Diolch, Dirprwy Lywydd. Last week, the energy regulator, Ofgem, announced the price cap that will take effect from April this year for residential energy consumers. As my colleague Jane Hutt set out on Thursday, the 54 per cent increase in the cap is clearly a devastating blow on households and hard-pressed families already struggling with the cost of living. This latest increase comes on the heels of significant increases in 2021, and means a typical household’s dual fuel energy bill will be close to £2,000 a year. While this rise has been in part fuelled by the recent fluctuations in the global wholesale price of gas, the UK Government must be held accountable for the choices they have taken. It is the UK Government that set the pricing framework that Ofgem operate, and this is having an unfair impact on households.

We all recognise the need for urgent action from Government to meet our net-zero targets, but we must also recognise that a progressive approach is the fairest way to achieve that goal. We have been consistent and clear on the need for a just transition, with those most able to pay for the necessary changes paying the greatest share of the costs. As a result, we have called for the UK Government to fund the cost of the change through a progressive tax system, rather than these costs being passed through directly to the consumer, hitting households hard with these steep price rises when other costs are also spiralling.

Secondly, the UK has long suffered from significant underinvestment in new renewable energy generation. Throughout the last decade, the Conservative Government in London cut subsidies and failed to put in place the incentives for the scale of investment needed. As a result, we have an imbalance in our energy system, with an over-reliance on fossil fuels, at considerable environmental cost. In addition, the UK Government advocates financial models for new energy investment that pass the costs to consumers, transferring the risk from developers to households, placing future burdens on household bills through higher prices.

And finally, we have a UK Government that has continued to cut welfare for those most in need, failed to raise taxation from those most able to pay, and left those most vulnerable in our communities with a cost-of-living crisis. Taking this latest increase in the price cap, 145,000 households who were at risk of fuel poverty in 2018 are now likely to be struggling to make ends meet. This means more than a quarter of all households in Wales, if not more, are having to make difficult choices about whether or how to heat their homes.

The Minister for Social Justice and I wrote to the UK Government on 11 January, pressing the case for immediate action and setting out a series of actions that needs to be taken. Those actions include an expansion of the warm home discount, removing policy costs from household bills and funding them instead from general taxation. The UK Government’s response announced last week falls considerably short of the action needed. While the proposal to provide a £200 discount to all households will help with the bills households need to pay today, it is not available until next October. Even when this support does come through, it is a one-off payment; it needs to be repaid over the next five years, so will do nothing to help households in the medium term.

The UK Government is gambling that wholesale gas prices will fall so that the impact of the repayment won’t be felt as much by households. But the reality is likely to be an additional burden on households to pay this money back at a time when the price cap continues to rise as a result of the fundamental failures in the way the UK Government oversees the energy system. The outcome here is that consumers face higher costs for a sustained period of time. This is not a short-term spike in the market, and in my meeting with Ofgem last week they were clear to me that there will be difficult times ahead for households. I called on Ofgem to ensure that the rights of customers are protected and vulnerable households have full access to the support and advice that is available. I reiterated my commitment to work with Ofgem to ensure households in Wales maximise all the services at this time of hardship.

Dirprwy Lywydd, we are clear that we will use the powers that are available to us to support those most in need. Our cold weather resilience plan sets out 14 actions we are already taking with partners to support households. A key action is helping to improve domestic energy efficiency through the Warm Homes programme Nest scheme. Our continued investment saves lower income households on average more than £300 on their energy bills. Our £51 million household support fund announced in November included £38 million being allocated to support a winter fuel support scheme. This offered working-age households in receipt of means-tested benefits a one-off payment of £100 towards the cost of their energy needs. And, last week, in the face rising pressure on households and inaction from the UK Government, we led by example and announced an expansion to the winter fuel support scheme, doubling the one-off payment to £200. Unlike the UK Government proposal, this is immediate support without a repayment schedule. This additional funding will go some way to helping the most vulnerable in our society to pay their fuel bills during this difficult time, but we know this still will not be enough for many people living in need. 

In light of the changes in April, and the likelihood of further increases, we want to do more. Last week the Minister for Social Justice and I met with National Energy Action to explore the options for further measures of support. To take this work forward we will be hosting a summit on 17 February with front-line services and other key groups to identify what more can be done to support households both now and in the future. And, as we look to the future, we need to recognise that the most sustainable watt of energy is the one that isn’t needed. That is why we will continue to put in place policies that support reducing the demand for energy, saving Welsh people and businesses money as well as tackling emissions—policies that include investing in the housing stock to improve energy efficiency, supporting the circular economy to encourage reuse and repair, and working closely with industry to support a more sustainable use of energy.

We are committed to a just transition and ensuring the energy system in Wales supports renewable energy generation is the fairest way possible. As we continue to press the UK Government for urgent changes to the way the market is regulated, we will do all we can to support households in Wales. A greener, stronger and fairer future for Wales is at risk from an outdated energy market and an energy pricing structure that is blind to the impacts on the poorest and most vulnerable in society. We must and will work to do whatever we can to keep our vision alive for future generations. Diolch.