Commons Sense

House of Commons · Westminster Hall

Gas and Electricity Costs — [Sir Edward Leigh in the Chair]

18 January 2022 · 13 other contributors · 13,470 words

Opened by Jamie Stone Lib Dem Caithness, Sutherland and Easter Ross

Responding minister: Greg Hands

Summarised by AI from the official record, so it can contain mistakes.

At a glance

Jamie Stone raised concerns about gas and electricity costs — [sir edward leigh in the chair] in Westminster Hall. A government minister responded.

Key points

  • Household electricity and gas bills are predicted to rise by around 45% in April, reaching 165 a month.
  • Rural Scottish households are particularly affected, with 33% living in extreme poverty and another 9% in ordinary fuel poverty due to higher electricity costs.
  • MPs asked the Government to remove VAT from energy bills and introduce a new social tariff for those in fuel poverty.

Key requests to Government

The Government should remove VAT from energy bills, double the warm home discount for vulnerable households, introduce a new social tariff for those in fuel poverty, double the winter fuel allowance for elderly pensioners, and implement a one-off windfall tax on oil and gas companies' super-profits to address the crisis.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Jamie Stone Lib Dem Caithness, Sutherland and Easter Ross

Household electricity and gas bills are predicted to rise by around 45% in April, reaching £2,000 a year or £165 a month. This could take the total number of households in fuel poverty to no less than 6 million, with 33% of rural Scottish households already living in extreme poverty and another 9% in ordinary fuel poverty. Rural constituencies are more exposed due to the lack of mains gas supply and higher electricity costs per unit compared to gas or oil. The highlands and islands produce over 300% of their electricity demand from renewable sources but pay higher prices due to transmission charging regimes.

Other contributors (13)
  • Afzal Khan Lab Manchester Rusholme

    In his constituency, almost a quarter of families were in fuel poverty in 2019. He questions whether this issue predates today's cost-of-living crisis and if the Government have overseen an increase in fuel poverty without taking action.

  • Alan Brown SNP Kilmarnock and Loudoun

    He wonders about the impact of a Robin Hood tax on oil companies operating in the North Sea and how it would affect reliance on foreign energy suppliers. The UK Government have failed to address the cost-of-living crisis, with household incomes dropping by up to £1,200 and energy bills rising. Alan Brown highlighted that without intervention, the number of fuel-poor households could increase to 6 million, leading to more premature deaths. He proposed a VAT holiday on fuel bills, estimated to save around £80 annually, but also stressed the need for direct action to prevent bill increases in April. Discussed the effectiveness of renewables and nuclear as replacements for fossil fuels, mentioned concerns over supplier of last resort costs.

  • Alan Whitehead Lab Southampton, Test

    The MP emphasised the need for urgent action to address the impending increase in energy bills, which could reach £600. He criticised the Government's mismanagement of the retail market and lack of oversight leading to 28 companies going bankrupt, leaving 4 million customers without supply. He suggested reducing VAT on bills and implementing a windfall tax on profit-making companies. The MP also advocated for expanding the warm home discount scheme and reforming the wholesale energy market to reduce dependency on gas prices.

  • Angus MacNeil SNP Na h-Eileanan an Iar

    The hon. Lady is making a very good speech, highlighting that the issue of high gas and electricity costs affects more than just the north of Scotland. House of Commons Library figures indicate that 11.7% of people in the UK are living in relative poverty according to the OECD's definition, with the UK having the highest Gini coefficient of inequality among 13 countries examined. Discussed the UK's electricity consumption, noting 16.9% from wind power supported by Government contracts for difference and questioned why companies are bundling this into energy prices when it is government-supported. The UK's reliance on overseas energy sources is a result of previous governments' reluctance to invest in renewables. This has left customers paying hundreds of pounds annually due to past decisions. In interventions, Angus MacNeil argued that past Government actions had contributed to the current situation, including the scrapping of the Department of Energy and a poorly managed smart meter roll-out. He suggested that these failures have exacerbated the present problems for UK consumers. 5.6% of the UK's energy need comes from overseas, according to the GridCarbon app. The MP urged that future contracts for difference (CfDs) should prioritise projects in areas like the Scottish islands to reduce reliance on continental and Scandinavian energy.

  • Anne Marie Morris Con Newton Abbot

    Ms Morris highlighted the severe impact of rising gas and electricity costs on her constituents, particularly in areas with low wages and high living costs. She noted that many pensioners are facing increased uncertainty due to potential price hikes expected to add £700 per household by February, bringing average bills close to £2,000. Ms Morris criticised the current energy pricing cap for failing to protect consumers adequately, as smaller suppliers went out of business and their customers were moved onto higher tariffs by larger companies. Highlighted cost-of-living issues and supported measures to provide relief to those affected by rising energy bills.

