That this House has considered e-petition 608056, relating to public ownership of energy companies.
It is a pleasure to see you in the Chair, Mrs Murray. I am grateful for the opportunity to present this important and prevailing issue—so prevailing that, within one week of the petition closing, another one, with the same title, was opened. I encourage anyone who supports the call for the Government to take back ownership of strategic energy assets to consider signing the new petition, because the issue is clearly not going away any time soon, and Parliament will undoubtedly be asked to revisit it. The new petition will remain open until 1 March next year.
The petition before us closed on 9 August and attracted over 109,000 signatures, including over 200 from my constituency. Before moving on to the essence of the debate, I thank the signatories to the petition and I particularly thank David Abrahams-Edley for starting it. It is David’s action that brought us here today for what I am sure will be an enlightening discussion. It is worth mentioning that David’s petition was started in February this year, just after Ofcom—Great Britain’s energy regulator—announced there would be a substantial, 54% price cap increase from 1 April. The fact that the petition was started before the announcement of an additional, eye-watering rise of 80% from 1 October shows a foresightedness that appears to have largely escaped the Government. I will say more about that later.
The petitioners call for the Government to
“take back ownership of strategic energy assets”
and
“accept that the Free Market has failed the energy sector”.
They believe that
“it is in the national interest to renationalise our energy assets”
In August, the Financial Times estimated that if a buyer was not found for Bulb the cost to the public purse could have reached £4 billion by spring next year, although transfer of ownership has now been agreed. Does the hon. Member share my concern that bailing out privately owned companies in this way could have a catastrophic impact on the public finances, whereas nationalising them could be much cheaper?
The hon. Lady makes a good point. It is reasonable to say that UK Governments of all stripes have overseen the deeply dysfunctional system of privatised energy companies, and we are where we are today. We need to get out of the hole that we are in.
It goes without saying that the situation that people are now facing has worsened considerably. In September, inflation exceeded 10%—its highest rate in 40 years.
It would be helpful if we quickly reminded ourselves what a free market is or is meant to be. Voluntary exchanges take place, accounting for supply and demand, and that is the basis of an economic system without Government intervention, with a key feature being the absence of coerced transactions or conditions on transactions. However, we all know that free market economies do not exist in the real world, because all markets are constrained in one way or another, with Ofgem and the introduction of the price cap being the obvious interventions in the market we are debating, and that is before the current energy crisis triggered even more interventions. So when the opening paragraph of the Government’s response to the petition states:
“Properly regulated markets provide the best outcome for consumers as a driver of efficiency and innovation”,
it raises various questions. Clearly, consumers are not benefiting from the best outcome. Does that therefore signal that the free market has indeed failed the energy sector, as the petitioners believe, or that the energy market is not being properly regulated? Either way, something is not working. Will the Minister tell us what the Government can do to fix it, if he does not agree that nationalisation is the right approach?
It is reported that economists who measure the degree of freedom in markets have found a generally positive relationship between free markets and measures of economic wellbeing. Unfortunately, most people in the UK are not enjoying economic wellbeing—we only have to look at the end of the Government response, which details what is described as the “unprecedented scale” of financial support that the UK Government are providing, to see that. Consequently, although Government intervention in this regard is welcome—indeed, necessary—it also serves as evidence that
It is an honour to serve under your chairmanship this afternoon, Mrs Murray. I pay tribute to everybody who has signed the petition.
Energy is a necessity for all of us, yet people are at the mercy of big business when it comes to deciding who can afford to heat their homes or run their businesses. Profits at the world’s biggest oil companies have soared to nearly £150 billion so far this year. At the same time, as the e-petition acknowledges, people are having to choose between heating and eating. That cannot be right. As Lord Sikka has written:
“It is Christmas every day for oil and gas companies, and their shareholders and executives are laughing all the way to the bank, leaving the rest of us to pick up the cost in higher energy prices, inflation, bankruptcies and a deepening cost of living crisis.”
Labour called for a windfall tax on oil and gas back in January so that some of the eye-watering profits that are being raked off by big business could support people to pay their bills. However, it took months for the Government to U-turn and follow Labour’s lead, and even then the then Chancellor, now Prime Minister, could not resist resorting to his instinct to put big business first and everyone else last. He allowed those energy giants to shield most of their profits from the very levy that he was announcing. The Energy (Oil and Gas) Profits Levy Act 2022, which the current Prime Minister designed, allows energy companies to apply tax savings worth 91p in every £1 invested in fossil fuel extraction in the UK. Promoting fossil fuel extraction instead of investment in renewables is irresponsible as we face the climate emergency, and it is an insult to young people and to future generations. Labour has called for the tax to be tightened to remove the option for energy firms to claim tax relief on 91% of the levy if the money is reinvested.
