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Gas Prices and Energy Suppliers
23 September 2021
Lead MP
Kwasi Kwarteng
Debate Type
Ministerial Statement
Tags
EnergyBenefits & Welfare
Other Contributors: 33
At a Glance
Kwasi Kwarteng raised concerns about gas prices and energy suppliers in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Government Statement
The Minister informed the House of Commons that protecting consumers, especially vulnerable ones, is the Government's primary focus and shapes their entire approach to addressing energy market instability. There are currently over 50 suppliers in the domestic market, and while more may exit due to rising wholesale global prices, Ofgem and the Government have established processes to ensure customer supply continuity. The Minister reiterated that the solution lies within industry and the market, not through government bailouts for failing companies. He emphasised the importance of a competitive energy market delivering choice and lower prices, with the energy price cap remaining in place to protect millions of customers from rising costs.
Ed Miliband
Lab
Doncaster North
Question
The MP questioned the Government's complacency and the necessity of using taxpayers' money to stabilise the market. He also highlighted Ofgem's warning about systemic risks during the pandemic, asking what planning was done for such an eventuality.
Minister reply
The Minister responded that they have not been complacent, stressing the effectiveness of existing processes like SOLR and SAR in managing supplier failures. He noted that these systems worked during the previous crisis and no special administration regime has been necessary so far.
Question
The MP asked for clarity on Government assumptions regarding energy pricing trends, given Ofgem's indications of continued high prices.
Minister reply
The Minister stated that he does not predict future prices but emphasised the importance of the energy price cap in protecting customers from rising costs.
Question
The MP argued that it was Government and regulator failure, not market failure. He proposed redistributing increased Treasury income to help bill payers and questioned why existing customers should cover additional transfer costs.
Minister reply
The Minister disputed the notion of ill-preparedness, noting that established processes like SOLR and SAR have been successfully tested during previous crises.
Joy Morrissey
Con
Beaconsfield
Question
Will my right hon. Friend confirm that the cold weather payment scheme will remain in place?
Minister reply
The Minister confirmed an ongoing focus on protecting vulnerable customers, including maintaining the warm home discount and looking to protect prepaid customers from worst effects of energy price spikes.
Barnsley South
Question
On Monday, the Secretary of State dismissed our lack of gas storage as “not…relevant”. It has clearly left us vulnerable, so will he now admit that the closure of the Rough storage facility was a mistake?
Minister reply
I do not think that it is relevant, because there is no way that any storage in the world will mitigate the effect of a quadrupling of the gas price in four months. The answer is actually getting more diverse sources of supply and electricity through non-carbon sources—through nuclear and through other sources of decarbonised energy.
Christchurch
Question
Why do we not reduce VAT on fuel as a temporary measure? We did it for the hospitality industry, which was badly affected by covid-19. Why do we not abolish VAT for consumers on fuel now?
Minister reply
My hon. Friend is quite right: we did a whole range of interventions to alleviate the burden on consumers and on businesses. Those were fiscal interventions that the Chancellor pursued last year, and I am sure that he is looking at a range of things this year, but that is a matter for him to decide ahead of the Budget.
Alistair Carmichael
Lib Dem
Orkney and Shetland
Question
What are the implications of the situation for the exploitation and extraction of gas within the UK continental shelf?
Minister reply
The right hon. Member will know that, in 2020, 48% of our natural gas came from the UK continental shelf, so that is clearly a strong, sustainable source of gas to this country. However, I suggest to him that gas is a transition fuel: in our pursuit of net zero by 2050, we want to transition away from it. That is why we are developing carbon capture and hydrogen.
Question
Further to the question that my hon. Friend the Member for Christchurch (Sir Christopher Chope) asked, surely the Conservative answer—I raised this the other day—is to reduce VAT on energy bills, as was pledged by those who supported Brexit in the EU referendum. I know that the Secretary of State will say that it is up to the Treasury to decide, but he is very persuasive.
Minister reply
I see the Chancellor on a regular basis, as my right hon. Friend knows, and I am delighted to inform him that those conversations tend to be confidential.
Matt Western
Lab
Warwick and Leamington
Question
The UK suffers from higher costs both for consumers and for our businesses and industries. Why then, to follow the point of my hon. Friend the Member for Barnsley East (Stephanie Peacock), is the UK’s storage capacity just 2% of annual demand versus an average of 25% in Europe? Is that part of the reason why we do not have energy price resilience?
