Committee Corridor: coping with rising energy bills

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Energy bills are a major concern for households and businesses across the UK. Committee Corridor explores concerns about vulnerable customers and how we future proof the UK’s energy supply. Host Darren Jones MP speaks to the Chief Executive of Energy UK, the trade association for the energy industry, Emma Pinchbeck, about home insulation, fuel poverty and the role of new technologies in relieving the pressure on low-income families. 

He’s joined by the Welsh Affairs Committee Chair Stephen Crabb MP, and Alison Thewliss MP from the Treasury Committee, who highlight recent work by their committees and how the cost of living crisis is hitting particular customers in Wales and Scotland. 

Transcript

Darren Jones: Hello, welcome to Committee Corridor, coming to you from the heart of Parliament. The Committee Corridor is a real place. It runs through Parliament from the House of Commons to the House of Lords. Open the door into any of the committee rooms and you'll find groups of parliamentarians putting questions to key people about the big issues of the day. Of course, you can see committees in action for yourself. Come to parliament and sit in on an evidence session or watch the committees in action on Parliamentlive.tv at any time of your choosing. 

I'm Darren Jones and I'm chair of the Commons Business, Energy and Industrial Strategy Committee. In this series of Committee Corridor, we are talking about the cost-of-living crisis and in this episode, we are looking at energy bills. Energy bills for our homes, businesses, schools and workplaces are a real cause for worry just now. Bills for the typical household have doubled. These soaring increases in domestic gas and electricity bills have been cushioned by a government cap on the cost per unit. We'll consider the issues at play. 

In a moment, we'll speak to MPs from the Treasury and Welsh Affairs Select Committees. Stephen Crabb chairs the Welsh Affairs Committee and is the Conservative MP for Preseli Pembrokeshire. His committee recently published a report on the benefits system in Wales and I'm particularly interested to hear if recent announcements have made an impact.  

Alison Thewliss is a member of the Treasury Select Committee and the SNP MP for Glasgow Central. The committee has run several sessions on the cost-of-living crisis and we'll get her take on that evidence.  

But first, Energy UK is the trade association which represents the majority of energy suppliers. Their members are drawn from the biggest FTSE 100 companies, as well as new growing suppliers. 

The Chief Executive is Emma Pinchbeck and she joins me now.  

Darren: Welcome, Emma. 

Emma Pinchbeck: Thank you. 

Darren: This series of the Committee Corridor, we've been looking at the cost-of-living crisis, and obviously one of the key drivers of that has been energy bills. Your organisation, Energy UK represents a very significant chunk of the energy supply market and millions of customers across the country. I just wondered if you could talk to us about where we were going into the 1st of October, the date at which the government started to set the price of energy. What was the state of customers' energy bills at the end of September? 

Emma: This is a problem that has been, I think, two years in the making. Certainly, for as long as I've been in the job, we've been talking about the fragility of the retail market in this country. Then last year, we had 29 suppliers fail and we saw bills starting to go up as a gas price rose. It rose for lots of reasons we could get into but it meant that this time last year, we were saying to government, "Look, we're getting really worried about the state of energy bills." 

We had then the support package announced in January from the chancellor, then Rishi Sunak. What's happened is that the war in Ukraine has just exacerbated those existing problems so going into this autumn, looking ahead at forward gas prices, we were seeing the potential for energy bills to be, for the average household, something like £5000 or £6000. That forecast was getting updated every month or so. We've had now, as well as that support package announced in January, news of an additional scheme to freeze energy bills at £2,500. That's still £2,500, and that's for the average household. 

If you're asking for a snapshot of the industry, it's an unprecedented time, but it is deeply, deeply worrying for our customers and it has been worrying for our customers for well over a year now. It's good we've got some support in place, but I think there are questions about what we do for the energy market, in the long run, to make sure this doesn't happen again for UK customers, but also what more we can do to help people through this winter and next winter. 

