That this House has considered the cost of energy.
It is a pleasure to serve with you in the Chair, Mr Western. I thank the Backbench Business Committee for granting me this debate. The cost of energy is a problem that impacts all areas of our lives, from the homes we live in to the businesses we work for.
For far too many, high energy bills are an immediate daily concern. A recent poll published by Opinium highlighted that, on average, 88% of all adults thought it was important that the Government focus on reducing the cost of energy over the next two years, while 90% remained concerned about the increase in energy prices. The cost of energy has become a key strain for most households. For households in Bath and across the country, bills continue to rise at unprecedented rates, and many struggle to keep up.
Those rises will heap considerable pressure on millions of people who are still feeling the pressures of inflation over the past few years. That is simply unacceptable, and it is a crisis that we cannot ignore. The effects of high energy costs extend far beyond the immediate financial burden; the cost of electricity in the UK is also holding back our efforts to decarbonise the economy and to address the climate crisis, and we must not shy away from that debate.
At present, UK households pay roughly the same for both gas and electricity bills—around £850—despite using more than four times more gas than electricity, making electricity in the UK four times more expensive than gas. That price imbalance is not only creating financial hardship for consumers, but actively deterring them from making the switch to cleaner, more efficient heating systems. The UK currently relies on 25 million fossil fuel boilers to heat its homes, accounting for 16% of the nation’s entire CO2 emissions. Decarbonising our heating sector is a significant opportunity for the UK to cut down on carbon emissions.
Take heat pumps, for example, one of the most advanced and environmentally friendly ways to heat our homes. Heat pumps are four times more energy efficient than gas boilers and could reduce CO2 emissions by 75%, yet just 1% of UK households have a heat pump. Why? Because the UK’s electricity prices consistently undermine the financial incentive to install them. With the current cost of electricity, running a heat pump can be more expensive than running a gas boiler for larger households and as expensive for medium-sized homes, even though heat pumps are far more efficient.
In Sweden, more than 50% of single-family homes have heat pumps installed, while 95% of all new homes are now heated by heat pumps. The success of Sweden’s heat pump adaptation hinges on the country’s price ratio between gas and electricity, effectively incentivising electric heating systems compared with fossil fuel ones.
A range of other heating technologies can work alongside heat pumps. Alternative technologies such as heat batteries are another example where the price of electricity is significantly hindering the UK’s ability to move away from gas. Heat batteries have become a proven solution for about 20% of UK homes for which heat pumps are not suitable. Modern heat batteries can operate at equivalent temperatures to fossil fuel systems; they can make use of the existing pipes and radiators in the home, at a similar running cost to a heat pump, and embed valuable flexibility in the electricity system. Despite having such innovations at our fingertips, the Government continue to drive consumers into the arms of gas boiler manufacturers, because more often than not it is still cheaper to buy a gas boiler.
The disparity in energy prices between gas and electricity is not just a domestic issue; it is part of a broader trend in which the UK is falling behind other nations in the transition to low-carbon heating. In the first half of 2024, gas prices in the UK were 22% below, while electricity prices were 27% above, the EU average. In fact, the UK had the highest ratio of electricity to gas unit prices in the entire EU at that time. That pricing imbalance places the UK at a competitive disadvantage in terms of decarbonisation.
As the rest of Europe steams ahead with its effort to electrify heating, the UK is lagging behind due to our higher costs of electricity, something that not only affects individual households and businesses, but significantly undermines the UK’s position as a world leader of climate action. To achieve our statutory net zero goals, we need to make sure that the transition to clean energy is as affordable as possible for everyone. The current energy pricing structure is holding us back, and that must change.
The first and most urgent step is to reform the policy costs currently placed on electricity bills. The regressive and incoherent stack of levies on electricity bills has inflated the cost of electricity for consumers to the point that it is uncompetitive with gas. The Government’s current energy policies are therefore working against their own objectives, making clean technology more expensive than its fossil fuel counterparts.
