“With the recovery well underway, and more than 1 million job vacancies posted, now is the right time for the scheme to draw to a close” – Chancellor Rishi Sunak
Chancellor hails Scottish workers as UK Government’s Plan for Jobs package enters the next stage
As furlough winds down flagship schemes such as the super-deduction and Kickstart scheme continue to support jobs and businesses
Rishi Sunak calls on Scottish firms to take advantage of ongoing support during a visit to a Legal and General modular homes factory and housing site in … Yorkshire!
The Chancellor will today (30th September) praise Scottish workers’ ongoing resilience as the government moves to the next phase of its Plan for Jobs, part of a £400bn support package for the economy.
The change comes as latest figures show more employees on payrolls than before the pandemic, underlying wages increasing strongly and the OECD predicting the UK to see the fastest growth in the G7 this year and next.
Having protected over 910,000 jobs in Scotland during the toughest times of the pandemic, the furlough scheme closes today after gradually winding down as the economy began to recover. With the majority of Covid restrictions removed and the economy open again, the government is focused on investing in jobs and skills.
The UK Government’s Plan for Jobs will carry on helping to fuel the economy’s bounce-back by supporting employers across the UK to create new jobs and workers to boost their skills.
The UK Government has also provided the Scottish Government with an additional £14.5 billion in funding since the start of the pandemic.
During a visit to Legal and General’s modular factory in Yorkshire, the Chancellor will ‘double-down’ on his call for firms across the UK to make the most of billions in further support on offer, including the super-deduction – the biggest business tax break in modern British history – and the Kickstart Scheme which offers fully-funded jobs to young people.
Chancellor of the Exchequer, Rishi Sunak said: “I am immensely proud of the furlough scheme, and even more proud of the determination and resilience of Scottish workers and businesses through the pandemic. With the recovery well underway, and more than 1 million job vacancies posted, now is the right time for the scheme to draw to a close.
“But that in no way means the end of the UK Government’s support in Scotland. Our Plan for Jobs is helping people into work and making sure they have the skills needed for the jobs of the future.”
Scottish Secretary Alister Jack said:“From day one of the pandemic, the UK Government put in place an unprecedented package of support. The strength of the UK Treasury has protected the livelihoods of nearly a million Scots, providing certainty for many during extremely difficult times.
“Thanks to the successful UK vaccine programme, businesses are trading once again, and the furlough scheme is winding up.
“Our focus now must be on recovering our economy, investing in Scotland’s communities, and getting people into work though our Plan For Jobs.”
Whilst some other countries ended their economy-wide support schemes earlier in the year, the UK’s Coronavirus Job Retention Scheme and Self-employment Income Support Scheme continued into the Autumn.
Over 18 months on from its launch and with over £68 billion spent on the scheme, today marks the final day of the furlough scheme which has been instrumental in protecting workers and incomes from the worst of the crisis.
The Resolution Foundation said this week that the furlough scheme has “prevented catastrophic rises in unemployment”, and there are now almost 2 million fewer people forecast to be out of work than was feared at the height of the pandemic.
While emergency support draws to a close, the UK Government says it will continue to maximise employment across the country, create high quality, productive jobs, and deliver the skills that people, businesses and the economy need to thrive.
Today, the Chancellor will visit Legal and General’s modular homes factory and housing development in Yorkshire to see some of the Plan for Jobs in action. The super-deduction has allowed them to expand their factory capacity and has supported over 1900 across the UK, including 400 new jobs.
The Chancellor will meet employees including an employee who has secured a placement with Legal and General through the Kickstart scheme.
Yesterday, Lothian MSP, and Scottish Greens Co-leader, Lorna Slater joined the overwhelming majority of MSPs in voting to oppose the cruel Tory £20 cut to universal credit that is being inflicted by Westminster.
The cut will impact tens of thousands of families in Lothian, cutting their income by £1,040 per year.
Lothian MSP and Scottish Greens Co-leader Lorna Slater said:“The Tories have shown their true colours. This is one of the biggest social security cuts ever seen in this country and could plunge tens of thousands of families in Lothian into despair.
“It is particularly unwelcome at a time when so many people are still struggling with the impact of the pandemic.
“£20 a week may not be a lot to the Prime Minister and his colleagues, but for far too many families it is crucial to their budgeting and their wellbeing. For many people across this city, it could be the difference between a warm home and a cold one this winter
“Many people claiming universal credit are in fact in work. The so-called uplift was not an act of generosity, but an admission of failure – an admission that the system had been so damaged by cuts that it was no longer able to provide adequate support for people needing help with their incomes for reasons beyond their control.
“The cut is symbolic of a UK government that knows the price of some things but the value of nothing. It shows why Scotland needs the powers to chart a different path that prioritises human need and builds a fairer, greener recovery for all.”
Holyrood Social Security Minister, Edinburgh Northern & Leith MSP Ben Macpherson, closed yesterday’s debate:
Demonstrators gathered at High Riggs Jobcentre yesterday to demand the re-instatement of the £20 cut to Universal Credit. The protest was called by Edinburgh Coalition Against Poverty in response to a call from Disabled People Against the Cuts for UK-wide protests.
