Energy Prices Bill

Committee stage
Monday 24th October 2022 Lords Chamber

Committee

Relevant documents: 14th Report from the Delegated Powers Committee and 4th Report from the Constitution Committee

15:30

Clause 1: Domestic energy price reduction schemes for Great Britain

Clause 1 agreed.

Clause 2: GB electricity scheme: supplementary provision

Amendment 1

Moved by

[Lord Lennie]

1: Clause 2, page 3, line 7, leave out “negative” and insert “affirmative”
Member’s explanatory statement
This amendment and others in the name of Lord Lennie make the regulations in the relevant sections subject to the affirmative procedure.

[Lord Lennie (Lab)]

My Lords, this group of amendments is all about making various clauses subject to the affirmative procedure in your Lordships’ House. I give notice that we intend to divide the House on Amendment 25.

The amendments affect Clauses 2, 3, 6, 7 and 16, and Schedules 1 and 2, making them subject to the affirmative procedure. The Government seek to justify some of the use of the negative procedure by pointing out that the Secretary of State already has the power to modify or revoke the schemes in Clauses 2 and 3, and Clauses 6 and 7 for Northern Ireland.

Clause 16, which confers powers to make it a temporary requirement on electricity generators to make payment regulations, uses the affirmative procedure on first use and the negative procedure thereafter. The Government’s justification for a temporary requirement represents a significant intervention in the electricity market. This clause will define the main parameters of the scheme. After this, the Government believe that interest will wane, with only minor or technical amendments likely to occur, therefore justifying the negative procedure thereafter.

The justification for the Schedule 1 powers is that, although the Government recognise that the powers are significant, they are necessary to allow the schemes for relief of GB businesses. The Delegated Powers and Regulatory Reform Committee report, established in haste last week, says that by including paragraph 3(2) of Schedule 1 the Government have completely ignored the recommendation contained in its report:

“No attempt has been made to limit the powers or to ensure that they will be subject to parliamentary scrutiny.”


Nor was any “compelling justification” offered to support the Government taking these powers. Schedule 2 powers relate to Northern Ireland, where a similar provision is proposed.

In Clauses 21 and 22, the subject of Amendment 25, the Government assert that their approach would include a fuller period of consultation with relevant stakeholders providing suppliers with earlier certainty. However, what guarantee is there that these steps will ever be taken? The department also considers that any delay could have negative consequences for those who were to benefit from the scheme. However, there are enough examples of regulations being scrutinised after the fact—for instance, those relating to Covid—and even after this primary legislation, which, as it stands, took effect from 1 October 2022. I cannot see why this cannot be applied here.

The pace of things is another justification offered by the Government. The affirmative procedure would not allow certainty that the licence modifications would follow and this in turn would inhibit suppliers making required operational changes, slowing delivery this winter.

There does not seem much justification for the Secretary of State taking these overwhelming powers. Clause 22 applies similar powers to Northern Ireland, also without the same compelling justification. It allows the Secretary of State to tackle barriers to delivering implementation of the schemes as necessary. There appears no justification for this at all. The Delegated Powers and Regulatory Reform Committee is firmly of the view that any power conferred by Clause 22 is inappropriate and that the Government should act by,

“imposing a time limit on the exercise of the power which is commensurate with other time limits contained within the Bill.”

I beg to move.

[Lord Rooker (Lab)]

My Lords, I shall speak briefly to some of the amendments in my name in this group. This is the only time I shall intervene. Although I have tabled amendments in the second and fourth groups, I do not propose to speak to them. What I am about to say covers the same points.

I declare an interest as a member of the Delegated Powers and Regulatory Reform Committee. I do not speak for the committee; the report does that. Over the weekend, I read the Government’s inadequate response to the report. I am grateful for the speed with which the Government responded, as I suspect other committee members are. That was useful but their response was completely inadequate. It is significant that the government response makes no mention at all of the Delegated Powers Committee’s report from November 2021, Democracy Denied? The Urgent Need to Rebalance Power between Parliament and the Executive.

Clause 22(5), which is not referred to in the government response, is the subject of Amendment 28. According to paragraph 14 of the Delegated Powers Committee’s report, Clause 22(5) is, in effect,

“a Henry VIII power because it allows the effect of legislation, including primary legislation, to be modified by a direction.”

Paragraph 14 also says:

“There are no limits on the kinds of requirements which may be imposed through the directions power.”


Paragraphs 14 to 18 say firmly that the powers in Clause 22 are inappropriate. Clause 22 brings in what is referred to as “disguised law”. This was referred to in the November 2021 report as “camouflaged legislation” and an “unacceptable ploy”.

The Delegated Powers Committee report on this Bill refers to the memorandum supplied with the Bill, particularly paragraphs 154 to 162. Referring to the government memo, the report says that it

“does not explain the full range of the things which can be done”.

It goes on to say, in paragraph 16:

“We are also not convinced by the reasons given in the Memorandum for the power not being subject to parliamentary scrutiny.”


As such, the Delegated Powers Committee report says that the Government appear

“to have completed ignored the recommendations”

in the committee’s report of November 2021.

I want to make a more general point, which I shall not repeat on the other group of amendments. I was not a member of the Delegated Powers Committee when its November 2021 report, Democracy Denied?, was published, in tandem and in co-operation with a report from the Secondary Legislation Scrutiny Committee of your Lordships’ House, entitled Government by Diktat: A Call to Return Power to Parliament. Both reports—that from the Delegated Powers Committee and that from the Secondary Legislation Scrutiny Committee—were about Parliament and the Executive. They were not about this House and the elected House of Commons. Parliament and the Executive are what this is about.

Both reports were debated in this House on 6 January under a Motion tabled by the noble Baroness, Lady Cavendish of Little Venice. I have no criticism of the Minister or his team for reasons I shall make clear. I do not expect he has read either report; I am not sure any Minister has. I do not hold the Minister responsible. He and his government colleagues are taking advantage of the slack role Parliament has played to bequeath powers from Parliament to the Executive.

On Wednesday 20 July this year—a significant date because it was the day before the Summer Recess started—both the Secondary Legislation Scrutiny Committee and the Delegated Powers and Regulatory Reform Committee, including Peers who had been members of those committees last year when the reports were prepared, took evidence on the reports from the then Leaders of both Houses and First Parliamentary Counsel. There was no sign that anybody had read anything about the 6 January debate on both of them. It was abundantly clear that neither of the then Leaders had even been briefed on the views of this House.

Parliamentary counsel have clearly continued to draft Bills, such as this Bill, which have “completely ignored” the recommendations of the Delegated Powers and Regulatory Reform Committee report, Democracy Denied? Why have they done this? Repeatedly, parliamentary counsel are producing Bills which transfer powers from Parliament to the Executive. It is parliamentary counsel doing this—they draft the Bills.

During the exchanges on 20 July in respect of what is referred to as Question 16, I asked the First Parliamentary Counsel, Dame Elizabeth Gardiner, about her saying during our evidence that day that counsel

“have that discussion on a daily basis with the teams and with the Ministers about the nature of what they are asking for”.

I pointed out that, in my time as a Minister, in both Houses, over 12 years—it is in the minutes—

“I understood … that parliamentary counsel took instructions from the department’s lawyers and Ministers never got involved with parliamentary counsel.”


Dame Elizabeth’s answer was:

“I think things have changed a lot ... Probably we do meet policy officials and Ministers more frequently on Bills than we would have done 30 years ago”.


I have checked on this. I think this change, or breach of convention, has happened in the past 12 years. My experience, particularly in two departments, as I recall, when I served in this House—there were four altogether, but two in particular—was that it was specifically said to me when I joined, because Bills came up, that in general the Government accepted most of the recommendations from the Delegated Powers and Regulatory Reform Committee. It was the norm to accept the majority. I was repeatedly told that. I think this change, or breach of convention—it is certainly a lapse in the accepted standards of conduct—has happened only since 2010, when somebody started playing wild with parliamentary procedures, and the House of Commons was blindsided by it. That, I think, is very dangerous.

I am prepared to say that I think the old way was best. If lawyers gave instructions for policy officials so that the policy officials would have to say to department’s lawyers, “This is what we want to do, and what our Ministers want to do”, the lawyers would then use the legal structures to put that case to parliamentary counsel. By and large, the system worked. I think it would be far less likely that clear recommendations made by Parliament would be “completely ignored” if the lawyers were the ones who gave the instructions to parliamentary counsel, as was the case up until 2010.

I trust the lawyers here to follow the conventions. Quite clearly, parliamentary counsel work with the Government—let us make no bones about it. These days, they do not even have their own office block in Whitehall, to which I was once invited to when I was a Minister in the other place. I know the way they work; they are now ensconced inside the Treasury. They work for the Government; they are not independent.

15:45

The fact of the matter is that they draft the Bills. They are drafting Bills, one after another—this is only one, but there have been others in recent years, and in the last few months in particular—after the two major committees of this House publish reports, as in November last year, criticising the transfer of powers from Parliament to the Executive. Parliamentary counsel seem not to have given a tinker’s cuss about that. They have just carried on doing what Ministers want to get more power.

I do not think the Secondary Legislation Scrutiny Committee or the Delegated Powers Committee have seen any evidence that their agreed recommendations are being taken on board by the Government. The House of Commons in particular needs to wake up, and fast, to what has been happening, for the sake of our democracy. I think this Bill would be a good place to start.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I apologise for not speaking at Second Reading. I did listen to the Minister’s opening speech and I had made my views clear in an earlier briefing. My views sync very closely with those of the noble Lord, Lord Rooker. Quite honestly, this Government are out of control—we have known that for months, if not years—and it is time they understood they are not acting in a democratic manner. This is a “something must be done” Bill, and I understand why something must be done. However, it has so little detail, and the Government are expecting us to take this on trust. I do not trust the Government, and so there is a big problem here for me.

There are two big issues. First, these energy price schemes will make the difference between people being able to pay their bills or not pay their bills, and whether they can feed themselves, clothe their kids and that sort of thing. We have to be sure of all this detail. The Government are proposing to fill in about 90% of the Bill’s details at a later date, and they expect us to just wave it through. We cannot know the impact of this Bill on ordinary people.

