Category: Energy

Kwasi Kwarteng – 2022 Mini Budget Statement in the House of Commons

The statement made by Kwasi Kwarteng, the Chancellor of the Exchequer, in the House of Commons on 23 September 2022.

Mr Speaker,

Let me start directly with the issue most worrying the British people – the cost of energy.

People will have seen the horrors of Putin’s illegal invasion of Ukraine.

They will have heard reports that their already-expensive energy bills could reach as high as £6,500 next year.

Mr Speaker, we were never going to let this happen.

The Prime Minister has acted with great speed to announce one of the most significant interventions the British state has ever made.

People need to know that help is coming.

And help is indeed coming.

We are taking three steps to support families and businesses with the cost of energy.

Firstly, to help households, the Energy Price Guarantee will limit the unit price that consumers pay for electricity and gas.

This means that for the next two years, the typical annual household bill will be £2,500.

For a typical household, that is a saving of at least £1,000 a year, based on current prices.

We are continuing our existing plans to give all households £400 off bills this winter.

So taken together, Mr Speaker, we are cutting everyone’s energy bills by an expected £1,400 this year.

And millions of the most vulnerable households will receive additional payments, taking their total savings this year to £2,200.

Secondly, as well as helping people, we need to support the businesses who employ them.

The Energy Bill Relief Scheme will reduce wholesale gas and electricity prices for all UK businesses, charities, and the public sector like schools and hospitals.

This will provide a price guarantee equivalent to the one provided for households, for all businesses across the country.

Thirdly, energy prices are extremely volatile, erratically rising and falling every hour.

This creates real risks to energy firms who are otherwise viable businesses.

Those firms help supply the essential energy needed by households and businesses.

So to support the market, we are announcing the Energy Markets Financing Scheme.

Delivered with the Bank of England, this scheme will provide a 100% guarantee for commercial banks to offer emergency liquidity to energy traders.

Mr Speaker,

The consensus amongst independent forecasters is that the Government’s energy plan will reduce peak inflation by around 5 percentage points.

It will reduce the cost of servicing index-linked government debt and lower wider cost of living pressures.

And it will help millions of people and businesses right across the country with the cost of energy.

Let no one doubt: during the worst energy crisis in generations, this Government is on the side of the British people.

The Bank of England are taking further steps to control inflation, acting again only yesterday.

I can assure the House, this Government considers the Bank of England’s independence to be sacrosanct.

And we remain closely coordinated, with the Governor and myself speaking twice a week.

But Mr Speaker,

High energy costs are not the only challenge confronting this country.

Growth is not as high as it should be.

This has made it harder to pay for public services, requiring taxes to rise.

In turn, higher taxes on capital and labour have lowered returns on investment and work, reducing economic incentives and hampering growth still further.

This cycle has led to the tax burden being forecast to reach the highest levels since the late 1940s – before even Her Late Majesty acceded to the throne.

We are determined to break that cycle.

We need a new approach for a new era, focused on growth.

Our aim, over the medium term, is to reach a trend rate of growth of 2.5%.

And our plan is to expand the supply side of the economy through tax incentives and reform.

That is how we will deliver higher wages, greater opportunities, and crucially, fund public services, now and into the future.

That is how we will compete successfully with dynamic economies around the world.

That is how we will turn the vicious cycle of stagnation into a virtuous cycle of growth.

So as a Government, we will focus on growth – even where that means taking difficult decisions.

None of this is going to happen overnight. But today we are publishing our Growth Plan that sets out a new approach for this new era, built around three central priorities:

Reforming the supply-side of the economy.
Maintaining responsible approach to public finances
And cutting taxes to boost growth.
Mr Speaker,

The UK has the second-lowest debt to GDP ratio of any G7 country.

In due course, we will publish a Medium-Term Fiscal Plan, setting out our responsible fiscal approach more fully.

Including how we plan to reduce debt as a percentage of GDP over the medium term.

And the OBR will publish a full economic and fiscal forecast before the end of the year, with a second to follow in the new year.

Fiscal responsibility remains essential for economic confidence, and it is a path we remain committed to.

Today we are publishing costings of all the measures the Government has taken.

And those costings will be incorporated into the OBR’s forecast in the usual way.

The House should note that the estimated costs of our energy plans are particularly uncertain, given volatile energy prices.

But based on recent prices, the total cost of the energy package, for the six months from October, is expected to be around £60bn.

We expect the cost to come down as we negotiate new, long term energy contracts with suppliers.

And, in the context of a global energy crisis, it is entirely appropriate for the government to use our borrowing powers to fund temporary measures in order to support families and businesses.

That’s what we did during the Covid-19 pandemic.

A sizeable intervention was right then…and it is right now.

The heavy price of inaction would have been far greater than the cost of these schemes.

Mr Speaker,

We are at the beginning of a new era.

As we contemplate this new era, we recognise that there is huge potential in our country.

We have unbounded entrepreneurial drive.

We have highly skilled people.

We have immense global presence in sectors like finance, life sciences, technology, and clean energy.

But Mr Speaker, there are too many barriers for enterprise. We need a new approach to break them down. That means reforming the supply side of our economy.

Over the coming weeks, my Cabinet colleagues will update the House on every aspect of our ambitious agenda.

Those updates will cover: the planning system, business regulations, childcare, immigration, agricultural productivity, and digital infrastructure.

And Mr Speaker, we start this work today.

An essential foundation of growth is infrastructure.

The roads, railways, and networks that carry people, goods, and information all over our country.

Today, our planning system for major infrastructure is too slow and fragmented.

The time it takes to get consent for nationally significant projects is getting slower, not quicker, while our international competitors forge ahead.

We have to end this.

We can announce that in the coming months, we will bring forward a new Bill to unpick the complex patchwork of planning restrictions and EU-derived laws that constrain our growth.