It is notable that, during the passage of that Act, the Government voted against a Labour new clause that would have required an assessment within three months of the Bill becoming law of how much extra revenue would have been raised if the levy had been introduced on 9 January 2022 rather than 26 May 2022. The 9th of January is significant because that is when Labour first called for a windfall tax—four and half months before the Government came forward with their U-turn. Why did it take the Government so long to act? I would be grateful if the Minister could respond on that point. There have been reports over the weekend that the windfall tax on energy companies could be raised to 30% and extended by three years. Perhaps the Minister could give us more information today, and let us know what discussions have taken place about that in Government.
On that point, in September, in response to a written question on an impact assessment for nationalisation, the then Minister, the right hon. Member for Beverley and Holderness (Graham Stuart), said:
“The Government does not intend to make such an assessment. Nationalisation will not solve the current challenge of high global fossil fuel prices and the impact this is having on the cost of energy.”
Does the hon. Member agree that it is difficult to see how Ministers can speak with such certainty if they will not even make a full assessment?
The hon. Lady raises a really interesting point, and I thank her for it. To me, it speaks of ideology rather than taking a practical approach to what needs to happen to secure our energy and bring down our energy costs.
Among other things, GB Energy will enable long-term investments in a range of new and emerging technologies. It will also ensure that home-grown research and development leads to domestic manufacturing, and nurture partnerships with small and medium-sized enterprises and large local employers. It will enable the UK to retain the strategic assets that we need to build national resilience.
To reiterate my earlier point, of the 10 countries in the world who are leading the clean energy transition, only the UK does not have a public generation company. The Government should reflect on that and be bold, as a Labour Government would be.
It is a real pleasure to serve under your chairship, Mrs Murray, and a pleasure to follow my hon. Friend the Member for Wirral West (Margaret Greenwood), who always makes such a compelling case for public ownership. I was pleased that she mentioned the escalating privatisation of the national health service, which she has worked hard to expose. It seems to me, and to many others, that the Government have an ideological opposition to public ownership: no matter the evidence, reality or public opinion, the Government will resist it.
Let us take a look at the petition that secured today’s debate: 109,000 people signed it, showing the strength of support for bringing energy into public ownership. A Survation poll this year showed that not a bare majority of the public, but 66%, believe that energy should be in public ownership. That includes a majority of Conservative party voters, and maybe even members too. The energy sector is being used as a cash cow for shareholders. We have an energy system that is privatised at every single stage—generation, transmission, distribution and supply. That means that at every opportunity, profits are extracted so there are higher bills for ordinary people, and so there is less investment and a worse service, resulting in a failure to make the green transition work.
Let us take the big six energy suppliers. Common Wealth shows that £47 billion-worth of dividends and share buy-backs have occurred since 2010. That money should have been in a public system, but it goes much deeper than that. Even the National Grid is paying out billions each year in dividends. It is lose-lose for everyone, apart from those who own our system. Who does own energy? Other states have bought our system, as is the case with EDF, for example. So have billionaires. Northern Powergrid is owned by the US billionaire Warren Buffett. UK Power Networks is owned by the Hong Kong billionaire Li Ka-shing.
The high prices are not just about the global crisis. Of course, we are in a global crisis, but privatisation makes it much worse. In many other countries, energy bills have not increased as they have here. Their Governments are using public ownership as a tool to help people. In France, for example, publicly owned EDF kept energy bill rises to just 4% in April 2022, while our prices soared and soared. Norway has been paying 80% of people’s bills above a capped price.
It is an honour to speak under your chairmanship for the first time, Mrs Murray. This winter, more than three quarters of UK households will face fuel poverty. Many will have to make impossible choices between putting food on the table or keeping the lights on. We are now at the dystopian point where local councils are forced to open warm banks to prevent people from freezing to death in their own beds. Unfortunately, this was the harsh reality for many across the country long before this current crisis. The UK is ranked sixth highest in long-term rates of excess winter mortality out of 30 European countries; that is literally thousands of people dying from fuel poverty because of extreme costs every single winter.
According to research from National Energy Action, the UK experiences mortality rates of, on average, 32,000 more deaths in each December to March period than across the rest of the year. Of these, 9,700 deaths are directly attributable to the avoidable circumstances of living in a cold home. That is about the same as the number of people who die from breast or prostate cancer each year. How shocking is that? The scale of the surge in fuel bills represents the gravest threat to living standards since the second world war. This winter, as fuel poverty skyrockets and inflation hits a decade-high peak, the impact on families cannot be overstated. Unless dramatic action is taken by the Government, countless people could even die, and that responsibility will lie in the hands of the Government and their friends in the energy lobby.