Secondly, the Government have been determined to protect the profits of oil and gas companies, which we all know is a piece of idiocy when we look at the climate emergency. That profit will probably be reinvested in creating more opportunities for the oil and gas industry. The Government take a different approach to renewables, and this will cause a long-term disruption to renewable development. I would argue that investors will be encouraged to invest more in dirty oil and gas, rather than in clean renewables. That is a huge bailout for all those stranded carbon assets, and seems to me to be a completely illogical way to move forward.

I sense that the Government might mean well—actually, I am being too generous. I understand that something must be done, but this is not it. I want the Minister to explain those two issues. Will people be able to pay their bills? Will this cause more investment in dirty oil and gas?

[Lord Teverson (LD)]

My Lords, I will speak to Amendments 27, 31, 34 and 40. What I have to say is very much in line with the speeches that have already taken place and I will not detain the House for long, except to make this point again. We understand the urgency of the Bill, for the health of households and their heat and energy over the next winter, and that of businesses as well, but there is a lot else included in this Bill that need not be rushed through in the same way.

I turn to Amendment 27. On reading the Bill, I was quite shocked—the noble Lord, Lord Rooker, forensically went through this in principle—that it says on page 21, in Clause 22 (4)(a), that these directions “must be in writing”. These are key bits of government policy, where a Secretary of State or a person who is subject to directions under this clause—we do not even know who it might be—is able to just write what should happen. Our own amendment would substitute that with

“made by regulations subject to the affirmative procedure”.

Amendments 31 and 34, with Amendment 34 relating to Northern Ireland—it is great to see the noble Lord, Lord Rogan, here following his contribution during the Second Reading—would remove the powers of sub-delegation.

Amendment 40 is around the sunset clause, which again the Opposition has, quite rightly, majored on. Here, we have put down a two-year limit.

Clearly, the Bill goes way beyond the authority given to the Government and the Secretary of State, without reference to Parliament. Some of these amendments must be voted on for the Bill to be put right and sent back to the House of Commons.

[Lord Cunningham of Felling (Lab)]

My Lords, I begin by expressing my wholehearted support for the speech given by my noble friend Lord Rooker. He has so comprehensively discussed these issues that it is barely necessary for me to support him, but I intend to do so wholeheartedly, as I have said.

Perhaps I had better say that I was previously a member of the Secondary Legislation Scrutiny Committee and I am now a member of the Delegated Powers and Regulatory Reform Committee, as indeed is my noble friend Lord Rooker, as he said. I participated in the discussions of the two reports that he referred to: Democracy Denied and Government by Diktat. It is amazing how little response there has been from Ministers to those fundamentally important reports; fundamental in relation to this House and the other place, and in relation to the control—I use the word “control” advisedly—of ministerial actions and decisions.

The latest report of the Delegated Powers and Regulatory Reform Committee—the 14th report of this Session—on the Energy Prices Bill, says in paragraph 10:

“We are disappointed that, by including paragraph 3(2) of Schedule 1, the Government appear to have completely ignored the recommendations contained in our report.”


That is true: the Government have completely ignored the recommendations made in the committee’s report. Paragraph 10 continues:

“No attempt has been made to limit the powers or to ensure that they will be subject to parliamentary scrutiny.”


There is no provision for that under the Government’s proposals—no provision for parliamentary scrutiny of any kind. Paragraph 10 goes on:

“Nor do we consider that anything close to a compelling justification has been offered for these powers”,


and their inclusion in what the Government intend to pursue.

Paragraph 11 of the report says:

“Accordingly, we consider that the legislative sub-delegation provided by paragraph 3(2) of Schedule 1 is inappropriate. We also take the view that the power to give directions is inappropriate to the extent that paragraph 3(2) enables general directions to be given which would have legislative effect.”

This is Ministers giving themselves powers to give general directions that would have legislative effect. In my long experience—35 years in the other place, and a long time in this House—I have never seen proposals like this, ever, from any Government. That is the reality of it. I quote from paragraph 12 of the report:

“Accordingly, for the same reasons we consider that powers conferred by paragraph 3(2) of Schedule 2 are inappropriate.”


The Delegated Powers and Regulatory Reform Committee is chaired by a person who sits on the Government Benches—a privy counsellor and former Cabinet Minister in the other place. There is no doubt that he is a good chair of the committee. He, along with other Conservative committee members, has signed up to this report, which is a damning indictment of what the Government are doing. It is time for this House and the other place to call a halt.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

I thank all noble Lords who spoke on this group. I understand many of the points that they made.

Let me first respond to the interesting points the noble Lord, Lord Rooker, made. I honestly do not think there has been any radical change from when he was a Minister. When he was speaking, I was racking my brains trying to remember. I have been responsible for bringing a lot of Bills to this House, taking them through, developing them in three different departments, and I honestly cannot remember ever having a direct meeting with OPC to give it the so-called instructions the noble Lord referred to. Clearly in PBL meetings, which he will be familiar with, they attend and report to PBL. However, I suspect my experience has been very similar to his experience as a Minister, in that Ministers are involved in discussing policy intent with the department, officials and department lawyers. The instructions to parliamentary counsel are given by department lawyers, obviously acting on ministerial direction and steers about what we want to achieve through certain policies. I can only speak for myself, but I think the noble Lord is saying “a conspiracy too far” here. I genuinely do not think things have changed rapidly since his time.

I will respond briefly to the noble Baroness, Lady Jones of Moulsecoomb, who posed me two questions. She asked, “Will this Bill will help people with their bills?” Absolutely, that is the whole purpose of it. It is to provide a subsidy to people for their bills, albeit indirectly via the suppliers, because otherwise they would be incredibly high, as the noble Baroness knows. Secondly, let me address her further conspiracy theories about this somehow being a hidden subsidy to the oil and gas companies. The noble Baroness is completely wrong. The oil and gas companies are not in scope of this Bill at all and there are no subsidies involved.

[Baroness Jones of Moulsecoomb (GP)]

I am so sorry to interrupt, but I would like the Minister to withdraw the word “conspiracy”. I have legitimate and reasonable fears. It is not a conspiracy; it is actual fact.

[Lord Callanan (Con)]

It is not a fact. The noble Baroness is absolutely wrong. Anyway, I am happy to take her reassurance on that. She was posing the question and I am giving her a direct answer. There are no subsidies involved for oil and gas companies in this Bill. They are not even in scope of the Bill. To answer her question directly, it is about direct support for people to help them with their electricity and gas bills.

Group 1 speaks to delegated powers in the Bill, including procedure, sun-setting use and scrutiny. I thank all those who spoke, those who tabled their thoughtful, well-intentioned amendments and the noble Lords, Lord Cunningham and Lord Rooker, who spoke on them. I also pay tribute, as the noble Lord, Lord Rooker, did, to the work of the DPRRC for its report on the Bill published last week. I have carefully considered and responded to it.

The first set of amendments would make certain regulations in the Bill subject to the affirmative procedure. I will go through all of them in turn. Amendments 1, 2, 3 and 4 relate to the energy price guarantee schemes in Great Britain and Northern Ireland. The Committee will be aware that the schemes have been operational from the first of this month. I am happy to tell the Committee that the regulations in the Bill to designate the schemes will be extremely brief and will simply identify scheme documents. They will therefore be technical in nature and I deem them perfectly appropriate to be subject to the negative procedure.

16:00

Amendment 7 would make regulations in Clause 15 subject to the affirmative procedure, and Amendments 17 and 18 would do the same for all regulations in Clause 16. I reassure the Committee again that regulations under Clause 15 will enable bodies to be designated as delivery partners and, following precedent, it is appropriate to use the negative procedure for these essentially technical regulations—no new policy is being made here. The first set of regulations under Clause 16, relating to the cost plus revenue limit, are already subject to the affirmative procedure. Further regulations that will be tabled under this clause are, again, likely to be technical amending regulations, so we have kept the affirmative procedure for the important stuff that I think the House will be interested in and would want to debate, and we have used the negative procedure for the technical amending regulations.

Amendments 33 and 36 would make regulations for the energy bill relief scheme in Great Britain and Northern Ireland, respectively, subject to the affirmative procedure. I am happy to confirm to noble Lords that the regulations are already subject to the affirmative procedure, as confirmed in Clauses 9(6) and 11(6), and Clause 26(4), (5) and (11) provide for exactly the type of affirmative procedure that noble Lords are asking for. As such, regulations will be implemented via the “made affirmative” procedure in the first six months from the date that the Act is passed. After that point, they will be subject to the normal draft affirmative procedure. The amendment also seeks to remove the provision for regulations to provide a power to give directions. I will deal with this and other amendments to the sub-delegation powers as I address amendments from other noble Lords.

Amendments 22, 24, 25, 27, 29, 40, 41 and 42 relate to powers to make energy licence modifications under Clause 21 and directions under Clause 22. Broadly, the amendments would make these powers subject to the affirmative procedure and implement a sunset provision of two years, subject to future extension. The powers in Clauses 21 and 22 have been included in the Bill to provide the Government with the ability—

[Lord Kerr of Kinlochard (CB)]

Could the Minister give us an example of the circumstances under which the powers in this clause to amend licences would be made by a legislative Act that is not a regulation and would take the form of him just writing down, “Do it”? What circumstances would make this necessary? I find the arguments of the noble Lords, Lord Rooker and Lord Cunningham, rather compelling. The wording of subsection (5) is astonishingly wide.

[Lord Callanan (Con)]

I accept what the noble Lord says about it being astonishingly wide but, if he will have a little patience, I will quote some examples to him shortly, and he will see that they are not the biggest items that he can think of.

The powers in Clauses 21 and 22 have been included in the Bill to provide government with the ability to react at pace to unforeseen delivery barriers. Making them subject to the affirmative procedure could delay the provision of support to consumers this winter and put at risk the point when energy suppliers have certainty over the final delivery requirements.

