Tag: 2022

PRESS RELEASE : Autumn Statement – PwC comments on the economic outlook [November 2022]

The press release issued by PWC on 17 November 2022.

Barret Kupelian, senior economist at PwC, comments on the Autumn Statement:

“We knew it wouldn’t be pretty, but today’s Autumn Statement demonstrates just how challenging the UK economic situation is, with the policies announced marking a return to Treasury orthodoxy. The Chancellor today announced a large fiscal consolidation to the tune of £55 billion, but it is his specific choices about both the form and the timing of when his policies will be delivered that didn’t make his statement.

“First, he decided to shoulder c.55% of the fiscal consolidation on spending cuts. The philosophy adopted by the Chancellor was similar but not as extreme to what George Osborne had followed in the Emergency Budget in 2010 where he chose to focus around three quarters of the policy decisions on spending cuts. Despite focusing on spending, the OBR estimates the tax revenue to GDP ratio will be at its highest sustained level since World War II, to almost 45% by FY 2027/28. Second, the overwhelming large proportion of the spending decisions come into effect in FY 2025/26, which is after the life of the current Parliament (see chart).

“The fiscal implications of the policy choices made in the Autumn Statement depend on how the economy fares in the future. On this, our high-level observation on the economic backdrop assumed by the OBR is that it is gloomy in the short-term but brighter in the medium-term. Specifically, the OBR assumes that there will be a recession next year, coupled with inflation. In practical terms this means economic output will return to pre-pandemic levels by the end of 2024, which is a significantly worse performance compared to all other G7 economies. The impact on the labour market is for unemployment to increase by half a million, followed by a gradual decrease in the subsequent years.

“Soberingly, this means that the combined impact on households will be to erode real household disposable incomes by a cumulative 6.5% relative to 2021 levels. This type of contraction has never been recorded in Britain’s post war history.

“On a more hopeful note, the OBR assumes financial markets’ forecasts on the path of interest rates, which are higher than those of professional forecasters. If the view of professional forecasters prevails, then this could mean lower debt repayments than those forecast by the OBR”.

November 19, 2022
PRESS RELEASE : Autumn Statement – PwC comments on new National Living Wage and National Minimum Wage rates [November 2022]

The press release issued by PWC on 17 November 2022.

John Harding, leader of PwC’s Employment practice, says:

“Following recommendations by the Low Pay Commission, the Chancellor’s announcement that the National Living Wage (NLW) will increase by 9.7% and the National Minimum Wage (NMW) will increase by similar levels from 1 April 2023, will be welcomed by the 2 million employees who are expected to benefit.

“A full time worker aged 23 or older currently on the NLW will see the biggest ever increase to £10.42 per hour. These increases mean that the Government is on track to meet its commitment to have a NMW equal to two-thirds of median earnings (for workers aged 21 and over) by 2024.

“This commitment supports the Government’s ambition to create a high productivity, high wage economy and a fairer society. But an employer with 200 employees paying at the National Living Wage will now face an increase of over £500,000 in their employment costs as a result. So while the proposed increases look good for employees, they will create challenges for many employers in industries such as retail and hospitality who traditionally employ large numbers of workers close to the NLW. In addition employers that also pay above the NMW levels are likely to be impacted as employees look to retain the differentials.

“Finally, the rules governing the calculation of NLW and NMW are complex and have been subject to significant changes in April 2020. Given this increase and how many employers will now have employees caught by the NMW regulations, they should be taking the time now to understand what impact these changes will have on their current operations as well as their future employment models to ensure they are not breaching the rules inadvertently. The financial and reputational implications of a NLW or NMW breach are significant and include penalties of up to 200% and being publicly named as a non compliant employer by the Government.”

November 19, 2022
PRESS RELEASE : Autumn Statement – PwC comments on personal and capital tax measures [November 2022]

The press release issued by 17 November 2022.

