MS - 7: Preventing Energy Price Hikes

[William.Croft]

Mr. Speaker, 

We're back again! I am sure that you, Mr. Speaker, and certainly my friends across the aisle are beginning to grow tired of seeing me behind the dispatch box today. It is, however, of paramount importance that I continue to avail myself to MPs and the British people at large to discuss the Government's work to bring down energy costs. Over the past few weeks, the Government has worked at warp speed and with frenetic energy to pursue policies that will increase the supply of fuel, cut regulatory barriers that are increasing costs, and amplify the corrective power of the free market to solve this crisis. Early today, I announced that the Government was introducing a raft of energy policies aimed at increasing the extraction of oil and gas, and taking emergency measures provided to us under law to reduce the UK ETS carbon price. These are meaningful steps towards ending the fuel crisis and providing the British people with the return to normalcy they want and deserve. 

Now, however, I'd like to address another looming issue that is on the minds of many across the country: the potential energy price cap increase. As this House well knows, the war in Ukraine and the breakdown of supply chains is resulting in a lack of available energy and an explosive in the cost of fuel, set of course by global markets. As a result, there are very serious concerns that our country's energy price cap could explode to over £3,500, and remain well above £3,000 for the entirety of 2023. For this Government, Mr. Speaker, that scenario is unacceptable.

The solutions on offer by the Opposition, if you can even call them solutions, fail to address the economic reality our country faces. The lack of supply is fueling this crisis, and one off cost-correcting payments provided by the state to individual families will not do anything to meaningfully address the problem. If anything, the proposes flaunted by the Labour Party will only serve to increase demand without addressing supply issues, jacking up the cost of energy and increasing inflation. The Labour Party is determined to sentence Britain to a never ending cycle of despair, with haphazard cash hands outs causing fuel prices to surge, resulting in the need for even more cash hands outs. Their ideas may sound good to some on paper, but in practice they spell disaster for working families. 

Energy prices are going to continue to rise until demand falls or supply increases. Labour may not want to admit that, but it is an economic fact that I, as this country's Prime Minister, will not run from. That is why the Government understands this solemn truth: an immediate settlement between the Government, Ofgem and energy providers is required if we are to prevent a shocking and disastrous spike in the energy price cap. I am happy today to confirm that such a settlement has been reached. Under the terms of the agreement, the Government has provided utility providers a loan to be paid back to British taxpayers that will allow Ofgem to keep price increases to a stabilized 5% increase in October until this historic energy price increase stabilizes on global markets. This limited increase, negotiated between by the Government and guaranteed by the loan, will prevent what could have been a massive price cap increase that would have crushed families, destabilized the economy, and thrown Britain into financial disarray. It is a win for working people up and down the crisis, who have unfairly been forced to suffer as a result of global events that have destabilized energy markets and rocketed the prices of commodities. I commend the Chancellor for his leadership and determination on securing this historic deal. 

At the same time, the Government is working diligently to increase domestic oil and gas production and secure trade deals with major natural gas producers in order to ensure stabilization occurs. This two pronged effort, detailed in the two statements I have made today to the House, provides a wholistic and comprehensive approach to the crisis we face. It responds directly to the concerns of the British people, promote economic consistency, and guarantees that we emerge on the other side of this crisis as quickly as possible. Fundamentally, Mr. Speaker, it reflects our core promise to the British people: that their Government will take aggressive and determined action to overcome the challenges we face. This is at the core of Right Way Forward agenda: leveraging the power of economic freedom, industrial development, and the ingenuity of the British people to drive our country forward. 

More work is undoubtedly needed, and the Government remains committed to providing support to those who need it most. This landmark agreement makes real progress, however, and does so without requiring empty promises, short term band aids, or harmful erosions of personal and economic freedoms. I commend this statement to the House, Mr. Speaker. The full details of the agreement can be found here. 

[Ruth Murphy]

Mr. Speaker,

Before I continue, I want to make one thing clear: the Labour Party welcomes the government’s multiple u-turns as it’s become increasingly clear the scale of the situation we were facing. After a week of Ministers showing indifference in the face of an unprecedented cost of living crisis, we have finally seen some level of action. I am glad we have pushed the government into keeping its original cost of living proposals and I am glad the government has ensured the energy price cap will not rise this winter.