Darren: So the scheme that was announced by government where it fixes the price of the unit of energy from the 1st of October was obviously welcomed by many, many people, but £2,500 on average for a household is still a lot more than it was a year ago. That's helping people whether they're wealthy or not. Do you think more needs to be done about targeting people that might already be in debt on their energy bills and who can't afford the £2,500 a year? 

Emma: We backed a universal scheme as the industry simply because we thought it was the quickest thing to do. There were suppliers that argued for a more targeted support scheme, things like a fuel poverty levy, things that really targeted vulnerable households. The issue with that, where there are issues, is that targeting can take time. And I think the most important thing, when we got around the table and talked about it, was the need to get support in place as quickly as possible for this winter. 

Does that mean we shouldn't be doing additional stuff? No, of course not. And the suppliers themselves are putting in place additional support for vulnerable households, topping up their vulnerability schemes, and so on.  But I think there is a question for the government about what you do on top of that. And the most obvious thing is tackling fuel poverty at the core and that's poverty. Looking at what they could maybe do with Universal Credit and so on, outside of the realm of energy, so not for me to comment on.   

In our world, the really obvious thing they could do is tackle energy efficiency. A lot of people who are already in vulnerable households also live in poor-quality buildings and the high rates of fuel poverty in the UK can be linked really directly to the poor quality of our buildings. So on top of financial support for this winter, a really sensible thing to do to reduce demand for energy in the long run, particularly for vulnerable people, would be to invest in energy efficiency and improving our building stock. 

It is a bit of a mystery as to why government is so reticent to do that and has been reticent over the last decade. 

Darren: If you think about the cost of insulating your walls, getting your loft insulated if you need new double glazing, this is also quite expensive to do. The average household after paying rent, I understand has a disposable income of about £9,000 a year. If we're saying to a household, "Well, you need to be spending £15, 000 [or] £20,000 insulating your house, maybe installing a heat pump, getting new radiators, this just works for people at the moment that either have the spare cash or are willing to take out a loan to pay for it, doesn't it? 

Emma: This is arguably where there's a role for government, right? Energy efficiency is one of those things that is basically, you get back what you pay for investing in it, across the economy and for individual households. To give you an example because it's in the news at the moment, most of us in the UK have gas boilers and if they're combi boilers, they're run at a particular temperature to get them to be condensed to be most efficient. 

For lots of reasons, most gas boilers are not installed at their most efficient temperature. So if we all turned down the flow temperature on our boilers, we'd save gas and run our systems much more efficiently. Just that small act of energy efficiency could save something like £19 million, across the economy, if only 1.5% of households did it. That's not even installing building fabric materials, but it's an indication of where the potential savings to the economy are of using energy more efficiently. 

If you install basic measures like loft and cavity insulation, of which there's still a lot of low-hanging fruit left in buildings, if government invests in the more complex measures, particularly for vulnerable households, you get the economic benefit of not importing as much gas because a lot of our gas exposure is for domestic heating. But on top of that, you save things like the NHS budget on increased rates of respiratory illnesses in children, on admissions to hospital in the winter for things like colds and flu and asthmas and other respiratory illnesses. 

We know that living in poor-quality buildings drives these sorts of conditions and there have actually been many demonstration projects in the energy industry where we've teamed up with things like doctors to prescribe energy efficiency for households where people are coming in often with respiratory illnesses and save money for the NHS in those areas. It's a very obvious thing to do that again the state hasn't invested in, to help the people that can't afford to do this for themselves. 

Of course, if you're able to pay you should be investing in your building fabric just as you invested in your kitchen and maybe there's more incentive to do it with prices the way they're now, but I think there's a real case for helping out the people who can't. 

Darren: Why do you think the government isn't doing it? 

Emma: It's not like opening a new nuclear power station and getting to wear a hard hat and go to a brand-new wind farm or a factory making winter buying components. It is loft insulation and I have been communicating about energy and energy issues and climate issues for a decade and I've yet to be able to make loft and cavity sexy or indeed heating. It is the really big missing piece in our decarbonisation plans. It's a really big thing to tackle for fuel poverty. I think the technologies aren't sexy politics, but the issue really is. I would say that has been the issue to date.  