Minister reply
A conference of EU Energy Ministers took place only yesterday to discuss that very problem. Mitigating a quadrupling of the gas price is not a function of storage—that is a complete red herring. One reason why we have less storage is that we have a greater diversity of energy supply, and that is a strength, not a weakness.
Question
The Secretary of State is absolutely right to focus on consumers and not to bail out energy firms that got things wrong or are too fragile. However, will he explain how he is dealing with customers currently on capped tariffs with suppliers that have gone bust?
Minister reply
As I have said, we have a supplier of last resort process that has worked well in the past couple of years. It is not my job to state the terms on which customers are absorbed by other companies.
Janet Daby
Lab
Lewisham East
Question
This Government are responsible for families facing a cost of living crisis due to the triple whammy of rising gas prices, looming tax rises, and cuts to universal credit. Will the Secretary of State finally acknowledge and accept that it is completely and utterly immoral to cut universal credit?
Minister reply
What I do acknowledge is that there has been a quadrupling of the gas price, and that we have an energy price cap that will protect customers from such spikes. Schemes such as the warm home discount will also protect the most vulnerable customers.
Question
What assessment has my right hon. Friend made of this country’s structural dependency on gas, which was created by the last Labour Government’s sidelining of green technologies, such as nuclear and even hydrogen?
Minister reply
My hon. Friend is absolutely right. For example, the last Labour Government did absolutely nothing to drive nuclear power, which is a fundamental ingredient of security of energy supply.
Question
The figure of £139 a year has been floated in the press as the increase in the energy price cap this year, but that refers only to the variable rate and does not take into account the changes in bills that people will face if they move from one tariff to another—often against their will in the current circumstances. Will the Secretary of State consider asking the regulator to direct energy suppliers to limit the price increase to any individual customer to a reasonable amount over the coming year?
Minister reply
As I have said, we have a supplier of last resort process, and it would be wrong of me here at the Dispatch Box to interfere in how it works. It has worked effectively over the past two years.
Question
Customers in Kettering and across the country will be worried that their gas and electricity could be cut off if their energy supplier goes bust. To put customers minds at rest, will the Secretary of State explain in straightforward understandable terms how the supplier of last resort process works?
Minister reply
What happens—and it is happening at the moment—is that there is a process of bidding for the customers of the exiting, failing companies, and the cost of absorbing those customers is taken on by the company that wins the bid and also by the industry at large; so the costs are mutualised.
Question
The Secretary of State clearly believes that the invisible hand of the market will solve all this without his doing anything—but when he talks about customers, does he mean only domestic consumers, or will he ensure that supply continues to keep industry going and jobs secure? In that context, does he think it acceptable that Germany has some 90 days of gas storage while we have only nine days’ worth?
Minister reply
We protect domestic consumers in the way I have outlined, but it is fair for the right hon. Gentleman to raise the issue of industrial users of energy in business. He will know that we have schemes that which protect industrial users of energy: we have the energy industry incentive scheme, and yesterday we launched a new tranche of the industrial energy transformation fund with up to £220 million.
Question
I thank the Secretary of State for his tireless work over the last few weeks, not just on the gas price crisis but on the carbon dioxide shortage that followed. I also pay tribute to CF Fertilisers, which has come back online in Stockton, and to Ensus in Redcar for offering to help and come online too. For the benefit of people across Redcar and Cleveland, however, can the Secretary of State outline how we are supporting people and protecting them from these high prices?
Minister reply
My hon. Friend has made an excellent point. The carbon dioxide crisis—or question in hand—we dealt with immediately. I spoke to the CEO of CF Fertilisers twice, on Sunday and Monday, and we had a solution on Tuesday.
Andrew Gwynne
Ind
Gorton and Denton
Question
These skyrocketing gas prices will have a devastating impact, not just on the public but on businesses, which will eventually have to pass those rises back on to the public. Does the Secretary of State understand that that double whammy for the public will see even more families being pushed into fuel poverty and consequently into food poverty as well? Apart from cutting universal credit very soon, making it even worse for many of these families, what is he doing?