We will streamline a whole host of assessments, appraisals, consultations, endless duplications, and regulations.

We will also review the government’s business case process to speed up decision making.

And today, we are publishing a list of infrastructure projects that will be prioritised for acceleration, in sectors like transport, energy, and telecoms.

And, to increase housing supply and enable forthcoming planning reforms, we will also increase the disposal of surplus government land to build new homes.

Mr Speaker, we are getting out of the way to get Britain building.

Mr Speaker,

One of the proudest achievements of our government is that unemployment is at the lowest level for nearly fifty years.

But with more vacancies than unemployed people to fill them, we need to encourage people to join the labour market.

We will make work pay by reducing people’s benefits if they don’t fulfil their job search commitments.

We’ll provide extra support for unemployed over-50s.

And we’ll ask around 120,000 more people on Universal Credit to take active steps to seek more and better paid work, or face having their benefits reduced.

And, Mr Speaker,

At such a critical time for our economy, it is simply unacceptable that strike action is disrupting so many lives.

Other European countries have Minimum Service Levels to stop militant trade unions closing down transport networks during strikes.

So we will do the same.

And we will go further.

We will legislate to require unions to put pay offers to a member vote, to ensure strikes can only be called once negotiations have genuinely broken down.

Of course, Mr Speaker, to drive growth, we need new sources of capital investment.

To this end, I can announce that we will accelerate reforms to the pension charge cap so that it will no longer apply to well-designed performance fees.

This will unlock pension fund investment into UK assets and innovative, high growth businesses.

It will benefit savers and increase growth.

And, we will provide up to £500 million to support new innovative funds and attract billions of additional pounds into UK science and technology scale-ups.

And Mr Speaker, this brings me to the cap on bankers’ bonuses.

A strong UK economy has always depended on a strong financial services sector.

We need global banks to create jobs here, invest here, and pay taxes here in London, not Paris, not Frankfurt, not New York.

All the bonus cap did was to push up the basic salaries of bankers, or drive activity outside Europe.

It never capped total remuneration, so let’s not sit here and pretend otherwise.

So we’re going to get rid of it.

And to reaffirm the UK’s status as the world’s financial services centre, I will set out an ambitious package of regulatory reforms later in the Autumn.

But Mr Speaker,

To support growth right across the country, we need to go further, with targeted action in local areas.

So today, I can announce the creation of new investment zones.

We will liberalise planning rules in specified agreed sites, releasing land and accelerating development.

And we will cut taxes.

For businesses in designated tax sites, for ten years, there will be:

Accelerated tax reliefs for structures and buildings.

And 100% tax relief on qualifying investments in plant and machinery.

On purchases of land and buildings for commercial or new residential development, there will be no stamp duty to pay whatsoever.

On newly occupied business premises, there will be no business rates to pay whatsoever.

And if a business hires a new employee in the tax site, then on the first £50,000 they earn…

…the employer will pay no National Insurance whatsoever.

That is an unprecedented set of tax incentives for business to invest, to build, and to create jobs right across the country.

I can confirm for the House that we’re in early discussions with nearly 40 places like Tees Valley, the West Midlands, Norfolk and the West of England to establish Investment Zones.

And we’ll work with the devolved administrations and local partners to make sure Scotland, Wales and Northern Ireland will also benefit, if they are willing to do so.

If we really want to level up, Mr Speaker – we have to unleash the power of the private sector.

And now, Mr Speaker, we come to tax – central to solving the riddle of growth.

The tax system is not simply about raising revenue for public services, vitally important though that is. Tax determines the incentives across our whole economy.

And we believe that high taxes reduce incentives to work, they deter investment and they hinder enterprise.

As the Prime Minister has said, we will review the tax system to make it simpler, more dynamic, and fairer for families.

And we are taking that first step today.

Mr Speaker,

The interests of businesses are not separate from the interest of individuals and families.

In fact, it is businesses that employ most people in this country.

It is businesses that invest in the products and services we rely on.

Every additional tax on business is ultimately passed through to families through higher prices, lower pay, or lower returns on savings.

So I can therefore confirm that next year’s planned increase in Corporation Tax will be cancelled.

The UK’s corporate tax rate will not rise to 25% – it will remain at 19%.

We will have the lowest rate of Corporation Tax in the G20.

This will plough almost £19bn a year back into the economy.

That’s £19bn for businesses to reinvest, create jobs, raise wages, or pay the dividends that support our pensions.

I’ve already taken steps elsewhere in this statement to support financial services, so the Bank Surcharge will remain at 8%.

But, Mr Speaker, we will do more to encourage private investment.

The Annual Investment Allowance, which gives 100% tax relief on investments in plant and machinery, will not fall to £200,000 as planned…

It will remain at £1m.

And it will do so permanently.

Our duty is to make the UK one of the most competitive economies in the world – and we are delivering.

And Mr Speaker,

We want this country to be an entrepreneurial, share-owning democracy.

The Enterprise Investment Scheme. The Venture Capital Trusts. We will extend them beyond 2025.

The Seed Enterprise Investment Scheme. Company Share Option Plans. We will increase the limits to make them more generous.

Crucial steps on the road to making this a nation of entrepreneurs.

Mr Speaker,

For the tax system to favour growth, it needs to be much simpler.

I’m hugely grateful to the Office of Tax Simplification for everything they have achieved since 2010.

But instead of a single arms-length body which is separate from the Treasury and HMRC, we need to embed tax simplification into the heart of Government.

That is why I have decided to wind down the Office of Tax Simplification, and mandated every one of my tax officials to focus on simplifying our tax code.

To achieve a simpler system, I will start by removing unnecessary costs for business.

Firstly, we will automatically sunset EU regulations by December 2023, requiring departments to review, replace or repeal retained EU law.

