Oral Answers to Questions
Kerry McCarthy Excerpts(1 week, 4 days ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Kerry McCarthy (Bristol East) (Lab)
I welcome the Minister to his post. I think he is struggling a little bit to get with the programme, but hopefully he will soon be on message. [Hon. Members: “Oh!”] That was in terms of his answer to the question about being anti-net zero.
The Department confirmed last month that curtailment payments cost a whopping £1.4 billion last year. That is bill payers’ money being used to pay providers to switch off wind power and switch on gas. Why should people be paying even more on their energy bills to switch off cleaner and cheaper energy because the Government have failed to deliver the net zero capacity that we need?
Justin Tomlinson
That is why we have been focusing on expanding the interconnectors network so that, where we produce energy that we cannot use domestically, it can be sold. I also welcome last year’s large-scale expansion of battery farms—they have been springing up at an amazing speed—which allow us to store the energy supplied that exceeds demand.
Kerry McCarthy
I look forward to hearing the Minister’s predictions of what the curtailment payments will be in the coming year, because they were up for the previous year. In a survey of energy industry leaders, nearly 90% said that we need new policies to make the UK more attractive to investors. Nearly two thirds are moving investment out of the UK, and three quarters blame a lack of clarity from this Government on net zero. Is it not time for Ministers and Back Benchers to drop the culture war and put British industry and jobs first?
Justin Tomlinson
On a lack of clarity, I think the shadow Minister has mixed things up with the green prosperity plan. Even I cannot keep up with the latest position of senior figures in the Labour party, but I think the shadow team lost that battle. The reality is that in 2023 we secured £60 billion of private investment in low carbon technology, which was up a staggering 71% on the previous year. That is a credit to our team who delivered that.
Energy Rebates: Highlands and Islands
Kerry McCarthy Excerpts(1 month, 3 weeks ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Kerry McCarthy (Bristol East) (Lab)
It is a pleasure, as always, to see you in the Chair, Mr Paisley. I thank the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) for bringing forward this debate, as well as all four Members who have taken part and highlighted the specific circumstances that mean fuel poverty is even more of an issue in their constituencies than in the rest of the UK.
We know that overall the average fuel poverty gap increased by 66% between 2020 and 2023. We know that 3 million people are in debt to their energy providers. We know that the Government are struggling to roll out their home insulation scheme; we saw figures the other day showing that in the first eight months of the Great British insulation scheme, only 2,900 houses had benefited from measures meant to benefit 300,000.
Obviously, in areas such as the ones represented by the Members present, home insulation is even more of a challenge. That is partly because of the nature of the homes—they are older buildings that are difficult to retrofit—but also because there is a much smaller retrofit-skills market. The scattered nature of the housing and its isolation means that the economies of scale from rolling out an insulation scheme would be far more difficult to implement. Unless local skills and finance can be mobilised, the areas are unlikely to be first in the queue to benefit from national schemes.
All Members in this debate have spoken eloquently, partly about the conditions that mean that fuel poverty is more of an issue: the longer darker nights, the cold, and the rain that “comes straight at you”, as the right hon. Member for Orkney and Shetland (Mr Carmichael) described. The hon. Member for Inverness, Nairn, Badenoch and Strathspey said that a third of people are living in fuel poverty, and a fifth of people are living in extreme poverty.
One of the things that I am grappling with is the debate about prepayment meters. We know about forced disconnection, when people simply cannot afford to carry on paying for their electricity. What is more difficult to ascertain is the extent to which people, while not going to those extremes, are living in very cold conditions because they have cut back on paying bills. We know that when there is energy bill support, and when prices come down, their energy use will go up, which implies that they were using less energy than they needed to keep themselves warm. A point was made about the impact on the health of children, older people and people with disabilities. People with disabilities have higher energy costs.
Drew Hendry
I am grateful to the hon. Member for underlining that there are big impacts on health, as well as the point that where there is a rebate and some funding to help people, it has a measurable impact. The whole point of the proposal on the highland energy rebate is to put that in place. It is an excellent point to underline and I am grateful that she has brought it to the table.
Kerry McCarthy
I would say that we do need to look at this in the round. Hopefully, the Minister will enlighten us a bit more, but Ofgem did a call for input on standing charges, which I think closed at the end of January. As far as I know, the outcome has not yet been published, but I think that it is for the Minister to give us some more details about the balance between standing charges, unit prices, and indeed the discussions about the social tariff. We are certainly looking at all those things.
As the hon. Member for Inverness, Nairn, Badenoch and Strathspey has said, the fact that the highlands and islands lack access to the gas grid means that they are in a particularly difficult situation. It was mentioned that 62% of properties in mainland Scotland were off the gas grid; I think I have that figure too. However, some places are almost entirely off grid, as I think the hon. Member said. That obviously leads to significantly higher costs because oil is often then used as a fuel, or heating is entirely electric.
Again, we have very much taken on board the point about decoupling from gas prices, but this all means that those people do not benefit immediately when wholesale prices do come down. I have figures here from Lochalsh & Skye Housing Association, which says that households in the area pay an additional £1,000 a year on energy bills compared with an average-sized home in the rest of Scotland, amounting to a 76% premium. That is just one figure illustrating the problem.
The point was very well made that Scotland is home to a huge amount of old and new generation energy generation. As the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) asked, where is the benefit for Scotland from that? I was reading through a report from Changeworks on fuel poverty in the region in advance of this debate, and there was a quote from an energy adviser that really stood out:
“The annoyance of being a 321% net generator of green electricity to the rest of the UK, all from renewables, yet we have no access to the polluting fuel which is mains gas and the price of energy is four times the cost.”
Again, we know that renewable energy is going to be way cheaper than fossil fuels, and that is one of the reasons why Labour is committed to the “clean power by 2030” mission—because we know that that will help bring down energy prices. However, I can appreciate how absolutely galling it is to be somewhere where so much energy is generated—I think the right hon. Member for Ross, Skye and Lochaber talked about an economic renaissance for the highlands and islands linked to renewable energy—yet to be last in the queue to actually benefit from that. We absolutely need to tackle that unfairness.
I do not know whether anyone wants to intervene on this, but my understanding is still that the SNP is opposed to a windfall tax within our proposal. It is telling that we have this debate today, with the upcoming Budget; I hope that we see firm action from the Chancellor on tackling fuel poverty and recognising many of the unfairnesses that have been raised. There is some talk— I think we have actually heard most of the Budget already, which is not normally the case—about movement on a windfall tax on oil and gas. Labour is calling for an increase in the rate on the energy profits levy to 78%—
Kerry McCarthy
Sorry, I will just finish what I was saying. And we are calling for an extension of the sunset clause to 2029, which would raise billions of pounds for the green transition, cutting household energy bills in the process.