Commenting on the personal tax measures announced at today’s Autumn Statement, Laura Morris, tax partner at PwC, says:

“HMRC is expecting to collect additional revenues of 13bn by 2028 as a result of the personal tax measures announced today. Nearly 30% of this will come from the reduction in the 45% tax threshold with approximately 23% each coming from the reduction in the dividend allowance and vehicle excise duty for electric vehicles.

“While the freezing of thresholds brings more people into higher tax brackets as wages and incomes increase, it’s clear that savers and people who ‘have more’ were the biggest focus of the personal tax changes announced today.

“The reduction in the threshold for the 45% tax rate to £125,140, brings it in line with the point at which individuals also lose their personal allowance. This means people will pay an effective tax rate of 60% on income between £100,000 and £125,140, and 45% on income above this.

“Threshold freezes create ‘fiscal drag’ whereby tax receipts rise because tax bands are not increasing in line with income and wage increases. For the maximum impact to be felt in terms of increased tax revenue, employment needs to hold up and wages need to continue to rise.

“The reductions in annual exemptions for Capital Gains and Dividend Tax will bring more people within the scope of these taxes and increase the tax return compliance burden for both individuals and potentially HMRC.”

Commenting on capital taxes, Alex Henderson, tax partner at PwC, adds:

“The Chancellor has announced a wide range of seemingly technical and limited changes to the tax system to raise taxes but they will have significant practical consequences. Many more people will now find themselves caught by the new lower thresholds which could mean we see behavioural changes. If you put yourself in the shoes of someone considering selling or investing in an asset, you may well delay your decision due to the threshold changes, but also due to the Chancellor’s signalling of a future direction of travel aimed at taxing capital gains more heavily.

“There will be a knock-on impact on the complexity of the tax system. The capital gains relief is only available to the most wealthy, but it does mean more smaller gains will now enter the tax system, adding to complexity for taxpayers and HMRC alike. The question is whether there will be any significant uptick in tax receipts resulting from these changes after the costs and behavioural changes are factored in.

“Ultimately all taxpayers value clarity and stability when it comes to taking a longer term view and unfortunately even relatively technical changes when they come seemingly every year undermine confidence.”

November 19, 2022
PRESS RELEASE : Autumn Statement – PwC comments on general tax and R&D [November 2022]

The press release issued by PWC on 17 November 2022.

Jon Richardson, head of tax policy, PwC, says:

“The Chancellor delivered on the promise that there would be few rabbits out of the hat on tax for this Statement. The bulk of extra revenue raised has come from freezing or reductions in allowances as well as the expected increase in the energy windfall tax. There was some positive news on business rates but the net impact is the UK is now facing a record tax burden.

“Apart from the additional tax there is a hidden cost to the announcements which is the additional tax compliance burden – as tax free allowances reduce, more income and gains are brought into the tax net which will need to be reported on tax returns for the first time.

“The Chancellor talked a lot about growth but with the corporation tax rate going up to 25%, no replacement to the super deduction and a net reduction in R&D tax relief, the UK’s tax competitiveness is significantly deteriorating.”

Rachel Moore, R&D tax partner, PwC

“The Chancellor has given large companies a surprise and much welcomed bonus by increasing the headline R&D credit rate from 13% to 20% resulting in a change in cash value from 10.5% to 15% (after taking account of the change in corporation tax rate). However this is being more than paid for by a significant reduction in credits available for SMEs where the rate of relief for loss making companies nearly halves from 33% to 18.6%. This rebalancing of rates between the two schemes will result in more than a £1 billion of extra funds for the exchequer.

“While it is widely recognised that there are issues in the SME market, this seems to be a blunt approach which penalises all claimants and does not tackle the underlying issues. It is also a double whammy for SMEs operating globally who will see claims reduced by the previously announced exclusion of overseas costs from claims. These changes will particularly impact the life sciences sector who depend heavily on R&D credits for funding.”

November 19, 2022
PRESS RELEASE : Autumn Statement – PwC comments on energy consumption reduction target [November 2022]

The press release issued by PWC on 17 November 2022.