Participants included disabled people, pensioners, workers and a group of school students.
Police attended but did not intervene.
The demonstrators denounced the UK government cut, due to be implemented from the end of this month. Protestors held placards with the hashtag #20MoreForAll, demanding the £20 increase be extended to “legacy benefits” like Job Seekers Allowance and Employment and Support Allowance.
Campaigners have raised alarm at the hardship which a £20 cut will cause to the six million Universal Credit claimants, who include the low paid, unemployed, families and sick and disabled people.
Edinburgh Coalition Against Poverty leaflets distributed at the protest quoted research by the Child Poverty Action Group.
The research reveals that over the last decade nearly 100 cuts have been made to social security entitlement and the value of payments has fallen as social security rates have been either frozen or increased by less than inflation.
Thus even with the £20 increase a typical Universal Credit claimant would be hundreds of pounds worse off in 2021 than in 2010.
Ethel MacDonald of Edinburgh Coalition Against Poverty said: “The brutal cut in Universal Credit is yet another example of governments attacking the poor to benefit the rich.
“This is also an attack on wages and conditions, aiming to force people to accept insecure low paid jobs. Many on Universal Credit are of course already in such badly paid work, since 39% of Universal Credit claimants are in employment.”
The ECAP spokesperson urged people to organise: “ We need to organise at the grass-roots to resist the cut to Universal Credit, the entire austerity agenda, and the whole profit-based system.
“Claimants need to join together and support each other – for example by accompanying each other to appointments and assessments.”
ECAP stress: “After today’s protest, the struggle against the cut continues. What’s more, we are opposing the DWP’s reckless return to compulsory jobcentre appointments – this endangers both claimants and jobcentre workers, due to the continuing covid threat. We totally oppose all sanctions, and urge claimants to contact us for solidarity.”
While MSPs will debate the Universal Credit cut at Holyrood today, the decision lies with Westminister. The UK Government insists the UC uplift was always intended to be a temporary measure and that their focus is on getting people into work.
Primary school children across the United Kingdom to receive a free book next year to mark The Queen’s Platinum Jubilee
Primary school children across the United Kingdom will receive a book that celebrates the achievements of the United Kingdom and Commonwealth over the last 70 years.
The book will be commissioned by the UK Government and designed to celebrate the people and places of the United Kingdom and Commonwealth. It will teach primary school children about recent and historical events, inspirational people, landmark innovations and inventions, and a selection of our best art, design, and culture.
The book will explore the role of the Monarch and what the Platinum Jubilee represents, so primary school children across the country can understand and engage with the celebrations next year, while broadening their education.
The content will continue to be refined over the coming months but will cover landmark achievements such as the construction of the Channel Tunnel, election of the first female Prime Minister and the invention of the World Wide Web, so children across the country can learn more about their home and its history.
The book will also look at a diverse range of rich culture and notable names for children to explore, including famous artists, designers, fashion designers, and musicians, capturing the true spirit of the last 70 years and the Queen’s reign.
Education Secretary Nadhim Zahawi said: “For 70 years Her Majesty The Queen has played an instrumental role in the events, people and places that have helped shape the United Kingdom and Commonwealth.
“From the hundreds of charities and organisations of which she is patron, to the 14 Prime Ministers who have served during her reign – thousands of children will be able to read about our great nation, its history and future.”
It will be available as an audio book, with plans for it to be in English, Welsh, Gaelic, and Irish in advance of the Jubilee Holiday weekend. The print version will include a QR code so children can scan the code to be taken to further material online, so they can learn independently.
The book will also form part of the wider programme of events and activities planned for The Queen’s Platinum Jubilee next year, including a concert, street parties, and an extra bank holiday for the Jubilee weekend itself from Thursday 2 to Sunday 5 June 2022.
The Department for Education will shortly issue an Invitation to tender for a contractor to see through the production of the book, including design, printing and distribution.
The Business Secretary met with senior executives from the fuel industry last night following ‘supply chain issues’ at petrol forecourts.
During the meeting, attendees discussed issues caused by supply chain pressures and spikes in localised demand.
As a result, Businesses Secretary Kwasi Kwarteng agreed to implement a measure to temporarily exempt industry from the Competition Act 1998 for the purpose of sharing information and optimising supply.
Known as The Downstream Oil Protocol, this step will allow Government to work constructively with fuel producers, suppliers, hauliers and retailers to ensure that disruption is minimised as far as possible.
The measure will make it easier for industry to share information, so that they can more easily prioritise the delivery of fuel to the parts of the country and strategic locations that are most in need.
Business Secretary Kwasi Kwarteng said: We have long-standing contingency plans in place to work with industry so that fuel supplies can be maintained and deliveries can still be made in the event of a serious disruption.
“While there has always been and continues to be plenty of fuel at refineries and terminals, we are aware that there have been some issues with supply chains. This is why we will enact the Downstream Oil Protocol to ensure industry can share vital information and work together more effectively to ensure disruption is minimised.
