The cost-of-living crisis: what next?

Increased energy and fuel costs are having a terrible impact on households and businesses at the moment, and unfortunately areas like Ceredigion are hit even harder due to our rurality. Following April’s energy price cap increase, the Welsh Government estimated that some 45% of households in Wales could fall into real fuel poverty. Fuel poverty comes at a cost: to educational attainment, to the economy, and to our public services. The risks to health, wellbeing and even life are profound.

In this context, the package of support announced by the UK Government to date is woefully inadequate and we desperately need an emergency updated package. Households are facing desperate choices and need certainty ahead of the October price cap increase.

In the short term, Plaid Cymru have called for the price cap to be returned to levels seen before April - that is, £1,277 per year and extended to small businesses and charities, who are currently excluded. We have also called for financial support for vulnerable households to be doubled.  

We could do this by extending and backdating the windfall tax to cover all excess profits made by energy companies: they’ve done nothing to earn this excess money, and it is patently wrong that they’ve benefited at a time when so many people are suffering.

There are of course households and businesses who would not benefit from a reduction or freeze of the price cap, which are those not connected to the mains gas grid and so not covered by the price cap. They have been exposed to sky-high prices that are increasing at a rapid pace. According to the mid Wales energy strategy proposed by the Growing Mid Wales partnership, as many as 72% of properties in Ceredigion are off the mains gas grid.  

As such, I have been raising these issues with the Government consistently over the past 6 months, and on the 25th of May I asked the Prime Minister to consider extending the Rural Fuel Duty Relief Scheme to areas like Ceredigion to help alleviate the impact of rising fuel prices on families, but also key workers like district nurses and carers: 

Following this exchange, I asked the Chancellor to confirm that off-grid homes would benefit from the Government’s £400 energy rebate, and was pleased to receive confirmation that they will receive the support: 

These households are caught in a specific energy price trap and it is crucial that commensurate support is provided to these households to match any reduction or freeze in the price cap. In Parliament I have supported a Bill introduced by the SNP MP Drew Hendry, the Energy Pricing (Off Gas Grid Households) Bill. The Bill would extend protections to off-grid homes by requiring that the UK Government work alongside Ofgem to address the issue head on and set out a clear timetable for ensuring that households do not have to pay more for energy because they do not have access to mains gas supplies.

The UK Government could choose a mechanism which would ensure that all off gas grid households are not charged any more than on-gas households for the same number of units used. 

More recently, I met with the Treasury to discuss the possibility of extending the Rural Fuel Duty Relief Scheme to Ceredigion, as well as extending the energy price cap to commercial energy contracts. I have also raised this question in the Chamber: 

The Treasury has thus far refused to confirm what measures they intend to introduce, but these are matters I will be raising with the new Chancellor.

During a wider debate on the future of off-gas grid properties, I urged the Government Minister to bring forward targeted support measures to help off-grid homes with their higher fuel and heating bills. Here are the links to both the video and transcript for your information:  

Another aspect of my speech was to raise the point that most suppliers require customers to make a minimum delivery order of 500 litres, which means the cost is simply unaffordable. The Minister responded by saying:  

“The hon. Member for Ceredigion mentioned the rules around heating oil providers not providing less than 500 litres. I urge him to speak to the UK and Ireland Fuel Distributors Association, which is a helpful trade body. I think the basic problem is that providing small volumes of heating oil is likely to raise fixed costs, and therefore to make an inefficient market with ultimately more expensive provision. His motive is a good one—to try to make heating more affordable, in smaller pieces, for constituents who are facing trouble with their bills—but the perverse impact might be to raise the fixed costs of such deliveries, but I urge him to speak to UKIFDA, which is the real expert.” 

I have since met with representatives from UKFIDA, who clarified the situation: Trading Standards currently require oil suppliers to measure accurately the quantity of fuel delivered to a household. It is however unfortunate that in some instances the technology that allows for such precision requires a minimum of 500 litres to pass through the system. The ability to supply quantities below 500 litres is, therefore, at the suppliers’ discretion.   

In my capacity as Chair of the All Party Parliamentary Group on Fuel Poverty & Energy Efficiency, I was pleased to chair a discussion in Parliament organised by National Energy Action the on the 4th of July. Indeed, during a debate on Tackling Short-term and Long-term Cost of Living Increases back in May, I urged the Government to consider National Energy Action’s proposals for a new social tariff to enhance protection for the most vulnerable customers. Such a proposal should be accompanied by efforts to increase the visibility of, and support offered through, schemes such as the discretionary assistance fund, and by an extension of the warm home discount and winter fuel payment to all low-income households. A transcript of the debate, including my contribution, can be found here.   

I argued in a debate on the 5th of July for much more urgent Government action to support families and businesses with rising living costs: 

I have also spoken in a debate detailing the consequences of the current cost of living crisis on farmers and the agricultural sector. It is alarming that the current rate of inflation according to the agricultural price index is at 28.4%. Under the energy bill support scheme, some £400 is due to households in the autumn, yet a question remains however as to whether farmhouses will be eligible, due to how they tend to have commercial electricity contracts as opposed to domestic ones. The Department for Business, Energy and Industrial Strategy is looking at options to ensure that farms do not lose out under the scheme, and I can assure you that I will continue to question the Government until a satisfactory resolution to this matter in offered.  

I have also spoken in a debate which was called to discuss the cost-of-living crisis in Wales specifically. Many of the issues outlined above were discussed, as well as possible short-term solutions to the crisis.  

If the UK Government were to introduce all the measures outlined above in an emergency package of support then I am confident that this would go a long way to ameliorating the pain of the energy price hike for households across the UK.

This moment should also be used as an opportunity to think more broadly about whether we need fundamental reform to the energy system itself. The energy market has failed to protect households and if, as many expect, energy prices will remain volatile for some time to come, can we really afford to live with the system as is?

We must ask the question, who is the energy market and those companies extracting fossil fuels serving? Given that access to energy is critical for survival, it surely isn’t right that the interests of shareholders can be put above the needs of millions of consumers in the UK?

What we need to do is recognise the essential nature of energy supply. The system should facilitate and encourage innovation, be accessible by all and treat everybody fairly, regardless of their circumstances. These should be the foundations upon which our energy system is re-built. 

That is why Plaid Cymru have made clear that the only long-term solution is to bring the big five energy companies into public hands and to radically increase investment in green energy and home insulation.

Over the next few weeks and months, I will continue to work with my colleagues in Plaid Cymru, and from across the House, to pressure the UK Government to be pro-active in its approach on dealing with the current cost of living crisis, and the detrimental effects of the crisis on rural communities such as ours in Ceredigion. 

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  • Carys Lloyd
    published this page in News 2022-09-05 17:38:00 +0100

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