As things stand, policy costs and levies currently account for 11% of a typical household’s total energy bill, but they are not allocated evenly. Policy costs account for 16% of a typical electricity bill, but only 5% of a typical gas bill. There is widespread industry and political support for reforming those policy costs and levies, but the argument over how to do so has been going on for far too long. The simplest options for reform would be to remove all levies from electricity and put them into general taxation. That would lower energy bills for every household in Britain, but at a very high cost to the Exchequer, which is currently not realistic.
Another option is to rebalance the levies by moving them from electricity to gas. This option would be good news for the 4.5 million households that do not use gas heating, but for the 22.5 million gas-using households, of which 2 million to 3 million are in fuel poverty, bills would rise by between £15 and £100 a year.
Some 17.6% of those who live in Keighley are in fuel poverty. Right now, Labour-run Bradford council wants to raise council tax by 10% and, with the removal of the winter fuel allowance, 64,000 pensioners across the wider Bradford district will be impacted. Does the hon. Member agree that, for the most vulnerable in our society, there needs to be more support not just with the cost of energy, but with making sure that they can keep warm during this winter period?
The hon. Member predicts my next point: it is important to emphasise the Government’s responsibility to look after the most vulnerable in our society and protect them during any efforts to rebalance gas and electricity prices. However, I cannot comment on the council tax bill to which he refers; that is, of course, a local matter.
It is imperative that any policy changes prioritise the needs of those vulnerable households, ensuring that they are not left behind as we look to electrify the UK’s heating system. A more focused way to adjust policy funding could be to collect revenue from levy-funded programmes through a single levy control system. Such a system would have two straightforward rates—one for electricity and one for gas—set by Ministers at an appropriate level. These rates would be based on the cost per kilowatt-hour, so more energy-efficient technologies would have lower taxable amounts, making them comparatively more affordable.
Unlike other rebalancing methods, this approach would allow the Government to directly manage the impact on households. As electricity is always more efficient than fossil fuels, its price would go down, encouraging more people to switch. Policy reform is an essential step towards addressing the unacceptable price disparity that currently exists in the UK between gas and electricity. I hope the Minister has listened very carefully to the proposal that I have just put forward.
The impact of Brexit on our energy system has been somewhat brushed under the carpet. The turbulence of covid and the shockwaves from Russia’s invasion of Ukraine have dominated the conversation and masked the quieter, but significant, effects of our departure from the EU’s energy framework. One of the most pressing issues is passive divergence: not following new EU regulations simply because we are no longer a part of the system.
That is not always a deliberate choice, but it is already creating challenges, particularly in electricity trading. The UK was once part of an integrated, efficient energy market with the EU, where electricity flowed freely, reducing costs and improving security. Now, without alignment, we risk inefficiencies, higher prices and reduced energy security. We need strategic decision making. Not all divergence is bad, but it must be a conscious, informed choice, based on clear evidence, not ideology.
It is a pleasure to serve with you in the Chair, Mr Western. I thank the hon. Member for Bath (Wera Hobhouse)—a fellow member of the Energy Security and Net Zero Committee—for introducing this important debate. We have been doing a lot of work over recent weeks in the Committee on energy pricing and the cost to consumers, so it is very timely.
It is clear that the Government have an ambitious plan to achieve clean power by 2030. For families in my constituency and across the country, that mission is really about lowering energy bills. Quadrupling offshore wind, tripling solar, doubling onshore wind and getting projects such as Hinkley over the line and operational are all critical things that will ensure resilience in our energy markets. Importantly, they will also protect UK consumers from volatile foreign markets, taking back control from Putin and petrostates, and placing the power of energy in the hands of British people. Those targets represent the biggest expansion of renewable energy in our history, and could save families hundreds, if not thousands, of pounds a year on their energy bills.
I recognise the great points made by the hon. Member for Bath in her opening speech, particularly on innovation in the sector. I also welcome her thoughts on heat pumps because I, too, believe that more than just heat pumps can solve this crisis, and it was positive to hear her talk about heat batteries. I want to add to the debate by speaking more about the energy cost crisis the Government are tackling, how it started and what we need to do to solve it.