Drew Hendry
I apologise if I got it wrong, but I thought that the hon. Member was inviting an intervention on that subject.
Kerry McCarthy
I was, but I just wanted to get my bit in first, otherwise I would have lost track.
Drew Hendry
Yes, of course. The point—I think I have to underline it again and again in this debate, and I think that the hon. Lady understands this—is that there is already a windfall tax, and other taxes coming from the highlands and islands through renewable energy, and we are getting nothing back. We are already seeing the effect of money being taken out, and it is not going back into the pockets of the consumers who are being punished in this way.
Kerry McCarthy
To do justice to the issues that hon. Members are raising, I will not go down the path of having an argument about the windfall tax, because we want to focus specifically on fuel poverty in constituencies.
Drew Hendry
The hon. Lady did actually raise the issue of windfall tax, so to say that she does not want to debate it is rather perverse. Let me try to help her a bit: over the past two years, oil prices rose to extraordinary levels and, as a result, many oil production companies made excess profits and have engaged in large-scale share buybacks. It is pretty simple and straightforward: in effect, it is a return of capital to shareholders, but it is untaxed. The Labour Opposition and the Government missed the opportunity to recognise the one-off nature of the situation. A one-off tax on share buy-backs could have alleviated the impact of higher energy prices, but both the Government and the Opposition missed the chance.
Kerry McCarthy
We have been calling for a windfall tax for quite some time. We have also been challenging the generosity of the investment allowance that goes to oil and gas companies, which I think is 91p in the pound. Not least because my voice seems to be slightly failing me, let us keep to the topic—[Interruption.] I will draw my remarks to a close.
Scotland’s huge potential for renewable energy generation shows the need for a place-based approach that allows people to feel that they are part of the transition and are directly benefiting. It is particularly galling that Scotland is responsible for so much of the new renewable energy generation, but is not benefiting. In some ways, it should be benefiting more than other parts of the country because it is doing the generation.
What Joe Biden has done with the Inflation Reduction Act in the States very much demonstrates a place-based approach to the green transition. I think that about 70% of the investment has gone into Texas, which is traditionally an oil-producing state but has been keen to embrace the benefits of the green transition not just for jobs, but for the community. Labour’s local power plan is partly about community energy generation and how communities can directly benefit from renewables and use them to serve their needs, but an element of it is about lifting places up because they have made a contribution to the rest of the country.
I suspect that the Minister will tell us she cannot say anything about what is being announced in the Budget today, but I would like some reassurance that she recognises the geographical disparities whereby some parts of the country are being hit harder by fuel poverty. There is an overarching need to tackle the fuel poverty that affects millions across the UK. Could the Minister say something about the geographical disparities? Could she also give some indication of where the Government are on the fairness of pricing, on the impact of standing charges versus unit prices, and on prepayment meters? I look forward to hearing from her.
Amanda Solloway
The hon. Gentleman is right. He has made that point clearly on several occasions, and I am prepared to discuss more fully the highland energy rebate paper that I have been sent.
I turn to energy prices and support. Despite the rise in standing charges, energy prices have fallen significantly since the winter of 2022-23. The 2024 quarter 2 price cap of £1,690 is 60% lower than the 2023 quarter 1 price cap peak. It is important to note that the Government reacted quickly to support households last winter. About £40 billion was delivered to support households and businesses, an average of £1,500 per household between October 2022 and June 2023. We delivered £40 billion to support households and businesses last winter, with a typical household receiving £1,500 in support between October 2022 and June 2023. Many highlands and islands households off the gas grid also benefited from the £200 alternative fuel payment schemes.
Despite the fall in energy prices since the winter of 2022-23, the Government have continued to support households. We are delivering a package of support worth £104 billion—an average of £3,700 per household—between 2022 and 2025.
Debt is an incredibly important challenge at the moment. Although we are doing a lot to help households, we know that some have fallen into energy debt. We want to support them to ensure that consumers do not fall into further debt. Last year, Energy UK announced a voluntary debt commitment: 14 energy suppliers announced their collective commitment to go above and beyond the current licensing conditions to help households with their energy bill debt. Those energy suppliers will aim to provide immediate assistance to those in debt and will arm people with knowledge and resources to empower them to manage their bills more effectively. For assurance, I regularly meet stakeholders such as Citizens Advice to discuss what can be done to address consumer debt. I welcome further input from hon. Members on the issue.
Kerry McCarthy
This week, I met some academics who are doing some research into debt levels. As I understand it, the average is about £1,000 per household, but I do not know the extent to which some people are in only £100 or £200 of debt and others are in five-figure debt. Do the Government have analysis of that? Does the Minister have figures she could share with me or put in the House of Commons Library?
Amanda Solloway
It is important that we consider the different levels of debt. It is quite complicated to get those figures because the suppliers have them, but I have pushed to see whether we can get a flavour of them. One of the things that I would advise households struggling with their bills to do is to speak to their supplier before going into debt, to receive help and support as soon as possible.
We have talked about prepayment metres, which can be a useful tool for consumers to manage their budgets and for energy suppliers to manage debt. However, it is important that the rules around their use are sufficient to protect consumers and are properly enforced. Involuntary installations should be used only as a last resort. Ofgem has strengthened its licence conditions for suppliers to conduct involuntary prepayment metre installations with exemptions in place for households with vulnerable individuals, such as those with people over 75 or children under the age of two.
The Government have already committed to supporting households past April 2024. Though I obviously cannot comment on today’s Budget, in the autumn statement we announced the biggest increase to the living wage and an increase to benefits of 6.7%. Earlier this year, we also cut national insurance for 27 million people, worth £450 for the average worker. As hon. Members have noted, in the autumn statement we also committed to giving communities living nearest to electricity transmission infrastructure up to £1,000 off their electricity bills for the next 10 years. That will apply across England, Wales and Scotland, including the highlands and islands, and they may be able to benefit from the scheme. We will also publish guidance this year on the wider benefits for local projects and provide an update on the electricity bill discount scheme.
As hon. Members have mentioned, many households in the highlands and islands are off the gas grid, which means they rely more on electricity. I also understand that many highlands and islands residents will use more energy and subsequently pay more for their energy bills due to the inclement weather, colder temperatures and poor insulation, but also due to having older and larger properties, which are harder to heat. To address that, the Government have already introduced several domestic energy efficiency schemes for all households in Great Britain to help lower bills and reach net zero targets. As an example, the Great British insulation scheme is delivering low-cost and free insulation to the least efficient homes in lower council tax bands, including many vulnerable households. The scheme will run until March 2026 with a value of £1 billion.