It is a nonsense, on the one hand, to be looking to reform your supply side and economics or in energy, but not taking steps to manage demand. That's what we're saying and continue to say to government and there's a really big alliance pushing for this from the right wing, from people like the Institute for Economic Affairs, aligned with the green NGOs, aligned with the energy industry. So if everyone is agreed, hopefully, we'll get something done.  

Darren: I hope so. You say it's not sexy policy but it's definitely on everyone's minds at the moment and just thinking about some of the things you've talked about. We're always told not to play with our boiler. Understandably people get a bit nervous about twiddling with it and some of the easy things like draft excluders or things… unless you're maybe into DIY, you might not really know where to start. It seems obvious to me that the government ought to be putting out independent information, practical advice to the public to help them reduce their own energy consumption by taking these simple measures.  

Emma: I'm really proud to see that, as well as offering their own independent advice to their own customers, there has been a campaign launched with Nesta, which is an information campaign charity, alongside some of the major suppliers to talk about exactly this. Simple energy-saving tips and tricks, and particularly boiler flow temperatures. I'd also point people to The Heating Hub, which is a couple of female engineers who advise people on how to turn down their flow temperatures safely and how to make their heating systems run efficiently. 

Obviously, there's something here for innovation and getting off gas completely and switching to forms of technology that should be cheaper, things like heat pumps. Many of the suppliers are leading that particular charge in trying to bring down the costs of alternative technologies. Doing things like, one of the major suppliers is offering people free electric blankets this winter because that is the most efficient way of heating a room, believe it or not, so they're sending those out. There's a whole range of things going on. 

As you say, government is a trusted voice. I am very proud to see what the industry has been doing, but let's be honest, we're still the energy sector. Sometimes we're not the people that are the most trusted on this stuff. Whilst we work with Citizens Advice and Which?, and other charities, and Money Saving Expert, and anyone we can, I think it's really helpful to have the government talk about this stuff. And in the previous energy crises, they have. There have been public information campaigns. There's good precedent for doing it, and all of Europe is doing it as we speak. 

Darren: We've heard evidence on the Select Committee that there were examples of some of the energy suppliers ramping up the Direct Debit payments maybe artificially too high, some quite aggressive debt collection measures being put in place. I had one example where an energy supplier told a customer it was cheaper and in their better interest to be on a prepayment meter until I told them to reject that advice. Are the energy companies really doing everything they can, in the best interest of their customers, or are they just trying to get as much money through the door as they can? 

Emma: It's a big industry and I'm not going to pretend that there aren't examples of practice which are regrettable or bad and when we hear about them, we as the trade body and the people who sit around our board are quick to respond to them because we are very clear that what customers need is good service, particularly at this time. What I would say is that this is an unprecedented period for the sector and we're getting record-breaking volumes of calls into call-centres and the sector trying to respond to something that in itself it's never dealt with. 

Your point about Direct Debits, for example, the sector has to buy gas ahead and hedge, and then try and work out what someone's energy use will be in the winter, which also involves working out how cold the winter will be and that kind of thing and then so they can average out the Direct Debit correctly across the year. Given how fast prices have been rising, they've been calculating those at speed and sometimes those calculations have been off. A lot of people don't have smart meters, which also makes a massive difference because they can see real-time use. Where there have been issues, they've been corrected and picked up as they should be. 

It's something we're going to have to keep an eye on. Again, the long-term solution to this is to build a really resilient industry because if you have an industry where you have 29 suppliers failing in a year, everyone's making a negative margin and then you go into a crisis. Finding the reserves to invest in the additional customer support and the things that we want to do to help people is challenging, but that doesn't mean we shouldn't be trying to do it. 