Commenting on today’s Autumn Statement, Zubin Randeria, ESG Leader, PwC UK commented:

“The tricky balance between protecting tax revenues while encouraging sustainable behaviour was made clear in the Autumn Statement. On one hand, we heard a renewed commitment to reduce greenhouse gas emissions by 68% by 2030, on the other electric vehicles will be subject to road tax by 2025. With tax incentives expensive, reducing energy consumption will be key to realising our climate ambitions.

There is a clear imperative to reduce energy consumption as one aspect of keeping increased costs down, but by setting out a national ambition to reduce energy consumption by 15% by 2030, the Government is also showing its commitment to the Glasgow Climate Pact.

“Hitting emission reduction targets will require collective action by every household and business in the country and brings with it a chance to make lasting changes to our behaviours when it comes to energy use.

“The new Energy Efficiency Taskforce can play an important role in moving us close to Net Zero but there should be no underestimating the scale of the challenge ahead. It’s encouraging then, that alongside direct support to counter steep energy prices, the government is aiming to introduce a range of cost-free and low-cost steps to reduce energy demand.

“A key aspect of hitting this necessary target is reducing energy consumption from buildings and industry, as highlighted in the Autumn Statement. Our Green Jobs Barometer research has shown that can only be achieved by investing in retrofitting – which could not only help the UK hit Net Zero, but can sustain upward of 500,000 jobs.”

November 19, 2022
PRESS RELEASE : Autumn Statement – PwC Chair Kevin Ellis comments on skills and education [November 2022]

The press release issued by PWC on 17 November 2022.

Kevin Ellis, chair and senior partner at PwC UK, said:

“It’s good to see the Chancellor’s focus on skills and education, and without lots of bitty new initiatives. Instead, the announcement that Sir Michael Barber will review the implementation of a skills reform programme is welcome. We need a big picture approach. Employers like PwC that rely on a strong pipeline of talent will be keen to support this important work, which links to other priorities including today’s renewed commitment to the Glasgow Climate Pact, and making the UK the ‘world’s next Silicon Valley’.”

November 19, 2022
James Cleverly – 2022 Speech at the Manama Dialogue in Bahrain

The speech made by James Cleverly, the Foreign Secretary, in Bahrain on 19 November 2022.

Your Royal Highnesses,

Your Excellencies,

Ladies and gentlemen,

Thank you for inviting me to speak here today. When Britain opened our Embassy here in Bahrain, our diplomats could look directly over the waters of the Gulf and watch dhows carrying pearl divers to the northern oyster beds.

Yet today our Embassy is almost half a mile from the coast, not because it has moved, but because Bahrain has moved the sea by reclaiming land that once lay beneath the waves.

All around us, the Arabian Peninsula has experienced one of the swiftest transformations in history, wrought by the power of hydrocarbons, allowing spectacular cities to rise from empty deserts and entire countries to achieve prosperity, great prosperity, within a single lifetime.

The lesson I draw is that when our friends in the Gulf and the wider region decide to make change happen, they can reinvent themselves, and indeed reinvent their economies, with astonishing speed.

And now another transformation is beginning – and I believe it will be equally momentous and filled with opportunity – as this region remakes itself by harnessing the power of sunlight, wind and nuclear energy.

As you embark on this journey, I want to assure you that the United Kingdom will remain a steadfast friend and partner, committed to our relationships in the Middle East and North Africa for the long term, and do so by building on centuries of tradition and friendship.

Because we know that your security is our security and that any crisis here would have inevitable global repercussions.

We know that your prosperity is our prosperity, that is symbolised by the ever greater flow of trade between us, including over £44 billion between the UK and the GCC.

We welcome regional initiatives to reinforce stability, including the historic Abraham Accords, of which the UK is a committed supporter.

And Britain is convinced that we will only be able to overcome mutual threats and seize the opportunities in front of us by cooperating ever more closely.

That’s why we’re negotiating a free trade agreement with the GCC, which I remind the room, is our fourth biggest export market after the EU, the US and China.

That’s why we’re providing development finance through British International Investment – including $500 million to Egypt and $250 million to Morocco so far.

