PARLIAMENTARY DEBATE
Businesses: Cost of Energy - 10 February 2026 (Commons/Commons Chamber)

We recognise that high energy costs remain a significant pressure on UK businesses. We are acting now through the British industry supercharger and the new British industrial competitiveness scheme to reduce electricity costs for energy-intensive sectors, while delivering our clean power 2030 mission to cut bills for good. We also intend to consult on further options to reduce costs and make low-carbon heat economically competitive.

Ametek and SSS Gears are two quite rare breeds—they are manufacturing companies in my Spelthorne constituency, inside the M25. One employs 200 people, while the other employs 43, and they seek to export around the world. How does the Minister expect those companies to be competitive in a global market when energy prices in Ashford, Middlesex are four times higher than those in Ashford, Alabama?

It is exactly that disparity in international energy prices for industry, which the previous Conservative Government left us with, that we are addressing through our clean power 2030 mission. However, we recognise that as clean power is coming online, industry will need further support. Both Ametek and SSS Gears are exactly the sorts of manufacturing businesses that this Government wish to support through initiatives such as our British industrial competitiveness scheme. The consultation for that scheme has just closed—I do hope both of those businesses responded to that consultation—and we will publish the results shortly.

Small and large businesses in my constituency of Surrey Heath—everything from small cafés to care providers and large manufacturers—tell me that they are being crushed by high energy costs. Given that the wholesale cost of gas has fallen substantially since its peak in 2022, can the Minister indicate what proportion of a typical business energy bill is driven by wholesale costs, network charges and policy costs, and which one of those is likely to be borne down on over the next year as a direct consequence of Government action?

The hon. Gentleman is quite right to point out the impact of energy costs on small businesses. As we have seen, that has been largely driven over many years by the linkage between energy costs and gas prices, which is something that this Government are determined to deal with as we pile on renewable energy as part of our clean power mission. UK gas costs are competitive with Europe after policy costs are included, but of course we want to remove businesses from having to rely on the whims of the fossil fuel market and enable them to rely on low-cost, secure, home-grown energy.

A third-generation advanced manufacturer in my Guildford constituency invested in a solar-covered, energy-efficient factory to cut emissions and expand, yet overall operating costs have risen sharply, including business rates increasing from £130,000 to £570,000. That business is doing everything right, including switching to renewables and working to become more efficient. On top of the crippling hike in business rates, the straw that breaks the camel’s back is energy costs, so what discussions has the Secretary of State had with the Chancellor about reducing industrial energy costs and the associated costs so that firms investing in clean growth are properly supported?

Of course, it is central to the Government’s policy that businesses are incentivised to invest in renewable energy and electrification where that is possible, so that they can access the lower-cost electrical energy that is coming on stream as part of our 2030 clean power mission. The hon. Lady mentioned that the business was a manufacturing business, so it is possible that it could qualify for our British industrial competitiveness scheme, which we will bring forward in 2027. The results of the consultation on that scheme will be published shortly.

My hon. Friend does a grand job of championing the critical minerals industry in Cornwall and the potential for floating offshore wind in her constituency. She highlights a great opportunity, where investment in energy and industry side by side can reduce the cost of capital for both parts of the supply chain and so create an economic opportunity. I thank her for the representations that she has made to me on behalf of her constituents prior to today. I will continue to work with her in trying to realise this opportunity.

To transition away from fossil fuels, we need zero emission vehicles on the road. Manufacturers such as Alexander Dennis should be leading that transition, although it currently operates with a gas-intensive production process. To stay competitive against imports, those manufacturers need greater support. The British industrial competitiveness scheme is hugely welcome as it will reduce industrial electricity costs, but will the Minister consider supporting a dual fuel discount that includes the cost of gas to support the automotive advanced manufacturing sector, including Alexander Dennis?

I am very concerned about gas-intensive industries, and the Government’s policy is intended to ensure that they are given the support to decarbonise by electrifying, where that is possible, whether that is through confidence in long-term energy prices owing to the delivery of our clean power mission or through support to invest in their business.

I know that the Department is working hard with the Department for Transport to decarbonise shipping, but the current system works against businesses. One of our ferry companies is having to pay £12 million up front for a shoreside connection and then wait for up to seven years. Will the Minister commit to reviewing this system to speed up electric shipping for places such as the Isle of Wight?

I am extremely grateful to my hon. Friend for engaging with me on this topic in advance of the recent changes to the emissions trading scheme to include maritime emissions. It is incredibly important that domestic maritime emissions are included, so as to incentivise the investment required to decarbonise. I am aware of the issue in the Isle of Wight. On one route, two vessels will be affected. I know that he has invited me to visit the Isle of Wight and meet the businesses concerned, and I am allowed to make the commitment from the Dispatch Box that I will do that.

Businesses and public services in the north of Scotland pay among the highest commercial energy prices in the whole UK. The Government have had 18 months to try and fix that. Why do they still think it is okay to discriminate against people in the north of Scotland in that way?

In fact, the Government are taking an approach across the whole United Kingdom to deliver the energy infrastructure and energy generation capacity to guarantee low-cost, home-grown, secure energy for the future, ensuring that the jobs and benefits from that are seen across the country. I would have thought that the hon. Member might wish to welcome those jobs in Scotland. There will be 20,000 additional jobs by 2030 in clean energy industries in his community and mine.

Time and again, small manufacturing firms in my constituency of Llanelli tell me that high energy costs are making it difficult for them to be competitive, and they feel that they are on the edge. Given the lack of investment by the previous Conservative Government and the fact that this Government are playing catch-up, when does the Minister think that enough new sources of energy will be generated to bring down prices? How soon will interim help arrive?

My hon. Friend is right to champion the small manufacturers in her constituency, which I know well from the time that I spent working in south Wales. It is important to note the announcement from my right hon. Friend the Secretary of State this morning—it will shortly be the subject of a statement to the House—about allocation round 7. It demonstrates our commitment to putting on new solar farms, new onshore wind and new offshore wind. Every single one of those installations contributes to our energy security and to reducing the cost of energy for domestic consumers and industry alike.

I call the Liberal Democrat spokesperson.

The cost of electricity is still too high, and, as we have heard, businesses are struggling to pay their energy bills. While the Government have offered help to the energy-intensive industries, it is the small and medium-sized businesses in my constituency and around the country that still feel overlooked and forgotten. Liberal Democrat researchers have estimated that 3.1 million SMEs saw a total bill increase of £7.6 billion when the Conservative Government ended the energy bill relief scheme. When will this Government finally help SMEs—the small businesses, the backbone of our economy—to see off their crippling energy bills?

The hon. Lady and I agree that more needs to be done to alleviate the high energy costs for small businesses. I used to run an energy-intensive small business myself, and I know how difficult that is. She is also right to point out that this is the legacy that the last Government left us.

We are pushing forward to 2030, when we will have lower energy costs and more secure energy in the UK, but we recognise that more needs to be done to support small businesses—although we are already helping with measures such as our zero carbon services hospitality trial, which is now delivering support for 600 hospitality SMEs across the UK, and the provision of £200,000 to fund improvements in the UK business climate hub and help SMEs with their carbon emissions.