“We thank HGV drivers and all forecourt staff for their tireless work during this period.”
The decision follows a package of measures announced over the weekend which will see the Government ease temporary supply chain pressures brought on by the pandemic and the global economy rebounding around the world.
These include an immediate increase in HGV testing, short term visas for HGV drivers and new skills bootcamps to train up to 3,000 more people to become HGV drivers.
In a joint statement, stakeholders* said: “We are in regular contact with Government ministers and policy officials and it was reassuring to meet with the Business Secretary again on Sunday evening and discuss further action.
“We will continue to work closely in partnership over this period with local and national Government and want to reassure the public that the issues that have arisen are due to temporary spikes in customer demand, not a national shortage of fuel.“
Up to 4,000 people will be trained as new HGV drivers to help tackle skills shortages and support more people to launch careers within the logistics sector.
Package of measures includes using MOD examiners to help increase immediate HGV testing capacity by thousands over the next 12 weeks.
Nearly 1 million letters to be sent to all drivers who currently hold an HGV driving licence, encouraging them back into the industry.
5,000 HGV drivers and 5,500 poultry workers added to existing visa scheme until Christmas 2021 to ease supply chain pressures in food and haulage industries during exceptional circumstances this year.
The UK Government is taking belated action to tackle the shortage of HGV drivers. Industry leaders have warned the government of an impending crisis since before Brexit.
Up to 4,000 people will soon be able to take advantage of training courses to become HGV drivers, as part of a package of measures announced yesterday by the government to ease temporary supply chain pressures in food haulage industries, brought on by the pandemic and the global economy rebounding around the world.
The Department for Education is investing up to £10 million to create new skills bootcamps to train up to 3,000 more people to become HGV drivers. The free, short, intensive courses will train drivers to be road ready and gain a category C or category C&E licence, helping to tackle the current HGV driver shortage.
An additional 1,000 people are expected to be trained through courses accessed locally and funded by the government’s adult education budget.
Fuel tanker drivers need additional safety qualifications, which the government will work with industry to ensure drivers can access as quickly as possible.
To help make sure new drivers can be road ready as quickly as possible, the Department for Transport (DfT) have also agreed to work with Driver and Vehicles Standards Agency (DVSA) to ensure that tests will be available for participants who have completed training courses as soon as possible.
The Ministry of Defence (MOD) has also announced the immediate deployment of their Defence Driving Examiners (DDEs) to increase the country’s testing capacity. MOD examiners will work alongside DVSA examiners, providing thousands of extra tests over the next 12 weeks.
The letter, which will arrive on doormats over the coming days, sets out that the steps the road haulage sector is taking to improve the industry, including increased wages, flexible working and fixed hours.
Alongside this, 5,000 HGV drivers will be able to come to the UK for 3 months in the run-up to Christmas, providing short-term relief for the haulage industry. A further 5,500 visas for poultry workers will also be made available for the same short period, to avoid any potential further pressures on the food industry during this exceptional period.
Recruitment for additional short-term HGV drivers and poultry workers will begin in October and these visas will be valid until 24 December 2021. UK Visas and Immigration (UKVI) are preparing to process the required visa applications, once made, in a timely manner.
However, we want to see employers make long term investments in the UK domestic workforce instead of relying on labour to build a high-wage, high-skill economy.
Visas will not be the long term solution, and reform within the industry is vital. That’s why the government continues to support the industry in solving this issue in the long term through improved testing and hiring, with better pay, working conditions and diversity.
Transport Secretary Grant Shapps said: This package of measures builds on the important work we have already done to ease this global crisis in the UK, and this government continues to do everything we can to help the haulage and food industries contend with the HGV driver shortage.
“We are acting now but the industries must also play their part with working conditions continuing to improve and the deserved salary increases continuing to be maintained in order for companies to retain new drivers.
“After a very difficult 18 months, I know how important this Christmas is for all of us and that’s why we’re taking these steps at the earliest opportunity to ensure preparations remain on track.”
Separately, the government is also bringing in legislation to allow delegated driving examiners at the three emergency services and the MOD to be able to conduct driving tests for one another. This will give the emergency services greater flexibility and help increase the number of tests DVSA examiners can provide HGV examiners.
The government will also provide funding for both medical and HGV licences for any adult who completes an HGV driving qualification accessed through the Adult Education Budget in academic year 2021/22.
Previously, adults who took these qualifications had to pay for their own licences. This change will be backdated and applied to anyone who started one of these qualifications on or after August 1st 2021.
Education Secretary Nadhim Zahawi said: “HGV drivers keep this country running. We are taking action to tackle the shortage of drivers by removing barriers to help more people to launch new well-paid careers in the industry, supporting thousands to get the training they need to be road ready.
“As we build back from the pandemic we’re committed to supporting people, no matter their background, to get the skills and training they need to get good jobs at any stage of their lives, while creating the talent pipeline businesses need for the future.”
Environment Secretary George Eustice said: “It is a top priority to ensure that there are enough workers across the country’s supply chains to make sure they remain strong and resilient.
“We have listened to concerns from the sector and we are acting to alleviate what is a very tight labour market.”