Darren: I just want to talk a little bit about customers who are on prepayment meters. We looked at this in our recent inquiry on energy bills on my Select Committee. It seemed that prepayment meter customers in the current circumstances are getting a pretty hard deal. They pay more for their energy because they don't pay by Direct Debit. It seems they can be cut off more readily than customers who are on Direct Debit. Also, they have to pay in real-time. 

Whereas you and I probably pay by Direct Debit and can spread the cost of an expensive January across the whole year, prepayment meter customers will have to pay for it in one go. Then the schemes that the government are bringing forward often require paper-based vouchers or online things you've got to try and figure out how to use. Most customers on prepayment meters are the type of customers on lower incomes that we worry about. Surely, this whole scheme for customers on prepayment meters needs to be updated. 

Emma: I've got loved ones on prepayment meters, so I hear you. They do get charged more for their energy. It's about £59 a year more on average under the new scheme from government. You are right. In order to qualify for the vouchers, customers on prepayment meters will probably need to go to something like a post office or another collection point and they need to make sure their details are up-to-date with their supplier to do that. It varies by supplier, but they will have to go and collect vouchers. 

As you say, many of these households are also vulnerable, so it's always something that is a challenge for the sector. The reason for the difference is that it costs more to serve those kinds of households. That is why they're regulated differently. In the long run, obviously, you want a system where as many people as possible are able to pay by Direct Debit and they're able to have a smart meter and access the services that we're talking about. In the short term, I think, again, it comes back to, we need to be helping people across the economy with the cost-of-living crisis beyond the energy sector. We need to be making sure that we know who our vulnerable customers are. 

It's worth noting that there are many, many, many steps before you end up on a prepayment meter, so there'll often be conversations about debt management, payment plans, and other support before you get down to being put on a prepayment meter and it's in no one's interest for people to be disconnected or, indeed, self-disconnect. I'm not saying the energy industry is perfect, but we want to be identifying and working with those customers before we get to the prepayment stage.  

In the long run, we need to sort out our energy market so that people will get a really fair deal and can access some of the great energy services that should come in a net-zero energy system. 

Darren: Just lastly, Emma, I want to talk about customers who are already in debt on their energy bills, people will have started to see some of the initial payments come through on their accounts from the government, the £400 that Rishi Sunak announced previously. Of course, we're going to start seeing the impacts of the government setting the price per unit of energy. If customers are already in quite a lot of debt on their account, that's going to be a worry for them. What should they be doing about that? 

Emma: The first thing they should do is contact their supplier. If they're not comfortable with that, then they should contact Citizens Advice and talk to someone in a call-centre. I should note that given the level of the crisis, call-centre volumes are at record levels already before we head into the winter. We know that people may be waiting to speak to people and the industry has invested in extra support and is doing what it can. In terms of support available, it's roughly £1 billion a year that the sector spends on obligated programmes to help vulnerable households, but they've put in around an extra £54 million over the last several years with the pandemic and now running into the cost-of-living crisis. 

For most households, who are vulnerable, who are struggling to pay, there'll be a variety of support available from relief on their bills through to repayment plans. There are a number of options available. I think a lot of people don't know that that is out there for them. Speak to a supplier is the first advice and there may well be support available. Then for the energy industry, we lost 29 suppliers last year. The sector on the retail side does not make a huge amount of profit. Many of the suppliers will be making negative margins. 

So it's in our interest as well to make sure that we're managing that debt and that bills are affordable. That's why we keep working with government to try to make sure this is dealt with at a whole economy level and that this crisis doesn't accelerate. [It’s about] about getting people through the next two winters and then we need to make sure this doesn't happen again, and that comes back to making sure that we're getting off gas in the economy, making sure we're investing in renewables, making sure we're investing in energy efficiency, helping vulnerable households break this cycle for good. 

Darren: I think it might have been as long as a year ago that you appeared for my Select Committee, and you said that unless the government got a grip of energy prices, it would drive inflation more widely in the economy and cause real trouble for the Treasury. It turns out you were right. 