The Select Committee heard evidence that paints a stark picture. Average energy bills are now 43% higher than in 2019, with over 6.1 million people living in fuel poverty. The situation in my constituency reflects the national crisis, with families and businesses struggling under the astronomical weight of energy costs.
It is a pleasure to serve under your chairmanship, Mr Western. The cost of energy is a crisis hitting every household in the country; it is not just a crisis of affordability but a crisis of national security, a crisis of climate and a crisis of social justice, but the Government have failed to act with urgency.
Russia’s assault on Ukraine has made clear the dangers of energy dependence, and we can no longer afford to be dependent on fossil fuels. Investing in home-grown renewable energy is about not just cutting bills but safeguarding our energy security to protect ourselves from geopolitical shocks. Climate change is an existential threat, with global temperatures driving wildfires, floods and droughts. With those come food and water insecurity and displacement, which in turn fuels conflict.
We need a Government willing to make tough choices to invest in clean energy and to ensure that the UK is not left behind in the global transition. Many areas require urgent reform. We need incentives that cover the real costs of installing heat pumps, as my hon. Friend the Member for Bath (Wera Hobhouse) outlined. We must also create a rooftop solar revolution by expanding incentives for households to invest in solar panels. That includes a guaranteed fair price for electricity sold back to the grid, which would tackle the twin cost of living and climate crises.
We must get the basics right and invest in insulation: cold, inefficient homes mean higher energy bills, fuel poverty and a staggering £1.4 billion NHS bill for treating cold-related illnesses. The UK has the oldest housing stock in Europe, with one fifth of homes built more than a century ago. A national strategy for retrofitting pre-1920 homes is long overdue, and the Liberal Democrats would launch an energy insulation programme, starting with free retrofits for low-income households.
We must also protect the vulnerable—now. The Government’s decision to axe the winter fuel payment was the wrong choice at the wrong time, stripping support from pensioners just as another cold winter bites. The Liberal Democrats would restore that help by introducing a social tariff for vulnerable households, raising the funds for it by imposing a proper windfall tax on oil and gas giants profiteering from this crisis.
It is a pleasure to serve under your chairship, Mr Western. This country has been in need of a coherent national energy policy for a long time, as the lack of one has left us in a difficult place. Figures from June 2024 show that UK energy prices are 27% higher than those of our EU counterparts. That has made energy-intensive industries unviable and is a major problem for all of us. Many millions of households in England live in fuel poverty, and total energy debt across the country is estimated to be £3.8 billion—indeed, in my constituency, it is one of the biggest causes of people slipping into debt.
The part of the solution that I want to focus on today is community energy. It is welcome that the Government are getting behind renewable energy projects, but they are paying little attention to gaining public consent. The great advantage of community energy is that it is generated locally, requires no unpopular transmission systems and benefits the very people who have to put up with the local infrastructure and the potential loss of green space. The best way to get local consent for a new solar or wind farm is to let local people benefit from the energy directly.
Unfortunately, neither the previous Government nor this one have done enough to encourage the community energy industry. It remains too costly and bureaucratic for community energy companies to become energy providers. There is no sliding scale of fees to reflect the size or capacity of an energy project, which effectively rules out smaller enterprises. Furthermore, community energy companies have to sell the energy they produce at a fraction of its genuine retail value to registered suppliers. Absurdly, local communities are frequently unable to buy energy directly from the solar farm or windmill they can see from their windows. Communities are obliged to sell their energy back to the grid at a low price and buy it back at the marginal rate of gas, with transmission costs that had no need to be included. That is despite the fact that some community energy projects achieve a 75% reduction in per kilowatt-hour pricing.
It is a real pleasure to serve under your chairship, Mr Western. I thank the hon. Member for Bath (Wera Hobhouse) for leading the debate. She has been assiduous, enthusiastic and committed on this issue, and we all owe her a debt for setting the scene so very well.