The government has been able to bring forward these solutions in response to a global issue made worse by coronavirus thanks to our existing work in this area. We have already taken a range of steps to support the industry, including streamlining the process for new HGV drivers and increasing the number of driving tests. Our measures provided a rapid increase in capacity and allow for an extra 50,000 tests to take place per year.
Progress has already been made in testing and hiring, with improving pay, working conditions and diversity. We continue to closely monitor labour supply and work with sector leaders to understand how we can best ease particular pinch points. Through our Plan for Jobs we’re helping people across the UK retrain, build new skills and get back into work.
The Food and Drink Federation’s Chief Executive, Ian Wright CBE, said: “We welcome the government’s pragmatic decision to temporarily add HGV drivers and poultry workers to the existing visa scheme.
“This is something UK food and drink manufacturers have asked for over the last few months – including in industry’s Grant Thornton report – to alleviate some of the pressure labour shortages have placed on the food supply chain.
“This is a start but we need the government to continue to collaborate with industry and seek additional long term solutions.”
Elizabeth de Jong, Logistics UK’s Director of Policy, said: “Logistics UK welcomes the government package of measures aimed at improving the ongoing driver crisis. The government’s decision to grant 5,000 temporary visas for HGV drivers to help in the short term is a huge step forward; we are so pleased the government has listened to our calls and has made this bold decision to support the UK economy.
“We are also delighted that DfT have agreed to jointly send nearly 1 million letters to all drivers who currently hold an HGV driving licence. With fantastic HGV driving opportunities available in the logistics industry, now is the perfect time to consider returning to the occupation.”
The Road Haulage Association says there is a shortage of around 100,000 drivers across the UK, with this particularly impacting the food and drink supply chain.
The Road Haulage Association’s Rod McKenzie said: “This is a major win for @RHANews in our long campaign on #lorrydriver shortage – but temp visas won’t solve it. Much more needs to be done on training, apprenticeships, testing and welfare facilities for truckers.”
British Chamber of Commerce President, Baroness Ruby McGregor-Smith CBE said:“Government has made clear its priority is to transition from a reliance on EU workers to a focus on the domestic workforce, and businesses have been ready to participate in this, but it is a long-term project.
“A managed transition, with a plan agreed between government and business, should have been in place from the outset. Instead, the supply of EU labour was turned off with no clear roadmap as to how this transition would be managed without disruption to services and supply chains.
“Now some action has been taken, but additional testing will take time and the low number of visas offered is insufficient. Even if these short-term opportunities attract the maximum amount of people allowed under the scheme, it will not be enough to address the scale of the problem that has now developed in our supply chains.
“This announcement is the equivalent of throwing a thimble of water on a bonfire.
“Government should be prepared to significantly expand the number of visas issued within this scheme and convene a summit that brings business and government together to find both immediate and longer-term solutions to the many challenges facing firms throughout the UK.
“Without further action, we now face the very real prospect of serious damage to our economic recovery, stifled growth as well as another less than happy Christmas for many businesses and their customers across the country.”
Hannah Essex, Co-Executive Director of the British Chambers of Commerce, said:“Chambers of Commerce have been warning Government about critical labour shortages for months now – not just in the food and haulage industries but in hospitality, construction, the care sector and elsewhere in the economy. Whilst businesses will welcome that government is finally taking action, this scheme does not go far enough.
“BCC data has shown that 76% of hospitality businesses, and 82% of construction firms have faced recruitment difficulties in recent months. At the same time, we found 3 out of 4 exporters reporting no growth in sales in Q2.
“Businesses are facing the most difficult environment for a generation. On top of labour shortages – border delays, increased debt and the rising cost of materials, shipping and energy are all putting huge pressure on firms struggling to recover from the pandemic. All of these issues are hitting smaller firms the hardest.
“Attempts to address the deficit of HGV drivers and poultry workers is a step forward, but these industries are only the tip of the iceberg when it comes to the huge impact of the current labour shortages. Without a comprehensive plan to tackle this issue across the board we are facing a winter of lost opportunities for our businesses, hampering the UK’s economic recovery.”
Culture Secretary unveils design of medal for Her Majesty The Queen’s Platinum Jubilee
Design features portrait of Her Majesty The Queen and the Royal Crest
Medal will be awarded to serving frontline members of the police, fire, emergency services, prison services and Armed Forces with five years service as part of four-day commemorations taking place next year
The design of the medal awarded to a number of front line emergency workers to mark Her Majesty The Queen’s Platinum Jubilee next year has been unveiled.
The medal, which has been designed by Timothy Noad of the College of Arms, will be awarded to individual George and Victoria Cross recipients and serving members of the Armed Forces and emergency services, among others, and acts as a token of the nation’s thanks to those who diligently serve the public.
The medal, which is made of nickel silver, features an image of The Queen with the Latin inscription ‘Elizabeth II Dei Gratia Regina Fid Def’ which stands for ‘Elizabeth II, By the Grace of God, Queen, Defender of the Faith’.