Whatever issues I have with the proposals – believe you me Mr. Speaker there are issues – my constituents and people up and down the country, for this winter at least, will be provided with a temporary respite that will get them through the worst of this winter. That is always something the Labour Party will welcome, and though we did not get everything we wanted I am glad the Labour Party went some way in pushing for action on the cost of living crisis in the face of Conservative indifference. That is the difference Labour in opposition makes, and the case for Labour in power could never be stronger. 

Because Mr. Speaker we must be clear that what the Conservatives have offered households today is not enough. The Conservatives have stretched out the costs and told the British public to be grateful for it. 

When the former Chancellor, the Right Honourable Member for Richmond Yorks, told this very House he would give energy companies a loan to get us through the crisis, we knew that bailout was not good enough. Now we're given a bigger bailout with interest payments attached and are told it is the panacea for struggling households. 

This represents what constitutes a significant bailout for energy companies: a bailout that doesn't pass the smell tests when those very companies are making a profit. I know Centrica will bemoan that British Gas “only” made profits of £97million. But we should be clear Centrica made 1.3 billion in profit. When being on the precipice of financial oblivion, the British public will not be shedding tears for Centrica and other oil and gas giants who have had to endure the misery of £97 million in profit in a single division of their business. 

And when 75% of energy is domestically sourced, we need to make clear it is a deliberate choice to put up prices for consumers. It is fair to ask them to cut bills instead of demand the taxpayer fund a bailout and consumers pick up the tab for it later down the line. 

We need to be clear Mr. Speaker that when asked to provide any financial relief for hard working families the Prime Minister and Chancellor refuse, dither and eventually are forced into providing that relief kicking and screaming if we’re lucky. But the moment the gas and oil giants ask for a handout the government will provide that – £6.8 billion in taxpayers’ money, I’ll add – proudly and without a second thought. All while a 5% hike is still forced on consumers with interest on top for the long term. This is still a deal that prioritises oil and gas giants over businesses and families across Britain which is why the Labour Party will be opposing it. 

Because while the government are adamant interest payments will go back to the Treasury, we know exactly how energy companies will make up the shortfall put on them through interest payments: by putting the cost onto consumers. The interest payment the government have put on the energy companies is little more than an extra tax on energy bills. That £6.8 billion will have to be paid back, and we know energy companies will not hesitate to make British consumers bear the brunt of that bill. A £6.8 billion bill.

We also know the Chancellor’s claims to save the average household £1,000 are wrong because his sums are based on an annual cap. I know he isn’t a fan of doing his homework, but this loan only covers three months. This bailout is snake oil because the Chancellor knows he could have chosen Labour’s plan, to provide further support to every household and to extend that additional support to the most vulnerable as Labour has offered. 

I suspect the government knows that this delays instead of cuts costs. But because they know how poorly the former Chancellor’s energy company bailout was received, they have tried to present this as something it is not to the British public. 

So, Mr. Speaker, Labour is clear that gas and energy giants should be taxed to support British households through this crisis, the Conservatives are adamant that it is the consumers that have to pay in the end, with their plan creating the conditions for consumers having to deal with higher energy bills in years to come. 

And this £6.8 billion is not risk free. If you owe a bank £100, that’s your problem. If you owe a bank £1 million – or, let’s say hypothetically, £6.8 billion Mr. Speaker, that’s theirs. On top of a cost of living crisis the government has now made the viability of energy company's the British taxpayer's problem. And, as this government have been privy to doing, this Chancellor and Prime Minister have swindled taxpayers’ money on a political bet, with all of us needing to pick up the pieces if that bet falls through. 

I know the Prime Minister has enjoyed discussing Labour's proposals. I think there is some well needed clarification:

The government seems to think the Labour Party is not committed to long term solution because we do not think the solution is to pollute the country, wreck our planet and trash our net zero goals. 

But we know that investing in cheaper and more effective renewables can bring Britain closer to energy independence, push down bill costs and help us reach our net zero target. But the government has not announced a single initiative which would support Britain’s renewable energy sector. 

We know we need to work with global partners to come up with a wider strategy to resolve Britain’s supply chain issues. The government has not shown that it has even began to take that global action, let alone act on it. 

But we also know that to get people through the winter, the sacrifice cannot be made by British taxpayers and consumers at the expense of oil and gas giants. While people’s wages will be driven down, the government has made clear to oil and gas companies that their profits can stay high in the process. That cannot stand.

This hashed out loan, a tribute act of previous ineffective government schemes makes one thing clear - we have a government that is out of ideas, out of steam and out of touch. Only a Labour government will be on the side of British households, not oil and gas giants who have profited from a cost of living crisis we have all had to suffer through.