This will reduce burdens on business, improve growth, and restore the primacy of UK legislation.

Mr Speaker, we can also simplify the IR35 rules – and we will.

In practice, reforms to off-payroll working have added unnecessary complexity and cost for many businesses.

So, as promised by My RHF the Prime Minister, we will repeal the 2017 and 2021 reforms.

Of course, we will continue to keep compliance closely under review.

Mr Speaker,

Britain welcomes millions of tourists every year, and I want our high streets and airports, our ports and our shopping centres, to feel the economic benefit.

So we have decided to introduce VAT-free shopping for overseas visitors.

We will replace the old paper-based system with a modern, digital one.

And this will be in place as soon as possible.

This is a priority for our great British retailers – so it is our priority, too.

Our drive to modernise also extends to alcohol duties.

I have listened to industry concerns about the ongoing reforms.

I will therefore introduce an 18-month transitional measure for wine duty.

I will also extend draught relief to cover smaller kegs of 20 litres and above, to help smaller breweries.

And, at this difficult time, we are not going to let alcohol duty rates rise in line with RPI.

So I can announce that the planned increases in the duty rates for beer, for cider, for wine, and for spirits will all be cancelled.

Now, Mr Speaker, we come to the question of personal taxation.

It is an important principle that people should keep more of the money they earn. And it is good policy to boost the incentives for work and enterprise.

Yesterday, we introduced a Bill that means the Health and Social Care Levy will not begin next year… it will be cancelled.

The increase in Employer National Insurance Contributions and dividends tax… will be cancelled.

And the interim increase in the National Insurance rate, brought in for this tax year…will be cancelled.

And this cut will take effect from the earliest possible moment, November 6th.

Reversing the Levy delivers a tax cut for 28 million people, worth, on average, £330 every year;

A tax cut for nearly a million businesses;

And I can confirm: the additional funding for the NHS and social care services will be maintained at the same level.

Mr Speaker,

I have another measure.

Today’s statement is about growth.

Home ownership is the most common route for people to own an asset, giving them a stake in the success of our economy and society.

So to support growth, increase confidence, and help families aspiring to own their own home, I can announce that we are cutting stamp duty.

In the current system, there is no stamp duty to pay on the first £125,000 of a property’s value.

We are doubling that – to £250,000.

First time buyers currently pay no stamp duty on the first £300,000.

We’re increasing that threshold as well, to £425,000.

And we’re going to increase the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.

The steps we’ve taken today mean 200,000 more people will be taken out of paying stamp duty altogether.

This is a permanent cut to stamp duty, effective from today.

And Mr Speaker,

I have another measure.

High tax rates damage Britain’s competitiveness.

They reduce the incentive to work, invest, and start a business.

And the higher the tax, the more ways people seek to avoid them, or work elsewhere or simply work less…

…rather than putting their time and effort to more creative and productive ends.

Take the additional rate of income tax.

At 45%, it is currently higher than the headline top rate in G7 countries like the US and Italy.

And it is higher even than social democracies like Norway.

But I’m not going to cut the additional rate of tax today, Mr Speaker.

I’m going to abolish it altogether.

From April 2023, we will have a single higher rate of income tax of 40 per cent.

This will simplify the tax system and make Britain more competitive.

It will reward enterprise and work.

It will incentivise growth.

It will benefit the whole economy and whole country.

And, Mr Speaker, after all, this only returns us to the same top rate we had for 20 years.

And that’s not all.

I can announce today that we will cut the basic rate of income tax to 19p in April 2023 – one year early.

That means a tax cut for over 31 million people in just a few months’ time.

This means we will have one of the most competitive and pro-growth income tax systems in the world.

Mr Speaker,

For too long in this country, we have indulged in a fight over redistribution.

Now, we need to focus on growth, not just how we tax and spend.

We won’t apologise for managing the economy in a way that increases prosperity and living standards.

Our entire focus is on making Britain more globally competitive – not losing out to our competitors abroad.

The Prime Minister promised that this would be a tax-cutting government.

Today, we have cut stamp duty.

We have allowed businesses to keep more of their own money to invest, to innovate, and to grow.

We have cut income tax and national insurance for millions of workers.

And we are securing our place in a fiercely competitive global economy…

…with lower rates of corporation tax…

…and lower rates of personal tax.

We promised to prioritise growth.

We promised a new approach for a new era.

We promised, Mr Speaker, to release the enormous potential of this country.

Our Growth Plan has delivered all those promises and more.

And I commend it to the House.

23/09/2022
Jacob Rees-Mogg – 2022 Statement on Shale Gas Extraction

The statement made by Jacob Rees-Mogg, the Secretary of State for Business, Energy and Industrial Strategy, in the House of Commons on 22 September 2022.

What a pleasure it is to be continuing on this theme—

Dame Angela Eagle (Wallasey) (Lab)

Get the right page!

Mr Rees-Mogg

Indeed, the hon. Lady is right to be saying that I need to find the right page because I am having some difficulty in finding the right page immediately, but do not worry. [Interruption.]

Mr Speaker

Order. Is there another copy we can give the Secretary of State? [Interruption.] He has got it.

Mr Rees-Mogg

I am very grateful to the right hon. Gentleman for asking his urgent question. I am glad to be able to announce that the moratorium on the extraction of shale gas is being lifted, and a statement about that has been laid before the House.

As I set out in the previous urgent question, it is important that we use all available sources of fuel within this country. It is more environmentally friendly to use our own sources of fuel than to extract them in other countries and transport them here at great cost, both financially and in terms of carbon. It is therefore something we need to revisit, and we need to revisit the seismic limits to ensure that shale gas extraction can be done in an effective and efficient way.

