Category: Energy

The speech made by Stephen Farry, the Alliance MP for North Down, in Westminster Hall, the House of Commons, on 16 November 2022.

I beg to move,

That this House has considered energy price support to households and businesses in Northern Ireland.

It is a pleasure to serve under your chairmanship. Sir Gary. I welcome the opportunity to have this debate and I am pleased that the Minister has joined us. The main purpose is to focus on energy cost support for households and businesses in Northern Ireland, with a focus on the urgent delivery of the £400 energy support scheme and the payments to those using home heating oil.

I am extremely concerned about the impact of delays in support for Northern Ireland households, and the ongoing lack of clarity around when that support will arise. The UK Government have yet to clarify whether the £400 energy support and the £100 in support for oil-reliant households will be made available to Northern Ireland.

I will give a few words on the broader context. I appreciate that the current energy cost crisis reflects a range of international and domestic factors. Beyond the short-term energy support interventions, there are clear imperatives around insulation and other energy-efficiency measures, and diversification of energy supply, especially in relation to renewables.

Northern Ireland has some of the most challenging rates of poverty and other social and economic indicators in the United Kingdom, including low productivity, high economic inactivity and reliance on benefits. It also has a different energy market from the rest of the UK, with different suppliers and a different profile of energy sources, and with its connectivity on the island of Ireland. Most notably, almost 70% of Northern Ireland households use home heating oil, compared with less than 5% in the rest of the UK.

Northern Ireland is already facing a series of unprecedented risks. Our political institutions have collapsed. There are huge challenges to consumer and business confidence, creating enhanced risks to the economic outlook.

Jim Shannon (Strangford) (DUP)

I congratulate the hon. Member for North Down (Stephen Farry) on securing this debate. It is a great subject for us back home. The welfare of our local businesses is extremely important. He will know that our family-run and smaller businesses are the backbone of our constituencies—his, mine and those of other Members here—making them unique.

A local Japanese restaurant in my constituency that has only been open for about six months has seen an increase in its electricity bills of £900 to £3,000 per month. Should this remain an issue, it is clear that jobs will be lost and the business forced to close. Does the hon. Member agree that more consideration must be given to the long term—not just the next four months, but beyond—because businesses are clearly on the brink of closing?

Sir Gary Streeter (in the Chair)

Order. Just a reminder that interventions should be brief, Jim.

Jim Shannon

I thought that was brief.

Sir Gary Streeter (in the Chair)

That was not brief.

Stephen Farry

By Jim’s standards, it was. I am grateful to the hon. Member for that intervention. I agree with him about the looming cliff edge that will come next year. It is also relevant to stress the issue of spending power in the economy, particularly in the run-up to Christmas for the hospitality sector.

Delivery of energy support should have been implemented by the Northern Ireland Executive. Normally, Northern Ireland would receive Barnett consequentials, based around equivalent spending in Great Britain, and would therefore have the scope to design or modify schemes to address local circumstances. Delivery of the £400 payments would have been implemented by now in those circumstances.

Furthermore, the size of the Barnett consequentials may well be significantly greater than the value of support that comes from direct provision from the UK Government to households and businesses. The Government have recognised that it would have been much easier for delivery to have been through a devolved Executive. However, in a political vacuum, it has fallen to the Government to intervene. I acknowledge the need for that, given the circumstances.

The energy price guarantee is now in place for Northern Ireland. That said, there are concerns about the scale and duration of the support, particularly what happens from next April onwards. The hon. Member for Strangford (Jim Shannon) has already touched on that point. For today, the most pressing issue is clarity on the timescale for the delivery of the £400 energy support payments, and how that will be phased, plus the implementation of the home heating oil support.

Despite those pressures, unlike in England, Wales and Scotland, households in Northern Ireland have not yet received a penny of the £400 energy support. There had been indications that we would receive that support in November, one month after the rest of the UK, yet it is now looking increasingly unlikely to be delivered this side of Christmas. We are also hearing that the payment might now be staggered, which means that households will have to wait even longer into next year.

Claire Hanna (Belfast South) (SDLP)

I thank the hon. Member for securing this debate on such an important issue—he is always current. I do not know of any suppliers that will deliver less than 200 litres of heating oil, so the £100 support that was proposed would not even get a tank filled—people will have to put in about £150 before they can even avail themselves of it. Does he therefore share my concern about what would happen if that support were staggered or delivered in a piecemeal way?

Stephen Farry

Absolutely. There are huge issues in recognising the subtleties of what is efficient for making deliveries in the home heating oil market and the minimum size of delivery, and £100 pounds will not cover the minimum order volume. It is also worth stressing that there are economies of scale. The larger the order, the cheaper it is proportionally, so the households that are struggling most will be hit doubly by that pressure point.

Paul Girvan (South Antrim) (DUP)

Another big problem that we have in Northern Ireland is supply and the volume of storage. Kerosene works out around 7p a litre more expensive than in any other region of the United Kingdom.

Stephen Farry

I am grateful to the hon. Member for that intervention, which again highlights how the situation in Northern Ireland is different from the rest of the UK, and reinforces the importance of trying to tailor solutions to address our very particular circumstances.