Thinking locally, my inbox is full of desperate pleas from my constituents—from carers, pensioners, local businesses and ordinary people who have not the slightest clue how they or their business will survive this winter. Sadly, they feel incredibly let down by the people in this House and this Government. They think that their pleas are not being recognised, heard or even valued.
It is a pleasure to serve under you as Chair, Mrs Murray. I commend the petitioners. It is clear that we need a serious debate about energy, strategic assets and how the energy market operates. For too long, what has constituted a so-called debate in this place has been the argument that private is good, and nationalised or public sector is bad—or vice versa. Unfortunately, there does not seem to be too much debate today either: most of the speakers are in broad agreement. It prompts the question: where are all these compassionate Conservatives, bringing forward their views, sticking up for what is going on and putting forward other ideas? [Interruption.] I see that someone is pointing to the Minister from a sedentary position. I state the obvious: the Minister has to respond. We will get his point of view, but where are all the Conservative Back Benchers?
I commend my hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) for securing the debate on behalf of the petitioners. He spoke in a balanced way, while also highlighting the abject failures of this UK Government. My hon. Friend rightly pointed out that the free market has effectively collapsed and failed. There has been insufficient regulation over the years. He also said that, if there was a properly regulated market, the citizens of the UK would feel the benefit, and there would not be such high levels of fuel poverty. He highlighted that the problems were exacerbated by Chancellors coming and going, and Prime Ministers coming and going, and the fact that when the current Prime Minister was Chancellor, he had no idea of the scale of the problem. The then Chancellor tried to introduce a £200 energy loan scheme, which would clearly never address the issues that real people face as they struggle to pay their energy bills.
Another point that my hon. Friend made on behalf of the petitioners was the need for a 25-year strategic plan. I certainly agree. In the long term, we should be looking at how we get to net zero. What do we need to do to get there? Where should we build the generation facilities to facilitate that, and in the cheapest possible way? What grid upgrades will we need? What other measures should be implemented, such as energy efficiency and upgrading homes properly? That would be long-term planning, and it would realise the most benefit for people in the UK.
Before I call the shadow Minister, I understand that people watching the debate online were unable to view the first 20 minutes. I reassure anyone watching that the full recording of the debate will be made available online later.
Before we go any further in this debate, we ought to be clear about what the petition is calling for. I congratulate the petitioners on bringing forward the petition, which has received over 100,000 signatures, 500-plus of which are from my city of Southampton. I congratulate the petitioners on bringing it forward because it really underlines just what a dreadful state we are in at the moment with our energy provision and energy markets. I take the petition to mean that the Government should effectively expropriate all generation, all transmission, all distribution and all retail energy; place it, with compensation, in the public sphere; and then run a fully nationalised energy system, as was the case 30 to 40 years ago, before the privatisation experiment came into being.
I can see why many people consider that that is the brief solution to the awful mess that we are in the moment. They see that they are paying sky-high energy bills and that, at the same time, a number of energy companies are making sky-high profits not from their ingenuity in suddenly developing new ways of delivering energy, but from doing what they have always done: supply gas to the UK market for the production of power, for which retail customers are paying sky-high prices.
Those customers scratch their heads about why that has happened: “How is it that we are paying absolutely out-of-the-window high energy prices while companies are making such enormous windfall profits?” They scratch their heads when the Government spend such a long time deciding whether to alleviate some of the problems caused by those sky-high bills by introducing any form of windfall levy on those companies, and when the Government put an enormous loophole in the windfall tax so that the companies get back most of what they would have paid in windfall tax if they are, so they say, in a position to undertake further gas and oil exploration. The grotesque result is that Shell has not—
Order. I remind the hon. Gentleman that he should address the Chair.
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“the Free Market has failed the energy sector”,
as the petitioners say.
At this point, a bit of background about the Government action in relation to the current energy crisis would be helpful. We likely all remember that the proposed solution of the right hon. Member for Richmond (Yorks) (Rishi Sunak) to situation at the time was to reduce every domestic electricity bill by £200 and then recover it over a five-year period. That initial intervention was the
“token gestures of mandatory loans”
mentioned in the petition. In case anyone is confused by the revolving doors at the top of this Government, the right hon. Member for Richmond (Yorks) was the Chancellor when David’s petition was started, not the third Prime Minister we have seen this year, as he is today.