The approach that the Bill takes to parliamentary procedure is not unprecedented: for example, a direction under the Electricity Act 1989 has already been used to deliver the energy bills support scheme in Britain. Furthermore, the powers in Clauses 21 and 22 may be used only “in response to” the current energy crisis,

“or in connection with the Act”

or with regulations or schemes made under it. They are therefore time-constrained in that respect. Amendment 39 would reduce the sunsetting provision for powers under the cost plus revenue limit from five years to three and a half years. We consider the five-year sunset appropriate for the Government to respond to the immediate effects of the energy crisis, while ensuring ongoing protection for consumers if gas prices remain abnormally high for a prolonged period. The upcoming consultation will allow the Government to further define the intended use of this power.

Amendments 40, 41 and 42 seek to sunset the powers under Clauses 21 and 22 to two years, with an extension permissible by affirmative regulations. The Bill already makes clear that Clauses 21 and 22 must be used only “in response to” the current energy crisis, or “in connection with” the Bill or with regulations or schemes made under it. Generally, those other provisions in the Bill are already subject to sunsetting. A crisis is, by its nature, something extraordinary and temporary. I submit that the circumstances and timing in which the Government can use this power are therefore already appropriately constrained by the Bill.

Three amendments have also been tabled that relate to requirements to consult. Amendment 19

“would require the Secretary of State to consult before utilising … powers”

on the temporary cost plus revenue limit. It is the Government’s clear commitment to consult as soon as possible; therefore, we do not believe that this amendment is necessary.

Amendment 21 would require the Secretary of State to consult on pass-through requirements on intermediaries. As the schemes are being stood up at pace, this requirement could delay much-needed support being passed through to consumers this winter, and therefore could be positively harmful.

Amendment 23 would require modifications to licences under Clause 21 to be subject to consultation with the relevant bodies. As I mentioned, this clause ensures the Government’s ability to react at pace to unforeseen barriers to delivering the schemes. A requirement to consult would, again, simply delay our ability to deliver the schemes effectively and quickly, and therefore would be counterproductive.

Finally, a set of amendments have also been tabled which would remove certain powers from the Bill, including the opposition of the noble Lord, Lord Rooker, to Clause 22 standing part of the Bill. Clause 22 and its powers enable the Government to issue directions to energy licence holders and the Northern Ireland regulator in connection with schemes under the Bill and in response to the energy crises. The ability to issue directions of a general character is necessary to deliver support under the Bill and to tackle barriers to their implementation. Amendment 26 would limit the Secretary of State’s powers to issue directions of a “general character” to those only of a “specific” character. Amendment 28 would remove Clause 22, which provides that, when a direction to a person conflicts with existing requirements in an “enactment or instrument”, such requirements should be “disregarded”. Currently, we envision limited circumstances in which these circumstances will arise.

I will now give the example asked for by the noble Lord, Lord Kerr: the Government may need to issue a direction to the Utility Regulator in Northern Ireland to ensure that the timing of electricity regulated tariff reviews is aligned with similar reviews in Great Britain. This may be necessary to ensure effective administration of the energy price guarantee in Great Britain and Northern Ireland. In doing so, it may be necessary to rely on Clause 22 to resolve any potential conflict between the terms of the direction and the statutory requirements of independence applying to the energy regulators in Great Britain and Northern Ireland, and any existing requirements as to timing in the supplier’s licences, to enable all parties to comply with the direction for tariff review alignment. Without this, licence holders or the Northern Ireland regulator may be uncertain about their legal position, and this could have the effect of households and businesses missing out on appropriate and timely support. This plays to the noble Lord’s points. I realise that there is a suspicion that there is some malign intent behind these clauses, but they are, essentially, designed to deliver support at pace in a fast-moving environment and to provide the Secretary of the State with the powers to ensure that this happens in a legally correct manner. I reassure the noble Lord that there is no hidden agenda here.

[Lord Kerr of Kinlochard (CB)]

I plead innocent to any imputation of malign intent, but it is an astonishingly wide power. The Minister’s explanation related it solely to Northern Ireland. It is not limited as the Bill is drafted to Northern Ireland, but it would be relatively easy by combining subsections (3) and (5) so to limit it. That would cause me to worry much less about this apparently extraordinarily wide-ranging power to overrule the law of the land or all existing regulation without making a new regulation.

[Lord Callanan (Con)]

The noble Lord asked me for an example. I have provided him with an example of one means that we envisage may be necessary. There could be other licensed modifications that we have not envisaged yet. As I said, this legislation has been drawn up at pace, using the excellent resources of lawyers and parliamentary counsel. It has been enacted very quickly. This is a clause that we think is necessary in order to, if you like, cover something that we have not thought of and that we have missed out in the Bill, but it is limited to use in the specific circumstances that the Bill requires.

[Lord Rooker (Lab)]

Just for the record, Amendment 28 refers to subsection (5). Does the Minister think, and is it his advice, that subsection (5) is a Henry VIII clause or not?

[Lord Callanan (Con)]

It is a power to give directions. Whether it qualifies as a Henry VIII power, I suppose depends on your definition of a Henry VIII power. Perhaps I may consult the lawyers and give the noble Lord a more detailed answer.

Additionally, there may be other circumstances—as I just said to the noble Lord—not yet known in which Clause 22(5) will be necessary to enable directions and the schemes that they are giving effect to to be implemented effectively with legal certainty and without undue delay. As I said, it is not unprecedented. A similar measure was included in the 1989 electricity regulations which we have just used to help implement this provision, and there has not been widespread abuse by a number of Secretaries of State from both parties who have been in office with that existing power since then. I understand noble Lords’ concerns, but history demonstrates that this is not unprecedented and noble Lords’ concerns are unwarranted.

Regarding Amendments 31 to 35, it is not uncommon for highly technical schemes to use tertiary legislation to provide for the detail of schemes, or for secondary legislation to enable directions to be made or provide that functions may be exercisable by persons named within them. These powers are crucial so that payments can be made for the energy bill relief scheme as quickly as possible—as I said, we are acting at pace, and I am grateful for the support of noble Lords to get this legislation through at pace—and to enable us to make any necessary changes to the technical nature and detail of the scheme as it becomes operational.

It is always the Government’s intention that delegated powers are appropriately limited and justified. Many powers in this Bill are already subject to the affirmative procedure and are expressly time limited. Other powers are subject to the requirement to use them in relation to the energy crises or in connection with other time-limited provisions in the Bill.

I return to the question from the noble Lord, Lord Rooker. I am told that it is not a Henry VIII power, but it has the same effect.

[Noble Lords]

Oh!

[Lord Callanan (Con)]

I knew it was a mistake to ask the lawyers for an answer, but there we go. Whenever I do these Bills, I always understand why I went into engineering and not the law when I did my degree.

However, I also emphasise the urgency of this Bill, which I believe the whole House understands, and I am grateful for Members’ support. Families and businesses up and down the country are hugely exposed to the energy crisis. It is crucial that the schemes—and I think all noble Lords share this aim—are rolled out and delivered in the way they are intended as quickly as possible and without delay. I would contend that provisions in the Bill, including the breadth of certain powers, enable to us to do just that.

I hope that I have been able to provide the House with sufficient assurances about how the Government will use the powers that we seek to take and hope that the noble Lord will be able to withdraw his amendment.

16:15

[Lord Lennie (Lab)]

My Lords, that is an interesting explanation from the lawyers about whether it is a Henry VIII clause. If it looks like a Henry VIII clause and it smells like a Henry VIII clause, it is a Henry VIII clause.

My noble friends Lord Rooker and Lord Cunningham made the important point that the DPRR Committee in its report has condemned the powers contained in Clause 22. There is no getting away from it: if it is pace that the Government are seeking, subjecting those instruments to the affirmative procedure would not significantly inhibit the pace at which they operate. The powers are vast and huge, and the example that the Minister has given is an acceptable one, but it is not the only circumstance that one can envisage. One can envisage the powers being used not by the noble Lord but by a succeeding Minister, in a way that is unforeseen by him. Therefore, the concerns remain. However, having said that, I beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

Clause 2 agreed.

Clause 3: GB gas scheme: supplementary provision

Amendment 2 not moved.

Clause 3 agreed.

Clauses 4 and 5 agreed.

Clause 6: NI electricity scheme: supplementary provision

Amendment 3 not moved.

Clause 6 agreed.

Clause 7: NI gas scheme: supplementary provision

Amendment 4 not moved.

Clause 7 agreed.

Clause 8 agreed.

Clause 9: Reduced energy charges for non-domestic customers in Great Britain

Amendment 5

Moved by

[Lord Teverson]

5: Clause 9, page 8, line 19, at end insert—
“(4A) Regulations under this section must apply to non-domestic customers—(a) that signed a fixed tariff agreement with their energy provider after 1 December 2021, and (b) on variable rates tariffs.”Member’s explanatory statement
Currently non-domestic customers who signed a fixed tariff agreement after 1 April 2022, and those on variable rates tariffs, benefit from the reduced energy charges. This amendment would extend this support to those customers who signed fixed tariff agreements between 1 December 2021 and 1 April 2022.

[Lord Teverson (LD)]

My Lords, I shall speak also to Amendment 6 in this group. Amendment 5 relates to the extension of the energy bill relief scheme for non-domestic customers. I hope that it is something that the Minister will be able to agree or reaffirm from the Dispatch Box, because it is really very straightforward. When the scheme was announced by the Government, only businesses that signed a fixed agreement after 1 April 2022 and those on variable rates were set to benefit. Businesses with energy agreements signed before this date—I repeat, that was 1 April—were unable to get a subsidy to their unit prices.

In the debate on the economy and the growth plan of 2022 in the House on Monday 10 October—so not so long ago—my noble friend Lord Fox raised this with the Minister, who responded that the Government would be “revising the cut-off date” so that contracts taken out between 1 December 2021 and 31 March 2022 would be “eligible for relief”. Can the Minister confirm that this is still the Government’s intention? If it is, given the uncertainty that businesses are facing with the current state of government, will he accept my Amendment 5, which seeks to put that commitment in the Bill? I see no reason why that should not be the case, to give absolute clarity and greater certainty to the non-domestic sector.