That’s why we’re deepening our security partnerships with Jordan and Oman and strengthening our cooperation with regional finance centres against illicit money.

And that’s why we want to be with you on our shared transition to green energy, ensuring that we all benefit from renewable technologies that are not only practical, but are increasingly affordable, but also promise near total energy security.

Last year we hosted COP26 in Glasgow, then we passed the baton to Egypt for COP27 this year and we look forward to COP28 in the UAE next year.

I commend Saudi Arabia and the UAE for their plans to invest nearly $350 billion in green energy, and also to Bahrain for its ambition to double its deployment of renewables by 2035.

I draw inspiration from the Middle East Green Initiative, which will help countries to achieve their Nationally Determined Contributions to reduce carbon emissions.

But none of our shared ambition will succeed without security – and the hard truth is that we face an ever greater array of threats.

In January of this year I was in the garden of the British Ambassador’s Residence in Abu Dhabi watching explosions in the night sky as incoming Houthi rockets were intercepted and shot down overhead – and I can assure you that I gave thanks for the accuracy and efficiency of the UAE’s missile defences on that evening.

Those trails of light, darting across the sky above me, were visible evidence of how Iranian-supplied weapons threaten the entire region.

Today the Iranian nuclear programme is more advanced than ever before and the regime has resorted to selling Russia the armed drones that are currently killing civilians in Ukraine.

As their people demonstrate against decades of oppression, Iran’s rulers are spreading bloodshed and destruction across the region and as far away as Kyiv.

Britain is determined to work alongside our friends to counter the Iranian threat, interdict the smuggling of conventional arms, and prevent the regime from acquiring a nuclear weapons capability.

Twice this year, a Royal Navy frigate operating in international waters south of Iran intercepted speedboats laden with surface-to-air missiles and engines for cruise missiles.

Had those engines reached their destination, they could have powered the type of cruise missile that bombarded Abu Dhabi on 17th January, killing three civilians – and the toll would have been even higher without the defences that I saw in action a few weeks later above the skies of Abu Dhabi.

That’s why British forces are striving alongside their counterparts in this region to keep us safe and defend the principles of sovereignty and territorial integrity which protect every nation.

Putin’s onslaught against Ukraine amounts to a flagrant breach of the principles of sovereign and territorial integrity.

No country is immune from the turmoil he has brought to world energy markets or the damage he has caused to global food security.

Day after day, Putin’s war is inflicting yet more suffering on Syrians and Yemenis, who were already enduring the privations of humanitarian emergency, and he’s having an impact on ordinary Lebanese, caught up in economic crisis.

Meanwhile the horrors that he is meting out to Ukrainian civilians compare with the destruction that he and Assad wrought upon Aleppo and other Syrian cities.

Yet despite using overwhelming and pitiless force, Putin is losing.

Almost everywhere, Russian forces are in retreat and it is only a matter of time before Ukraine prevails.

And it should be dawning on other regimes, who might have been tempted to behave similarly, that most of the world is determined to ensure that aggression does not pay.

This region demonstrated its belief in sovereignty and territorial integrity when it voted at the UN General Assembly to condemn Putin’s annexation of Ukrainian territory.

Just as those principles remain constant, so I fervently believe that Britain’s friendships across the Middle East and North Africa will deepen and endure, as we uphold peace and security together, and as this region masters its second transformation, allowing a new world of green energy to succeed the old.

November 19, 2022
PRESS RELEASE : Foreign Secretary to call out Iran and Russia as threats to Middle East security [November 2022]
The press release issued by the Foreign Office on 18 November 2022.
- The Foreign Secretary will today [Saturday 19 November] call out Iran and Russia as threats to the security of the Middle East in a speech to global leaders in Bahrain.
- He will commit to working with partners to ensure Iran can never develop a nuclear weapon and to tackle its destabilising activity in the region.
- The Foreign Secretary will also call out Putin’s invasion of Ukraine as a ‘flagrant breach’ of the principles of sovereignty and territorial integrity which is ‘heaping misery’ on millions of Syrians and Yemenis by driving up food prices.
The Foreign Secretary will call out Iran and Russia as threats to the security of the Middle East in a speech at an international security conference today.