Thankfully, that part of the petition was addressed by the then Chancellor, and his so-called loan-not-loan was ditched and replaced by the energy bills support scheme, under which domestic electricity consumers were to receive £400 of support with their energy bills, paid as a grant over six months, starting from the beginning of this month.
Then our second Prime Minister this year, the right hon. Member for South West Norfolk (Elizabeth Truss), announced the two-year energy price guarantee—an intervention in an intervention—which superseded the proposed energy price cap increase of 80% and limited the price that suppliers can charge customers for units of gas from 1 October. That move was of course widely welcomed, not least as the right hon. Member for South West Norfolk was reported to be acting
“so people and businesses are supported over the next two years”,
but it was simultaneously criticised for being misleading. A UK Government press release on 8 September stated:
“a typical UK household will pay no more than £2,500 a year on their energy bill for the next two years from 1st October”.
However, the MoneySavingExpert Martin Lewis, who is arguably the most trusted man in Britain, commented:
“I’ve seen a lot of confusion, so let me start by saying there’s NO MAXIMUM ENERGY BILL.”
Not surprisingly, that confusion continues.
Exactly two weeks ago, the right hon. Member for South West Surrey (Jeremy Hunt), our fourth Chancellor this year—so far—announced that, instead of lasting two years, the energy price guarantee would last only until April next year. In just over five months, many could be placed back on the energy regulator Ofgem’s price cap. According to energy analysts Cornwall Insight, that means another massive hike in bills for millions of people. The current prediction under Ofgem’s existing cap methodology is an increase of 74% more than the energy price guarantee.
I hope everyone here is keeping up with the Government actions taken so far to manage the UK’s energy crisis. Recapping on these recent events demonstrates that the energy crisis could have been handled in a more straightforward way if strategic energy assets were not open to the free market economy but owned by the Government, as the petitioners call for.
In the previously mentioned UK Government press release of 8 September, the right hon. Member for South West Norfolk was reported to say:
“Decades of short-term thinking on energy has failed to focus enough on securing supply”.
I am sure that that is a sentiment the petitioners wholeheartedly agree with. Indeed, they call for a 25-year strategic plan. However, like me, I do not think they would agree that launching
“a new oil and gas licensing round”
and lifting
“the moratorium on UK shale gas production”
is the way forward. That is regressive and builds on a nonsensical investment allowance that, unbelievably, incentivises investment in fossil fuel extraction instead of a just transition. Investment in energy security should be targeted at renewables, carbon capture and storage, and our net zero future. Have the Government forgotten the commitments they made to the world at COP26 last November? Additionally, the press release was entitled,
“Government announces Energy Price Guarantee for families and businesses while urgently taking action to reform broken energy market.”
If that reference to a broken energy market does not align with the petitioner’s claim that
“the Free Market has failed the energy sector”,
I fail to see what would.
Returning to a question I posed earlier about whether the energy market is being properly regulated, will the Minister explain why the Government’s response states that they continue to believe
“that properly regulated markets…provide the best outcome for consumers and promote market competition as the best driver of efficiency, innovation and value”?
Aside from the fact that market competition has all but disappeared, with the removal of lower-price tariffs from the market, and with around 24 million households out of 28 million on standard variable tariffs at the end of August, I do not think people across the UK believe they are getting value from the energy market, not least because of the punishing standing charges that are levied before even a kilowatt of power is used. Perhaps the Minister can come up with something to change my mind on that.
The Government response also mentions that
“properly regulated markets…incentivise private capital to invest in the energy system”.
My basic understanding of investment is that private capital is invested to make money for the people who have money to invest in the first place. Would it not therefore make more sense if those energy assets were in public ownership, so that the return on investment came back to the public purse, not the coffers of the energy companies? Of course, the temporary energy profits levy gains 25% of profits from oil and gas firms, and it is reported that it will raise £5 billion in its first year. That will help, but does the Minister agree that 100% of profits would help more?
The Government response stated that
“if the Government renationalised energy companies, the British taxpayer would have to compensate directors, shareholders, and creditors to the tune of tens of billions of pounds—money that would be better spent supporting families.”
This is where I return to the Government’s lack of foresightedness. Have they considered that the taxpayer has already been saddled with the burden of paying for the Government’s cost of living support for years to come? Has any assessment been done comparing a one-off payment to directors, shareholders and creditors with the repeated, ongoing costs that have been forced on the taxpayer? Why should the public be paying for energy costs while companies rake in significant increases in profits earned from UK oil and gas extraction?
Earlier this month, the chief executive of Shell said:
“The solution should not be government intervention but protection of those who need protection.”