Emma: [chuckles] Depressingly correct, yes. Look, this is a personal view. I'm on maternity leave, so I get a lot of time to think about the bigger picture here as well as dealing with what is managing a crisis. I think underpinning all of this is that we are at a point of energy transition. We cannot do the same thing we've done previously to deal with an energy crisis because the technologies have changed, the world has changed. 

Fossil gas, coal, and oil are more expensive to extract than they used to be. They're in more volatile parts of the world and they're controlled largely by foreign states, some of whom are actively hostile to the UK and there's more competition for that resource now [that] there are bigger global economies. In short, I think this is about building a new economy based on the energy technologies of today. The energy price is linked to our overall economic performance in a way that cannot continue as fossil fuels decline. We've got to build a new economic model that reflects the energy technologies of today.  

That sounds a bit incoherent because it's early-stage thinking. Again, the energy industry has been saying to government for a long time, "We are ready to build a very different energy system. The technologies we have available to us like renewables are cheaper. We've got a world-leading market in the UK for those technologies. The faster we get on and do that, the cheaper energy should be to the end consumer and it should also drive sustained economic growth to do that because these are technologies with jobs and skills and opportunities that are forward-looking rather than the technologies of the past. The long-term opportunity hasn't changed. The crisis has just sharpened the reasons for doing it." 

Darren: Well, that's a great call to action for the government, so thank you for that. I'm very grateful that you've taken some time out of your maternity leave to speak with us today on the understanding that this was your idea of fun. 

Emma: [laughs] It was my idea of fun. As I said, Darren, someone reminded me that it's not usually fun to appear in front of you at the Select Committee. 

Darren: [laughs] 

Emma: They thought I might have gone fully mad. Thank you for the opportunity to talk about these things in a more relaxed setting. 

Darren: Thank you for joining us. We're very grateful. 

[sound] 

Now, to consider how select committees are looking at energy and the important issues, which Emma raised. I'm joined by two committee members, Stephen Crabb chairs the Welsh Affairs Committee and is the Conservative MP for Preseli Pembrokeshire. His committee recently published a report on the benefit system in Wales.  

Alison Thewliss is a member of the Treasury Committee and is the SNP MP for Glasgow Central. That committee has been looking at the drivers of the current pressures, how long it's likely to last, and which groups have been hit the hardest.  

Alison, there's been a big intervention from the government on helping people with their energy bills, but of course, that is expensive. Then there's the debate about how on earth are we going to pay for it all. What are your thoughts from a Treasury Select Committee perspective? 

Alison Thewliss: What we heard from five different economists was the tax cuts funded by borrowing is not what you want to be doing, in this context. That is going to make everything so much worse and so much more unpredictable as we've seen from the market reaction to the mini-budget. Getting rid of some of those, I think, would take a bit of pressure off the economic system more widely because everyone accepts that there has to be an intervention on energy. Everybody accepts that there has to be something done there because families simply could not afford to pay for the bills. 

Darren: Stephen, the government's announced some other ways to try to get some money in. They've announced a windfall tax on some of the electricity generators including renewable electricity sites. Do you support that idea? 

Stephen Crabb: I do. I've had the view for quite some time now that in an extraordinary period when energy producers, be they oil, gas, or even renewables,  are earning what we can call super profits, so profits not driven by any innovation that they're doing, just purely driven and inflated by global market conditions, I think at a time when we do need to provide more assistance to those on the lowest incomes and to actually households and small businesses generally, government’s got a duty to go and get some of that money back from the big energy producers. So I am comfortable with what the government is doing, yes. 

Darren: We've just heard from Emma, from Energy UK, the energy suppliers are also thinking about what they can do. Even with the capping of the price on people's energy bills, it's still double what it was on average from a year ago. We've heard that there are some energy suppliers doing things like offering free electric blankets. Is that the type of thing we need to see from energy companies as well, Stephen? 

