-based appeal was ignored by the Chancellor. That reasonable ask of the farming community to extend the ETII scheme was ignored. There was no extension of ETII to support energy-intensive farms. A range of other industries continue to receive support. High-level energy relief continues to several sectors, including food processing and manufacturing, but the primary producer is forgotten. The Government once more ask the farmer to do more with less, and that is simply not possible.

[Wendy Chamberlain]

I thank the hon. Lady for giving way again. Wholesale energy prices are already falling. The Government have not spent the amount of money that they had expected to spend on their energy-relief schemes. Does she agree that the Government have the headroom to go over and above what they announced in the Budget and to date? They could use those additional funds to support our farmers.

[Carla Lockhart]

I absolutely agree with the hon. Lady. There is the headroom and available money. I encourage the Government to do the right thing by the industry and to support those farmers at this time of need. This decision will have consequences; the cliff edge will be too much for some farmers. They will exit the industry and others will reduce output, unable to absorb the cost of maintaining their current output. Consequently, UK food production will fall, processors and manufacturers in the supply chain will be impacted, food inflation may well increase, and consumers ultimately will end up paying more.

No one wins from this decision. I believe it is still in the interests of the Treasury and the Government as whole, the agrifood industry and consumers that this decision is revisited. I ask the Minister to undertake to explore this comprehensive case once more, and to step up with the support these farms need to face the challenge and conditions they find themselves in. I also invite him to visit my constituency in his ministerial capacity to witness at first hand the value that these farms add to our economy and the pressure that they are currently feeling.

We need to back British farming. The Government demand the highest standards of our farmers and must repay their endeavours to produce world-class produce to the best animal welfare, environmental and sustainability standards with sufficient levels of support to enable them to do just that.

--- Later in debate ---

[Carla Lockhart]

I thank everyone who participated in the debate. Farming is clearly the backbone of our economy, and it was important to highlight this issue. I thank my hon. Friend the Member for Strangford (Jim Shannon) for raising food security. His constituency always gets a mention. No one is in any doubt about the importance of Comber spuds.

I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for highlighting not just the energy issue, but labour shortages and the effect of the increase in production on feed and so on. That was an important point.

I thank the hon. Member for North Ayrshire and Arran (Patricia Gibson) for highlighting the lack of support and raising the need to prioritise domestic food production. She digressed slightly with some of her views on Brexit, but her overall point about energy and the need for more support for our farming families was well made.

I thank the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), for his contribution. He made the important point that the Government need to look at the definition, and the Minister said he would do just that. The shadow Minister asked whether the definition is being diluted; we need to look at that important point.

I thank the Minister for his comments in this important debate. He highlighted that lots of support has been given out, but it really is a drop in the open. He will understand why I say that I do not believe it goes far enough. I encourage him to look again at the definition and include farming in the intensive industries list. It is intensive, and it needs more support or farming families will be diminished across the United Kingdom. We do not want to see that; we want more food to be produced in this United Kingdom. We want to serve our communities and produce high-class, quality produce for all to feed on.

Question put and agreed to.

Resolved,

That this House has considered energy support for farms.