That was before Shell’s third-quarter profits of $9.5 billion were reported just last week—eye-watering profits for the super-rich, compared with eye-watering bills for those who can least afford them. The Government are making the rich richer at the expense of low-income and middle-income households. Can they take immediate and prudent action to protect those most impacted by this energy crisis, now and in the future?
I am reminded of a famous George Bernard Shaw quote:
“Success does not consist in never making mistakes but in never making the same one a second time.”
Can the Minister convince me, as well as David and the other petitioners, that the Government’s refusal to nationalise the country’s strategic energy assets is not, in fact, an ideological blind spot? A nationalised energy sector would have the potential to deliver an integrated approach, guiding the country away from its dependency on unstable fossil fuels, thereby tackling climate change while, at the same time, protecting consumers. Are this Government capable of using some foresight?
I feel I have barely scratched the surface of the issues surrounding today’s petition, but I look forward to hearing the contributions of the other speakers. I particularly look forward to hearing what the Minister has to say in response.
It is clear that there is a need for long-term change where energy is concerned. As the independent campaign group We Own It has highlighted, of the top 10 countries in the world that are leading the energy transition to renewables, only the United Kingdom does not have a publicly owned renewable energy generation company. Of those that do, Sweden owns 100% of Vattenfall, one of Europe’s largest producers of electricity and heat; Norway owns 100% of Statkraft, Europe’s largest renewable energy producer; Switzerland owns 100% of Axpo, the country’s largest producer of renewable energy; Iceland owns 100% of Landsvirkjun, the country’s largest electricity generator; and France will soon own 100% of EDF, a world leader in low-carbon electricity generation and a company that many of us in this country use—despite the fact that the French people will own 100% of it fairly shortly. The other countries—Denmark, Austria, Finland and New Zealand—all own at least 50% of renewable energy generation companies.
There is a lot of public support for the United Kingdom to go down a similar path. There are no profits for shareholders in a publicly owned energy company. A poll for We Own It, carried out by Survation, found that 66% of those surveyed wanted energy in public ownership. Earlier this month it was reported that a YouGov poll found that 55% of more than 1,700 adults who were surveyed across Great Britain favoured public ownership of energy. In August, a poll by 38 Degrees found that 73% of voters would favour temporarily renationalising energy companies if they cannot offer lower bills.
Public ownership of services is understandably popular, whether that be energy, water, buses, trains or the NHS. The NHS has been massively opened up to the private sector on the Conservative’s watch, with billions of pounds of taxpayers’ money being handed to private companies to treat NHS patients. Privatisation is never a guarantee of quality. According to a study by the University of Oxford, private sector outsourcing in the NHS corresponded with significantly increased rates of treatable mortality, potentially as a result of a decline in the quality of healthcare services.
To return to energy, Common Wealth reported recently that 72% of voters think it is a good idea to set up an energy company that is Government owned and aims to create low-cost environmentally friendly energy. Labour has announced a plan to establish Great British Energy, a new publicly owned, clean-generation company that will harness the power of the sun, wind and waves to cut energy bills and deliver energy security and independence for our country, as well as good, secure, high-paid jobs.
Even before the current energy crisis began, domestic energy bills steadily increased by 50% in real terms—inflation-adjusted—from 1996 to 2018. We see and people out there feel what privatisation means in practice. In practice, privatisation of our energy system means higher bills than needed. Research shows that prices are 20% to 30% lower in systems with public ownership. Privatisation means, in practice, wasting vital funds on lining the pockets of shareholders. Privatisation means, in practice, failing to invest enough in connecting renewable energy to the grid, with the needs of the current fossil fuel firms put first.
What is the way forward? This petition, signed by well over 100,000 people, shows the way forward: nationalise the big five energy supply retail companies, most of which are just owned by bigger companies anyway. I welcome the plan from the TUC setting out how a publicly owned energy retail system could deliver a social pricing structure that lets everyone afford the energy they need to cook, clean and stay warm all year round, while the wealthiest with extravagant energy use pay more per unit. The way forward is also to bring the privatised monopolies of the National Grid and regional distribution into public ownership to help us prepare for the energy transition that we need. The way forward must include introducing permanent—and high—windfall taxes on North sea oil and gas companies that use the revenues to cut people’s bills, invest in renewable energy and pay for further nationalisation policies that will benefit the country.