Culture Secretary Nadine Dorries said: “Her Majesty The Queen’s Platinum Jubilee is a wonderful opportunity to recognise the dedication and service of those who, like the Queen, tirelessly serve our country.
From the troops who serve overseas to the emergency services workers at home who run towards danger when others would flee, we are honoured to have such dedicated and professional public servants who keep us safe.
“2022 is an opportunity for us to come together as a nation to celebrate and say thank you to Her Majesty and all those who work so hard to make Britain Great.”
The history of awarding medals to mark Royal Jubilee’s dates back to the Victorian period when the first medal was awarded to mark the 50th anniversary of Queen Victoria’s reign.
Those who will receive the medal for Her Majesty The Queen’s Platinum Jubilee are:
Serving members of the Armed Forces that have completed five full calendar years of service on 6 February 2022.
Frontline emergency services personnel that have been in paid service, retained or in a voluntary capacity, dealing with emergencies as part of their conditions of service, and have completed five full calendar years of service on 6 February 2022.
Prison services personnel who are publicly employed and are regularly exposed to difficult and sometimes emergency situations that have completed five full calendar years of service on 6 February 2022.
Members of the Royal Household with one year of qualifying service.
Living individual recipients of the George Cross.
Living individual recipients of the Victoria Cross.
2022 will be a blockbuster year of celebrations with plans to mark Her Majesty The Queen’s Platinum Jubilee with a four-day Bank Holiday weekend from 2 – 5 June which includes Trooping the Colour, the lighting of beacons, a Service of Thanksgiving, a concert, Platinum Pageant and nation-wide street parties.
As well as celebrating 70 years of Her Majesty The Queen’s reign, Britain will host the Commonwealth Games in Birmingham and the Festival 2022, which will celebrate the cross collaboration of the Science, Technology, Engineering, Art and Maths sectors.
The government has also launched its Platinum Jubilee website which includes an interactive map for people and organisations to contribute to and search for information on events and activities taking place near to them.
“we have reluctantly concluded that, for practical reasons, alignment with the UK is the best option” – Michael Matheson
Testing for inbound international travel is to be eased and will align with the UK following consideration of the logistical, health and economic implications, Cabinet Secretary for Net Zero, Energy and Transport Michael Matheson confirmed yesterday.
Pre-departure tests for fully vaccinated travellers will be removed. Travellers from non-red list countries who have been fully vaccinated in a country that meets recognised standards of certifications will no longer be required to provide evidence of a negative test result before they can travel to Scotland.
For practical purposes, Scotland will also align with the UK post-arrival testing regime. Details for the UK are still being finalised and we will continue to engage with the UK Government ahead of confirmation as soon as possible.
Separately, in consultation with Public Health Scotland, the Scottish Government will consider how additional safeguards and surveillance of inward travel can be implemented to guard against the importation of new variants. This will be at no cost to travellers. Details will be set out in due course.
Last week, the Scottish Government announced how restrictions put in place to protect public health have been substantially revised to make travel simpler, with green and amber classifications merged while the red list is retained for those countries deemed to have high COVID19 case rates or variants of concern.
Cabinet Secretary for Net Zero, Energy and Transport Michael Matheson said: “We have concerns that the UK Government’s proposals to remove the requirement for a pre-departure test for some travellers could weaken our ability to protect the public health of Scotland’s communities.
“However, we also recognise that not having UK wide alignment causes significant practical problems and creates disadvantages for Scottish businesses. Also, if non alignment led to travellers to Scotland choosing to route through airports elsewhere in the UK, the public health benefits of testing would be undermined in any event.
“We have urgently considered all these implications, weighing any possible impact on the public health and the logistical realities.
“After liaising at length with stakeholders from the aviation sector to understand the impact of adopting a different approach in Scotland, we have reluctantly concluded that, for practical reasons, alignment with the UK is the best option.
“The new proposals make clear pre-departure tests will no longer be a requirement. We also intend to align with the UK post-arrival testing regime. The detail of that is still being developed with lateral flow tests being considered and we will engage further with the UK Government on those plans. Details will be announced at the same time as the UK.
“Lastly, the importance of guarding against new variants entering the country can’t be ignored. We will therefore be considering, with Public Health Scotland, the implementation of additional public health surveillance around international travel. We would intend this to be at no cost to travellers.”
The traffic light system of checks for international travel put in place to protect the public health comes to an end on 4 October.
Statement to Parliament on the UK gas market by the Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng:
With permission, Mr Speaker, I will make a statement on the UK Gas Market.
As Honourable and Right Honourable members will be aware, over the weekend I held meetings with Ofgem and energy companies, and this morning I held a further roundtable discussion.
Today I will set out the government’s approach to manage the impact of high global gas prices affecting the UK – and countries across Europe.
To begin, I want to make two points extremely clear.
Firstly, Mr Speaker, I must stress that protecting consumers is our no.1, our primary focus – and will shape our entire approach to this important issue.
Secondly, I also want to reassure the House that while the UK – like other countries in Europe – has been affected by global prices, Britain benefits from having a diverse range of gas supply sources.