Since it was launched in January 2013, the energy company obligation has delivered around 3.8 million measures in approximately 2.5 million homes. Across ECO schemes, around 31,600 measures have been delivered to 23,100 households in local authority areas in the Scottish highlands and islands since 2013. As hon. Members will know, fuel poverty is devolved, with the Scottish Government responsible for the matter in Scotland. However, the ECO and the Great British insulation scheme are delivering energy-efficient measures to the least efficient low-income homes in Scotland. We are currently reviewing the fuel poverty strategy for England and will engage with the devolved Administrations as part of the process.
I understand this is a complex matter and one that is important to all hon. Members here. I thank them for bringing it to the debate. I would be happy to meet people further to today’s discussion. Finally, I want to touch on lived experiences and the impact on health. Having been brought up in a household that was fuel-poor, I know what it is like. I know the impact that that can have on someone’s health, especially as my mum suffered with chronic obstructive pulmonary disease and we found it incredibly difficult to manage all those challenges. My commitment is therefore to do the very best I can to support all those energy-poor households.
Oral Answers to Questions
Kerry McCarthy Excerpts(2 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Kerry McCarthy (Bristol East) (Lab)
A year ago, the then Energy Secretary said that if suppliers had wrongly installed prepayment meters in any home, they would have to recompense their customers for the way they had behaved. One year later, can the Minister tell the House how many individuals who had a prepayment meter wrongly installed have had compensation, how many are yet to receive it and, of those still waiting, when they will get the compensation?
Amanda Solloway
One thing on which we can all agree across the House is that it was absolutely abhorrent that people had prepayment meters forced on them. We are working our way through the compensation, but I can assure Members that we are doing everything we can to ensure that, when prepayment meters are installed, we are doing exactly the right thing to make sure that everybody is kept safe.
Kerry McCarthy
I asked the Minister three questions but did not get an answer to any of them. Perhaps she can put the figures in the House of Commons Library, because she clearly does not have a clue what they are.
More than 3 million households are in debt to their energy suppliers and almost 10 million households are living in cold, damp and poorly insulated homes. The Great British insulation scheme is proving to be a great Tory insulation fiasco. Will the Minister tell me why the insulation scheme is proving to be such a disaster?
Amanda Solloway
We have taken great steps to support people. For example, last winter we gave unprecedented support to households and businesses. Of course, debt is a major concern, and I have regular meetings with stakeholders to ensure that we are doing the very best not only to get people out of debt, but to prevent them getting into debt in the first place.
Draft Nuclear Decommissioning Authority (Pension Scheme Amendment) Regulations 2024
Kerry McCarthy Excerpts(2 months, 1 week ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Kerry McCarthy (Bristol East) (Lab)
It is a pleasure to see you in the Chair, Dame Maria. As the Minister has said, this delegated legislation brings the Nuclear Decommissioning Authority’s pensions into line with wider public sector pensions, as a result of the Public Sector Pensions Act 2013, by moving from a final salary scheme to a career average scheme.
We do not object to the broad objectives—as the Minister will recall, we had this discussion during the passage of the Energy Act 2023—but we have a few issues with the way the consultation has been run and how long the process has taken, which have been raised by unions and affected members. I pay tribute to everyone who works at the NDA. They are integral to keeping the public safe, and they should be recognised when determining legislation. We do not want to build in disincentives through watered down pensions for the people who work there.
I want to address a couple of points that have been raised. The unions did vote in favour of the reforms, but that was because they were worried about what the alternative would be; it was not an overwhelming endorsement. Legislation is needed to implement the proposals because the members of these schemes currently have statutory protection against detrimental changes under the Electricity Act 1989 or the Energy Act 2004. Although, as I said, union members voted in favour of the reforms, albeit a little reluctantly, there is concern about these protections being broken again. That was not helped by the fact that during the consultation many respondents felt that the terminology used to describe the application of the powers was too broad or unclear.
Another question has been raised: why are the Government not applying the Hutton reforms to public service pensions in full? Lord Hutton ruled out providing pensions on a defined contribution basis, but the Government refuse to apply that recommendation to the many thousands of employees in the NDA estate who are in the defined contribution section of the CNPP.
Finally, the Minister talked about the starting gun being fired in 2011; that has been a hell of a long time to get off the starting line. I know that the Minister is a speedy marathon runner, as well as being a speedy talker—it is not like him to drag his feet. Members of the scheme were first balloted on the reforms back in 2017, with the Government taking the decision to bring forward this statutory instrument in December 2018. I know that it required the Energy Act as paving legislation but the fact that it has taken until 2024 to reach implementation is not optimal, to put it mildly.
It is said that the estimated total savings are expected to be about £200 million. What impact has the delay had on the estimated savings?
Andrew Bowie
I thank the shadow Minister and my hon. Friend the Member for Amber Valley for their questions. The hon. Lady asked about the time it has taken for us to bring the changes forward. She is absolutely right: it is sub-optimal that it has taken this long. Having met the unions in the latter part of last year, I am aware of the concern and the not inconsiderable worry caused by how long it has taken us to bring this forward. However, we did need to wait for parliamentary time and the actions that we brought forward through the Energy Act to allow us to make the changes required to bring the NDA’s pension schemes into a much better place than where they were.
It should be recognised that the pension is very good. Allowing a full pension award at 60 for the majority of members when most public pensions are linked to a state retirement age of 67, as my hon. Friend the Member for Amber Valley mentioned, was a considerable win for workers at the NDA and something we are proud to have achieved. It means that the Nuclear Decommissioning Authority—a vital part of our effort to maintain a safe, sustainable nuclear estate in this country—will continue to be attractive to the best and brightest. We all agree that that should be an ambition.
The NDA will, of course, continue to engage extensively in communicating the reform to employees affected by the changes and the trade unions that provide representations across the NDA group. Of course we are always happy to look at the impact of the changes once they have been implemented. There is the ability after the implementation of this secondary legislation to make changes to how the schemes operate.
Kerry McCarthy
Did the Minister address the point about the £200 million savings or did I miss that?
Andrew Bowie
No, the hon. Lady is absolutely right. Sorry, I had forgotten that she asked. There will be significant savings, of course, for the NDA and that is a good thing. We have reached a good settlement on the new pension scheme. It is a good pension for members. We will continue to attract the brightest and best into the organisation and give people certainty about where they are going to be when they hit retirement age, while providing significant savings for the Nuclear Decommissioning Authority, which will allow it to carry on with its important work for this country, at Sellafield and the other nuclear sites in which it is engaged across the UK. That work is only set to grow, by the way, as more of our civil nuclear fleet reaches the stage of having to consider moving into decommissioning mode. The NDA’s work is about to increase exponentially so the savings made by the changes will be important and allow it to do more and do it effectively.
The Government remain committed to ensuring that pension schemes are fair, efficient and in line with the wider public sector. The regulations are essential to the successful implementation of a CARE-based pension reform of the NDA group. Crucially, they preserve commitments to excellent benefits, including provisions for members to retire at the current retirement age. They also yield financial savings that will be used to bolster the NDA’s mission of responsibly decommissioning the UK’s nuclear legacy. I urge the Committee to support the draft Nuclear Decommissioning Authority (Pension Scheme Amendment) Regulations 2024.