Edward Miliband

This is obviously a case of “the dog ate my homework”, and it is hardly surprising. Let us start by taking the Secretary of State’s excuse for lifting the fracking ban—that it will make a difference to the energy bills crisis. It will not, because gas is sold on the international market. The current Chancellor said so in February of this year:

“No amount of shale gas…would be enough to lower the European price”

of gas. In an article published yesterday, even the founder of Cuadrilla said that the Secretary of State is wrong. First, why does he not admit the truth that anyone who knows anything about this subject says his claim that fracking will cut bills is nonsense?

Next, let us come to safety. The 2019 manifesto, on which the Secretary of State and every Conservative Member stood, said:

“We will not support fracking unless the science shows categorically that it can be done safely.”

They are lifting the ban, but they cannot supply the evidence, and the British Geological Survey report published today certainly does not do it. So in the absence of the evidence, his approach is to change the safety limits. He says in his written statement laid before this House that

“tolerating a higher degree of risk and disturbance appears to us to be in the national interest”.

I look forward to him and his colleagues explaining his charter for earthquakes to the people of Lancashire, Yorkshire, the midlands, Sussex, Dorset and, indeed, Somerset who will be part of his dangerous experiment. Let me tell the Conservatives that we will hang this broken promise round their necks in every part of the country between now and the next general election.

The Conservative manifesto also said:

“Having listened to local communities, we have ruled out changes to the planning system.”

Does the Secretary of State stand by that promise, and how will he abide by the Prime Minister’s commitment to local consent? The truth is that he does not understand that we cannot escape a fossil fuels crisis by doubling down on fossil fuels. Renewables are today nine times cheaper than gas. The only way to cut energy bills and have energy security is with zero-carbon home-grown power, including onshore wind and solar, which his wing of the Conservative party hates and he continues to block. For communities in every part of our country, today shows that they can never trust a word this Government say again, and he has shown he is willing to break his promises to support dangerous fringe ideas that put the interests of fossil fuel companies above those of the British people.

Mr Rees-Mogg

There was plenty of energy in that, Mr Speaker, but it was, I am afraid, more sound and fury that signifies nothing. We know that shale gas is safe. It is safe in the United States, where it has been one of the biggest contributors to the decline in carbon emissions of any activity that has gone on in that country. We know, even if Labour Members wish to ignore it, that seismic activity of 2.5 and below on the Richter scale takes place millions of times a year across the world. Our standards for ground-level movements for construction work are double those that have ever been achieved by any shale gas exploration in this country. There is a huge margin over what we allow for building work against what has actually happened in terms of shale gas. The right hon. Gentleman seeks to deny the ordinary rules of supply and demand. He ought to be aware that when we increase supply and demand remains steady, that has an effect on pricing, and pricing is always set at the margin. The price of any commodity is set by the final user who demands that commodity. If supply exceeds demand prices fall, and any increase in supply helps to reduce costs.

But there is another point. We have—all of us— constituents with gas boilers, and we are going to have them for many years to come. Do we really want them to be dependent on strange dictatorships that wage war in this world, or do we want to have our own security, and our own supplies? Do we want to maximise what we receive from the North sea and from underneath our feet? This seems to me to be just good common sense. It is safe, it is shown to be safe, and the scare stories have been disproved time and again. The hysteria about seismic activity fails to understand that the Richter scale is a logarithmic scale. It seems to think it is a straight arithmetic scale, which of course it is not. Bringing on the supply will bring us cheaper energy, which we need, and that will help our constituents. It secures our supply, which will ensure that our businesses can continue to operate whatever the weather. This is of such importance, and it is sheer Ludditery that opposes it.

22/09/2022
Jonathan Reynolds – 2022 Speech on Supporting Business

The speech made by Jonathan Reynolds, the Shadow Secretary of State for Business, Energy and Industrial Strategy, in the House of Commons on 22 September 2022.

I welcome the new ministerial team to their posts.

The energy crisis poses a severe challenge to businesses of every size, many of which have been desperate for clarity and reassurance. While the Conservative party spent much of the summer distracted by its own internal drama, the Opposition spent that time arguing that the crisis demands a response commensurate with the scale of the challenge, paid for by a windfall tax on the excess profits that have accrued because of Russia’s illegal invasion of Ukraine.

While I welcome the Government’s damascene conversion to freezing energy prices, we must all acknowledge that for too many companies the news will have come too late to save them. Businesses cannot plan on speculation and briefings. It is regrettable that a Minister who respects the role of Parliament chose to avoid parliamentary scrutiny, instead opting for a sparse press release and a short media interview. That is why the Opposition have tabled this urgent question: to get the much-needed clarity on these plans that businesses desperately need.

May I ask the Secretary of State what, specifically, the review after three months will be looking at and what the criteria will be for determining whether to extend the support? Secondly, how will the taxpayer be protected from energy traders inflating prices, knowing that the Government will be picking up a substantial slice of the costs come what may? Thirdly, what support will the Secretary of State be offering to businesses in the long term to protect themselves from rising energy costs through efficiency measures and the transition to renewable energy?

I also ask the Secretary of State to address the elephant in the room: who is paying for this? The Government say that they cannot cost this package, but it is clearly expensive. This Government say that they can cut taxes, increase spending, increase borrowing and magically pay for it through the higher growth that, after 12 years in office, has completely eluded them. This is fantasy economics. It is a threat to British businesses and to the financial stability of the country. What can the Secretary of State say to reassure the country that these plans are robust, responsible and fair, as well as being sufficient to get us through the crisis and better protect businesses in the long term?

22/09/2022
Jacob Rees-Mogg – 2022 Statement on Supporting Business

The statement made by Jacob Rees-Mogg, the Secretary of State for Business, Energy and Industrial Strategy, in the House of Commons on 22 September 2022.