On Amendment 6, the alternative fuel payment scheme is intended to deliver a one-off payment of £100 to UK households which are not on the mains gas grid—I declare my own interest in that I rely on biomass and oil—and therefore use alternative fuels such as heating oil to heat their homes.

Powers in the Bill will enable the Government to deliver support via electricity bills under a similar delivery model to the energy bills support scheme, which, as noble Members will know, is a £400 non-repayable discount for eligible households to help with their energy bills, as announced in April by then Chancellor and soon-to-be Prime Minister Rishi Sunak. Households who are eligible for but do not receive alternative fuel payments or the £100 heat network payment—a very round number, as we saw on Second Reading—because they do not have a relationship with an electricity supplier, for example, will receive the £100 via this alternative fund, which will be provided by a designated body. According to the Government, they will set out timing and details of this payment soon. I look forward to hearing from the Minister whether we have any more detail at this time.

It is estimated that more than 4 million people in the UK are off the mains gas grid and rely on other means to heat their homes. As I know in Cornwall, fuel poverty is greater in rural areas than in urban areas and, crucially, it is often deeper, meaning that rural families need to save more money to make sure their energy bills are affordable. This amendment says that it is vital that a fast and easy way to use this system be set up to get these payments to them. Amendment 6 would ensure that payments are made directly to consumers’ bank accounts, which is clearly the quickest and easiest way to make the biggest difference to rural and off-grid customers. Therefore, I hope the Government will be able to accept this amendment, but I certainly hope that the Minister will be able to give more detail and a timeframe so that these particular consumers know their future. I beg to move.

[Lord Lennie (Lab)]

My Lords, our Amendments 37 and 38 seek to backdate the electricity and gas price reduction scheme to 8 September, which was the day the Government first announced the energy price guarantee. Apart from anything else, this would produce money to be passed on to customers’ bills. It may seem a small change, but it would be extremely popular among all UK households.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lords, Lord Rooker, Lord Teverson, Lord Lennie and Lord McNicol of West Kilbride, for their amendments, which seek to make changes to the schemes to reduce energy bills—namely the alternative fuel payments, the domestic energy price guarantee and the energy bill relief scheme.

First, turning to Amendment 5 tabled by the noble Lord, Lord Teverson, on the energy bill relief scheme, I am pleased to note that he agrees with the decision to extend the eligibility date for customers on fixed-term contracts back to 1 December 2021, which my noble friend Lord Callanan confirmed in this House on 10 October. This will be implemented in regulations. I can give further reassurance that when the scheme was first announced on 23 September, it stated that all non-domestic customers on variable contracts, as well as deemed and flexible contracts, will be eligible for the scheme. Given that these details have already been published and will be implemented in regulations, the proposed changes to the Bill are unnecessary. I hope that gives the noble Lord the reassurance he was seeking.

I turn to the amendment tabled by the noble Lord, Lord Rooker, which seeks to remove Clause 9. This clause provides for the establishment of the energy bill relief scheme in Great Britain. This scheme will provide a price reduction to ensure that all businesses and other non-domestic customers—for example, charities and public sector organisations such as schools and hospitals—are protected from excessively high energy bills over the winter period. Under the provisions in Clause 9, the Secretary of State may, by regulations, reduce the amount that all eligible businesses and other non-domestic customers would be charged for their gas and electricity. Clause 9 allows for this through the calculation of a notional wholesale price for gas and electricity, referred to as the government-supported price, with a discount being provided which pays the difference between the government-supported price and the wholesale price.

The clause provides for regulations to detail how the Government may calculate this reduction. We intend for the scheme to run initially for a six-month period. Schedule 6 to the Bill allows for the scheme to be extended for up to three further consecutive periods for up to two years. We recognise that the diversity of contracts between suppliers and their non-domestic customers makes implementation of the scheme complex. This clause therefore provides for necessary powers to support successful delivery of all aspects of the scheme, and to allow the Government to respond appropriately to any rapid changes in the market. I therefore ask that Clause 9 stand part of the Bill.

Turning to Amendment 6, tabled by the noble Lord, Lord Teverson, on the alternative fuel payment scheme, households eligible for the domestic alternative fuel payment scheme in Great Britain will receive £100 as a credit on their electricity bill under a similar delivery model to the energy bills support scheme; we are exploring a similar route for Northern Ireland. We understand that consumers are already experiencing significantly increased living costs, and that is why the Government are delivering this support to customers as fast as possible and have committed to delivery of the payment this winter. Requiring that payments be made direct to consumer bank accounts would significantly slow down the ability to deliver, meaning that the target to pay this winter would be unlikely to be met. This Government do not have an established direct relationship with the relevant consumers, and a bespoke delivery scheme would need to be created, which would take significant time.

Delivering the domestic alternative fuel payment as a fixed credit amount via electricity bills will be significantly quicker than other possible routes and means that customers need take no action to receive it. Consumers eligible for the domestic alternative fuel payment but who do not have a relationship with an electricity supplier will receive the £100 via the alternative fuel payment discretionary fund. Details on how to access this fund will be confirmed shortly.

Turning to Amendments 37 and 38, on the domestic energy price reduction scheme, tabled by the noble Lords, Lord Lennie and Lord McNicol of West Kilbride, I thank the noble Lords for their amendments to enable backdating of the electricity and gas price reduction scheme in Great Britain to 8 September. The energy price guarantee was implemented from 1 October so that consumers can expect to pay well below the scheduled increase in the price cap to £3,549 for a typical dual-fuel household. The energy price guarantee has been designed to work in combination with the May 2022 cost of living package to ensure that the most vulnerable households will see little change in their energy costs between last winter and the coming winter. I therefore see no need to alter the operative date of the energy price guarantee schemes. I hope that on this basis, the noble Lords will not feel it necessary to press their amendments.

[Lord Teverson (LD)]

My Lords, I very much welcome the Minister’s statement on the backdating to December, and that the obligation that was accepted by the Minister earlier this month is to be repeated. I thank her for that, but I am not quite sure where we are with households that are due the £100 but who do not have a relationship with an electricity supply company, which is probably not insignificant. Before I withdraw Amendment 5, can the Minister be a little clearer on how this is going to function?

[Lord Callanan (Con)]

The noble Lord makes a good point. As he correctly observes, it is difficult to implement in practice because by their very nature, those households do not have a relationship with their energy supplier. We are urgently looking at a delivery mechanism, with all the appropriate protections against fraud et cetera. Delivery is likely to be through local authorities, but we are still working on a precise mechanism and as soon as we have more details, we will update the House.

[Lord Teverson (LD)]

I thank the Minister for that. If you cannot do it directly through Ministers, then through local authorities is probably the right way to do it. I know that Cornwall council is already starting to make some preparations in that area. I beg leave to withdraw Amendment 5.

Amendment 5 withdrawn.

Clause 9 agreed.

Clauses 10 to 12 agreed.

Clause 13: Power of the Secretary of State to give support for meeting energy costs etc

Amendment 6 not moved.

Clause 13 agreed.

Clause 14 agreed.

Clause 15: Role of other bodies in giving support for meeting energy costs etc

Amendment 7 not moved.

Clause 15 agreed.

16:30

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

My Lords, before calling Amendment 8, I must advise the House that the noble Baroness, Lady Thomas of Winchester, will be taking part remotely.

Amendment 8

Moved by

[Lord Teverson]

8: After Clause 15, insert the following new Clause—
“Report on effectiveness of energy efficiency programmes in reducing energy costs
(1) Within six months of the day on which this Act is passed, the Secretary of State must review the impact of energy efficiency programmes in reducing energy costs in accordance with this section.(2) A review under this section must consider the impact of—(a) the number of homes and business properties which have increased their EPC rating,(b) the number of homes and business properties which have undergone retrofitting programmes, including— (i) fitting of solar panels, and(ii) replacement of gas boilers,(c) increases in renewable energy sources, and(d) public messaging campaigns into changing energy usage habits.(3) The Secretary of State must lay a copy of the report before each House of Parliament.”Member’s explanatory statement
This new Clause would require the Secretary of State to report on the impact of energy efficiency programmes in reducing energy costs.

[Lord Teverson (LD)]

My Lords, we come back to a subject we always discuss in energy Bills, whether the dormant Energy Bill or the Energy Prices Bill in front of us today: energy efficiency and demand reduction. Whatever the Government say from their Front Bench about what is being done, it is quite clear that this is not seen as a priority in reality. Indeed, as far as I have noticed, it does not feature to any significant extent in this Bill. However, although I accept that the Bill is very much about short-term measures, we still have to look forward to the medium and longer term and how we make sure that, after the payments we are making and the Bill intends to make into the future—which are substantial, with estimates varying from £40 billion to £100 billion, depending on how long these measures last—we do not go back to square one whenever such a crisis arises again, despite having spent literally billions of pounds of taxpayers’ money.

This is a very mild amendment. We are being modest because we hope that the Government will accept that we should have at least something in the Bill about energy efficiency. We are asking for a proper and comprehensive review of costs to do with energy efficiency within six months of the Bill being passed. As noble Lords can see from the amendment, we are asking for a review of the impact of

“the number of homes and business properties which have increased their EPC rating … fitting … solar panels, and … replacement of gas boilers, … increases in renewable energy sources, and … public messaging campaigns”.

I would be interested to understand where the Government are on public messaging campaigns at the moment. I understand that the almost-past Government very much resisted them. Can the Minister give us more of an idea of where we are now?

What I am emphasising here is that it is essential that energy efficiency and demand reduction should be at the top of the list of tools of energy policy as a way forward. We clearly need some reference to them in the Bill, while we are making these huge payments, to make sure that businesses are able to continue in the future and that households can afford their energy bills without going into debt—although I fear that many will in any case. That is the core of this amendment and we take this very seriously. We believe that the Government have not performed sufficiently on this during their time in government.