Question put and agreed to.
2.41 pm
Committee rose.
Oral Answers to Questions
Kerry McCarthy Excerpts(3 months, 1 week ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Kerry McCarthy (Bristol East) (Lab)
Having shared a constituency border with the former Member for Kingswood for 14 years, I know that he was genuine in wanting what was best for his constituents. He knew that a green transition would protect their jobs at Rolls-Royce and Airbus, help the science park to thrive, and bring opportunities for small and medium-sized enterprises and the self-employed. He knew that home insulation and clean energy would bring warmer homes to Warmley and Woodstock, and lower bills to Bitton. He resigned because he had lost all hope that this Government would deliver on those things. He was right, was he not?
Graham Stuart
Just to spell it out—because we do have to speak very slowly for the Opposition Front-Bench team—we have cut our emissions more than any other major economy, and our plans and the expectation of the UN are that we will continue to lead the world. That is leading the world: not talking about it, not promising to borrow £28 billion and put everyone’s taxes up, and then fluctuating on a daily basis. It is about delivery. We have delivered and will continue to do so.
If we want to see the reality of Labour on energy, we only need to go to Nottingham. There, Labour invested in Robin Hood Energy, which went spectacularly bust—a forerunner of a Labour Government, perhaps, if there ever were to be one. It is typical of Labour to reverse all the principles of Robin Hood: all Labour does is steal from the poor in order to pay for the bailiff.
COP28
Kerry McCarthy Excerpts(5 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Kerry McCarthy (Bristol East) (Lab)
The UN has warned that the world is on course for a catastrophic 2.8°C of warming, in part because promises made at COP26 and COP27 have not been fulfilled. We are running out of last chances. We know what we need to do and we know how to do it, but where is the sense of urgency? The Prime Minister was shamed into attending COP last year. I would have thought he would be ashamed to be there this year, after his climate climbdown last month derailed momentum at exactly the wrong time. The world needs climate leadership.
Does the Minister think it is acceptable for the Prime Minister to sabotage the UK’s history of climate leadership with his cynical backtracking on net zero? Labour will be going to COP with a message that the UK can be a climate leader again and that, in doing so, we will cut energy bills and boost energy independence at home, which this Government have conspicuously failed to do. Labour will put the UK back in a position of leadership and establish a clean power alliance. We will pledge to issue no new oil, gas or coal licences and set an example with our mission for clean power by 2030. What example does it set if the current UK Government ignore the science and global consensus on fossil fuels, especially when the Energy Secretary admits that her policy will not even cut bills?
Labour will also be working for multilateral development bank reform to help developing countries access capital, as well as championing the UK as the future green finance capital of the world, with mandatory 1.5°C-aligned transition plans for FTSE 100 companies and financial institutions. Can the Minister tell me what the Government will be doing to advance that agenda?
There is so much more that the UK can and must do to reduce emissions and deliver energy security, to cut energy bills and to back British industry. With Labour, Britain would lead the world at COP. Labour is ready to lead; is the Minister?
Amanda Solloway
As I have mentioned, we do take this issue incredibly seriously. If I think about some of the facts, as the hon. Member rightly mentioned, at the G20 the Prime Minister announced $2 billion to the green climate fund. That is the biggest single funding commitment that the UK has made to help the world tackle climate change. Half of that contribution will go to adaptation. We are committed, and that is why we have a presence at COP28. The House will see that senior members of the UK Government are there, as well as King Charles.
Oral Answers to Questions
Kerry McCarthy Excerpts(5 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Kerry McCarthy (Bristol East) (Lab)
I have to say that I spent the first 40 years of my life in Bedfordshire and I had no idea that Bedfordshire Day was a thing, but happy Bedfordshire Day anyway.
Fifteen years ago, the Labour Government introduced the Climate Change Act 2008, a landmark piece of legislation that has guided climate policy and progress in this country and inspired similar action around the world—admirably led, it has to be said, by my right hon. Friend the Member for Doncaster North (Edward Miliband). But where is that leadership now? How can the Prime Minister show his face at COP when, in the words of the Climate Change Committee, his entirely cynical backtracking has created
“widespread uncertainty for consumers and the supply chain”,
has increased
“both energy bills and motoring costs”
and made
“Net Zero considerably harder to achieve”?
Claire Coutinho
I think the hon. Lady is putting a lot of words into the Climate Change Committee’s mouth there. What it actually said was that, in terms of emissions, it would make no material difference. As I have said, the UN’s emissions gap report showed just last week that the UK was expected to reduce emissions between 2015 and 2030 at the fastest rate in the G20 group. This is yet more doom and gloom from the Opposition. If we look at what we have actually achieved, we can see that we have the most ambitious targets in the world and we have set out unprecedented levels of detail. We will continue to do so.
COP28
Kerry McCarthy Excerpts(5 months, 1 week ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Kerry McCarthy (Bristol East) (Lab)
Simon Stiell, the UN climate executive secretary, said at COP27 that we need
“everybody, everywhere in the world, every single day, doing everything they possibly can to address the climate crisis.”
That is the scale of the challenge ahead of us, and the global stocktake synthesis report has underlined what is at stake. We are falling short on mitigation, adaptation and finance. Current NCDs are 20 to 24 gigatonnes of carbon dioxide equivalent short of what is needed to limit warming to 1.5°. The conclusion is stark: there is a rapidly closing window of opportunity to secure a liveable and sustainable future for all. Indeed, in meetings I have had recently with climate scientists, they have warned that although they want to cling to the hope of keeping 1.5° alive, they fear we are now in the territory of 2°. At 2°, we lose our coral reefs, for example; that is not a solution that we should be happy to live with. Echoing Simon Stiell, the global stocktake report states that
“much more action, on all fronts and by all actors, is needed now”.
One would not know it from the speech that the Minister has just made, but we do not have a Government who are taking the action on all fronts that is needed now: we have a Government who are not just stalling, but taking us backwards. I thought it was quite a cheek for the Minister to cite electric vehicles, given that the Government have just rowed back from the 2030 ban on the sale of new internal combustion engine vehicles. The motor manufacturing sector, including the Society of Motor Manufacturers and Traders and the Ford motor company, was quite happy with that 2030 date. The only reason that date was moved was that in the wake of the Uxbridge by-election, the Prime Minister wanted to play party politics with net zero. The Minister is quite audacious at times: he said that some countries were seeking to stoke division at COP, but that is exactly what his Government have been doing in recent weeks on net zero.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
The rest of the European Union has set the deadline of 2035. It was right that the United Kingdom Government set the ambition for 2030, but we recognise that things are changing: we have had covid, and there is still a need to roll out infrastructure. I think the hon. Lady is being ungenerous, since we will now be in line with the rest of the European Union, and we have a higher take-up of EVs than many other countries.