  • Craig Mackinlay Con Castle Point

    Asked if the hon. Member for Bath had considered how old buildings listed or in conservation areas could be insulated affordably and effectively. Expressed concern about the impact of global gas price rises on UK's energy security and supply.

  • Fiona O'Donnell Lab East Lothian

    Joined in supporting the plea for urgent action to protect consumers from rising energy costs.

  • Jim Shannon DUP Strangford

    He highlighted soaring global gas prices and their impact on domestic energy bills, noting an estimated 1.2 million to 1.5 million households across the UK will struggle with electricity or gas bills. He mentioned significant price increases by local providers in Northern Ireland, such as Firmus Energy's third rise for Greater Belfast network users. Shannon also welcomed an emergency fuel payment of £200 but called for more Government assistance and suggested considering viable ways to bring down prices, including extending winter fuel payments. Asked for details of Government support measures for constituents dealing with high energy bills.

  • Layla Moran Lib Dem Oxford West and Abingdon

    Concerned about the impact of rising energy costs on constituents in fuel poverty, Layla Moran cited specific cases of individuals struggling to afford their bills. She questioned what measures were being taken by the Government to support those in hardship and criticised the lack of action despite the evident need for intervention. Moran also highlighted the profiteering by energy companies during this crisis. Proposed a windfall tax as a way to address the impact of high gas prices on energy bills, suggested it could send a message against 'rogue states'.

  • Margaret Ferrier Ind Rutherglen and Hamilton West

    Ms Ferrier highlighted the economic challenges faced by constituents due to rising energy costs, exacerbated by cuts in universal credit and furlough. She noted recent projections that household bills could rise by over £700 annually, equivalent to nearly a month's rent in her constituency. This increase represents an additional £59 per month, which is similar to the average weekly food shop or after-school club costs for children. She also mentioned warnings from charities about rising fuel poverty and industry estimates that it might take 18 months to three years for the energy crisis to resolve. Called for a VAT reduction on domestic fuel to help vulnerable customers with high energy bills.

  • Patricia Gibson SNP North Ayrshire and Arran

    640,000 people in Scotland find their energy bills unaffordable. The cost of energy is doubling and credit card lending has jumped by 41%. 6 million people will slide into fuel poverty due to rising costs. There are concerns about cold-related morbidity this winter and the UK's lowest storage capacity for energy. The MP asked if the Minister would give way to speak, but there was no further response or discussion recorded for this intervention. Discussed Northern Ireland's electricity situation, mentioned devolved powers regarding electricity.

  • Wera Hobhouse Lib Dem Bath

    Expressed concern about fuel poverty affecting over 10% of households in Bath, highlighting the council's local household support fund grants but noting they are insufficient. Criticised government policies for not insulating homes and increasing reliance on imported gas instead of renewables. Called for a windfall tax on oil and gas firms' profits to help those struggling with energy costs. Customers who wanted to do the right thing and bought their energy from renewables only should not be subject to energy price rises when renewable prices are falling because energy supply companies can lump the prices together. Called for a windfall tax on companies profiting from high gas prices, questioned the scrapping of the ECO scheme.

  • Yvonne Fovargue Lab Makerfield

    Ms Yvonne Fovargue is concerned that rising gas and electricity costs will cause people to choose between eating or heating, highlighting statistics from the Joseph Rowntree Foundation indicating that 54% of single adults and 25% of single parents spend more than half their income on heating. She calls for immediate action such as a VAT cut on fuel, increasing the warm home discount, and funding it from a different source to avoid penalising everyone. Fovargue also suggests a social or below-cost tariff funded by energy companies to help those in fuel poverty. Raised concerns about support for low-income households and prepayment customers, mentioned 4 million prepayment meter customers.

Government Response

Greg Hands

Responded to concerns raised by MPs about rising energy costs and global price volatility. Emphasized UK's secure energy supply despite increased gas prices, mentioned plans for expanding renewable energy sources like offshore wind capacity over the decade. Addressed specific points on rural support measures such as ECO3 transitioning to ECO4 scheme, extended warm home discount from £140 to £150 and reached 3 million households, highlighted multiple Government initiatives including winter fuel payments, cold weather payments, household support fund worth £421 million. Rejected calls for VAT reduction on domestic fuel and windfall tax proposals.

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