We must create a new state-owned renewable energy company to ensure that the errors of privatisation are not repeated. It is useful to reflect on the fact that nine out of 10 countries leading on green transition have a state-owned company leading the way on renewables. We cannot become fixated on continuing and defending privatisation because of ideological dogma and the hero worship of the Thatcher period. As someone once said, “What matters is what works.” Public ownership works; privatisation has failed. Let us have an energy system that puts people and planet before profit. If we do, that is a good way to set about helping to get people through this cost of living crisis and making way for a better, greener, fairer and more decent future.
Ilford is a proud and diverse working-class community. I have lived and worked there most of my life, and I am proud to still call it home now. It represents the best of our country: its diversity, industry, entrepreneurialism and communal spirit. However, working-class communities like Ilford are suffering—they are being left behind to freeze this winter. The Government tell us that we must all tighten our belts during this crisis and be prepared to make tough decisions and sacrifices. Why do these tough decisions seem to fall on working-class people every single time, when many at the top think that things have never been so good?
This year, Britain’s oil and gas giants are taking home record profits. Last week, Shell announced profits of £8 billion—double its profits for the same period last year. In August, the big five posted quarterly profits of £50 billion. These energy companies are literally profiteering off the backs of the unimaginable suffering of millions in the UK, paying out huge multibillion-pound dividends and bonuses to their wealthy shareholders. It is an immense cost, and it is hurting people.
It is not as if those companies are running an exemplary service for which they should be rewarded. While supporters of privatisation may claim that it benefits consumers and lowers prices, the opposite has been true. Even before the current energy crisis, domestic energy bills had increased by 50% since energy was first privatised by Margaret Thatcher. The UK energy industry is now so bloated and out of touch that it is unable to deliver for the citizens of this country. I argue that it has, in fact, stifled innovation and held back the fight against climate change. Because the market is so desperately out of control, the UK has lost a decade of potential progress on decarbonising buildings, and that has made the task of decarbonising before it is too late all the more challenging. It is hardly cost-effective for the taxpayer, either. Since June 2021, this Government have spent more than £2.7 billion to bail out these failing energy companies.
It is indeed a great energy rip-off. It has sparked palpable public outrage, with people organising on WhatsApp and the internet about not paying their bills in the same way as with the poll tax revolts in the ’80s. People are sick and tired of being taken for mugs by the ultra-rich who are ransacking the economy and making even more money on a daily basis.
There is clearly an alternative. Private UK energy providers must be replaced by a single publicly owned energy company that is run in a way that involves workers and—more importantly—consumers alike. It is the right thing to do for the families who have been suffering for so long. Bringing those energy companies into public ownership, or, as Labour has proposed, starting a new company that could begin to take control and offer better services for all at cheaper prices, would allow us to put a freeze on any further price increases for the remainder of this Parliament—at least until the end of 2024. There could be cuts to current charges and the company could deliver a moratorium on disconnections.
Bringing energy companies into public hands would also generate huge revenues for the state. Analysis by the TUC shows that the Government are missing out on between £63 billion and £122 billion of direct income over the next two years because of past decisions to privatise power plants and the resulting lack of UK public ownership of electricity generation.
Bringing energy companies into public hands would also truly put Britain back at the heart of the battle against climate change—the biggest issue facing humanity. Indeed, the election in Brazil was won partly on that basis. Research by We Own It found that state-owned utilities invest far more in renewables, as they can make use of the state’s ability to plan for the long term and ensure that more ambitious climate targets become a reality.
UK public energy would accelerate the deployment of new clean power. It could include developing new technologies where the private sector is slow to scale up—priming the pump for the private sector to get with the programme—such as floating offshore wind or zero-carbon hydrogen. It would also deliver thousands of good, green, unionised jobs. Evidence commissioned by GMB suggests that where public bodies invest in renewables directly, orders are far more likely to be placed through UK supply chains, ensuring that we all benefit from the climate transition. Nine out of 10 countries leading the green transition have a state-owned company of some description—why do we always choose, through sheer ideology, to do things differently, when there is something that could work for our country and our people?
The energy companies have proven, time after time, that they cannot be trusted to keep bills at affordable levels or to keep executive pay under control. Public ownership could generate billions for the Treasury. It could be the linchpin for a genuinely revolutionary green industrial strategy that could deliver jobs and transform communities from the top of Scotland to the bottom of Cornwall. It could protect millions across the country from the very worst whims of disaster capitalists who are looking to make a quick buck out of the suffering of others.
Some 66% of the public believe that energy should be brought into public hands. I hope that His Majesty’s Government and the Minister will listen and take action. The ability to make a difference on the issue is in their hands, but I suspect that it will be a Labour Government—hopefully soon incoming—who will begin to deliver the change that this country needs.