Kerry McCarthy
In all the conversations I have with businesses, they say that they want certainty and a strategic sense of direction; they want to know where they are going, so we should not move the goalposts. There was no reason to row back from that target, and as I have said, the motor industry itself has expressed concern. That industry needs to develop a market in new vehicles now, so that in a few years’ time, we will have the affordable second-hand market that we need so that people can afford to make the transition. The right hon. Lady is absolutely right that the infrastructure is not there, but that is a challenge that we should rise to, getting a comprehensive network of public sector charging points, grid connections and so on. She will have heard that from Labour at its recent party conference.
Let me turn to domestic progress. Again, to listen to the Minister, one would think that everything was going swimmingly. The Climate Change Committee has assessed that the UK is unlikely to meet its NDC to reduce emissions by 68% between 1990 and 2030. The Government’s own carbon budget delivery plan conceded that Ministers only have plans for 92% of our NDC, but they have said that they are confident about delivering those emissions savings—that is something we often hear from the Minister, without any actual detail about how we will get there. In fact, it has been assessed that the Government have credible plans for only 28% of the required emissions reduction. There is a lot of work to be done.
The Climate Change Committee assessed the Government’s policies in October with and without the Prime Minister’s climate climbdown, and found a 20% increase in the proportion of the NDC pathway covered by “insufficient plans” having taken into account the Prime Minister’s intervention. It said that the
“widespread uncertainty for consumers and supply chains”,
is more difficult to quantify, but, as I have said, at all the meetings I have had, people are saying that this has absolutely knocked them off course. There is a huge amount of enthusiasm for going down the path to net zero and I am told that there is a lot of private sector finance ready to invest, but they need a stable economic climate, not a Prime Minister who is U-turning just when action is needed.
Following the disastrous contracts for difference auction, the proportion of the electricity supply pathway with significant risks increased by over 5,000%. The refusal to help renters contributed to a fivefold increase in insufficient plans for buildings. When the Government’s policies are, as the Climate Change Committee found,
“making Net Zero considerably harder to achieve”
and driving up energy bills, how can Ministers go to COP trying to boast about how well things are going in the UK? I do hope for action before COP. We have the autumn statement next week, and we were expecting some plans—I think the Chancellor promised in the spring that he would bring them forward—in response to the Inflation Reduction Act and the measures we then saw in the EU. I hope that we do get something on that front to at least reassure businesses that the Government still have net zero in their sights and see it as an important part of a future industrial strategy for us.
The UK used to be at the forefront of global climate action, and again the Minister was being a bit cheeky when talking about the progress that has been made since 2010. I think he entered Parliament when I did in 2005. Is that right?
Kerry McCarthy
The Minister may recall being on the Green Benches in 2008 when the Labour Government introduced the world’s first Climate Change Act, which was then adopted by more than 100 countries around the world. It was groundbreaking.
Graham Stuart
If the hon. Lady wants to have a history lesson—and we did, indeed, come in together—she will remember that it was David Cameron, as the leader of the Conservatives, who was the first leader of a major party in this country to call for a climate Act. I think the Liberal Democrats leader followed suit a few hours later, and the Labour Government then eventually did so. I served on the Joint Committee, chaired by the brilliant David Puttnam, that put this into place, so I will not take any lectures from her. It was the Conservatives who led the charge to get that going—the first major party to support it—and I was pleased to see it put on the statute book. We were of course the first major economy in the world, and the first Government, to legislate for net zero overall.
Kerry McCarthy
It was a Labour Climate Change Act brought in by the now shadow Secretary of State for Energy Security and Net Zero, my right hon. Friend the Member for Doncaster North (Edward Miliband). I can see why the Minister may be desperate to try to claim credit for it, because the Government have so little else that they can claim credit for, but it was a Labour Act introduced by a Labour Government. It is because that was enacted that we have seen so much progress, and as I have said, it was taken as a model for many other countries to follow. However, we are now setting entirely the wrong example to other countries by scaling back on our net zero ambition and last year the Prime Minister had to be forced to attend COP.
Kerry McCarthy
The Minister will have an opportunity to respond in his wind-up at the end, but I suppose I will give way once more.
Graham Stuart
This is a really important topic, and it is important that we get our language right. The Government have not scaled back our net zero ambitions for either our NDC in 2030 or net zero by 2050. The hon. Lady can make lots of points, partisan or otherwise, but it would be great if she acknowledged that this country has, under this Conservative Government, cut emissions by more than any other major economy on earth and has the most ambitious plans for 2030.
Kerry McCarthy
The Minister will also know that the Government had to be taken to court, because it is one thing declaring targets and ambitions, but unless they have the strategy—[Interruption.] The Government were taken to court, and that is why they had to produce the delivery plan earlier this year. The Climate Change Committee, which by his account was all his idea because it was all his idea to introduce the Climate Change Act, has said that the Government are not on track to meet their ambitions. So the Minister cannot just rely on grandiose boasts about where he wants to get us to if he does has not have a plan to get us there, and it is very clear that he does not have a plan to get us there.
The Minister said that we represent only 1% of global emissions, which is true, but the NDC emissions gap is approximately the total combined annual emissions from the top three emitting countries. Yes, they have responsibilities, but this does need everybody everywhere to play their part. I do not think we would want to try to suggest that we were insignificant in the big global picture because we represent only 1% of the total population.
I will move on specifically to the COP agenda and what we hope to see. Will the UK be calling for the phase-out of unabated fossil fuels, and does the Minister agree with the global stocktake report—[Interruption.] I am just about to come to that. I know the Minister mentioned it, but does he agree with the global stocktake report that fossil fuel subsidies are stifling cost-effective low-carbon alternatives? The global stocktake report states that
“lifetime emissions from existing and planned fossil fuel infrastructure will exceed estimates for keeping…1.5 °C within reach”.
My point is that, if the UK will be calling for the phase-out of unabated fossil fuels, how does he think going to COP when the Government have just announced the Offshore Petroleum Licensing Bill in the King’s Speech will sit when he tries to lecture other countries on moving away from fossil fuels?
The global stocktake report is clear that CO2 removals have a role, but are
“not a substitute for deep emissions reduction.”
It states:
“A rapid reduction of the world economy’s reliance on fossil fuels towards clean energy is central for reaching global net zero”.
That sounds to me like an endorsement of Labour’s clean energy mission for 2030. Unlike the Government’s short-term approach, this will increase our energy security, create good jobs and reduce energy bills—unlike, as the Secretary of State for Energy Security and Net Zero admitted the other day, the Offshore Petroleum Licensing Bill—and it will mean that the UK is leading the world in tackling the climate crisis.