That is why I am saying that I am very grateful, Mr Speaker. I always think it is important that this House gets to know, and your generosity in setting a precedent where statements can be made on the days set aside for taking the Oath is, I think, a good one.

It is vital that businesses have the support that they need to pay their energy bills this winter. His Majesty’s Government are determined to grow the economy. We cannot do that if business becomes insolvent thanks to what is tantamount to blackmail by a malevolent state actor. His Majesty’s Government announced yesterday that they will provide a discount on wholesale gas and electricity prices for all non-domestic customers, whose current gas and electricity prices have been significantly inflated by global energy prices. That includes all UK businesses and covers the voluntary sector, such as charities, and the public sector, such as schools and hospitals. The scheme will apply to fixed contracts that have been agreed on or after 1 April 2022, as well as to deemed variable and flexible tariffs and contracts. It will be applied to energy usage for six months from 1 October until 31 March next year.

As with the energy price guarantee for domestic customers, in order to benefit from the scheme, customers do not need to take action. The discount will automatically be applied to their energy bills from 1 October. In terms of real-world savings, non-domestic users will start to see the benefits of the scheme in their October energy bills, which are typically received in November. The level of price reduction for each business will vary depending on its contract type, the tariff and the volume used.

We will publish a review of the operation of the scheme in three months to inform decisions on future support after March 2023. The review will focus in particular on identifying the most vulnerable non-domestic customers and on how the Government will continue assisting them with energy costs beyond the initial six-month period.

A parallel scheme—based on the same criteria and offering comparable support, but recognising the different market fundamentals—will be established in Northern Ireland. For those who are not connected to the gas or electricity grid, equivalent support will be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. Further detail on this will be announced shortly.

22/09/2022
Liz Truss – 2022 Comments on Help with Energy Bills

The comments made by Liz Truss, the Prime Minister, on 21 September 2022.

I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.

As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.

At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.

21/09/2022
Jacob Rees-Mogg – 2022 Comments on Help with Energy Bills

The comments made by Jacob Rees-Mogg, the Business Secretary, on 21 September 2o22.

We have seen an unprecedented rise in energy prices following Putin’s illegal war in Ukraine, which has affected consumers up and down the country and businesses of all sizes.

The help we are already putting in place will save families money off their bills, and the government’s plans for businesses, charities and public sector organisations will give them the equivalent level of support.

This, alongside the measures we are taking to boost the amount of domestic energy we produce to improve both energy security and supply, will increase growth, protect jobs and support families with their cost of living this winter.

21/09/2022
Ursula von der Leyen – 2022 Statement on Energy

The statement made by Ursula von der Leyen, the President of the European Commission, on 7 September 2022.

We are facing an extraordinary situation, not only because Russia is an unreliable supplier, as we have witnessed over the last days, weeks, months, but also because Russia is actively manipulating the gas market. I am deeply convinced that with our unity, our determination, our solidarity, we will prevail. And we have, over the last six months, during this war, very much increased our preparedness and we have weakened the grip that Russia had on our economy and our continent. We have done three things, as you recall: The first one was demand reduction. Demand reduction, so save gas in order to save it in the storage. We have created a joint storage, and this is really a success story, because now we are already at 82% with the joint storage in Europe. As you know, our goal was to reach 80% at the end of October. So we overshoot it, and that is good.

The second step that we have taken was: Diversify away from Russian fossil fuels. And you know that we have stopped the import of Russian coal. We are winding down the Russian oil. And we have been working very hard to diversify away from Russia towards other reliable suppliers, like for example the United States or Norway, Azerbaijan, Algeria and others. Actually today, Norway is delivering more gas to the European Union than Russia. And we were able, if you look at the cuts that Russia has done in gas, to completely compensate so far the gas imports through other reliable suppliers.

And of course, the third step is the most important one. This is massive investments in renewables. We have REPowerEU on the table. The renewables are cheap, they are home-grown, they make us independent. We will deploy renewables this year that are an equivalent to round about 8 billion cubic metres. So the renewables are really our energy insurance for the future.

But we also see that the Russian manipulation of the gas market has spillover effects on the electricity market. So there is, on the one hand, the Russian manipulation, but there are also other factors during this summer. We see the effects of climate change. We see the drought. Hydropower has been reduced by 26% in the European Union, and by 46% in Portugal. And we have the fact that we have less nuclear electricity in the European Union at the moment being. And this is the reason why we are now confronted with astronomic electricity prices for households and companies, and with an enormous market volatility. Therefore, we will put forward a set of five different immediate measures.

The first one is smart savings of electricity. What has changed over the summer, because of the elements I was just mentioning, is that we see that there is a global scarcity of energy. So whatever we do, one thing is for sure: We have to save electricity, but we have to save it in a smart way. If you look at the costs of electricity, there are peak demands. And this is what is expensive, because, in these peak demands, the expensive gas comes into the market. So what we have to do is to flatten the curve and avoid the peak demands. We will propose a mandatory target for reducing electricity use at peak hours. And we will work very closely with the Member States to achieve this.

The second measure: We will propose a cap on the revenues of companies that are producing electricity with low costs. The low-carbon energy sources are making in these times – because they have low costs but they have high prices on the market – enormous revenues. Revenues they never calculated with; revenues they never dreamt of; and revenues they cannot reinvest to that extent. These revenues do not reflect their production costs. So, it is now time for the consumers to benefit from the low costs of low-carbon energy sources like, for example, the renewables. We will propose to re-channel these unexpected profits to the Member States so that the Member States can support the vulnerable households and vulnerable companies.

The third measure is that the same goes, of course, for the unexpected profits of fossil fuel companies. Oil and gas companies have also made massive profits. Therefore, we will propose that there is a solidarity contribution for fossil fuel companies. Because all energy sources must help to overcome this crisis. Member States should invest these revenues to, as I said, support vulnerable households and vulnerable companies, but also to invest them in clean home-grown energy sources, as the renewables are, for example.