We have sufficient capacity and more than sufficient capacity to meet demand, and we do not expect supply emergencies to occur this winter.
There is absolutely no question, Mr. Speaker, of the lights going out, or people being unable to heat their homes.
There’ll be no three-day working weeks, or a throw-back to the 1970s. Such thinking is alarmist, unhelpful and completely misguided.
To begin I’d like to set out some context for the global situation we are now witnessing.
As the world comes out of COVID-19 and economies begin to reopen, we are seeing a dramatic uptake in global gas demand, much faster than many people had anticipated.
High demand in Asia for Liquified Natural Gas (LNG), transported globally by freight, means that far less LNG has reached Europe. Weather events in the US have also affected LNG exports to Europe.
So therefore, increased demand, coupled with reduced variety of supply globally, has put upward pressure on the price of gas traded globally.
High wholesale gas prices have subsequently driven an increase in wholesale power prices, with a number of short-term markets trading at, or near, record levels.
While we are not complacent, we do not expect supply emergencies this winter. This is a very important point. This is not a question of security of supply.
The GB, the Great British, UK gas system has delivered securely to date and is expected to continue to function effectively, with a diverse range of supply sources and sufficient delivery capacity to more than meet demand.
The National Grid Electricity System Operator has the tools within itself to operate the electricity system reliably, to balance that system and we remain confident that electricity security can be maintained under a very wide range of scenarios.
We aren’t reliant on any one particular source for our gas, like many of our friends in Europe.
Domestic production, and member and right honourable members should know, is still our largest single gas supply source, and accounted for about 50% of total supply last year.
However, the UK also benefits from an excellent relationship with Norway, one of our most important and reliable energy partners, and that delivers nearly 30% of our total gas supply. Just in the past half hour, I was privileged enough to speak to the Norwegian Energy Minister to welcome the announcement from Equanoir today that gas production will significantly increase from 1 October to support the UK and European demand.
Our remaining supply, Mr Speaker, is sourced from global markets via two interconnectors to the Continent, and also through our LNG infrastructures, which is as many of you know, the largest in Europe.
Obviously, the global gas situation has had an impact on some energy suppliers. We have already seen four suppliers exit the market in recent weeks, and we may well expect to see further companies exiting the market over the coming weeks.
I have to say, Mr. Speaker, at this point that having been energy minister for nearly 2 years before I became Secretary of State, we saw in those two years, at around this time, companies exiting the market. It may well be more this year, but this is something that, as this time of year, and ahead of the renewable obligation, is often seen in the market.
I want to make clear today, however, that it is not unusual for smaller energy suppliers to exit the market – particularly, I may add, when wholesale global prices are rising.
The sector has seen regular entry and exit over the last five to 10 years, that is the feature of a highly competitive market.
The current global situation may see more suppliers than usual exiting the market, but this is not something that should be cause for alarm or panic.
We have clear, processes in place to make sure all customers are supplied with energy. When an energy supplier typically fails, Ofgem appoints another supplier to take on serving the customers and there is no interruption to supply. I reiterate, our first and primary concern is for the customer.
I’d like to stress three further principles, which are guiding my and the government’s approach in this matter.
Firstly, the government will not be bailing out failed companies. There will be no rewards for failure or mismanagement. The taxpayer should not be expected to prop-up companies who have poor business models and are not resilient to fluctuations in price.
Secondly, customers, especially and most particularly vulnerable customers, must be protected from price spikes.
And thirdly, Mr. Speaker, we must ensure that the energy market does not pay the price for the poor practices of a minority of companies, and that the market still maintains the competition that is a feature of today’s current system. We must not see a return to, I quote, the “cosy oligopoly” of years past, where a few large suppliers simply dictated to customers conditions and pricing.
I’d like to reassure all members, and honourable members and their constituents that the Energy Price Cap – which still saves 15 million households up to £100 a year is staying – isn’t going anywhere.
As I said earlier, our priority in this situation has to be the consumer, the Great British public, and the cap has done that effectively. It protects, and has protected, millions of customers from sudden increases in global gas prices this winter. We are committed to the Price Cap and it will remain in place.
Meanwhile, our Warm Home Discount, Winter Fuel Payments and Cold Weather Payments will continue supporting millions of vulnerable and low-income households with their energy bills.
It is absolutely vital that the energy supply sector remains a liberalised competitive market in order to deliver value and good service to consumers.
As a result of high global gas prices, members and right honourable members will have read, two fertiliser plants shut down in Teesside and Cheshire last week. They suspended the production of CO2 and anomia. A decision which has affected in the short-term our domestic supply of CO2, which is used in the food and drink, as well as the nuclear and health sectors.
Yesterday, I met Tony Will, the global chief executive of CF Industries. We discussed the pressures the business is facing and explored, quite thoroughly, possible ways to secure vital supplies.
Work is ongoing across departments in Whitehall, across government to ensure that those sectors impacted and affected by this announcement have appropriate contingency plans in place to ensure that there is indeed minimal disruption. To maintain our domestic supplies of CO2, we are in constant contact with relevant companies who produce and supply CO2 and we are monitoring the situation minute by minute.