The Minister mentioned nature-based solutions, and I was very pleased to hear that, but can he say a bit more about what global action the Government will be supporting with sustainable land management—I understand that that will be on the agenda at COP in a way that it has not been in the past—as well as terrestrial and ocean carbon sequestration? What discussions are there likely to be on the role of setting up credible international carbon markets? To give one example, we know that wetlands have huge potential, but we are still waiting to hear about the saltmarsh code—the former Secretary of State for Department for Environment, Food and Rural Affairs, the right hon. Member for Suffolk Coastal (Dr Coffey), may have something to say about that—and whether we can add saltmarshes to the greenhouse gas inventory. With the UK’s leading position as a world financial centre, we are ideally placed to be playing a role in creating these markets both on the nature side and on the carbon side.
It is estimated that tree loss last year was 2.1% higher than the maximum level. Will the Minister update us on that? He mentioned halting and reversing deforestation by 2030, and on the international side that is very much about stamping out links to deforestation in our supply chains. Could he give an update on how that is going, because as I understand it, it is not going well? Those issues were all highlighted in the global stocktake.
The built environment and transport are also on the COP agenda, and it would be helpful if the Minister could tell us a little more about the Government’s priorities for the talks. He mentioned the loss and damage fund, and the work of the transitional committee. It would be interesting to know more about what conversations he has had with climate-vulnerable countries, and the small island developing states in particular, because it is one thing to set up these financial arrangements, but in the past the smaller a country, the fewer resources it has, and it finds it very difficult to access the finance that is out there.
The Minister also mentioned the need to reform international financial institutions, which was welcome. I do not know whether he intends to reveal much about his actual agenda at COP before he goes—and it would be useful to know who else is going with him—but one question that has been asked of me is whether he will be attending the ministerial event on methane on 4 December. I think it is really important that we start addressing methane in connection both with the fossil fuel sector and with agriculture and waste. I hope that will be a priority for him.
To conclude, the UN has previously warned that the world is on course for a catastrophic 2.8°C of warming, in part because promises made at COP26 and COP27 have not been fulfilled. We are running out of last chances, but we can still avert the very worst of it, because we have the knowledge and tools to do so; it is just the willpower that is lacking at the moment.
The UK under Labour will, as called for in the global stocktake, transform our energy system with a plan to double onshore wind, treble solar, and quadruple offshore wind. Our warm homes plans will see 90 million cold and draughty homes brought up to standard, and Labour’s answer to the Inflation Reduction Act will restore Britain’s international leadership and create jobs across the country. Our proposals for a clean power alliance will lead ambitious countries and support the most vulnerable. A net zero target should not lead to complacency. There is so much more that the UK can and must do, not only to reduce emissions but to deliver energy security, reduce energy bills, and enable British industry to thrive over the long term. That is the vision we need to see at COP.
Graham Stuart
I congratulate all the Members who have spoken in the debate, which is an important one ahead of COP28. Further to the other interactions that I mentioned in my opening speech, we will be making a written ministerial statement on our priorities for COP before we go, and I will be responsible for the negotiations there.
It has been a very interesting debate, but it is a shame that the hon. Member for Bristol East (Kerry McCarthy) struggled so much to acknowledge the position that we are in. I have never heard it come out of her mouth that this country has cut its emissions more than any other major economy on this earth, which it has, or that it has the most ambitious plans of any economy on this earth, which it has. It would be good to have that as a baseline; there is plenty of room to pick up on issues and concerns about our performance while also acknowledging that the UK truly is a global leader. I am pleased to say we are not only leading domestically, but leading in the international space as well.
A couple of Members mentioned the Climate Change Committee in the context of the Prime Minister’s speech in September. It is worth noting that the Climate Change Committee’s analysis shows that there is “no material difference” in our progress in cutting emissions since its last report in June. We are tacking, as I would put it. However, our destination remains exactly the same. We are reassuring people in rural areas who were fearful that they could neither afford heat pumps nor be sure of their functionality, while increasing the subsidy for them by 50%, and working to build the system and drive the cost curve down, so that more and more homes can have them. That is right the way to ensure that we maintain public support for delivering net zero.
The same applies to zero-emission vehicles. Manufacturers have a ZEV mandate—an obligation to “green” their fleet up to 2030. That builds on our successful record to date; we are ahead of the Climate Change Committee’s and our own projections. We are maintaining that ZEV mandate. The Climate Change Committee spoke of “no material difference” in progress on particular changes, but the focus on grid and other aspects of the Prime Minister’s speech are all about turbocharging our efforts to deliver not only the nationally determined contribution in 2030, but net zero by 2050.
Methane was mentioned, and it is an important issue. The global methane pledge is a collective commitment intended to mobilise international action on methane. I am pleased to say that UK methane emissions between 1990 and 2021 dropped by 62%, one of the largest reductions in any OECD country, but I should also to highlight the fact that methane represents one of our biggest opportunities—the opportunity to ensure that that pledge is delivered not only domestically but internationally. It should also be noted that we are the only major economy to set a legally binding emissions reduction target, of 77%, for 2035 as part of carbon budget 6. We will see what happens at the 2025 COP in Brazil—10 years on from Paris—but the expectation is that new NDCs will come forward for 2035.
Finance was touched on in the debate. We remain one of the largest and most active donors in international climate finance, and we are making record commitments. With the aim of helping the world to adapt to the inevitable climate change impacts that we can already see, at COP27 the Prime Minister made a commitment to triple UK adaptation finance from £500 million in 2019 to £1.5 billion in 2025. The UK is also committed to maintaining a balance between mitigation and adaptation spending, and to providing at least £3 billion of UK climate finance for the purpose of protecting and restoring nature. We provide the majority of our climate finance in the form of much-needed grants rather than loans—which I think compares well with what is provided by some other donor countries—and we prioritise our contributions for the biggest challenges faced by the poorest and most vulnerable.
Alongside Malawi and Vanuatu, I co-chaired the climate and development ministerial ahead of the Abu Dhabi pre-COP meetings. It focused on the issue of access, which was absolutely right. We hear again and again from countries such as Samoa, whose Minister has said that the access process takes too long. At the CDM, we set out a “vision statement” expressing greater recognition of the need for national programme development to ease access to money as well as increasing the quantum. The hon. Lady is right: it is not enough to have this notional money if it does not actually flow to those who by definition, as she said, are the least able administratively to meet the requirements of some vast organisation. We need to make sure that the system fits the needs of those it serves, rather than the other way round.
Kerry McCarthy
I welcome what the Minister has said. I think that another problem for those countries is coming up with the evidence base to demonstrate the impact that climate change is having on them. There are currently some very good initiatives: for example, science students from the UK are going out to study marine areas. There is a great deal of interchange. Does the Minister think we could do more to facilitate that evidence-gathering, which could then be used as a basis for making an application to show the need for climate adaptation funding?
