Soaring energy prices will hit those living in the North the hardest, MPs hear

People living in the North will be hit hardest by soaring energy prices this winter, Business Secretary Kwasi Kwarteng has acknowledged.

Thursday, 23rd September 2021, 12:06 pm
Updated Thursday, 23rd September 2021, 12:28 pm
Energy prices are set to soar

The colder weather up north was blamed for the expectation that those living there will have their heating on a higher temperature or for longer.

Rocketing global wholesale gas prices have put pressure on the domestic energy sector, with suppliers going to the wall in recent weeks.

Speaking in the House of Commons, Labour MP Rachael Maskell (York Central) said: "The rise in energy prices will disproportionately impact people living in the North because it is colder during the winter in the North.

"So what assessment has he made of the regional disparities and how is he going to mitigate against that?"

Mr Kwarteng replied: "I think the honourable lady raises a very fair point and clearly in terms of the gas price the single most important determinant of it is the weather, and she's absolutely right.

"That's why we've got schemes like the Warm Home Discount and that's why we're absolutely focused on protecting the most vulnerable customers, wherever they are in the UK."

Earlier, Mr Kwarteng insisted the industry and market will find the solution to the energy crisis.

Responding to an urgent question from Labour, he said: "The Government has been clear that protecting consumers is our primary focus and shapes our entire approach to this.

"We will continue to protect consumers with the energy price cap.

"The solution to this crisis will be found from the industry and the market, as is already happening, and the Government - I repeat - will not be bailing out failed energy companies."

Shadow business secretary Ed Miliband said the Government had been "far too complacent" about the gas crisis, after he made warnings earlier in the week.

Mr Miliband said: "He pretended on Monday and again today that it was normal for a number of suppliers to go down each winter, but what we are dealing with is far from normal - 800,000 customers losing their suppliers yesterday alone, 1.5 million in the last six weeks."

The Labour MP also quoted from a letter energy regulator Ofgem sent to the Government 18 months ago warning about "systemic risk to the energy supply as a whole".

He added: "We are seven days from the cut to Universal Credit. This is the last time a Government minister will be in the House to explain to millions of families why it is plunging them further into fuel poverty.

"Instead of warm words or platitudes, can he now tell the British people how he can possibly justify this attack on their living standards?"

Mr Kwarteng said the Government had "not been complacent" as suppliers collapsed.

He said: "The whole point about the supplier of last resort process which was interrogated last year is that it is an organised process, well established, which can allow existing strong companies to absorb customers in failure."

Mr Kwarteng also said: "With respect to Universal Credit, I will say what I said earlier in the week, that it is a matter across Government in terms of budgetary responsibility. There will be a budget at the end of October and there will be plenty of time to discuss that then."

Conservative former ministers Sir Christopher Chope and Robert Halfon suggested the Government should reduce or abolish VAT on energy bills.

Sir Christopher said: "Why don't we reduce VAT on fuel as a temporary measure?

"We did it for the hospitality industry, which was badly affected by Covid-19. Why don't we abolish VAT for consumers on fuel now?"

Mr Halfon added: "I am sure the Conservative answer to this is to reduce VAT on energy bills, something that was pledged by those who support Brexit in the EU referendum."

Mr Kwarteng replied: "As he knows, I see the Chancellor on a regular basis and I am delighted to inform him that these conversations tend to be confidential."

The Business Secretary also dismissed the claims the UK's limited gas storage capacity is causing prices to soar, arguing it is actually a "strength" rather than a weakness due to the country's "greater diversity" of energy supply.