I will also speak briefly to Amendment 9, and I thank the noble Baroness, Lady Bennett of Manor Castle, who is not in her place at the moment, for her support. Amendment 9 looks forward to where we go after this major splurge of public expenditure. I think a consensus is coming—from consumers, consumer groups and energy companies themselves—on how we need to treat energy Bills in the future, in that we have to move to a different place. One place we could move to is a social tariff. Nothing is perfect in this world. We know that in a situation where people move out of the definition of qualifying for a social tariff, it can have negative effects on income or whatever.

A social tariff would mean those households in fuel poverty being able to solve that issue by paying a different tariff on their electricity from those not in that degree of poverty. We all know that, even without the current crisis, many millions of households are in fuel poverty. This has not been solved by Governments over the years. The long-term way is energy efficiency and demand reduction but, in the medium term, surely we should start planning now for something of the order of a social tariff. I beg to move.

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

My Lords, the noble Baroness, Lady Thomas of Winchester, is taking part remotely and I invite her to speak. She does not seem to be technically available at present; it is therefore open to any other noble Lord to speak to this amendment.

[Baroness Brinton (LD)]

My Lords, first, I apologise for being unable to be present at Second Reading. I am speaking to Amendment 12, which my noble friend Lady Thomas of Winchester has also signed. It sets up the mechanism for the Secretary of State to have a strategic plan for very vulnerable people who would be extremely adversely affected by power outages—for some, probably resulting in death—and for the requirement on energy suppliers to work with the local resilience forums, which are tasked with delivering local emergency plans in communities.

I read the impact assessment with interest. On page 28, paragraph 70, headed “Disability or vulnerability”, states:

“Of those surveyed … by the ONS Wealth and Assets Survey, over 40% of adults in Great Britain have a combined financial and property wealth below £23,249. Of those poorer households 41% have a physical or mental disability ... Furthermore, households with energy-using health equipment will typically be associated with higher energy use and stand to benefit more from the volumetric scheme”.


The Minister may remember that I raised the issue of ensuring electricity supply to the most vulnerable disabled and seriously ill people, who may die if their home electricity supply is not maintained, on 11 October 2022 when the noble Baroness, Lady Kennedy of Cradley, asked a Question on energy pricing. I cited our family’s experience when my granddaughter, then aged two, who had to use a ventilator and a heart monitor faced a power outage on her south London estate. I thank the Minister for his response to my question and his being keen to reassure me and the noble Baroness, Lady Finlay of Llandaff, but I was concerned that BEIS Ministers may not be aware of what is happening in practice and how serious the problem is.

Since 11 October, I have talked to others who rely on ventilators, dialysis machines and other equipment at home. It is clear that the reality of what happened to my granddaughter in a small-scale electrical outage in south London about four years ago is, in practice, not unusual. Let me explain the process. On the advice of the consultants at the Evelina London Children’s Hospital, and as a condition of her being allowed to leave hospital for the first time aged 11 months, my son had brought her home and registered with their energy supplier that she required ventilation and a heart monitor for about 17 hours out of every 24. Without it, she would have to be taken back to the specialist hospital as her lung capacity put her at high risk of death as her oxygen levels would plummet quickly.

My son had understood that the supplier would ensure that there was an alternative supply as soon as possible. On the evening of the outage, my son called the emergency line, who were encouraging: they were on the list for an emergency generator to be delivered to their house. After one hour, it had not arrived. They were told that it could take another two hours. At that time, and because my granddaughter was still quite small, he bundled her and all her medical kit—believe me, a carful—and drove to our house, an hour away. Believe me, if you have watched a small child struggling for breath, you do not hang around.

There is absolutely no doubt that the register of vulnerable users is helpful. However, the reality of a power cut means that the small batteries in those items that they have as a back-up will not last for many hours, especially if the outage is not planned and people do not know how long it will last for. That is why the suppliers knew that they had to get a generator to my granddaughter’s house. But they failed.

My concern is that, in the event of mass outages in the cold months of January and February next year, however unlikely, much larger swathes of the country will lose electricity in a number of hours. National Grid was predicting even worse last week—even if that is also deemed to be highly unlikely—and it might mean that the whole country would be without power from late afternoon until late at night for a number of days a week in January and February.

The Disability News Service picked up on the questions that the noble Baroness, Lady Finlay, and I asked. John Pring at the DNS has been investigating current practice and how large outages would be handled by the energy suppliers, so he rang them. They said, “Talk to the Department of BEIS”, so he rang BEIS, which said, “Talk to the Department of Health and Social Care”—I have no idea why. The DHSC has not even replied, probably because it is not involved in emergency provision planning.

Many disability groups are very concerned about this coming winter too, as they, like my family, have experience of support in an emergency not being quite what was expected. Neither BEIS nor the DHSC seemed aware that the energy suppliers should be talking to their local resilience forums, run by each local authority, which have a statutory duty under the Civil Contingencies Act 2004 to deliver their local emergency health plan in the event of such an incident. However, directors of public health whom I have talked to, who are jointly employed by their authority and by the NHS, are core to LRFs, and they say that talking to energy suppliers is extremely difficult.

It is important to be clear that not all help for those whose lives depend on electricity will be on the register. Those registered with suppliers will include the elderly and the frail who must be kept warm, but they do not need individual generators at home. The LRFs need to plan with energy suppliers where generators will go in community halls or other planned venues and how vulnerable people will be taken to that venue. The current advice from suppliers to disabled people on their helpline is—wait for it—get a thermos and more battery packs. I have to say that that is causing alarm, and it tells me that proper planning is not going on, and people who are supposed to be giving advice do not know what it should be. That is also confirmed by the directors of public health whom I have talked to.

Under the Civil Contingencies Act 2004, local resilience forums are level 1 responders, and energy suppliers are level 2 responders. Energy suppliers keep the register and must liaise with them. The problem is that at the moment the LRFs are entirely reliant on the energy suppliers communicating with them. As with Covid, when the local resilience forums played a fantastic role as we went into lockdown in their communities, the possibility of a serious outage means that there needs to be real planning now because, otherwise, people will die in a power cut. All the elements needed are available through various duties on differing people; the problem is that they are not joined up. Hence my amendment, which is to try to join up the key partners at a national level through the powers of the Secretary of State to create a strategic plan, while ensuring an action plan at a local level which gives a duty to energy suppliers to maintain contact with their local resilience forums.

16:45

I ask the Minister: what formal arrangements should be in place, because they are clearly not working? Does he accept the need for a strategic plan owned by BEIS as well as energy suppliers, working with local resilience forums to ensure action plans in the event of future large-scale outages? Will he agree to meet me, my noble friend Lady Thomas of Winchester and representatives of disabled people’s groups to provide us with not just reassurance but detailed evidence of how this will work, if needed this winter?

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

My Lords, I am glad to say that the technical gremlins have now been slain, and the noble Baroness, Lady Thomas of Winchester, is online. I therefore invite the noble Baroness to speak.

[Baroness Thomas of Winchester (LD) [V]]

My Lords, I am very grateful to my noble friend Lady Brinton for tabling the amendment, to which I have added my name.

There will be a lot of severely disabled people who, like me, are terrified of power cuts. We rely through the day and night on electricity to keep us alive. We are not talking about just hot drinks and hot water bottles. In my case, I am talking about a feeding pump, ventilators, riser lavatories, an electric hospital bed, two lifts, a door opener and a wheelchair that needs charging—and, of course, heating and light. There are many others much worse than I am.

In answer to my noble friend’s question on 11 October, the Minister said that the Government would do

“all we can to protect the most vulnerable.”—[Official Report, 11/10/22; col. 662.]

Can he be a bit more specific about exactly what the Government will do? The energy companies are not exactly strapped for cash at the moment, so I hope that, between the energy companies and the Government, there will be proper, practical planning for the most vulnerable customers if outages occur, which could literally make the difference between life and death.

We need reassurance on this; otherwise, we will be fearful of every winter storm. Can the Minister give us this reassurance?

[Baroness Bennett of Manor Castle (GP)]

May I beg the indulgence of your Lordships’ House: I was in the Grand Committee?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am very sorry, but the Companion is quite clear: if you were not here at the start of the debate, you are unable to speak.

[Lord Foster of Bath (LD)]

My Lords, I am sad that we cannot hear the words of the noble Baroness, and I very much support her amendment, because she, like me, believes that this Government are not doing anything like enough to reduce energy consumption, the amount of energy expended nor making the most efficient use of the sources of energy available to us.

Other countries are doing far more than we are. Germany, for instance, is rushing to try to reduce its energy consumption by 20% in a very short space of time; we are doing very little about that. On energy efficiency, it was only 11 days ago that the European Union countries got together to celebrate Energy Efficiency Day, and Mr Frans Timmermans, the Commission vice-president responsible for the Green Deal, stated the bleeding obvious, because he said:

“saving energy, not using energy, is the cheapest energy”.

I agree with him, given that it is perfectly possible, given the Long Title of the Bill, as my noble friend on the Front Bench pointed out, to have done far more on these issues.

In truth, from this Government, we have had scheme after scheme which has floundered and left the industry in total disarray. As a result, since I was a Minister with some responsibility for this, the amount of energy efficiency work in this country has declined by a staggering 90%. It has gone down by 50% in the past 12 months alone. What we get from the Government is a lot of fine words—the Minister trots them out from time to time—from various government documents. The trouble is that if you follow through on what is said, you discover that there is not much action to back it up.

As an example, the Clean Growth Strategy, a document produced by this Government in October 2017, stated very clearly that:

“The Government will look at a long-term trajectory for energy performance standards across the private rented sector, with the aim of as many private rented homes as possible being upgraded to EPC Band C by 2030, where practical, cost effective and affordable. We will consider options with a view to consulting in 2018”.


The consultation took place, and was in fact extended because of Covid to 8 January 2021. That was 21 months ago, yet we have still not had any evidence of a response from the Government. When are we going to get the results of the consultation and the action promised by the Government around privately rented homes?

The situation is made even worse when you look at socially rented homes, in which the vast majority of those who are less well off are living. Five years ago, that same document said that the Government were going to

“look at how social housing can meet similar standards on the same timetable.”