It also emerged this week that the UK Government’s joint taskforce responsible for delivering the scheme into Northern Ireland has met only twice. While households across the rest of the UK are being insulated from the worst effects of the crisis, families in Northern Ireland are still waiting for this lifeline and have no clarity about when it will arrive. It is not tenable to argue that, because the money will be coming next year, Northern Ireland will not be missing out. There must be a real urgency for getting this resolved now.

Disposable incomes in Northern Ireland are being particularly eroded by rising energy costs. This represents a grave threat to the wellbeing of households. People in Northern Ireland are also being left behind in terms of their ability to access energy support and are suffering as a result. A survey by National Energy Action in Northern Ireland in June indicated that 45% of Northern Ireland households were already spending more than 10% of their total household income on energy costs. This will be even higher now. That has resulted in dangerous coping mechanisms. Some 80% of Northern Ireland homes admitted to rationing their use of central heating in an effort to reduce costs, and one in 10 households has resorted to skipping meals to ensure that they have enough money to pay for their energy.

Jim Shannon

The hon. Gentleman is being incredibly generous, and I thank him for that. Some figures I got from Northern Ireland today indicate that an estimated 12% of Northern Ireland families live in absolute poverty—it is even worse than normal poverty, if there could be such a thing. Does that not support his case for why we need urgent help in Northern Ireland now?

Stephen Farry

I am grateful again to the hon. Member for his intervention. Households are facing, in effect, destitution, which is taking poverty to the nth degree in terms of their ability to cope. Similarly, reliance on food banks has increased by 76% in Northern Ireland over the past three years, which is way in excess of the increase in any other UK region. We cannot afford to see households tipped into poverty, more children going hungry, or more pressure on the national health service due to worsening physical and mental health.

These behaviours put households at significantly increased risk of detrimental impacts on their health and wellbeing, and people in 75% of households admitted to being stressed, anxious or worried about paying for the cost of their energy, either at present or over the winter months ahead.

Fuel poverty organisations in Northern Ireland are already overwhelmed by demand. NEA in Northern Ireland has seen significant rises in the number of households seeking emergency support. Indeed, it was forced to suspend its referral system temporarily in October because of unsustainable levels of demand on the service, a trend that has now been replicated across other organisations in the sector.

There will also be a knock-on consequence for consumer spending. Potentially £300 million of spending power is at risk. This is particularly crucial in the run-up to Christmas, with many businesses, which are struggling themselves, depending on Christmas trade to survive. It is make or break time for them.

Northern Ireland is also suffering because we have a very different energy market from the rest of the UK, and the UK Government’s energy price guarantee does not reflect that. Although households using gas have been protected from price rises through the Government’s energy price cap, those who use oil are yet to receive the paltry £100 of support. That is a mere £100 in heating assistance, which applies to almost 70% of Northern Ireland households. Therefore, the vast majority of homes in Northern Ireland have not received a penny in support for heating cost pressures so far—that is, those households that do not use their electricity for heating.

We know that oil prices have not risen as much as gas prices. Nevertheless, £100 is simply not enough, particularly given the up-front costs of filling an oil tank. The Consumer Council for Northern Ireland estimates that it now costs £460 to fill a typical 500-litre tank, compared to £269 this time last year. In practice, as the hon. Member for Belfast South (Claire Hanna) has already mentioned, there is not a supplier in Northern Ireland that will provide a tank fill for less than 200 litres, meaning that households need to find an additional £150 before they can even avail themselves of support. Orders for oil need to be larger in order to access those economies of scale.

We also still do not know when or how this £100 will materialise in Northern Ireland. Not only is the assistance for Northern Ireland households late, but it is lower than the assistance provided to those in the rest of the UK, if we make that comparison between oil and gas costs.

There are also problems and distortions that come from the use of electricity bills to help oil customers. It is likely either that those people will end up with a credit on their electricity bill that they cannot access at this time of greater stress, or that this will lead to people switching from oil heating to using electric fires, which are potentially more expensive, pose greater health and safety risks, and put further strain on the electricity grid.

Finally, I am also worried about the looming cliff edge that is faced not only by households but by businesses next April. Recent research by Danske Bank indicates that energy prices rank highly among the key concerns for businesses in Northern Ireland. The latest data from the Office for National Statistics shows that 58% of businesses in the food and drink sector say that their energy prices were their main concern in November, up from 39% in October. Businesses are also extremely concerned about the risks associated with consumer spending, and the current impasse on the energy assistance for Northern Ireland puts local businesses at a direct disadvantage in that respect. I urge the Government to acknowledge that most businesses will likely need continued support, and to confirm that they will cast the net widely in that regard.

In summary, the human costs of this energy crisis are very real. I suspect that the ongoing uncertainty about post-April assistance will only serve to fuel the economic costs, as consumer spending and business investment will be constrained as a result. I urge the Government to provide assistance and greater clarity as a matter of extreme urgency, for the good of the people of Northern Ireland, the business community and indeed the broader economy, all of which will ultimately have fiscal consequences for the UK Government if conditions further deteriorate.

I am grateful to the Minister for his presence today. I will focus on the most pressing questions that I hope he will respond to, among other comments that he may wish to make. When and how will households receive the £400 of energy support? Will the Government review their calculation and the level of home heating oil support, and how is that support to be delivered?