Speaking at the Manama Dialogue security conference in Bahrain, he will commit to working with partners in the region to ensure Iran never develops a nuclear weapon and highlight the impact of Russia’s illegal invasion of Ukraine on food security across the region.

He will also highlight opportunities for cooperation on Gulf states’ transition to green energy and look forward to greater trade between the Gulf and the UK following the conclusion of talks on a new Free Trade Agreement with the Gulf Co-operation Council, expected next year.

On the threat posed by Iran, the Foreign Secretary is expected to say:

Iranian-supplied weapons threaten the entire region. Today Iran’s nuclear programme is more advanced than ever before, and the regime has resorted to selling Russia the armed drones that are killing civilians in Ukraine.

As their people demonstrate against decades of oppression, Iran’s rulers are spreading bloodshed and destruction as far away as Kyiv.

Britain is determined to work alongside our friends to counter the Iranian threat, interdict the smuggling of conventional arms, and prevent the regime from acquiring a nuclear weapons capability.

On Putin’s war in Ukraine, the Foreign Secretary is expected to say:

Putin’s onslaught against Ukraine amounts to a flagrant breach of those principles [sovereignty and territorial integrity]. No country is immune from the turmoil he has brought to world energy markets or the damage he has caused to global food security.

Putin’s war is inflicting yet more suffering on Syrians and Yemenis, who were already enduring the privations of humanitarian emergency, and ordinary Lebanese, caught up in economic crisis.

The Foreign Secretary will hold bilateral meetings with a range of international counterparts at the Dialogue and take part in panel events on key issues facing the Middle East, including maritime security and conflict resolution.

Following the Manama Dialogue, the Foreign Secretary will be travelling to Qatar. He is planning to meet with UK police representatives who are in-country supporting British fans to enjoy a safe and enjoyable trip, to understand more about their plans for the tournament.

While there, he will also speak at an event on global food security, hold bilateral meetings with key partners and visit UK Armed Forces stationed in Qatar, alongside attending the opening ceremony of the World Cup and the first England game.
November 19, 2022
Kevin Hollinrake – 2022 Speech on the Energy Price Support Payment in Northern Ireland

The speech made by Kevin Hollinrake, the Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy, in Westminster Hall, the House of Commons, on 16 November 2022.

It is a pleasure to speak with you in the Chair, Sir Gary. I congratulate the hon. Member for North Down (Stephen Farry) on securing this very important debate, and I thank the hon. Members for Strangford (Jim Shannon), for Belfast South (Claire Hanna) and for South Antrim (Paul Girvan) for their interventions. They all made important and salient points relating to the problem in Northern Ireland.

Given the record energy prices, the Government understand the pressures being faced by households and businesses in Northern Ireland and right across the United Kingdom, and we are taking direct action to address the issue. Clearly, the crisis has been driven by Mr Putin’s illegal invasion of Ukraine, which has caused a surge in the global price of wholesale gas, leading to an unprecedented increase in the amount that households and businesses are paying for the gas, electricity and oil they use. This has compounded already high prices in economies across the globe that are recovering from the covid-19 pandemic. The effects of the price rises are being felt up and down the country, but the Government are determined to ensure that families can provide power for their homes and that businesses can power the economy.

Paul Girvan

While we have been sitting here, I have taken the opportunity to check on today’s oil price. In England, people can buy a litre of 28 kerosene for 85.9986 pence, but the current price in Northern Ireland is £1.0835—a difference of 22 pence. How can we address the imbalance in transporting oil from GB to Northern Ireland? We have no refinery in Northern Ireland, and no way of dealing with it.

Kevin Hollinrake

The hon. Gentleman makes a very good point, and I heard his comments earlier about the increased price of oil in Northern Ireland. The hon. Member for North Down spoke of the very high number of households in Northern Ireland that are off-grid, and that is extremely important. I will try to cover that point in my remarks.