Over the past few days, as has been widely reported, I have held several discussions with chief executives of the UK’s largest energy suppliers and operators, and also with Ofgem to discuss this vital issue.
Just this morning, I chaired a roundtable with UK energy companies & the representatives of consumer groups, in which I reiterated as I have on the floor of this house, the need for us all of us in government and industry to prioritise customers, in short to protect the consumer.
Meetings continue across government today and throughout the course of this week.
In terms of further actions and statements, this afternoon, shortly after the statement presented here, I will be making a joint statement with Ofgem setting out the government’s next steps following healthy and illuminating discussions with them and suppliers.
Mr Speaker, our security of gas supply is robust. But it is the case that the UK is still too reliant on fossil fuels. Our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to strengthen our energy security into the future.
Thanks to the steps that we have made as a government, renewable energy has quadrupled in terms of gigawatts capacity since 2010, far more than quadrupled in fact – but there is clearly a lot more we can do in this area.
That is why we committed to approve at least one large-scale new nuclear project in the next few years, and are backing the next generation of advanced nuclear technology with £385 million, helping to attract billions of pounds in private capital and create tens of thousands of jobs.
Consumers come first. We must protect our constituents.
Gas market and soaring fuel prices: joint statement from Government and Ofgem
Joint statement on the UK gas market from Business and Energy Secretary Kwasi Kwarteng, and Ofgem chief executive Jonathan Brearley:
The recent increase in wholesale global gas prices continues to be a cause of concern for consumers, businesses and energy suppliers across the UK.
We want to be clear that this is not an issue of supply – the United Kingdom benefits from having a diverse range of gas supply sources with capacity that can more than meet demand.
This morning we hosted a roundtable with leading energy suppliers and consumer groups to hear about the challenges they currently face. There was overarching consensus among meeting participants that the top priority must be ongoing support for energy customers, especially the elderly and vulnerable. In the event an energy supplier fails, we are committed that consumers face the least amount of disruption possible – and there are clear and well-established processes in place to ensuring this is the case.
In the coming days, we will also meet with smaller and challenger energy suppliers and set out the next steps for protecting consumers, businesses and energy suppliers from these global prices rises. Central to any next steps is our clear and agreed position that the Energy Price Cap will remain in place.
The UK Government sets out the background to the issue of wholesale gas prices and the action the it is taking to protect the UK’s energy supply, industry, and consumers:
There has recently been widespread media coverage of wholesale gas prices, and the effect this could have on household energy bills. The impact on certain areas of industry, and its ability to continue production, has also attracted attention.
This explainer sets out the background to the issue and the action the government is taking to protect the UK’s energy supply, industry, and consumers.
Natural gas prices have been steadily rising across the globe this year for a number of reasons. This has affected Europe, including the UK, as well as other countries around the world.
We have a diverse range of gas supply sources, with sufficient capacity to more than meet demand. The UK’s gas system continues to operate reliably and we do not anticipate any increased risk of supply emergencies this winter.
Why are there high global gas prices?
The prices that are currently visible reflect the high value being placed on gas at the present time, with prices being determined by global supply and demand. They are not necessarily representative of pre-existing contracts and therefore do not apply to all of the gas being consumed in the UK this winter.
Current prices reflect a number of factors including:
as the world comes out of COVID-19 lockdowns and economies reopen, we are seeing an uptick in global gas demand this year. *combined with a cold winter (which has an impact on gas demand as gas is often used for heating homes) this has led to a much tighter gas market with less spare capacity
in particular, high demand in Asia for Liquified Natural Gas (LNG), natural gas transported globally by ship, means less LNG than expected has reached Europe *some essential maintenance projects rescheduled from 2020 due to coronavirus coincided with necessary scheduled projects in 2021, while weather events in the US have adversely affected their LNG exports to Europe
How are high global gas prices impacting the UK?
The gas market is crucial to the UK’s energy supply because of its significance in heating, industry and power generation.
Over 22 million households are connected to the gas grid and in 2020, 38% of the UK’s gas demand was used for domestic heating, 29% for electricity generation and 11% for industrial and commercial use.
High gas wholesale prices have subsequently driven an increase in wholesale power prices this year.
In recent weeks, this trend has been exacerbated by the weather and planned maintenance at some power stations. This has resulted in unusually low margins for this time of year. These factors have combined to cause spikes in wholesale electricity prices, with a number of short-term markets trading at, or near, record levels.
While we are not complacent, we do not expect supply emergencies this winter.
Is our gas supply at risk?
The Great Britain (GB) gas system has delivered securely to date and is expected to continue to function effectively, with a diverse range of supply sources and sufficient delivery capacity to more than meet demand.
While our largest single source of gas supply continues to be the UK Continental Shelf (approximately 48% of total supply in 2020), the maturity of that source means we have to supplement supply from international markets.
Whilst the diversity of those international sources promotes our energy security, by reducing reliance on a particular source, the UK – as with other nations – is exposed to global trends in supply and demand which affect the price of gas traded at UK’s market hub (the National Balancing Point).