Stephen: I don't know about that. My fear about the kind of  intervention that the government has done in the energy market is that by basically compensating the energy suppliers for the increase in the wholesale price... there is a question there about whether we're taking off the pressure from these energy companies to do everything they possibly can. Yes, these schemes that they're coming forward with and these tips and advice and practical interventions are all useful. At the end of the day, we just got to help people pay their bills. That's the key priority I think at the moment for the government. 

Darren: Alison, in terms of these excess profit taxes, there's been a debate about whether the government is treating oil and gas companies differently from renewable generation companies. Do you think that's fair? Are we withdrawing the incentive to invest in places like the North Sea, where you are in Scotland, or do you think we should be treating all the different types of generators the same way? 

Alison: There was a lot of chat around this from Rishi Sunak when he was talking about this, after his budget, after he talked about the windfall tax initially for oil and gas. He came to the Treasury Select Committee and I tried to pin him down a little bit on, "Well, what is this excess profits for renewables generators?" He couldn't exactly put a figure on it, to begin with. I'm not sure if your committee is any clearer on what that figure might be and how to go after it as well because the regime for taxation and profits and everything for renewables is different as well with all the way that that's set up. 

He couldn't really explain what the mega profit was. He couldn't really explain how the government intended to get at it, and a lot of it is really to do with the fact that the price is coupled to the price of fossil fuels in the first place. There's, again, no suggestion from the government that they're about to go and uncouple that and change that because actually, that would make sense. Renewables shouldn't be pegged to the price of fossil fuels and we produce such a huge amount in Scotland, but we don't see the benefit from that as well. I think there's a lot that needs to be unpicked within that market as well. It can't just be about these mega-profits, which again, are yet to be properly defined as far as I can tell. 

Anything that disincentivises renewables and incentivises oil and gas seems to me to be absolutely bonkers. We've had COP26 in Glasgow, in my constituency. Everybody talked up how we were going to switch that over, how we were going to change the way that we were generating electricity and moving away from fossil fuels and getting towards net zero. Anything that goes in the opposite direction just seems to me to be absolutely bonkers really. 

Darren: Thanks. Stephen, I want to move on to talking about what this means for individuals. You obviously chair the Welsh Affairs Select Committee, you're a Welsh MP, so you hear this from a constituency perspective as well as a Select Committee perspective. How are people feeling, now that the government's introduced the price cap on the price of energy? Are they comfortable and happy, or are they still worried? 

Stephen: There's a lot of anxiety still out there, and that will continue through the winter and I suspect for some time beyond that as well. Wales has the highest rate of long-term unemployed in the UK, highest rates of poverty I think after Northern Ireland.  

There are a lot of structural factors in the Welsh economy as to why we are lagging behind other nations and regions of the UK, time and time again, in the economic league tables. It's understandable, there's a lot of anxiety out there. When you think about my constituency though, more than 50% of the households in my patch are off the main's gas grid. They rely on heating oil. They rely on deliveries of LPG. 

Now, the government has come forward and said, "Okay. We will give these people £100 to provide an equivalent level of compensation." Now, that doesn't go anywhere near meeting the increased costs of those fuel types for rural households. There's still a battle to be fought on that. Let's be clear. I think the government's intervention is a very big one, it's going to cost this country many tens of billions of pounds long term, but I'm interested in making sure that it is as comprehensive as possible for people in Wales and particularly in West Wales where I represent. I still think there's some unanswered questions and some gaps that really need to get filled in here. 

Darren: Alison, that's presumably the same for you in Scotland, in rural parts of the country where people are not connected to gas. There's even some circumstances where I think if your energy company is entirely renewable or if you're maybe on a heat network in some circumstances, you might not benefit from the price cap, there must be more to be done. 

Alison: Yes. It's not really a price cap either. It's an average, and there are many households who will spend much, much more than what this average is. It's colder in Scotland. Our housing types are different from the tenements in Glasgow to very rural circumstances. For those that rely on fuel tanks, £100 is really just an insult. It's not going to last you because that fuel is going to require you to fill up the full tank when you do that, and that's a huge outlay for many households. People are putting that in credit cards and getting into debt in order to do that. That puts people further at risk when they have to face those circumstances. 