It is a real pleasure to see the Minister in his place. Mr Western, I will tell you what: as Ministers go, this is a hard-working one. He has done the lot—urgent questions yesterday, a statement yesterday, this debate today—all in a matter of hours. We look forward to his contribution to today’s debate. It is also a pleasure to see the hon. Member for Beaconsfield (Joy Morrissey) in her place as shadow Minister. In the last couple of years we have seen massive fluctuations in terms of energy prices, with thousands of households carrying the burden of that for many months. Energy prices have fallen since summer 2023, but there is little prospect of cuts soon. For that reason, it is good to be here to discuss the issue.
I will, of course, give a Northern Ireland perspective, and I have one big ask of the Minister. He probably knows what it is, and knew before we started, but I would be very keen to hear about his discussions with his equivalent in the Northern Ireland Assembly to see how we can work better here together to help our constituents back home. Global prices for gas, electricity and oil have been on the increase from summer 2021 after the pandemic. Furthermore, we witnessed a massive hike in prices after the Russian invasion of Ukraine in February 2022. There are things that the former Government and this Government have had no control over, but there are also things that we can do.
For Northern Ireland customers it has been slightly different, because we are not controlled by the energy price cap in England. However, although Government support was provided, it was withdrawn in July 2023, leading to a very large hike that families are still struggling with. The Minister knows, having responded to my urgent question yesterday, the point that I am going to make about oil: 68% of households in Northern Ireland have oil as their main and primary heating and cooking sources. Since October 2023, the cheapest prices for Northern Ireland’s largest supplier have been higher than prices under the cap in the rest of the United Kingdom.
I thank the hon. Member for giving way; he is making an excellent contribution. The radio frequency network that, as the Minister is aware, controls what many people in remote areas pay for heating will be switched off in June. At present, the replacement infrastructure is not there, so many people could inadvertently end up paying through the nose. I find that very worrying, so will the hon. Member, and perhaps later the Minister, tell us whether they agree that the data communication company needs to speed up its roll-out of cellular coverage as quickly as possible? We are only four months away from June, and it is a deeply worrying situation for pensioners in my constituency and many other remote areas.
I thank the hon. Member for that intervention. The Minister has been listening, and I know that he does listen. The hon. Member has outlined a specific issue that is incredibly worrying. The older we get, the faster time goes; I am not sure whether that is right, but it seems to go faster. June will be here tomorrow—it will be that quick—so the crisis must be addressed today. I thank him for raising that and look forward to the Minister’s response.
I will always ensure that the Minister and his Department are aware of the impact that this issue could have—and has had this winter—on health. We look to him for direction and, most importantly, reconsideration for the coming years. Schemes were available under this Government that were available under the previous Government and were set up to support families and households who were struggling, but they have now closed. Similarly, back home, the Assembly has previously taken steps to support people.
It is no secret that people are still struggling. On occasions when the price of energy is out of our hands, there are measures we can take to ease the burden. Despite the general fall in prices since early 2023, typical bills under the January to March 2025 price cap will still be 43% higher than in the winter of 2021 to 2022. The perspective of prices and costs today is really bleak, so I look to the Minister for direction and plans for the rest of the coming year to support our constituents.
Steps can be taken to reduce pressure: perhaps there could be a closer look at the impact of renewable solar energy or better dedication to financially supporting our constituents. Regardless, I look forward to hearing what the Minister has to say, and to hearing about the planned integration between himself and his counterparts back home in the Northern Ireland Assembly, because we need to see the benefits of being a part of this great United Kingdom of Great Britain and Northern Ireland. We are very proud to be part of it, but we also look to Government here centrally to help us in the Northern Ireland Assembly and to help our constituents. I honestly believe that the Minister has a heart for that, and I very much look forward to his response and to seeing how he can help us.
It is a pleasure to serve under your chairship, Mr Western. I thank my hon. Friend the Member for Bath (Wera Hobhouse) for securing this important debate. I declare that prior to being elected, I spent the better part of a decade in renewable energy finance. While I would not claim to be an expert, I hope to bring some useful insights to this debate.