Graham Stuart
The hon. Lady is absolutely right. We need to make sure that technical assistance is there because, even as we try to get the green climate fund, the global environment facility, the World Bank and various others to improve their systems and ambitions to better meet the needs of the most vulnerable—shouting at both parties is like shoving a nine-pin plug and a three-pin plug together and wrapping them in gaffer tape—we also need to get a smoother system that helps them both to step up so that it genuinely flows, otherwise we will have endless frustration. Hearing Ministers from Vanuatu, Tuvalu, Samoa and elsewhere brings it alive, which is why these international meetings are useful. They remind us of the realities on the ground.
Since 2011, The UK’s climate finance has supported more than 100 million people to cope with the effects of climate change, improved the climate resilience of more than 32 million people and reduced or avoided more than 86 million tonnes of greenhouse gas emissions.
Nature has rightly been mentioned, and we want to see action and ambition from the presidency and all parties on transforming food systems and building policy, practice and investment for sustainable agriculture at scale. That includes endorsement of the leaders’ declaration on food, agriculture and climate action, supported by a further commitment to policy action, innovation and investment through the policy dialogue for sustainable agriculture and the agriculture breakthrough.
It is always difficult to keep our head around all these issues, as there is an alphabet soup of initiatives. I always want to check that they are not duplicative, but they are often complementary and working together.
Graham Stuart
The hon. Lady is absolutely right. The Congo has extraordinarily large and important peatlands, which have the same basic dynamics. Everything is different, and every country is different, which is why we have to pull different things together, but the fundamental principle is that we have to create a system in which the local people—from the governor of the province down to the indigenous villagers—are better off by maintaining and keeping these peatlands. We are keen to make sure that the role of peatlands is understood because, again, they are a critical enabler. Lost peatlands cannot easily be replaced, and they are part of the negative tipping point we could reach if we do not take urgent action.
Kerry McCarthy
I welcome the Minister’s enthusiasm and recognition that peatlands have an important role to play but, at the moment, they are emitting carbon because of how they are treated in this country, particularly when it comes to grouse moor management. Does he agree that we need to address those practices? Many peatlands are also sites of special scientific interest or are meant to be protected for nature in other ways.
Graham Stuart
I will not stumble into another Department’s area of responsibility. We work collectively across Government to share the burden of making sure we meet our net zero targets.
In wrapping up the debate, I assure hon. and right hon. Members of the Government’s commitment to delivering on net zero at home and internationally. Although there is evidence that a peak in global emissions is within sight this decade, we need emissions to peak by 2025 and to reduce by 43% by 2030. The sobering reality is that, this year, global emissions are likely to reach a new peak, as Members across the House have said. Keeping 1.5° within reach requires nothing less than a paradigm shift.
As I said in my opening remarks, the UK accounts for less than 1% of global emissions. Beyond what is directly within our grasp, the question before us is how we can help to create the will and the capability to move the remaining 99%, for which the major emitters, in particular, will be crucial.
I would like to close by offering some reflections on the UK’s role in helping to drive forward international progress in this critical decade. For hon. Members who are interested, we have set out in greater detail the UK’s vision and role in driving forward international action on climate and nature to 2030 in our 2030 strategic framework, which is available online. It sets out six key global challenges, and how we will use our international partnerships, strengths in finance, expertise and domestic leadership, trade and investment, and world-leading strengths in science and innovation to drive forward progress.
The first point to make is that though the gap looks unassailably large, we must not lose hope and fall into a council of doom. The reality is that efforts to date have succeeded in bending the emissions curve away from apocalyptic levels of warming of 3° or more. In some sectors, notably energy and electric cars, the transition is taking off. The IEA’s latest world energy outlook predicts a peak in fossil fuel use by 2025, due to what it describes as the “unstoppable” growth of low-carbon technologies. Solar and electric vehicles particularly stand out. Since only last year, the IEA has revised up its global solar 2050 capacity forecast by 69% and increased by 20% the number of electric vehicles it expects to be on the roads by 2030, such that it is expecting electric vehicles to comprise two thirds of new car sales by 2030.
The lesson we should draw here is clear: rapid, large-scale transformation is possible. The challenge is that we need to replicate this success across all sectors of the economy. There will be no single silver bullet to driving the transformational systemic change that we need on a global scale. We will deploy every important lever we have to accelerate action in this critical decade, building on the framework we put forward in the Glasgow pact and our 2030 strategic framework. That includes working through the United Nations framework convention on climate change, bilaterally and through other channels. Working with others who are like-minded, and others, we need to see countries upgrading their climate targets. There is no point in having a global stocktake eight years after the Paris agreement if it does not lead to a ratcheting up of the nationally determined contributions to match the requirements that we find from the science. In particular, we need the major emitters to do that. Countries representing more than 90% of global GDP are covered, as I have said, by some form of net zero target. Those countries now need to align their near-term targets with the commitments that they have made. We will harness our global diplomatic network, international development offer and partnerships to drive forward action.
We will also be taking action to realign financial flows in line with the Paris agreement and a nature-positive future. We will use our strengths as a global green finance centre and role as a shareholder of key financial institutions to reorientate finance flows and tap the power of markets to make progress towards unlocking the trillions required. We will accelerate transitions globally through targeted collaboration with others, focusing on the most important, highest-emitting sectors, through initiatives such as the breakthrough agenda, so that we can reach positive tipping points and avoid negative ones, and so that clean tech is affordable and accessible across all sectors of the global economy. We will also continue to push to accelerate the global energy transition, for example, through our long-standing leadership on phasing out coal in the Powering Past Coal Alliance. We will also champion the need to phase out unabated fossil fuels and at the same time transition the North sea into a clean energy powerhouse here at home.
Let me touch on that issue, as it was raised by others. We have new licences in the North sea for oil and gas because we continue to need oil and gas. We will need oil and gas in 2050 and beyond. Our production is falling, without new licences, at a rate of about 9%. With no new licences and no new investment, we will not see a greening of the basin. Worse, we will see the loss of the subsea and offshore engineering capability we need, as it will either leave this country or be made redundant, rather than being retained here.
The hon. Member for Edinburgh North and Leith (Deidre Brock) raised the issue of a just transition. There is a true transition to be made, and opposing new oil and gas licences in this country when we are a net importer of both, and when the emissions that will come from imports such as liquified natural gas would be higher, makes the Opposition parties friends of oil and gas workers, but just not those in this country. The approach of those parties will not make any difference to how much we consume, but it will make a difference to our emissions, and not in a good way, and it will lose the very engineering capability we need to deliver the transition, as well as a very material contribution to our ability to make that change, which is of course the £50 billion of taxes that we expect to get from the sector over the next five years. The Opposition parties are in entirely the wrong place. They have put optics ahead of doing the right thing, and it does not take a lot of reflection or analysis to come to the conclusion that we are doing the right thing.