The fourth point is addressing the energy utility companies that must be supported to be able to cope with the volatility of the markets. Here, it is a problem of securing futures markets. And for that, liquidity is needed. These companies are currently being requested to provide unexpected large amounts of funds now, which threatens their capacity not only to trade, but also the stability of the futures markets. It is a liquidity problem. Therefore, we will help to facilitate the liquidity support by Member States for energy companies. We will update our temporary framework and enable thus state guarantees to be delivered rapidly.

The fifth and the last point: We aim at lowering the costs of gas. Therefore, we will propose a price cap on Russian gas. Of course, the objective is here very clear. We all know that our sanctions are deeply grinding into the Russian economy, with a heavy negative impact. But Putin is partially buffering through fossil fuel revenues. So here, the objective is: We must cut Russia’s revenues, which Putin uses to finance his atrocious war in Ukraine. And now our work of the last months really pays off. Because, at the beginning of the war, if you looked at the imported gas, 40% of it was Russian gas, since a long time. Today, we are down to 9% only.

So these are the five measures that we will discuss with the Member States at the informal Energy Ministers Council on Friday. These are tough times, and they will not be over soon. But I am deeply convinced that, if we show the solidary, the unity and we have the determination for that, we have the economic strength, we have the political will, that then we shall overcome.

13/09/2022
Jacob Rees-Mogg – 2022 Speech on Energy Price Capping

The speech made by Jacob Rees-Mogg, the Secretary of State for Business, Energy and Industrial Strategy, in the House of Commons on 8 September 2022.

May I begin by adding my voice to those of other right hon. and hon. Members in wishing Her Majesty the Queen well from this House? It is a matter of the gravest concern to all of us when our sovereign is unwell.

I congratulate my right hon. Friend the Prime Minister not only on her appointment, but on the way she has chosen to meet this energy challenge: with immediate and decisive action. I thank her for introducing this debate, for ensuring that the contents of her speech were not leaked beforehand, which shows a proper respect for Parliament, and for seeing that her policy is robustly debated in this Chamber.

I thank the Chancellor, my predecessor at BEIS, for paving the way for this announcement. I look forward to working very closely with him to ensure that households and businesses are protected this winter and beyond. I also thank the right hon. Gentleman the shadow Business Secretary for his kind words about me in his opening comments. Indeed, we have had a friendly personal relationship over some years. I hope we can continue that while having, no doubt, some less friendly debates on these fundamental issues.

We need to understand why we are here. We are here because Vladimir Putin has weaponised energy supply as part of his barbarous attack in Ukraine. Last week, he turned off the main pipeline to Europe. It is a deliberate blackmail tactic against the west. Britain’s energy system must be strengthened and diversified to protect our homes and our businesses.

As we have heard over the course of this debate, our plan comes in two parts. First, we must get our constituents safely through this winter. We know how concerned people are about expensive energy bills. Some of the projected figures have been truly alarming and we are intervening to stave off an unprecedented crisis. It would be wrong to stand by as people struggle. I give the assurance to the hon. Member for St Albans (Daisy Cooper) that our plan for businesses will include care homes. That is fundamentally important. It would be madness to ignore other businesses too, as they see their bills spiral out of control.

The new energy price guarantee will ensure that bills are kept down, remaining at around £2,500 a year for the average consumer. This intervention reflects the severity of the situation we find ourselves in. The Government-funded support will take effect from 1 October, saving the average household around £1,000. That will be combined with the original support we announced.

I reassure the hon. Member for Kilmarnock and Loudoun (Alan Brown), who raised this question first, that we will act to help people on the lowest incomes. The Government have already announced a package of support that will see 8 million of the most vulnerable households receive £1,200 of one-off support to help with the cost of living, and all domestic electricity customers will receive £400.

We know that from biscuit makers to bars, businesses are worried about their bills. The Government’s price guarantee for businesses, which will be announced shortly, will bring down energy bills for the acute phase of the crisis. All businesses on variable contracts, whose fixed-price contract is coming to an end or that have agreed a fixed-price contract recently will be eligible to enter the new Government-guaranteed contract. That will apply to businesses of all sizes and include schools, nurseries and care homes, as well as manufacturers and retail. That is the short term.

Quite rightly, Opposition Members, particularly the Leader of the Opposition, asked who is going to pay for this. The energy bills guarantee is not a direct loan to customers or to energy suppliers. However, as the price stabilises in due course, the Government will need to consider when and how to recoup at least some of the cost of the scheme. The Opposition are all for taxation, Madam Deputy Speaker. That should not surprise you, as you know the inner workings of the Labour party better than most. None the less, all we get from the other side is tax, tax and tax again. It may be that we are at the highest rate of taxation in 70 years, but the answer is always more tax. It is their only answer to any question. Even the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), the leader of the SNP, who used to be a very successful businessman, and therefore may know a thing or two about this, was advocating higher taxes. Now that he is a humble crofter, perhaps he thinks that is easier.

Ian Blackford

I am grateful to the right hon. Member—we go back a long way. He is, of course, right that I have a background in the City. No doubt he has read Shell’s quarterly figures, as I have done. Off the top of my head, the return on capital employed has gone up from 3% to 13%. By anyone’s definition, that is excess profit. It is right at times such as this that we take our share of that.

Mr Rees-Mogg

That is structurally wrong. Taxes need to be certain. If we are to encourage investment—and we need investment in this country—the tax policy has to be set for the long term. We cannot retrospectively pick people’s pocket; we need to tell them what the charge will be beforehand and keep it clear.

John Redwood

Would the Business Secretary like to remind the House that the Republic of Ireland deliberately chose much lower corporation tax rates than the rest of the advanced world and collects a far bigger proportion of its economy in taxes on business than we do?