The cost of energy remains one of the largest issues faced by households across the country, and nowhere is that more apparent than in rural communities like West Dorset. Fuel poverty is a dire issue. In 2023, 13% of households were in fuel poverty, and nearly 40% of households were spending more than 10% of their annual income on energy. The situation is even worse for vulnerable families: nationally, nearly 900,000 single-parent households are living in cold homes.
It is a much-cited statistic that the UK has the highest energy prices in the developed world, but that is misleading, and in no small part based on an accounting issue. In 2000, just 3% of the UK’s energy came from renewables; today that figure is 42%. Despite that progress, we are still paying energy bills tied to the price of fossil fuels because of the marginal pricing system, which means that all electricity is charged at the rate of the most expensive source, which is currently gas—a commodity that, like oil, is at the whim of international events and geopolitical fluctuations.
Between 2010 and 2021, the global average cost of electricity generated from a renewable energy source over its lifetime declined by 88% for solar, 68% for onshore wind and 60% for offshore wind. Yet, even as renewable energy has become drastically cheaper to generate, the wholesale cost of energy to consumers remains high. It is simply unacceptable that companies are making vast profits while households, particularly in rural areas, are struggling to afford the basic necessity of heating their home.
It is a pleasure to serve under your chairship, Mr Western. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing this morning’s debate. I will not speak for too long, because we have had several debates on this issue; instead, I will focus on the key points that I think need hammering home.
For several years colleagues in the highlands and islands, and now my hon. Friend the Member for Argyll, Bute and South Lochaber (Brendan O'Hara) and I, have worked on the highland energy rebate campaign., which would mean a geographic rebate for people in the highlands and islands affected by higher fuel prices. I am not precious about the mechanism for that. There is a bit of kickback about a geographic mechanism, but it is a very useful debating tool because it hammers home the fact that there is a geographic discrepancy and discrimination for people living in the highlands and islands, and the north of Scotland more generally.
We need a solution from the Government, and we need it urgently. For decades, people in the highlands and islands have been paying more for their energy than those in almost any other part of the UK. They pay more for distribution, and no other part of the UK pays more for transmission. All that people see are wires and pylons. The energy infrastructure, much of it in the highlands and islands, is used to send energy hundreds of miles away, but that is not distributed across bills in the same way as the distribution charges are. For example, in the flat that I live in when I am down here in this place, I pay roughly 40p on standing charges, and at home I pay 60p-plus on standing charges. That is a third extra every single day on that standing charge, and that is the same for people across the whole of the highlands and islands, which puts it in perspective for folk.
For decades, successive Governments have failed to tackle poor regulation. Ofgem has shown little interest in dealing with energy prices in the north of Scotland. Twenty years ago, we were less focused on decarbonisation issues than we are now. We were trying to get people on grid because there were so many people off-grid in the highlands and islands. The authorities would not look at getting gas into more remote areas; that was very low on the priority list. I am not advocating that we should do that now; new technologies have come in since then and we need to focus on decarbonising our energy systems. But it evidences that this has been going on for a long time, and that solutions have not been found.
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When it comes to energy, the benefits of co-operation with the EU are overwhelming. Shared markets bring stability, common rules ensure fair trade and joint planning strengthens resilience against global energy shocks. The EU and the UK share the same fundamental energy challenges in securing affordable, clean and reliable power for the future. Our interests remain aligned and so should our approach. We must ensure that divergence, where it happens, is a decision and not an accident.
In addition, we need to focus on policies for community energy. We Liberal Democrats have long championed the idea of community energy. Community energy currently accounts for less than 0.5% of total UK electricity generation capacity. However, according to the Parliamentary Environmental Audit Committee, with the right Government support, the sector could grow 12 to 20 times by 2030, powering 2.2 million homes and saving 2.5 million tonnes of CO2 emissions every year.