The hon. Member for Wirral West (Margaret Greenwood) effectively highlighted the dilemma that many people now have: heating or eating. Sadly, in some cases, they can afford to do neither, because they cannot even turn on their gas hobs to heat their food. She highlighted the failings in the design of the oil and gas profits levy, and the obscene oil and gas profits that are being realised. That was another common theme from speakers. The hon. Member rightly highlighted the success of smaller countries, such as Norway, Denmark, Iceland and so on, in public ownership and leading the way in the renewable transition. That is not lost on us MPs from Scotland.
The hon. Member for Leeds East (Richard Burgon) asked: who actually owns the energy companies at the moment? We keep hearing the UK Government talk about energy security, yet they are quite happy to have many foreign owners of our energy companies. That is a real paradox. The response to the last written question I tabled about the consortium building Sizewell C showed that China General Nuclear still owns a 20% stake. When will the Government realise that that partnership should be dissolved, and that they need to end their obsession with Sizewell C?
The hon. Member for Leeds East mentioned social pricing structure; I would call it social tariffs. Now is the time for that to be considered. We need layered tiers based on usage, because we all know that people on the lowest incomes use the least amount of energy, so they would benefit from that. We can also use social tariffs to protect the most vulnerable. It is much more progressive, because those who can afford to pay more for the energy that they use do so.
The hon. Member for Ilford South (Sam Tarry) made the final Back-Bench contribution, which started with eye-watering figures about the tragic consequences of fuel poverty. The reality is that fuel poverty kills people. Roughly 10,000 people a year die prematurely because they cannot afford to heat their homes. That is a national scandal that needs to be remembered. I would like the Minister to explain how the Government will address that, because we cannot let that scandal continue. Clearly, it will get worse, as fuel poverty rates have increased massively. Have the Government even assessed what that means for future excess deaths?
A year and a half ago, the so-called price cap was £1,100 per annum for an average household. Now people are expected to be grateful for the support package that the Government announced, which is equivalent to £2,500 per annum for an average household. My hon. Friend the Member for Linlithgow and East Falkirk highlighted the fact that the previous Prime Minister did not even understand her own policy. She kept stating that she was ensuring that people would not pay more than £2,500 for their bills. Average bills in Scotland are likely to be £3,300 even under the support scheme. That shows the gravity of her misinformation. Too many people will be under the illusion that their bill will be smaller than they actually will be. Frankly, it is dangerous for people’s financial management.
The Government’s own impact assessment for the Energy Prices Act 2022 estimated that the support package would prevent average bills from rising to over £4,400 come January 2023. The former Prime Minister was claiming that the support package would prevent energy bills from rising to over £6,000 per annum. Given that the UK Government made the last-minute decision to slash the support period, will the Minister advise us what he thinks Ofgem’s cap level will increase to for the 22 million or so dual fuel customers who are currently on standard variable tariffs when the support package ends in April 2023? When will the Government announce their plan to protect the most vulnerable, as they claim they will?
The reality is that more and more people are already in debt, and they have been put on to prepayment meters, so why is the Government’s support package not even contingent on not forcing more people on to prepayment meters, which have higher standing charges? National Energy Action estimates that with the current support package, there will still be 6.7 million households in fuel poverty. Can the Minister provide an estimate of how many people will go into fuel poverty come April 2023, when the support package ends? How many households do the Government think are vulnerable enough to merit further support, and when will we hear what that support package will look like?
Fuel poverty on this scale is why people are angry and want a more serious debate about the merits of nationalisation and putting people before profits. They know that the energy profits levy for oil and gas companies does not go far enough, and that the investment allowance of 91p in the pound perversely incentivises investment in fossil fuels over renewable energy. For too long in the energy retail sector, the excess profits being made by the big six were deemed acceptable by the Government. When they eventually moved to a price cap, the truth is that it came in too late, because by that time the market was being squeezed by new entrants that thought that they could come in and make easy money in the energy retail sector. Thirty companies have gone bust since July 2021 and many of them had been using customers’ money for their cash flow, effectively operating their own Ponzi schemes while the Government and the regulator were sleeping on the job. The reality is that, unfortunately, it is now billpayers who are picking up the tab for these losses and covering the customer credit that these companies effectively stole. Why has there not been stronger action to bring the guilty people in these companies to account?
The largest energy company to go into administration, as the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) pointed out, is Bulb, which has cost the taxpayer billions of pounds. What is the Government’s estimate of the special administration regime costs for Bulb? What we have seen in this energy market—and in the retail market in particular—is similar to what we have seen in other markets, particularly the rail market: profits are being privatised, but the debts and the risks lie with the people. How can that be a fair system?