Mr Rees-Mogg

My right hon. Friend will be glad to note that the Chancellor of the Exchequer, from a sedentary position, is agreeing with him. My right hon. Friend is a higher authority on this than I am, but we know that the cut in corporation tax led to an increase in receipts. Higher taxation is not the answer.

Looking at the long term, we must fix our broken energy system. We must have energy independence and become a net exporter of energy by 2040. We cannot be held captive by volatile global markets or malevolent states. We must tackle the root causes of the problems in our energy market by boosting domestic supply. We will invest in renewable energy with vim and vigour, accelerating the deployment of wind, solar and—particularly exciting, I think—hydrogen technologies. To reassure my right hon. Friend the Member for Pendle (Andrew Stephenson), we will invest in nuclear technologies, which also provide us with cheap and clean electricity.

I note that my hon. Friend the Member for Ynys Môn (Virginia Crosbie) said that her constituency is known as energy island. That is exactly what we need in this country. My hon. Friend the Member for Gloucester (Richard Graham) noted that not just Ynys Môn but the whole of the United Kingdom is energy island. We must use all the resources available to us, including tidal energy, as my right hon. Friend the Member for Maidenhead (Mrs May) said. This is a great opportunity.

James Sunderland (Bracknell) (Con)

Will my right hon. Friend give way?

Mr Rees-Mogg

I would love to give way, but time is very short.

We are fully committed to green growth and the green industrial revolution, and to net zero by 2050, but we have to get there, and to get there we are going to need oil and gas. We are therefore going to have a new oil and gas licensing round, which we hope to launch in October. I reassure the right hon. Member for East Antrim (Sammy Wilson) that we will work with communities and individuals to use shale gas as well, with the support of those who may be affected. The pause on extraction is being lifted through a written ministerial statement and will come into effect immediately. This will allow us to gather further data on seismic safety. It is fundamentally important, as any economist knows, that pricing is set at the margin. If you have more, it helps bring prices down. That is fundamental. It is not in any way contradictory to what we have said before. We will also have legislation to support people in Northern Ireland, which is fundamentally important. We must be one United Kingdom in how we do this.

I am very grateful for the many contributions that were made in the course of the debate, including by my hon. Friend the Member for Worcester (Mr Walker), my right hon. Friends the Members for Central Devon (Mel Stride), for Forest of Dean (Mr Harper) and for South Northamptonshire (Dame Andrea Leadsom), my hon. Friend the Member for Bolton West (Chris Green), my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), my hon. Friends the Members for East Surrey (Claire Coutinho), for Watford (Dean Russell) and for Gloucester, my right hon. Friend the Member for Basingstoke (Dame Maria Miller), and my hon. Friends the Members for Ynys Môn, for Dudley South (Mike Wood) and for Sevenoaks (Laura Trott). I commend the motion on the Order Paper to the House.

09/09/2022
Ed Miliband – 2022 Speech on Energy Price Capping

The speech made by Ed Miliband, the Labour MP for Doncaster North and Shadow Secretary of State for Business, Energy and Industrial Strategy, in the House of Commons on 8 September 2022.

Before I address the issues in this debate, I send my best wishes to Her Majesty the Queen and her family. I know that all our thoughts, and the thoughts of the country, are with them at this time.

There are two central questions at the heart of this debate: have the Government responded to the emergency that we face in a way that is fair, and do they recognise the fundamental truth that the only way to end this crisis in the long term is to get off fossil fuels? I am afraid that, on today’s evidence, the answer to both questions is no.

Let me start by discussing the plan unveiled by the Prime Minister earlier. Labour led the way on the energy price freeze. We called for it, despite doubts, including from the Prime Minister. I am glad that she has admitted she was wrong about that, because even though there have been disagreements, we have heard throughout this debate—I thank all right hon. and hon. Members who have spoken—agreement about the scale of the emergency facing families. That is why we spent the summer fighting for the energy price freeze. However, the devil will be in the detail and people will want to see the small print. The problem is that bills still seem to be rising by at least £129 a year.

The even bigger problem, and the fundamental issue in this debate, has been who pays. The right hon. Lady has been clear that she is against a windfall tax. We know the effects of that: it means that all the costs are loaded on to the British people. Let us dispose of the argument that this issue is somehow not about higher taxes; in the end, this intervention will have to be paid for by the British people in higher taxes. So the question is not whether we are going to tax to pay for it, but whom we are going to tax.

Let us take the arguments we have heard in this debate against the windfall tax and take them apart one by one. First, we have the argument that a windfall tax will reduce investment. Is there any truth to that? As my right hon. and learned Friend the Leader of the Opposition said in his eloquent speech, the BP boss says that it will not have an effect on investment; when asked what investments it would affect, he said, “None of them.” So even BP does not believe the argument the Prime Minister is mounting in defence of BP.

Next, we have heard the argument that a windfall tax cannot raise extra money beyond what the former Chancellor announced. Let us dispose of that argument, too. I gather that there is a dispute about the figure of £170 billion in excess profits. The current Chancellor is not here, but I say to the Prime Minister: publish the Treasury’s estimate of excess profits. If it is not £170 billion—we have it on good authority that it is—the estimates should be published so that we can all see them for ourselves.

Dame Andrea Leadsom rose—

Edward Miliband

I am not going to give way, because I have little time for the wind-up.

In any case, we know that tens of billions could be raised. First, there are significant resources from the windfall tax on the oil and gas companies, including through abolishing the absurd £5 billion loophole proposed by the Chancellor.