I welcome the Government’s inclusion of the local power plan in the Great British Energy Bill, which marks a welcome step forward for the community energy sector. The plan intends to deliver an ambitious target of 8 gW of renewable energy projects by 2030, in partnership with local authorities and communities across the country. To achieve that target, significant scale-up of local and community-owned energy will be required and we will need a support programme in place for community energy organisations in England, drawing on successful models from Scotland and Wales.
Bath and West Community Energy, a community benefit society, has reduced carbon emissions by an average of 3,300 tonnes per year with its around 31 renewable energy projects. Let us make sure every community across the country has something like Bath and West Community Energy in its patch. As we have repeated many times, community energy reduces bills, creates local jobs and accelerates the transition to a low-carbon future.
Home insulation is another key area to reduce energy costs, particularly in my Bath constituency, where much of the housing stock is old and in dire need of insulation. Insulation remains one of the most effective ways to reduce energy demand, lower bills and cut emissions, but the Government have significantly delayed the implementation of their warm homes grants. The scheme was not implemented this winter and will only operate from next winter. The Government must tackle the efficiencies of these schemes head-on, ensuring that residents receive retrofit measures that provide value for money and stand the test of time. The Select Committee on Energy Security and Net Zero will look into those issues tomorrow, and I hope people will listen very carefully.
To accelerate and de-risk delivery of the warm homes plan, the UK Government should create a national expert advice service for England so that households have the confidence to receive tailored advice to upgrade their homes. Doing so would deliver consistent outcomes across the country and end the postcode lottery in advice services.
I hope the Government consider the points outlined today. We need long-term solutions that will make clean energy affordable for all, meet our net zero targets and lift the pressures on families of rising energy costs.
However, the crisis did not happen overnight; it is the direct result of years of Conservative failure to properly insulate our homes, diversify our energy sources, reform the energy market and, ultimately, protect consumers. The previous Government’s resistance to onshore wind, their devastating cuts to energy efficiency programmes and their reckless over-reliance on volatile international gas markets has left British taxpayers paying the price.
When the last Labour Government left power, energy efficiency installations were at their peak, with 2.3 million homes upgraded, but the next Government dropped support and the numbers plummeted. As was mentioned, we now have some of the least efficient housing in the whole of Europe. The consequences of those decisions are felt every day by my constituents, who find themselves living in poorly insulated homes. There are 17,000 homes in Northampton South with an energy performance certificate rating of C or below. Those homes waste energy, but also my constituents’ money.
The fundamental issue is clear: we must break our dependence on gas if we want energy bills to come down. As Ofgem’s chief executive officer told the Committee a few weeks ago, unless we transform energy infrastructure we will remain at the mercy of volatile international gas markets. The evidence shows that, in a clean power system, even a major shock of the kind we have seen in recent years would see bills rise by an average of 9%, versus 44% following the gas crisis in 2022. That is why this Government’s mission for clean power is so vital. It is not just about the climate; it is about bringing bills down. Under questioning from our Committee, Ofgem’s representatives agreed that the target, while ambitious, is very achievable. However, they also warned that, without urgent action on planning reform and supply chains, we risk missing that crucial deadline.
We must also acknowledge the historic failures of market regulation. Consumer debt has now reached an astronomical £3.82 billion, which is nearly double what it was two years ago. When we pressed Ofgem representatives on what would trigger serious Government intervention, they could not give a clear answer, but it is clear that something more has to be done. The chief executive admitted that they should have developed much more detailed rules on prepayment meters and market regulation much earlier, rather than relying on broad principles that left vulnerable customers exposed. Even now, Ofgem acknowledges significant gaps in its powers to protect consumers, particularly around data sharing between Government Departments to identify vulnerable households that need support.
The Committee dug into one particular example: the regulator’s handling of supplier failures, which is deeply problematic. We were told that when energy companies went bust, the shareholders were able to walk away with hundreds of millions of pounds of energy hedges, while taxpayers were left picking up the bill. Ofgem admitted to us that it lacks the power to recover those funds on behalf of the taxpayer, so hundreds of millions of pounds have been lost to those who have gambled on our energy market. That is a striking example of how the market has been stacked against ordinary people. The regulator’s director of markets did acknowledge to the Committee that some suppliers are still not compliant with new financial resilience requirements, but he could not assure us as to what actions Ofgem would take if those suppliers fail to meet the deadline by March.