We must globally focus on the positive tipping points we need to accelerate the global low-carbon transition. I thank hon. Members from across the House for their contributions to this debate, and I hope that my team and I will be able to count on the support of everyone in the House, despite all of the global challenges we face, to make the upcoming COP the success that the world needs it to be.
Question put and agreed to.
Resolved,
That this House has considered COP28.
Oral Answers to Questions
Kerry McCarthy Excerpts(7 months, 1 week ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Kerry McCarthy (Bristol East) (Lab)
According to the Climate Change Committee,
“the private sector…is being held back…by weak policy signals, uncertainty, and barriers to investment,”
and perhaps we would not need to be so reliant on China if those issues were addressed. Just last month, UK investors representing £1.5 trillion in assets wrote to the Prime Minister, warning that that could mean the UK missing out on 1.7 million jobs. Will this zombie Government listen to investors and their own advisers, look at the game-changing interventions in the States and bring forward a UK version of the Inflation Reduction Act before it is too late to save British businesses and British jobs?
Graham Stuart
Yet another unfunded spending commitment from the Labour party—the party that left us with less than 7% of our electricity coming from renewables and that left us reliant on coal; a party that wants to nationalise the industry and drive out all those companies that have transformed the North Sea basin, led the world in cutting the cost of offshore wind, and made us the European leader in offshore wind and the global leader in cutting emissions. The Labour party is the biggest enemy of net zero and the biggest enemy of the private investment in this country that will help us get there.
Energy Supply Market: Small Businesses
Kerry McCarthy Excerpts(7 months, 2 weeks ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Kerry McCarthy (Bristol East) (Lab)
It is a pleasure, as always, to see you in the Chair, Ms Fovargue. I thank the hon. Member for Aberconwy (Robin Millar) for bringing this important debate to Parliament. He came up with quite a comprehensive list of asks for the Minister, so I hope she has time to respond to them in full. I endorse many of the things he said.
As the hon. Member for Aberconwy suggested, the energy supply market seems stacked against hospitality businesses in particular, and we need both short and long-term action. Today’s debate has reflected the fact that although the actual peak of the energy bills crisis has dampened a little, the problems are still out there. Just because it is not on the front page and we are not having urgent questions every other day in Parliament, that does not mean to say that the problem has gone away.
As has been said, small businesses in the hospitality sector have faced an onslaught of difficulties over recent years. We had the pandemic, which obviously hit them very hard, we have had a rise in rents and interest rates, and we have had soaring inflation, yet sky-high energy bills remain one of small businesses’ main concerns. I have certainly seen that in my own constituency and across Bristol.
The Christmas period should be a boom time for hospitality companies, but in Bristol we saw several go under, including a brewery that was forced to stop production after a 500% increase in energy bills. That was the last straw after everything else they had had to contend with. Thankfully, there are other businesses that are just about surviving, although they are very much struggling with their bills. An independent bakery contacted me to say that it had received a final demand for an energy bill that was in the thousands—way more than they had been paying in the past. It managed to get the money together to just about pay when the final demand came in, but the bailiffs were still sent in and disconnected it. It is now having to rely on a noisy generator, which is understandably upsetting the neighbours. That is not how it wants to conduct its business, but it has no choice.
An independent café told me about the problems it was having. The neighbouring café is part of a big nationwide chain, which can negotiate an energy bill contract that goes across all of its outlets. The little independent café found that the energy companies do not want to talk to it at all because it is not a big enough customer. As we have heard, too many small businesses are locked into expensive multi-year energy supply contracts that were perhaps taken out at the peak of the market. The fact that many of them have been denied service altogether because they are deemed to be too high risk is an issue on which we need to hear from the Minister.
The Government and Ofgem must work in tandem with suppliers to ensure that the disproportionate hit that hospitality is taking does not continue. The hon. Member for Aberconwy quoted the CEO of UKHospitality, Kate Nichols, talking about a canary in the coalmine; last month she said:
“The Ofgem review last week was crystal clear that many of the issues facing businesses lie at the door of the energy suppliers. Whether it is refusing to renegotiate contracts, demanding enormous deposits, or simply refusing to supply the sector, it’s clear that some energy suppliers are mistreating the sector.”
We have heard about how extortionate security deposits and unfair contracts are holding businesses back. Labour’s view is that we need to start reforms to the market to ensure that the cheap price of low-carbon energy is passed on to consumers. We also support calls for decoupling gas and electricity, which is something that we have mentioned many times before.
It is good to hear that Ofgem has been encouraging suppliers to work with hospitality businesses to resolve the issues they are facing with fixed prices that are far above the current market level. However, that sort of voluntary approach is not good enough. The British Beer and Pub Association has been calling on Ofgem to ensure that, beyond voluntary measures for suppliers, there is also
“recourse to more binding mechanisms to ensure expected standards of conduct and behaviour are met and maintained.”
The context here is important. It is not a crisis that has come out of the blue. The situation in Ukraine has had an impact on global energy supplies, but that is not the only factor. From getting rid of our gas storage—unlike any of our European counterparts—and slashing energy efficiency installation rates, to banning onshore wind and crashing the market for solar, the Government have failed to prepare and protect Britain. It is families and businesses that have paid the price.
The extent of that failure was laid bare last week during the auction round for contracts for difference for offshore, which saw zero bids because the price was set at an unrealistic rate. There was the potential there for 5 GW of wind, which could have powered nearly 8 million homes and saved consumers £1.5 billion a year compared with the cost of electricity from gas. That is a real lost opportunity to bring cheap and clean power to many more houses. We had an urgent question on that in Parliament yesterday.
Hospitality businesses need immediate short-term support, and we heard good examples from the hon. Member for Aberconwy about delivering that within the supply market. Until we transition to clean, cheap and secure renewables, however, we will remain exposed to the same energy market that forced the Government to cap energy bills. Analysis from Labour revealed that over the summer 300,000 businesses have been forced to cut hours directly as a result of inflation, with 17% of hospitality firms reporting reducing staff work because of price rises. I think we have all seen that: anyone who went down to places like Cornwall or Devon over the summer will have seen cafés that we would expect to be open at the peak of the tourist season having to close early because they cannot get the staff to maintain seven-day-a-week opening.
Despite record energy profits, the Prime Minister continues to refuse to implement a proper windfall tax, which we have been calling for. Our green prosperity plan would cut £53 billion off businesses’ energy bills by 2031. In the short term, we would help businesses to cut their plans for good, with vouchers for energy efficiency measures. The hon. Member for Aberconwy is right to raise the deficiencies in the energy supply market. Soaring energy bills are a threat to livelihoods up and down the country. I reinforce his calls for the Government to not just sound sympathetic but actually take action to help SMEs to survive.