I understand that consultation is needed before you can go ahead, but one would have thought that by now the consultation would have started. Yet in a letter to me and many other noble Lords in the last few days, the noble Baroness, Lady Scott of Bybrook, wrote:

“The Government has now committed to consulting on introducing standards in the social rented sector. This will happen within six months of the Social Housing (Regulation) Bill gaining consent”.


The consultation has not even started for something promised five years ago.

We have a lot of fine words from the Government, but in many areas the action does not take place. This is why it is so important that we have Amendment 8 on the statute book, at least in the very minimal way that requires the Government to give us a report on what is happening and what the benefits really are.

In relation to that, I acknowledge that the Minister pointed out at Second Reading that the Government have introduced one new scheme relating to energy efficiency, called ECO+. It will somehow run alongside ECO4, which was preceded by ECO1, 2 and 3. However, we do not know how that will work. It would be helpful to have a little more detail about how the two schemes will work together.

I have a specific question to ask the Minister about this new wonder-scheme. We know from all the evidence that the previous ECO schemes have been raising improvements to people’s homes. The Government claim that those schemes have led to improvements saving people up to £1,000 a year. Looking at the ECO+ documentation, my understanding is that the scheme is in fact expected to lead to a saving for consumers of about only £200 a year. The difference between the savings of the early ECO schemes and what appears to be that of the new scheme is huge. I hope that the Minister can explain to me why that is the case.

I have a couple of amendments down, which I will speak to very briefly. Amendment 10 is based on something from the Government’s own document. On page 12 of this year’s British Energy Security Strategy—which, incidentally, they described as ambitious—it says:

“We will cut the cost for consumers who want to make improvements”


to energy efficiency by

“zero-rating VAT for the next five years on the installation of energy saving materials”.

Some of that was introduced by the then Chancellor—I cannot remember how many Chancellors ago that was—back in the Spring Statement. I welcomed this at the time, but I genuinely do not believe it went anywhere near far enough. A large number of energy-saving materials were not included in the list.

At Second Reading, I raised one such example: retrofitting a battery to an existing solar heating scheme. Introducing a battery makes a system infinitely more efficient, which is a benefit to the homeowner and a benefit to the nation as a whole because more energy can be put back into the national grid, not least at times of high demand. At that time, I proposed that VAT on additional, retrofitted batteries should be zero-rated. Batteries needed to be retrofitted because, when many schemes were first introduced, batteries were either too expensive or people did not see the benefits of them.

I then looked at some of the other items that were not in the list. I was staggered to discover that something as simple as double-glazing was not included. The figures are staggering: 86% of homes already have double-glazing but a high proportion—more than a quarter—is old fashioned and nowhere near as efficient as modern double-glazing. The relevant associations which produce the figures are firmly of the view that, if all windows could be brought up to current standards, a staggering £14.5 billion could be saved.

I am not asking the Government to pay for all the double-glazing to be done. However, we know from all the research evidence that reducing VAT would significantly help many people take on the additional burden of uprating their windows to modern double-glazing standards. Evidence has shown the impact of the reduction in VAT in other areas. I am convinced that reducing VAT on double-glazing and on some of the other items mentioned in Amendment 10 would be of enormous benefit.

Finally, I turn to Amendment 11 in my name. I draw the Minister’s attention to my earlier speeches. He has heard me speak on this subject in one form or another on numerous occasions, so I will not repeat it all. Suffice to say that all the evidence shows that this Government claim to believe that putting targets into legislation is beneficial for driving forward investment. I have 60 quotes from current and former Ministers and from government departmental documents that back up the claim that targets put into legislation ensure that action happens.

Amendment 11 is simple. It seeks to put into legislation the targets that the Government have already set for improving the energy efficiency of our homes. It would bring fuel-poor homes up to EPC level C by 2030 and all the rest of the housing stock by 2035. In this country, unlike, for instance, in the countries of our neighbouring friends in the European Union, we have far less efficient homes—15 million homes are below the appropriate energy efficiency targets set by the Government.

The industry has made it very clear that if it is now to invest in the research, training and equipment needed to start doing more work in this field, it needs to have the confidence of targets placed into legislation. The Government have refused this on numerous occasions so far, and not once have I heard a good reason from any Minister. I am optimistic that, on this occasion, I might get a decent reply. I look forward to hearing it.

17:00

[Lord McNicol of West Kilbride (Lab)]

My Lords, many of the amendments in this group are sensible and could easily be accepted by the Government. We on these Benches will support Amendment 8 if the noble Lord, Lord Teverson, tests the opinion of the House. The Member’s explanatory statement is exactly as the noble Lord said, and it is a modest amendment:

“This new clause would require the Secretary of State to report”—


just to report—

“on the impact of energy efficiency programmes in reducing energy costs.”

It is modest indeed, and I am at a loss as to why His Majesty’s Government are not willing to accept it.

To quote from the government website:

“Improving the energy efficiency of UK buildings is the quickest way we can support families and businesses, to respond to rising energy prices.”


I am sure we all agree. It goes on:

“Improving the efficiency of our homes could reduce our heating bills by around 20% and reduce our dependency on foreign gas.”

Again, that is something I am sure we all agree with, so these amendments are in line with BEIS’s priorities and language.

As the noble Lord, Lord Foster of Bath, said, the UK has some of the least energy-efficient housing in Europe. According to my figures, 19 million homes are estimated to be below EPC band C. His figure was 15 million; I am sure he will forgive the 4 million. In excess of 10 million homes are worse than EPC band C. Under the Conservatives, home insulation rates have plummeted. In 2013, the then Government cut energy efficiency programmes, after which insulation rates fell by 92% in 2013. Further to that, new statistics show that home insulation dropped again by 62% in the second quarter of 2022 compared with the first quarter, with only 35,000 installations being recorded. The Resolution Foundation estimates that 9 million households are paying an extra £170 per year on their energy bills as a result of these failures. Since then, the Government have botched the green homes grant, which has yet to be adequately replaced.

These amendments would help with the bills people have to pay, and they would help the Government, the country and consumers. On top of this, Labour would give the devolved Administrations the power and resources to bring every home in their area up to EPC band C or higher within a decade.

The chief executive of E.ON, Michael Lewis, has pointed out that a sustained programme of energy efficiency could have reduced the amount of energy used in UK homes by 25%. That is the equivalent of six Hinkley Point C power stations. As we have heard throughout the debate on these amendments, the cheapest energy is the energy we do not use. A simple uprating of a home from EPC band D to band C would save the bill payer some £500 a year on the basis of April prices, so if it is put to the test we will support Amendment 8.

[Lord Callanan (Con)]

My Lords, I thank the noble Lords for their interventions. This group includes amendments relating to energy efficiency and energy savings which would help to reduce energy costs and, of course, ensure energy supply for vulnerable consumers, which I will come on to shortly. I completely agree with noble Lords that improving the energy performance of domestic and non-domestic properties is vital in the context of affordability, energy security and fuel poverty.

Amendment 8, tabled by the noble Lords, Lord Teverson, Lord Foster and Lord McNicol, would require the Secretary of State to produce a report on the effectiveness of energy efficiency programmes in reducing energy costs. The Government already evaluate the impact of their energy efficiency programmes and publish extensive energy statistics and evaluation reports as a matter of course. There really is no shortage of published materials on these matters, and I believe that they sufficiently cover the intention of this amendment. Bedtime reading for noble Lords interested in this matter includes the Annual Fuel Poverty Statistics Report: 2021, the Household Energy Efficiency Statistics, and the English Housing Survey, commissioned annually, on housing circumstances, condition and energy efficiency in England. Therefore, I am not sure there is any more information we could provide noble Lords with, and we believe this amendment to be unnecessary.

The noble Lord, Lord Teverson, also asked about a government public campaign on energy demand reduction. As I have mentioned in this House before, I have been working with officials and we have just launched our new website on GOV.UK—we have migrated the SEA site over to the government website and updated it. We now provide home owners with a kind of home energy MOT that gives impartial recommendations and could help them save hundreds of pounds a year. It is linked to the EPC database, so it provides personalised information on people’s property. Of course, we will be rolling that out further and linking it to several other sources of advice from energy companies, charities and others, to make sure that people have the information they need to make energy efficiency savings.

Amendment 9, tabled by the noble Lord, Lord Teverson, would require the Secretary of State to formally assess the merits of introducing social energy tariffs. I would never accuse the noble Lord of wanting to go back in time or of being stuck in the past, but in 2011 the Government of which his party was a part replaced social tariffs in the energy sector with the warm home discount scheme. The warm home discount is a better scheme than the then social tariff scheme; it provides a consistent level of support, standardised across all the participating energy suppliers. It has been an improvement on the previous arrangement of voluntary social tariffs—not all companies took part in them—where the level of benefits and eligibility varied between energy suppliers.

I hope the noble Lord is not suggesting that we should go back to that time. The warm home discount was introduced as an improvement to the old social tariff system. Any new social tariff would be almost identical to the warm home discount in its design and operation. It is already a mandated, targeted mechanism to reduce the cost of energy for those in vulnerable circumstances, on benefits et cetera. If the noble Lord thinks about it, he will accept that this is a better way of doing essentially the same thing, but I do not disagree at all with the objective. In short, this proposal simply seeks to provide benefits to vulnerable energy consumers that are already provided by the existing warm home discount model, and it would add a further level of complexity to the support system. Certainly, to judge by my postbag from Members of Parliament, it is already quite a complex system with complex eligibility requirements, and I do not think we would be well served by adding to that complexity.

Before I turn to Amendments 10 and 11 from the noble Lord, Lord Foster, let me answer the questions he asked me. He compared ECO4, the current iteration of the energy company obligation, and the forthcoming ECO+, and highlighted that there could be different levels of bill savings in each one. The reason for that is that the energy company obligation is an obligation based on suppliers; it used to be bill funded and is now funded by the Exchequer. One of the elements of the mini-Budget that remains—the last time I looked—is the ECO+ announcement that I worked hard to get in there, and we will shortly be consulting on the way it works. We project lesser bill savings because we want to do more under that scheme. The latest iteration of ECO4 looks at whole-house retrofits, so it is obviously much more expensive and treats fewer whole-house property refits. We have to consult on the details of ECO+, but the idea is that it would provide a smaller number of targeted measures, possibly only two or three, such as loft insulation, cavity wall insulation and heating controls.