The announcements made by the Government in September demonstrated our commitment to protecting UK households and businesses through the energy price guarantee, the energy bill relief scheme and the energy bills support scheme, which is the key matter under discussion. Under the plans, households, businesses and public sector organisations across Northern Ireland will be protected from significant rises in energy bills, thanks to the Government’s support. As well as outlining the support that still needs to be delivered, I will set out what the UK Government are already delivering in Northern Ireland, and what is to follow shortly.

The energy price guarantee in Northern Ireland launched on 1 November, offering equivalent support to that provided in Great Britain for domestic households. The scheme reduces the price that energy suppliers charge customers for units of gas and electricity, providing money off energy bills. Households will receive backdated support to cover October 2022 through a higher discounted rate. Through the EPG scheme, a typical household in Great Britain with both gas and electricity contracts will save around £700 this winter, based on current prices. Equivalent support will be provided for households in Northern Ireland.

Government support will also be provided for households that use alternative fuels for heating, such as heating oil or liquified petroleum gas instead of mains gas. The alternative fuel payment scheme will provide a one-off payment of £100 to ensure that all households that do not benefit through the energy price guarantee receive support for the cost of the fuel they use. The £100 payment has been calculated with reference to increases in the cost of heating oil between September 2021 and September 2022. The aim is to ensure that a typical customer using heating oil will be offered support that is broadly in line with that offered by the energy price guarantee for those using mains gas to heat their homes. However, I hear what hon. Members say, and we are monitoring the price of heating oil and other alternative fuels very closely, now and in the months ahead, to see whether further payments are required at a future point in time.

Households in Great Britain that are eligible for the payments will receive £100 credit on their electricity bills this winter. For Northern Ireland, the Government are working with electricity suppliers to explore how the payment could be delivered via electricity bills under a similar delivery model. Details of when the payment will be made will be confirmed shortly—we have heard that word a number of times from Ministers at the Dispatch Box—so I cannot give the hon. Member for North Down a firm date, but we are very keen to deliver it as quickly as possible.

Jim Shannon

I thank the Minister for his response. In Northern Ireland, my understanding is that the proportion of those who are dependent on oil—I think the hon. Member for North Down (Stephen Farry) referred to this—is between 65% and 68%, so two thirds of the population in Northern Ireland need the payments. I hope he does not mind, but I am going to press the Minister on this. He says the payment is imminent or will be made shortly, or whatever. The people back home in my constituency—indeed, all our constituents—want it, and they want it now. The people have it here on the mainland, and we want the same.

Kevin Hollinrake

I totally understand that. We have to get this right. There are some complications in terms of timing, which I will set out. I wish I could give the hon. Gentleman a firm date. I get frustrated, too, in debates like this. I am slightly sitting on the fence in not giving a firm date, but I guarantee to him and other Members that the measure will be implemented as quickly as possible. I had meetings with officials earlier today. They are fully cognisant of the issue and keen to deliver quickly.

There are a number of complications. There is no central register either in Great Britain or in Northern Ireland for people who do not use the gas grid for their heating. We are working rapidly with stakeholders on the best way to identify those who merit support. Households that are eligible but do not receive alternative fuel payments because they do not have a relationship with an electricity supplier will receive the £100 via the alternative fuel payment alternative fund, which will be provided by a designated body.

Stephen Farry

I am grateful to the Minister for giving way and for what he has said so far. May I press him on the data on customers who use home heating oil? If we take the entirety of households in Northern Ireland and subtract those currently using gas, we can use the dataset that remains and assume that they are using home heating oil. That will give the Minister 99% accuracy. Similarly, I hope the £400 energy support will come shortly. Will the Minister explain the technical issues to the people of Northern Ireland, who are slightly confused as to why it is taking so long? We appreciate that the companies in Northern Ireland are different from those in Great Britain and that there might be question marks over their viability, but, to our minds, they are well-established and secure companies, so there should not be any real doubt about their ability to deliver the Government scheme.