Darren: Stephen, your committee recommended that the government reintroduce the weekly £20 uplift in Universal Credit that was introduced during the pandemic. Do you still support that idea? Do you think that would help? 

Stephen: That idea has slightly passed because actually what the government has done for low-income households, in terms of the emergency payments for energy costs, actually has gone above and beyond if you average it out across a year, what the £20 uplift has done. That's been very good. The point that I would move on to make is around the need for a proper uprating now of social security benefits because what happened in April this year, basically, an out-of-date inflation figure was used for the uprating from last autumn. We know that the real rate of inflation for low-income households in terms of their food costs are actually higher than the average that the government uses anyway. 

So actually, in real terms, already social security has fallen behind the cost of living. That's why it's so important. Now, the argument is around proper uprating next April. My own view is that we should try and find a way to bring it forward because a lot of households actually can't wait till spring next year. They need the assistance now. For a long time now, I've basically come to the conclusion that social security is not where it's at. The idea that we have some kind of overly generous social security system in this country is not true. Yes, we do need to bring down the welfare bill overall but at a household level, we don't have a generous welfare system. That's being, I think, demonstrated right now in this cost-of-living crisis. 

Darren: Customers who are on low incomes have a higher chance of being on a prepayment meter. We've heard about not only the inequity about how they get charged more for their energy and they've got to pay in real-time not spread the cost over the year, but often schemes to pass money to prepayment meter customers are much more difficult to administer. It's kind of vouchers in the post or tear-off slips that you take to top up your key or trying to do something with your app on your mobile phone. From the delivery of benefits perspective, which you looked at on the Select Committee, do you think that has to change for prepayment customers, and if so, what would be the best route to do that? 

Stephen: It's a good question and it's a difficult question as well because there are a lot of people who, for whatever reasons, whether it's kind of inertia or attachment to how things always have been done, don't want to leave doing prepayment meters even though, so often it is the case that they are worse off in that position. There's a bit of a cultural change to be achieved there, but government's got a duty to try to bring people with it and also a duty to try to fill in the gaps. It's not just people on prepayment meters, people who live in park homes for example, where there is one site management office that accounts for all of the electricity bills aggregated. We still haven't yet, as a government, found a solution for giving the energy price support payments to these people. 

There are these quite difficult groups out there in society that don't fit neatly into the kind of systems that Whitehall wants to set up. This is where government does need to work a bit harder and this often demonstrates the great distance, the detachment if you like, between how things actually are on the ground in our communities and how often I think ministers and their civil servants and special advisors sometimes view the world from Whitehall. 

Darren: In terms of thinking about the real-world impacts, Alison, you've been looking at the wider impacts of the cost of energy beyond our homes on the treasury committee thinking about businesses and people's workplaces. We've heard stories about school head teachers or GP surgeries or hospitals having similar challenges.  In Bristol we've started to set up these warm hubs in the community that people can come to. There's a cost of energy challenge beyond our individual homes. Did you hear any solutions to that in your committee session? 

Alison: We haven't heard much by way of solutions yet, but I am getting a lot through from businesses in my constituency as well. There's a food manufacturer based in my constituency, they've been going for a long time. Their bills have increased sixfold and this is with the government support as well. It's going from like £160,000 odd to £940,000 per year for their electricity and that's just to get the contract. It could yet go higher because it's already gone higher from when they first came to me. They say, "Well, we can't afford to keep the business going as it is." They're really worried that the only way that they can save any money is to reduce production and when reducing production, they'll have to let go of staff and they really don't want to do that. They don't want to do that at all. 

They're really worried about it because those staff stayed with them all through the pandemic. They kept things going and they feel very, very loyal to them. We've had this six-month reprieve announced and there's still yet no conversation from the government about exactly how they're going to prioritise people after the six months because if people are signing up to those contracts, those contracts have to be honored on the other side of the six months as well.  