Even though they are both called “ECO”, they will be targeted at different parts of the market; indeed I hope ECO+ will be targeted more at the able-to-pay market—those who are not necessarily on benefits and slightly above benefit level but who are still suffering and could take advantage of some support. The noble Lord will not have long to wait. We are working on policy design now and we will consult shortly on how that will work. The House will have an opportunity to debate the regulations and it is my intention to have this up and running as early as possible next year.

The noble Lord also asked me about the PRS regulations. As he correctly said, we consulted on them; we are currently looking at the recommendations and working on a government response. If I am honest with the noble Lord, it is about getting the balance right between wanting to see improvements and operating in the private rented sector and not doing so at the expense of less rented properties being available where there are already shortages in many areas. It is about trying to get the balance right between, on the one hand, obliging landlords to improve their property and, on the other, not wanting to provide them with incentives to leave the market.

Amendment 10 would zero-rate VAT for battery storage when used to store energy generated by solar panels, and measures to reduce energy demand in domestic properties. The installation of central heating system controls and insulation draught stripping already qualify for the zero rate for energy saving materials. The noble Lord will, of course, know that changes to tax policy are considered as part of the Budget process. If he has ever had interactions with the Treasury, he will know that this is important and will be jealously guarded. Tax policy decisions are taken in the context of the Government’s wider fiscal position. It permits sufficient time to consider the impact of any changes on government finances and individual taxpayers. The Treasury would wish him to know that that it keeps all taxes under review and welcomes representations to help inform future decisions on tax policy. I am sure that the noble Lord will want to feed in his views to Treasury, as we all do.

Amendment 11 would make it a legal requirement, as of 31 December 2022, for all fuel-poor households to be upgraded to band C by 2030 and all other households by 2035, with specified exemptions. The Government already have a statutory requirement to upgrade as many fuel-poor homes to band C as is reasonably practicable by 2030, and we have set out in the 2021 fuel poverty strategy how we intend to do so. The Warm Homes and Energy Conservation Act 2000 placed an obligation on the Secretary of State to make regulations that have as their objective the improvement of households in fuel poverty by a target date. Such regulations have been made for each of the devolved nations. The Governments of Scotland, Wales and Northern Ireland have set out their own approaches. This amendment seeks to replicate that requirement. I therefore submit that it is unnecessary.

We remain committed to our aspiration of improving as many homes as possible to EPC C by 2035, where that is cost effective, affordable and practical. However, we need to retain flexibility to choose the best approach, including how and when to introduce reforms, rather than being restricted by a statutory longstop date. This will ensure that we set policy that reflects best practice in the industry and that homeowners will not be required to make upgrades that are sometimes inappropriate for their property.

We move on to the important issues raised by the noble Baronesses, Lady Brinton and Lady Thomas, in Amendment 12, which would require a

“strategic plan for the supply of energy for those who are disabled or seriously ill”.

I know that this is an important issue and one to which the noble Baronesses are deeply committed.

As I think the noble Baroness said, electricity distribution network operators are obliged to maintain priority services registers to ensure that support is given to the most vulnerable customers during power disruption, including those customers who are disabled and rely on electricity-powered devices. Furthermore, as the noble Baroness also said, under the Civil Contingencies Act 2004, network operators are required to liaise with local authorities, strategic co-ordinating groups and third parties such as local resilience forums and partnerships to share information about vulnerable customers and work together to provide welfare support.

17:15

While the right processes and duties are in place—I think the noble Baroness recognises this—she and others have concerns about how it is working in practice. We are also keen to ensure that all relevant parties are co-ordinated as they should be. A review was carried out as a result of the electricity disruption faced during the storms of 2021-22. As a result of its key recommendations, distribution network operators have since created a guidance document and standard presentation to ensure consistency and clarity on provision of welfare and support during such incidents. This will form the basis of network operators’ winter liaison with local resilience partnerships. As I mentioned, I completely agree that a crucial issue has been raised. The Cabinet Office has responsibility for ensuring the plan is implemented. I will certainly pass on the noble Baroness’s comments and ensure with them that this is followed through.

Amendment 15A was tabled by the noble Baroness, Lady Bennett. I am sorry she was not able to speak to it. It would give the Secretary of State powers to introduce measures such as reducing unnecessary lighting, advertising, heating and air conditioning in commercial premises. It is right that commercial and other organisations should look to be energy efficient. We already have measures such as the energy savings opportunity scheme for large businesses to achieve exactly that.

While I commend the sentiment of the amendment, I do not consider that the noble Baroness’s approach is the right one. The Government believe that it is for businesses to make decisions on the basis of the information they have available to them. We want to avoid unnecessary and burdensome regulation. There would also be practical complications in delivering such regulations; for example, in defining unnecessary heating or lighting, as well as potentially significant enforcement costs and risks.

We will also publish a review into the operation of the energy bill relief scheme in three months to inform decisions on future support. The review will focus particularly on identifying the most vulnerable non-domestic customers and how the Government will continue assisting them with their energy costs. They are likely to be those who are least able to adjust by, for example, reducing their energy usage or increasing their energy efficiency.

In conclusion, I have sought to assure noble Lords who tabled amendments in this group that the Government are committed to energy efficiency and supporting vulnerable consumers. Therefore, I hope they will perhaps not press their amendments—but looking at the gathering of the clans, I suspect not.

[Baroness Brinton (LD)]

I asked the Minister whether he would meet me, the noble Baroness, Lady Thomas, and representatives of disabled peoples’ organisations. I think I heard him say that this was more appropriately handled by the Cabinet Office. Would he help me to ensure that this same group, including myself, could meet the relevant Minister in the Cabinet Office on this issue?

[Lord Callanan (Con)]

I will certainly reply, although of course I cannot speak for Cabinet Office Ministers. I checked and they do have responsibility for ensuring that the Civil Contingencies Act is followed and implemented. I will certainly do my best to facilitate what the noble Baroness wants.

[Lord Teverson (LD)]

My Lords, I welcome the Minister’s response to my noble friend Lady Brinton on that important issue. He said that there are already lots of statistics for energy efficiency: absolutely, there are. They are all over the place, and every time you need to search for them, you have to work out what they are. One, from the energy poverty statistics, points out that, in England alone, 3.6 million households are in fuel poverty. That was in 2020, before this crisis.

Although the Bill, which we welcome in principle, is there to solve that problem—or not make it any worse—let us remember that the present average price cap is £2,500 per household, which is getting on for double what it was in 2020. So the level of fuel poverty will hugely increase.

There may be good will or a wish among the Government but, whatever the Minister says—I do not doubt his sincerity—there is never a major move forward in the form of action on energy efficiency and demand reduction that actually makes a difference. As my colleague and noble friend Lord Foster, and the noble Lord, Lord McNicol, said, we have some of the least efficient housing and commercial building stock in this country. That is why we need to reboot the whole energy efficiency and demand reduction conversation, which must lead to action. This amendment is not the end of that process; it is a modest but essential start. On that basis, I wish to test the opinion of the Committee.

17:21

Division 1

Ayes: 170

Noes: 174

17:34

Amendments 9 to 12 not moved.

Amendment 13

Moved by

[Lord Teverson]

13: After Clause 15, insert the following new Clause—
“Energy profits levy
(1) The Secretary of State must lay before Parliament an assessment of the additional revenue that would result from the following policy measures—(a) amending the Energy (Oil and Gas) Profits Levy so that it applies to oil and gas profits incurred since 1 October 2021,(b) removing from the Energy (Oil and Gas) Profits Levy allowances for investment in oil and gas extraction,(c) increasing the rate of the Energy (Oil and Gas) Profits Levy beyond 25%, and(d) implementing a windfall tax on the excess profits of coal- and gas-fired power stations.(2) In addition, the Secretary of State must lay before Parliament an official estimate of the oil and gas super profits over the next 2 years.(3) The Secretary of State must lay the report before Parliament no later than 31 October 2022.”Member’s explanatory statement
This new Clause would require the Secretary of State to lay a report before Parliament detailing the impact of expanding the government’s Energy (Oil and Gas) Profits Levy.

[Lord Teverson (LD)]

My Lords, without, I hope, taking away too much tension from the Committee, I am not going to press this amendment so I shall be relatively brief in explaining it. It has an important basis in the Government’s Energy (Oil and Gas) Profits Levy Act. It also has an element of looking at how the Bill and previous schemes discriminate against the renewables industry compared with fossil fuels.

A key element of Amendment 13 is to assess the impact of that date in the levy so that it applies to oil and gas profits incurred since 1 October 2021. The Government’s energy profits levy is effective from 26 May, meaning that profits accrued before that date are outside its scope. It was clear over a year ago that surging profits for the oil and gas companies were in stark contrast to the real struggle faced by ordinary people and small businesses faced with high and soaring energy costs. In fact, it was one year ago today that my right honourable friend Ed Davey MP called for the windfall tax on the profits of oil and gas companies, accompanied in due course by other parties and other parties represented in this House.

If the Chancellor had responded at that time and a levy had been in place from October, it would have raised billions more. If I could just remind the Committee of the profits since then, BP saw profits rise by 138% between quarter 1 of 2021 and quarter 1 of 2022—from £2.6 billion to £6.2 billion; it was similar for Shell. These combined super-profits alone amount to £7.5 billion in the first quarter of 2022. That is £7.5 billion more than they made in the same quarter in 2021. Had those windfall profits had been taxed by the same amount, it would have raised £1.8 billion.

What we are looking for in particular here has to do with the levy. Like proposed new subsection (1) in Labour’s Amendment 14, proposed new subsection (1)(b) in Amendment 13 calls from the removal of allowances in the levy for investment in oil and gas extraction. This is one of the key differences between the revenue cap on renewables and the fossil fuel industry, where there is that huge investment incentive of getting 80% back for investment in—dare I say?—fossil fuels, obviously. That is where we want there to be quality.