Next, we come to the electricity generators. We need to de-link the price of gas and electricity, but that will not happen for a number of years. In the meantime, these companies are making enormous profits. Onward, a conservative think-tank, said this week that up to £10 billion a year can be raised, while the Tony Blair Institute gave a figure of £14 billion. We could even have a cross-party consensus on this. Why would we leave this money in their pockets when it could help to pay for the action on energy?

The alternative that the Government appear to have adopted is to have a voluntary agreement whereby companies decide to opt in to reduce prices. I say to the House that that is a terrible proposal—it came originally from Energy UK—because in exchange for giving up some profits now, the deal will lock in higher prices over the next 15 years. This is not a good deal for consumers. A chart published by Energy UK—I am a nerd, so I read these charts—precisely sets out the fact that consumers will pay through the nose over the 15 years ahead.

The third and final argument we have heard in this debate, and indeed from the Prime Minister, is that a windfall tax is somehow unfair to business. Let me take advantage of her being present to recommend that she reads an article by Mr Irwin Stelzer, a long-time confidant of Rupert Murdoch. In my experience of Tory leaders, it is worth their while to stay on the right side of him. Mr Stelzer wrote:

“Now is the time for a windfall profits tax”.

He continued:

“People who believe in capitalism believe that private sector companies should be rewarded for taking risks…not be rewarded for happening to be around when some disruption drives up prices, producing windfalls.”

In this case, we are talking about the barbaric invasion of Ukraine.

What principle is the Prime Minister defending here? What is the hill on which she stands? Is the principle she really wishes to defend that oil and gas companies should pocket any scale of profits, however bad the political instability; that however large the crisis and however gigantic the windfall, taxation must not change; and that the British people must take the strain? That is the effect of her argument. The argument I am making is not one simply made by leftie suspects such as me: Margaret Thatcher, her heroine, imposed a windfall tax in 1981; George Osborne, whom the Prime Minister worked for, imposed one in 2011; and the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), her very close friend—[Interruption.] I think she is disavowing George Osborne, but I can understand that. As I was saying, the right hon. Member for Uxbridge and South Ruislip imposed a windfall tax two months ago. So the Prime Minister is flying in the face of logic, fairness and common sense, and is engaging in tens of billions of pounds of borrowing that she does not need to engage in. Let us never, ever hear again lectures from the Conservative party on fiscal responsibility after the decisions it is making today.

That brings me to the longer term. Let us face facts: the only way out of this crisis is to get off fossil fuels. I can do no better than quote the words of Lord Deben this week. He said that

“if you want to deal with climate change and you want to deal with the cost of living crisis and oil and gas prices, you have to do the same things. Renewable energy and energy efficiency, they are the answers.”

I would add nuclear to that, but the central point is that solar and wind energy are nine times cheaper than gas. We cannot solve the fossil fuel crisis by doubling down on fossil fuels, but that is what the Government have done today with this announcement on fracking. My right hon. and learned Friend the Leader of the Opposition quoted the words of the new Chancellor that fracking would make no difference to prices and would take years to come on stream. I do not know where the Prime Minister got the six months she mentioned in her statement, but the Chancellor was saying only a few months ago that it would take 10 years to get anything out of the ground on fracking.

This is where I come to the Business Secretary, whom I congratulate. He and I have known each other a long time and we have had a good personal relationship—perhaps we can form an unlikely alliance on the issues that we face. I want to make a serious point to him about some of what he has said in the past, because it relates to these issues. He has said a number of things about climate. I have been part of the work done on building a cross-party consensus on climate for getting on for 20 years in this House, and we have to look at some of what he has said about climate. He has questioned the modelling and whether there is anything we can do about the climate crisis. In 2017, he said:

“If we were to take action now, to try and stop man-made global warming, it would have no effect for hundreds or thousands of years”.

He went on to say that the cost of climate action is “probably unaffordable”. I quote those words because this is flirtation with climate denial. Never in the past 20 years have we heard these words from someone in charge of tackling the climate crisis, and we should not normalise it. The bipartisan consensus on climate change has been hard won. We have worked across parties over two decades to secure it and there is a heavy responsibility on the Business Secretary to be part of maintaining that consensus, not destroying it.

The problem for the Business Secretary, and the reason he faces that challenge, is that this problem is not just about the climate crisis, because not taking action on green energy is a recipe for higher bills. The ban on onshore wind is driving bills higher and gas imports higher, and it is terrible for the climate. The blocking of solar, which the Prime Minister supports, is driving bills higher and gas imports higher, and it is terrible for the climate. The refusal to act on energy efficiency is driving bills higher and gas imports higher, and it is terrible for the climate. There is nothing more anti-business than scaring off investors in renewables with climate denial.

In conclusion, here is the truth about this new Government, only two days in. They have revealed their true colours. We face a social and economic emergency. In such an emergency, what matters is who you stand up for, who shoulders the burden and the choices you make. The Government have chosen to stand up for the oil and gas companies, not the British people, who will pay for this action in the long-term. The Government cannot answer the challenges of energy security. They cannot answer the challenges of energy bills. They cannot answer the challenges of the climate crisis. And they have the wrong priorities for Britain.

09/09/2022
Felicity Buchan – 2022 Speech on Energy Price Capping

The speech made by Felicity Buchan, the Conservative MP for Kensington, in the House of Commons on 8 September 2022.

I warmly welcome this bold, decisive and comprehensive measure, which is exactly the right thing to do. I particularly welcome the measures on communal heating networks, which are huge in my constituency with all my mansion blocks.

I like that we are focused on self-reliance. I tried to intervene on the Leader of the Opposition, because he rightly talked about self-reliance when it comes to energy, but part of the reason why we are not self-reliant is because, between 1997 and 2010, the Labour party failed to invest in renewables and other sources of energy, so our dependence on gas went from 32% to 46%.

All the measures announced today are welcome. I welcome the commitment to net zero, and I welcome the investment in renewables.

09/09/2022