We have a wide range of supply sources including direct pipelines across the North Sea from Norway to the UK, our single biggest source of imports. We are also investing millions into scaling up strong renewable energy capacity and driving down demand for fossil fuels.
GB also has a number of gas storage facilities that act as a source of system flexibility when responding to short-run changes in supply and demand.
What is the government doing on this?
Energy security is an absolute priority for this government. The government works closely with the regulator and gas supply operators to monitor supply and demand.
While wholesale gas prices have increased internationally this year, the market continues to balance supply and demand through adjusting the prices at which energy trades take place. We have no reason to suggest this will not continue but will monitor the market.
National Grid Gas has a number of tools at its disposal to mitigate the risk of a gas supply emergency, including requesting additional gas supplies be delivered to the National Transmission System. Together with the Department for Business, Energy and Industrial Strategy (BEIS), National Grid Gas has robust response plans in place in the unlikely event that risk should materialise. Read plans for network gas supply emergencies.
Will this affect energy bills?
The high wholesale gas prices that are currently visible may not be the actual prices being paid by all consumers.
This is because major energy suppliers purchase much of their wholesale supplies many months in advance, giving protection to them and their customers from short-term price spikes.
The Energy Price Cap is also in place to protect millions of customers from the sudden increases in global gas prices this winter. Despite the rising costs of wholesale energy, the cap still saves 15 million households up to £100 a year.
The current global wholesale gas price situation as set out above could have an effect on companies.
Companies without longer-term contracts may face higher costs, but we expect that companies with longer-term contracts in place may have little exposure to the current high wholesale prices. If there were an event where a supplier fails, Ofgem would work to ensure that customers are moved to a new supplier, so they are not without energy.
How is the government helping poorer households?
Our Energy Price Cap will protect millions of customers from the sudden increases in global gas prices this winter.
We are also supporting low income and fuel poor households with their energy bills in a number of ways which demonstrates the government’s commitment.
This includes through:
the Warm Home Discount which provides eligible households with a £140 discount
in addition, Winter Fuel Payments and Cold Weather Payments will help ensure those most vulnerable are better able to heat their homes over the colder months
Vulnerable people and anyone in financial distress during this time should talk to their energy supplier, who will be able to discuss personal circumstances and consider options to help, including reassessing, reducing or pausing payments. Emergency measures have been agreed between government and energy suppliers to support those most in need during the disruption caused by COVID-19, and this agreement remains in place this winter. Read details of the agreement.
As set out in the Energy white paper, we plan to extend the Warm Home Discount until 2026, increase it to £150, and help an extra 780,000 pensioners and low-income families with their energy bills. With a total of 2.7 million to get support, with the vast majority to receive the money back automatically, without having to apply as at present.
Cold Weather Payments provide vulnerable households on qualifying benefits with financial support when the weather has been, or is forecasted to be, unusually cold. £25 is available for eligible households for each 7 day period of very cold weather between 1 November and 31 March.
Business and Energy Secretary meets and energy industry chiefs
Business and Energy Secretary Kwasi Kwarteng held a series of individual meetings with senior executives from the energy industry yesterday to discuss the impact of high gas prices, driven by international supply and demand factors.
During the calls, the Secretary of State was reassured that security of supply was not a cause for immediate concern within the industry. The UK benefits from having a diverse range of gas supply sources, with sufficient capacity to more than meet demand. As previously stated, the UK’s gas system continues to operate reliably and we do not anticipate any increased risk of supply emergencies this winter.
The Secretary of State stressed that energy security is an absolute priority for this government. We are confident that security of supply can be maintained under a wide range of scenarios. Great Britain also benefits from a diverse electricity mix, which is one of the reasons why we have one of the most reliable electricity systems in the world.
Whilst our largest single supply source of gas continues to be from domestic production – and the vast majority of imports come from reliable suppliers such as Norway – the UK’s exposure to volatile global gas prices underscores the importance of the government’s plan to build a strong, home-grown renewable energy sector to further reduce our reliance on fossil fuels.
The pressure being faced by some energy companies was also discussed during the meetings after four small suppliers ceased to trade in recent weeks. Ofgem has robust measures in place to ensure that customers do not need to worry, their needs are met, and their gas and electricity supply will continue uninterrupted if a supplier fails.
If the appointment of a Supplier of Last Resort is not possible, Ofgem and the Government have agreed processes in place to appoint a special administrator to temporarily run the business until such time as a new supplier can be found for the customers.
The Secretary of State also stressed the importance of protecting vulnerable customers during a time of heightened global gas prices. Government initiatives such as the Warm Home Discount, Winter Fuel Payments and Cold Weather Payments will help ensure those most vulnerable are better able to heat their homes over the colder months. The Energy Price Cap is also in place to protect millions of customers from the sudden increases in global gas prices this winter.
The Business Secretary will be meeting with Ofgem this morning to discuss the issues raised by the industry in more detail, and on Monday he will convene a roundtable with industry to plan a way forward.
The Secretary of State is also working in contact with colleagues across government to manage the wider implications of the global gas price increase.