Minister reply
The hon. Gentleman will have seen reports that energy companies want the Government to lift the energy price cap. I have repeatedly resisted that. I have said explicitly, on the Floor of the House and in other places, that the price cap must stay.
Question
We are all hearing about the number of businesses in this market that are going bust at the moment, but can my right hon. Friend assure me, and my constituents, that this is expected to be a short-term shock and we will come out of it with a robust market and plenty of diversity of supply?
Minister reply
My hon. Friend knows that competition is the key to this market. We had a world that was oligopolistic in this respect, but we have introduced the price cap, and there are plenty of small, nimble entrants driving innovation and a dynamic system.
Kirsty Blackman
SNP
Aberdeen North
Question
Asks the Secretary of State to investigate and reduce the period during which energy consumers experience uncertainty due to lack of accurate forecasts from suppliers of last resort.
Minister reply
States willingness to look into the matter with Ofgem's CEO, Mr. Brearley.
Question
Questions whether the Government will address offshore tax loopholes used by renewable energy producers receiving subsidies via special purpose vehicle companies.
Minister reply
Offers to meet the MP at any time to discuss the matter.
Diana R. Johnson
Lab
Kingston upon Hull North and Cottingham
Question
Asks if changing Government is a better option for consumers than switching energy suppliers.
Minister reply
Replies that they have a vibrant, competitive market and encourages consumer choice.
Question
Inquires about the security of supply and price stability this winter in Basildon and Thurrock.
Minister reply
Affirms no one needs to fear supply failure or sudden hikes, prioritising customer continuity.
Fleur Anderson
Lab
Putney
Question
Critiques the decision to cut the green homes grant earlier this year and asks for a commitment to reform and reintroduce it.
Minister reply
Explains that while some aspects worked, the one that was closed will be revised and brought back.
Question
Congratulates the Secretary of State on offshore wind energy achievements and asks for continued investment in North Devon and the Celtic Sea.
Minister reply
Agrees to continue investing in floating offshore wind projects and criticises previous Labour government's lack of action.
Question
Quotes a care worker struggling with universal credit cuts, tax increases, and rising energy bills; questions the impact on people like her.
Minister reply
Explains that the issue is global but stresses efforts to protect vulnerable customers and low unemployment rates.
Question
Urges for swift implementation of the offshore energy grid to prevent countryside destruction from cable corridors.
Minister reply
Acknowledges the MP's consistency on the issue, confirms accelerated work on the offshore transmission network review.
Chi Onwurah
Lab
Newcastle upon Tyne Central and West
Question
Challenges the Secretary of State's description of small energy companies as failures and seeks clarification on support for employees.
Minister reply
Reiterates that no grants or subsidies will be given to larger companies and confirms SOLR process is in place.
Gareth Davies
Con
Grantham and Bourne
Question
Welcomes the market-led approach and questions whether Labour's renationalisation plan would threaten energy supplies.
Minister reply
Claims nationalising industry would be disastrous for UK's reputation as a capital and investment hub.
Rachael Maskell
Lab Co-op
York Central
Question
Asks about regional disparities in rising energy prices, especially affecting colder regions.
Minister reply
Acknowledges the weather's impact on gas prices and highlights schemes like the warm home discount.
Question
Critiques Government plans leading to higher household bills, unemployment, inflation, and national insurance tax hikes.
Minister reply
Highlights successful vaccine roll-out, low unemployment rates, and effective handling of the pandemic.
Question
Raises concerns about victims of green deal mis-selling scandal and their recourse for late discovery of debt.
Minister reply
Offers to meet officials to discuss particulars of this individual case.
Jim Shannon
DUP
Strangford
Question
Asks how the Government can assist with uncontrollable factors causing energy price spikes and hopes for bill reductions.
Minister reply
Reiterates focus on continuity of supply through SOLR process and keeping the energy price cap to protect consumers.
Shadow Comment
Ed Miliband
Shadow Comment
The Shadow Minister criticised the Government's complacency regarding the current crisis, highlighting that it is far from normal for suppliers to exit the market with unprecedented numbers losing their providers recently. He questioned whether taxpayers' money would be necessary to stabilise the market and demanded clarity on previous warnings about systemic risks from Ofgem during the pandemic. Additionally, he challenged the justification for reducing universal credit payments amidst rising living costs.
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