We on these Benches know, as do Members from other parts of the House, that renewables, rather than fossil fuels, are really the way forward. The Government have committed themselves to a large amount of investment in offshore wind. We recognise that but we need to keep at least a level playing field in taxation matters between renewables and fossil fuels. I very much believe that we need then to push investment in renewables further forward. I beg to move.

[Lord Lennie (Lab)]

My Lords, the whole question of the energy market is complicated and beset by a series of legislative procedures which can cause confusion. That said, the new clause proposed by Amendment 14 would simply require the Secretary of State to produce a report assessing the impact of removing the investment allowance from oil and gas companies, as set out in the Energy (Oil and Gas) Profits Levy Act, and, in particular, to assess the impact on domestic and non-domestic users. Currently, oil and gas companies receive an 80% rebate on every pound invested but that is not available to renewables or other zero-carbon technology. This appears to tilt the market away from investments in cheaper domestic clean power sources towards oil, gas and fracking.

The proposed new clause would require the Government to assess the revenue and profits of electricity generators and oil and gas producers every six months, to see what the effects would be. Amendment 20 would require the Secretary of State to disaggregate the cost of production of natural gas from the cost of production of other energy sources to reduce the cost of electricity to domestic and commercial consumers. This dates back to when gas was the only game in town for energy companies; now, renewables account for 43% of the generation mix.

Gas prices have increased fourfold since the beginning of 2011, which means that consumers are paying much more for electricity than the average cost of generation across the market. Splitting the market is a likely consequence, by creating a separate pool for cheaper, intermittent, renewable generation and a second for traditional fossil fuel, which in turn could lead to consumers determining when to use cheaper electricity for things such as car charging by timing their usage accordingly. Electricity prices would be determined competitively by companies considering their own boundaries rather than working through gas. I give notice of our attention to move Amendment 14 to a vote.

[Lord Callanan (Con)]

I thank all noble Lords who have tabled amendments in this area, on the energy profits levy, including an amendment that seeks to reduce the costs of electricity to consumers.

I start with Amendment 13, tabled by the noble Lord, Lord Teverson, which would require the Secretary of State to publish a report on the additional revenue that could be raised from expanding the energy profits levy. I shall say something very similar to what I said to the noble Lord, Lord Foster, that all taxes are kept under review, and any changes in tax policy should be considered and announced by the Chancellor, in line with the usual Budget processes. The Treasury view, therefore, is that this amendment is not appropriate for this Bill.

The energy profits levy has been designed with a bespoke tax base, appropriate to respond to the extraordinary global context of high oil and gas prices. The levy is expected to raise substantial revenue while providing companies with a new incentive for investment. It is right that we continue to encourage investment in North Sea oil and gas to strengthen the UK’s vital offshore oil and gas sector and bolster our future energy security. The amendment would also require the Government to produce an estimate of upstream profits expected in the next two years. Such estimates will be highly sensitive to commodity price fluctuations. Given the volatility in prices since last year and that most companies’ out-turn profits are publicly available, it is not clear that producing such an estimate would be a beneficial use of public resources.

I turn to Amendment 14, tabled by the noble Lords, Lord Lennie and Lord McNicol. This amendment requires the Secretary of State to publish a report on the impact of removing the investment allowance in the energy profits levy. The Treasury has made clear its view that it is not for this House to discuss the matters raised by this amendment in relation to this Bill, on the basis that fiscal issues are a matter for the House of Commons. Tax policy changes are an area for the Treasury, which believes that the Chancellor should consider and announce any changes in line with the usual Budget process. Taxation on the profits of oil and gas producers is not in scope of this Bill. The energy profits levy, introduced under the Energy (Oil and Gas) Profits Levy Act 2022, has been in place since May. It is not standard for the Government to publish assessments of the economic impacts of measures that they are not introducing. The Government already monitor the UK oil and gas sector; data on upstream production is published regularly on GOV.UK. It is not clear how a report on the impact of a hypothetical change would be a beneficial use of public resources.

I turn to Amendment 15, also tabled by the noble Lords, Lord Lennie and Lord McNicol, which would require the Secretary of State to publish an assessment of the revenue and profits of electricity generators and oil and gas producers every six months. The profits of oil and gas producers are not in scope of these measures but are subject to the energy profits levy, which has been in place since May. The out-turn revenue and profits of most electricity generators are already in the public domain, so I do not believe this amendment is necessary. The objective of the Energy Prices Bill is to protect consumers from very high energy prices. We recognise that we must strike a balance that is fair to generators, achieves value for money for consumers and maintains investor confidence. That is why it is appropriate that the House gets the chance to debate fully the first set of regulations made under the temporary cost-plus revenue limit.

17:45

I turn to Amendment 16, proposed by the noble Lord, Lord Rooker. The Government are seeking powers to introduce a new temporary cost-plus revenue limit for low-carbon generators not already on a contract for difference, limiting the revenue they are able to achieve in the wholesale electricity market. This amendment would mean that the temporary cost-plus revenue limit would not apply to low-carbon energy generators that have fuel import costs. It would affect biomass and nuclear technologies that can provide dispatchable and baseload power. Of course, we recognise the value of the power that these technologies can provide, hence we have been clear that we are giving careful consideration to their specific arrangement as part of the detailed policy design. However, it is right that no generators should receive excess revenues just as a result of Putin’s illegal invasion of Ukraine. The precise scope and mechanics of the temporary cost-plus revenue limit will be subject to an appropriate consultation to be launched shortly.

I turn to Amendment 20, proposed by the noble Lords, Lord Lennie and Lord McNicol. The cost-plus revenue limit is a temporary measure to break the link between extraordinarily high gas prices arising from the invasion of Ukraine and the cost of production of low-carbon generators not already on a fixed-price contract. I agree that we need a long-term solution, which is why the Government have launched a review of electricity market arrangements. As I said earlier in Committee, the review is considering a broad range of reforms, including ways in which we could decouple gas and electricity prices. It is important that we do not prejudge the correct solution in our haste to tackle the present crisis. I must therefore resist this amendment. The Government have recently concluded a consultation on the review. We will pursue reforms at pace to ensure that our electricity market is fit for purpose and delivers secure, low-cost, low-carbon electricity for the long term. I hope that the noble Lord will therefore not press the amendment.

Finally, I turn to Amendment 30 tabled by the noble Lords, Lord Lennie and Lord McNicol. It is my firm belief that this amendment is not necessary. As I have mentioned before, the Bill does not legislate for oil and gas producers. We are imposing the cost-plus revenue limit on some low-carbon electricity generators. This is subject to consultation and the drafting of secondary legislation. The amendment would prejudice the outcome of that consultation and development of secondary legislation, which of course will be debated fully in this House. Therefore, I hope that the noble Lord will feel able not to press his amendment.

[Lord Teverson (LD)]

I thank the Minister for his reply, and beg leave to withdraw the amendment.

Amendment 13 withdrawn.

Amendment 14

Moved by

[Lord Lennie]

14: After Clause 15, insert the following new Clause—
“Report on additional expenditure treated as incurred for purposes of section 1 of the Energy (Oil and Gas) Profits Levy Act 2022
(1) The Secretary of State must, within six months of the day on which this Act is passed, publish and lay before Parliament a report on the effect of removing the allowance under section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022.(2) The report must set out projections of the effect of the reduction set out in subsection (1) on domestic and non-domestic energy bills.”Member’s explanatory statement
This new Clause requires the Secretary of State to produce a report assessing the impact of removing the investment allowance for oil and gas companies as set out in the Energy (Oil and Gas) Profits Levy Act, and in particular to assess the impact on domestic and non-domestic bills.

[Lord Lennie (Lab)]

My Lords, the welcome part of the Minister’s statement was the consideration of disaggregating gas from electricity. We welcome that and look forward to seeing the outcome. But Amendment 14 simply asks for a report to be produced; it is not trying to interfere in Treasury decisions or to do anything about fiscal policy. It is simply trying to find out whether the market is distorted and, if it is, by how much. I wish to test the opinion of the House on this amendment.

17:49

Division 2

Ayes: 153

Noes: 174

18:01

Amendments 15 and 15A not moved.

Clause 16: Temporary requirement for electricity generators to make payments

Amendments 16 to 19 not moved.

Clause 16 agreed.

Clauses 17 and 18 agreed.

Amendment 20 not moved.

Clause 19: Requirement to pass on energy price support to end users

Amendment 21 not moved.

Clause 19 agreed.

Clause 20 agreed.

Clause 21: Power of the Secretary of State to modify energy licences etc

Amendments 22 to 24 not moved.

Clause 21 agreed.

Clause 22: Power of Secretary of State to give directions

Amendment 25

Moved by

[Lord Lennie]

25: Clause 22, page 21, line 1, after “may” insert “by regulations”
Member’s explanatory statement
This amendment and others in the name of Lord Lennie make the powers in Clause 22 subject to affirmative parliamentary procedure including a sunset Clause.

[Lord Lennie (Lab)]

My Lords, I just want to remind the House of the warnings and the contribution from the noble Lords, Lord Rooker and Lord Cunningham, about the Government ignoring the recommendations of the DPRRC as against the normal practice of this House. I beg to test the opinion of the House.

18:04

Division 3

Ayes: 154

Noes: 166

18:16

Amendments 26 to 29 not moved.

Clause 22 agreed.

Clauses 23 to 26 agreed.

Clause 27: Consequential provision etc

Amendment 30 not moved.

Clause 27 agreed.

Clauses 28 to 30 agreed.

Schedule 1: Non-domestic relief regulations for Great Britain

Amendments 31 to 33 not moved.

Schedule 1 agreed.

Schedule 2: Non-domestic relief regulations for Northern Ireland

Amendments 34 to 36 not moved.

Schedule 2 agreed.

Schedules 3 to 5 agreed.

Schedule 6: Time limits on the exercise of certain powers under this Act

Amendments 37 to 42 not moved.

Schedule 6 agreed.

Schedule 7 agreed.

House resumed.

Bill reported without amendment.