Darren: The Treasury can't really run away from that issue because if people are losing their jobs, they're going to start having to claim Universal Credits. If businesses are closing, we're going to lose tax revenue, have an impact on the government's priority around economic growth. Surely we'd just have to get a grip of energy as a fundamental plank of the British economy, both for consumers and for business. 

Alison: Yes, and energy is a huge part of that. I think as we were chatting about earlier on, decoupling renewables would make a big difference, doing something about the standing charges which are very variable across the UK. Scotland pays more for standing charges than other parts of the UK. Looking at some of the structural issues around the energy market, those things need to be changed. You can tinker about the edges, you can look at additional financial support, but it is really, fundamentally, how the energy market is set up in the UK. It's set up for an old system where you have big belching power stations and that has to change. 

Darren: There'll be a lot of work that happens over the next 10, 15 years on building out energy infrastructure. We'll be looking at that later on in this podcast as part of the BEIS Select Committee inquiry on decarbonising the power sector. The government have been talking up a lot about nuclear as well as more offshore wind and they've reintroduced fracking to the debates. Alison, how do you think that's all going to pan out in Scotland? 

Alison: We don't actually need nuclear and I've heard answers from ministers in recent days about all the problems, all the woes would be solved if we just consented to have some new nuclear power stations in Scotland. It'll take a long time to do that and it won't actually add anything to what we have already. We are already generating all we need in renewables. We're generating more than we need in gas.  

What we need is for reform of the markets to make that a better set-up industry and the industry has been calling out for this for years to get this sorted and it hasn't happened. We also need the UK government to change its tune on carbon capture and storage in the northeast of Scotland. Again, a huge project that unlocks things to do with electricity generation and hydrogen generation. All of these things are possible and it's beyond me why the UK government isn't interested in it. 

Darren: Stephen, you've been looking at the question of power infrastructure on your Select Committee in Wales, talking about nuclear energy and the capacity for your grid to move all of this power around. What have you been hearing from the evidence so far? 

Stephen: Yes, so as a committee, yet again, we're trying to grapple with nuclear in North Wales. The question that's been doing the rounds now for more than 10 years is whether there's a potential for a new nuclear power station at the Wylfa site in North Wales. Certainly, the government's made some positive noises around that but look, nuclear I think is going to be part of the long-term energy mix for the UK but it is difficult to do. It's expensive and it's long-term. It isn't an answer in the immediate sense to any of the challenges or problems that we've been discussing today. 

We're also looking though at floating offshore wind and the new opportunities that are emerging in the Celtic Sea off the coast of West Wales and southwest of England where that can happen, I think, much sooner than a new nuclear power station. We're looking at some of the challenges and risks around the plans for delivering that.  

There's a lot of interest amongst industry, but the problem that we keep coming back to time and time again actually is lack of grid capacity in Wales. Whether you're talking about decarbonisation of transport and heating in Wales, enabling Welsh people to use electric vehicles, or whether you're talking about bringing onstream some of these big renewable projects like floating offshore wind, the lack of grid capacity we keep coming back to time and time again. 

Darren: Yes. All of this work on big infrastructure, on energy efficiency will obviously take many years to complete nationally but the sooner we get started, the better.  

Darren: That's all the time we have today. Alison Thewliss, Stephen Crabb, thanks for joining me. 

Stephen: Thank you very much. 

Alison: Thank you. 

Darren: My thanks to all my guests today. If you want to feed back on what you've heard, please leave us a review or spread the word about our podcast Committee Corridor.  

Next time, we'll be talking about the impact of the cost-of-living crisis on jobs and the workforce. Torsten Bell presented us with a stark choice in Episode 1, “Inflation or Unemployment”. You can listen to every episode of Committee Corridor wherever you get your podcasts or visit us on www.parliament.uk/committee corridor. I'm Darren Jones, chair of the House of Commons Business Committee and you've been listening to Committee Corridor. Thanks for listening. 

 

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