Moving to clean power is essential, and we must take immediate action to protect vulnerable households. That is why I support the move to a social tariff; a discounted energy scheme for low-income households would make sure that we build a fairer, greener and more sustainable energy system for everyone. At its core, a social tariff is a targeted discount on energy for people on low incomes, which would act as a vital safety net and ensure that nobody must choose between heating and eating. A social tariff could provide a guaranteed below-market rate for eligible households, with automatic enrolment for those who qualify. There would be no complex switching around or shopping around, just straightforward help for those who need it.
The evidence shows that 6.1 million households now live in fuel poverty, with many of those who are struggling paying a poverty premium. They are using prepayment meters or are on standard variable tariffs, which is simply wrong. A properly designed and implemented social tariff would be mandated across all suppliers, so that no one misses out; it would automatically enrol eligible households, using existing data to remove barriers to entry; and it would deliver real savings for those most in need.
As one of the richest economies in the world, we should make sure that everyone can afford to keep their homes warm. The technology and the mechanism exist, but now we need the political action to make it happen. Achieving clean power by 2030, combined with proper consumer protection and targeted support, will bring bills down for good. The previous Government’s failures have cost families dearly, and I urge Members on both sides of the House to use their voice to call for greater protection for energy users and greater power for regulators, and to call out the profiteering of energy companies at times of crisis.
The cost of energy is pushing people into hardship today, and without action it will do for years to come. Just in Epsom and Ewell, 6,518 people are living in fuel poverty. I welcome the work of the many community centres that provide warm hubs, but frankly they should not be needed. We must support households by restoring winter fuel payments, introducing a social tariff and driving a rooftop solar revolution. We must cut bills by investing in clean energy, making homes more efficient and ensuring that those who have done the right thing and gone green are not penalised. This is about security, sustainability and fairness. The Government must act; the cost of inaction is simply too high.
Those obstacles are part of the reason why Community Energy Horsham in my constituency is struggling to get its solar energy project across the line. It has had council backing for a community-funded project to put solar panels on the Bridge leisure centre for some time, and I am sure it will happen at some point, but it has taken a few years already and the whole process is much more difficult than it needs to be.
We need a community electricity export guarantee to create a statutory right for sites with capacity below 5 MW that generate low-carbon electricity to export their electricity on their terms to an existing electricity supplier. We need a community electricity supplier services scheme to create a requirement on existing larger energy suppliers to work with community schemes so that they can sell the power they generate back to local customers.
Encouraging community energy is the democratic way to determine local land use. When local communities directly reap the rewards from community energy projects, it not only puts power—in every sense of the word—in the community’s hands, but demonstrates the benefits of a greener energy transition, which is important for our net zero targets and the planet.
I urge the Government to put public consent at the heart of their energy strategy—indeed, I could say the same about their planning strategy, but that is a whole other debate. The best way to do that is to empower community energy schemes. Never mind Great British Energy, I want to see Great Horsham Energy and, indeed, Great Everywhere Energy.
The cost of energy can be monumental for local businesses, not just for the large chain businesses. The local, family-run small business is the one that will probably suffer the most. After the pandemic, I was approached by countless local businesses in my constituency that were simply unsure how they would survive. After so many years, many were facing the climax of their business. A local coffee shop I frequently used in the town where my office is had to close down as it was no longer sustainable. Energy suppliers back home, such as Power NI, can provide tailored plans for businesses, but the price is no different and businesses can often be forgotten.