Kevin Hollinrake

I will go on to explain some of the complications. The hon. Gentleman’s points have been well made and heard by me and officials, so we will do what we can. In the discussions that I had this morning, it sounded as though there was a solution. We just need to roll it out as quickly as we can.

The energy bill relief scheme for Northern Ireland will apply to all eligible non-domestic electricity and natural gas customers, including businesses, charities and the public sector, which receives its gas or electricity from licensed suppliers. Discounts will be automatically applied by suppliers to the energy bills of eligible customers, covering energy usage between 1 October 2022 and 31 March 2023. The scheme, as has been said, will run for an initial six-month period. The exact discount applied will depend on the type of contract a customer is on and when it was agreed. Although the scheme applies to energy use from 1 October, savings applied to October bills are typically received in November, which means businesses in Northern Ireland start to feel the benefits in November.

The Government announced on 21 September that we will also provide support to non-domestic consumers who use alternative fuels in Great Britain and Northern Ireland. Further information will be provided shortly. The schemes are supporting millions of households and businesses with rising energy costs, and the Chancellor made it clear that they will continue to do so from now until April next year.

Beyond April, the Prime Minister and the Chancellor—this applies to the whole of the United Kingdom—have agreed that it would not be responsible for the Government to continue exposing the public finances to unlimited volatility in international gas prices. A Treasury-led review is considering right now how households and businesses will be supported after April 2023 and will publish its findings by January 2023. The objective is to design a new approach that will cost the taxpayer significantly less than planned while ensuring enough support for those in need. It is very important that non-domestic customers that are less likely to be considered vulnerable to energy price increases, particularly larger businesses that are not energy-intensive, use the six months we have to identify measures they can take to protect themselves against high energy prices.

On support already received, low-income households received a cost of living payment in July of £326 and will receive another payment of £324 by 23 November. The energy bills support scheme launched in Great Britain in October provides eligible households with a discount of £400—that is the key point in front of us—that is being paid in six-monthly instalments in the UK.

Energy policy is devolved to Northern Ireland, but the issue has now been put back to the UK Government to deal with. The hon. Member for North Down referred to the taskforce. The reason it only met twice was that its job was to determine the best way to address this issue, and it determined that the UK Government should do it. The issue is now with officials and Ministers in my Department to make sure that we deliver the scheme in a way that accounts for the differences in Northern Ireland, and we are working with suppliers to get this across the line as quickly as possible.

Detailed work is under way to establish how suppliers can use their systems to pass funds on to consumers in a way that is consistent with the Government policy intent, while ensuring that public money is properly protected. We will of course use our experience thus far in the scheme in the rest of the United Kingdom, and we will work with the Utility Regulator in Northern Ireland to deliver the scheme.

We have already acted to resolve one of the barriers to delivering the scheme in Northern Ireland by taking new powers in the Energy Prices Act 2022, which received Royal Assent only on 25 October. We now need to provide clarity on timings on when the scheme will be finally rolled out to households in Northern Ireland.

Some households in Northern Ireland who do not have a direct contract with an electricity supplier or a meter of their own, for example park homes, cannot receive the £400 discount directly via an electricity supplier. We will also support those households under a separate arrangement called the energy bills support scheme alternative funding.

The Government have delivered and will continue to deliver comprehensive support for energy consumers across the United Kingdom to overcome the extraordinary challenges we are facing. We are delivering support to households and businesses in Northern Ireland through the EPG and the energy bill relief scheme already, but we fully recognise the need to provide further clarity on when these measures will be delivered to consumers in Northern Ireland and are working at significant pace to do so.

I cannot give a firm date, but I can give the commitment that we are trying to expedite payments by every possible means. We have listened to the points made by the hon. Gentleman and others, particularly about off-grid homes, which is an issue not just in Northern Ireland but across the country, and we are working to make sure that the payments are at the right level. I am very grateful to the hon. Gentleman for raising this important topic today. I will continue to work with him to try to make sure that we get the money out of the door as quickly as possible.

November 18, 2022
Stephen Farry – 2022 Speech on the Energy Price Support Payment in Northern Ireland

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?

November 18, 2022