While Bulb was in a special administration regime, its chief executive was still allowed to pick up his salary of £250,000 a year, supposedly for his expertise. That is the same man whose expertise took the company into administration. Only a Government who see raising bankers’ bonuses as a priority could think that that chief executive should have been kept in place with a £250,000 salary.
Another example of privatising profit while taxpayers take risks is something I touched on earlier—the Government’s obsession with new nuclear power. Hinkley Point C is nearly 50% over budget and EDF’s latest programme shows that it could be 2030 before both units are operating, which would be five years behind schedule. Yet the Government still tell us that replicating the world’s most expensive power station at Sizewell is the answer to our cost and security crisis.
It beggars belief that the Government want to give EDF a 60-year contract while moving the risk on to the bill payers under the regulated asset base model of funding. This is a project that the Government’s own impact assessment shows could cost £63 billion for capital and borrowing costs. We have a classic example of how the free market in nuclear energy generation has completely failed, yet the Government are stepping in to the market to support a fully nationalised French company and transfer the risk to UK bill payers.
What frustrates me is that Labour continues to goad the Tories to build even more nuclear power plants. It is groupthink madness and it is tying up future generations of bill payers to pay not only for these costly new power stations but for the nuclear waste legacy, which is already estimated to cost about £140 billion. How will that approach reduce bills in the future?
Switching slightly, if we look to Scotland we see that it provides an example of a nationalised utility company that has kept all its assets under public ownership: Scottish Water. Water and sewerage bills are cheaper in Scotland compared with the rest of UK water companies; comparative performance is better, as measured by the regulator; and of course any surpluses or savings are reinvested. By contrast, the privatised water companies south of the border have taken something like £60 billion in dividends since privatisation and, as we know, sewage discharges into rivers and seas by these private water companies are out of control. Will the Minister comment on the comparative success of the nationalised utility company in Scotland and say what lessons can be learned from that? In a similar vein, what assessment have the Government made of the dividends paid out in the energy sector over the years with regard to risk and balance, and whether the dividends paid by the energy companies have indeed been excessive?
When we look at the oil and gas industry elsewhere, we see what nationalised companies have achieved in returns for the benefit of their citizens. In Norway, Statoil generated profits for the citizens of the Norway while the Norwegian Government still took taxes and put some of that money aside in a sovereign wealth fund, which now sits at $1 trillion, making it the largest such fund in the world.
That energy company, which is now Equinor, operates in 30 countries around the world and has massively diversified into renewable energy. Although it was technically privatised, the Norwegian state is still the majority shareholder, with a 67% shareholding. It really is the ultimate success story, whereas in Scotland’s case, we know that by comparison the UK, with broad shoulders, has squandered all the oil and gas revenues—some £380 billion over the years.
Independence will allow the Scottish Government to create an investment fund that would invest in renewable energy; could be used to support the decarbonisation of homes; and could take stakes in renewable generation while also levering in private investment. The Energy Prices Act gives the Secretary of State powers to buy energy assets. Is that a nod away from ideological opposition to all forms of nationalisation, and can the Minister tell us whether the Government will be using those powers to buy some energy assets, for which the Energy Prices Act allows?
I have highlighted a lot of the benefits of having publicly owned assets—for instance, the success of Scottish Water—but I do not believe that now is the right time to renationalise energy companies in full. The amount of money to pay out is untold billions, and it will scare off future investors and the market. The only estimates on costings that I have found are from the Centre for Policy Studies which, I accept, is a right-wing think-tank—not necessarily one that I would normally utilise. The CPS estimated that it would cost something like £55 billion to nationalise transmission assets, but £185 billion to nationalise the entire sector. Those are eye-watering sums that might not be manageable in this difficult climate.
The same principle applies when Scotland becomes independent, because there is no point creating additional debt and investor turbulence. However, that does not preclude a Scottish energy company being set up and working in collaboration with the private sector on a mixed-equity basis to ensure that maximum investment is levered in, but also that the state gets returns for the good of the population and revenue streams that allow for reinvestment.
With independence, we can end the ridiculous situation whereby people in the highlands of Scotland pay a surcharge on their electricity bills while renewable energy generation in the highlands supports the rest of the UK. They are bringing down bills across the UK, while they pay a surcharge on their own bills. It is completely topsy-turvy and unfair, and it something that the Government refuse to address. Again, it is another inequity that only independence will resolve. Although Scotland is an energy-rich country, we do not yet have the powers to unleash our potential and create a fairer society, but I have a feeling that that day is coming, and I look forward to the response from the Minister.