It would be remiss of me to participate in this debate without mentioning the impact of the Government’s decision to withdraw the winter fuel payment from pensioners. Many such pensioners in my constituency who have contacted me relied on that payment to get them through the winter. There are concerns not only that this may plunge thousands of pensioners into fuel poverty, but about the massive potential health risks. Older individuals’ struggling to afford adequate heating could increase the risk of respiratory illnesses, strokes and hypothermia. It is not an exaggeration to say that many of the elderly people that I know do not have and cannot afford to heat, so they do not turn it on, but they do put on extra clothes. It is distressing to visit elderly people and see them wrapped up like a polar bear—
The Government could solve this problem by delinking fossil fuels and renewable energy pricing, as other countries do. Our wholesale energy price would then be the weighted average between the two, which would bring us on a par with the energy prices of other nations. Far more importantly, it would also reduce the cost to consumers. The Government must take decisive action to break the link between gas prices and electricity prices. The previous Government promised to review electricity market arrangements, and this current Government should do so. Creating a separate market for renewables and fossil-fuel generated electricity would make energy fairer and more affordable to consumers.
I will make one other appeal for action by this Government. It is a trope often repeated that we need to put more solar panels on roofs and car parks, rather than farmland. I do not disagree, but the trope fails to recognise that doing so is commercially unviable. If utility-scale solar—this is an oversimplification—costs 50p per unit to build, commercial rooftop is double that, and carports double that again. The value paid by energy companies for exported renewable energy is often as little as 5p or 5½ p per unit, so utility scale is the only solar that works as a pure export model. That unit of electricity is then sold under a green energy tariff to consumers at a vastly inflated price. The only people who benefit are the energy companies.
Again, the Government have a relatively straightforward fix at their disposal: mandating a minimum export value. Yes, energy wholesalers will make less money, but I can live with that. More importantly, it would unlock investment in rooftop and carport solar, end the competition between food production and net zero, and ultimately reduce costs for consumers. Those are easy wins for a Government who claim to be committed to fighting climate change. Instead of following the advice of industry, the Government have chosen to axe winter fuel payments, stripping vital support for many of the poorest pensioners at a time when energy bills remain high—a decision that should be reversed.
The UK must take back control of its energy future. We cannot continue with a system where consumers are at the mercy of volatile international gas prices while energy companies rake in massive profits. We must end the outdated pricing model that ties renewables to the cost of fossil fuels, and we must unlock investment in rooftop and carport solar. We must ensure that the benefits of renewables reach the people who need them most and ensure that no family, child or pensioner is left struggling to heat their home when we have the tools to fix this at hand.
Governments have always focused on urban areas with big populations to the detriment of rural customers. That is not acceptable, because the highlands and islands of Scotland are the coldest parts of the UK and have the highest levels of fuel poverty per head of population. That major issue needs to be addressed.
I want to highlight a couple of strategic issues about generators. We have wind farms consented to produce many gigawatts, but they are not able to progress because the Ministry of Defence has not come up with a radar solution that will allow them to operate. That is a matter of urgency. It is about capacity within the MOD and the amount of effort that it has been able to put into coming up with a solution; it is not because there is no solution, but because not enough people are working on it.
As a consequence, we have big projects that would generate employment through their construction and would contribute to our net zero goals, but they cannot get over that hurdle, despite being consented and having passed all the other barriers. If they cannot get over that hurdle, those consents will fall and the projects will be lost. That needs to be urgently addressed, and I urge the Minister to do what he can to work with colleagues in the MOD to get some focus on that.
I welcome the work on social tariffs, on which the SNP has a manifesto commitment, and I know from colleagues in the Scottish Government that a lot of close working is going on with the Department, which I welcome. Hopefully we will see a positive resolution to that in the not-too-distant future.
Finally, it would be remiss of me not to mention the winter fuel payment. The £300 winter fuel payment has been lost to tens of thousands of people across the highlands and islands. That combines with the points I have already made—along with the cost of energy going up since the Government came in last July and the promise to reduce energy bills by £300 for the most vulnerable pensioners—so we are now looking for £780. I am not entirely sure how that £780 reduction in bills will be achieved, but that is essentially the position that the Government find themselves in—they need to find that for thousands of people in order to maintain that manifesto pledge, and it will be interesting to know how that is going to happen.