Draft Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022
(1 year, 5 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)
I beg to move,
That the Committee has considered the draft Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022.
It is a pleasure to serve under your chairmanship, Mr Gray. These regulations were laid before the House on 20 October 2022. The Subsidy Control Act 2022 provides for a new UK-wide subsidy control regime that will enable public authorities to give subsidies that are tailored to their local needs and that drive economic growth. It does this while minimising distortion to UK competition and investment and protecting our international obligations. Section 11 of the 2022 Act enables the Secretary of State to make secondary legislation to define subsidies and schemes of interest or particular interest.
I will briefly summarise the implications of a subsidy or scheme meeting the definition of a subsidy or scheme of interest or particular interest. Part 4 of the 2022 Act establishes the mechanism for the referral of subsidies and schemes to the subsidy advice unit—a new unit established within the Competition and Markets Authority. Voluntary referral will apply to subsidies or schemes of interest. Subsidies or schemes of particular interest will be subject to mandatory referral. When a subsidy or scheme is referred, the public authority’s assessment of compliance with the subsidy control requirements will be evaluated by the SAU and a report will be published with its findings. This adds an additional layer of scrutiny for the small proportion of subsidies and schemes that have greater potential to lead to undue distortion and negative effects on competition or investment in the UK or on international trade or investment.
The Government ran a public consultation between March and May 2022 that sought views on the categories of subsidies and schemes and the Government’s intended approach to setting out the criteria and definitions. Respondents expressed broad support for the Government’s approach. In our response to the consultation, published in August this year, we set out our final proposals, which built on the constructive feedback received from the consultation.
In the regulations, subsidies and schemes of interest or particular interest are defined based on clear criteria. They are, first, based on simple monetary thresholds. Subsidies above £10 million, or that accumulate above this threshold, are subsidies of particular interest. Subsidies between £5 million and £10 million are generally subsidies of interest. However, if they are awarded in a sensitive sector, they are subsidies of particular interest.
John McDonnell (Hayes and Harlington) (Lab)
These Committees might not be the most exciting part of parliamentary life, but we should try to at least understand what we are dealing with. I have found my way around the SOI and the SOPI and the SAU part of the CMA, but what defines a “sensitive sector”? It does not seem to be laid out anywhere, as far as I can see.
Kevin Hollinrake
That is a very good question. I was just getting on to that. Sensitive sectors are areas of economic activity in which there is a record of international trade policy disputes, evidence of global overcapacity within the sector or evidence that one or both of these features will apply to the sector in future.
If the right hon. Gentleman looks at the last part of the regulations, he will see that it lists the sectors that would be defined as sensitive, and those include automotive, steel and other sectors. Subsidies in those sectors have greater potential for substantial distortion, even at lower values. That is why those sectors are subject to a lower monetary threshold, of £5 million, to be defined as a subsidy of particular interest. The Government have set out a list of these sectors in the regulations.
The monetary thresholds are cumulative. As such, a subsidy of £5 million may be above the threshold for a subsidy of particular interest if the recipient had already received a related £6 million subsidy within the last three financial years. This avoids public authorities salami-slicing subsidies to avoid scrutiny. In addition, the regulations set out a minimum value for referral of £1 million. That means that where related subsidies cumulate above the £10 million threshold for subsidies of particular interest, public authorities will have to refer only the most recent subsidy if it exceeds £1 million.
The second element of the criteria is specific categories of subsidy. Subsidies designed to rescue an ailing or insolvent enterprise are subsidies of interest, and restructuring subsidies are subsidies of particular interest. That reflects the fact that both rescue and restructuring subsidies have greater potential to cause undue distortion, but rescue subsidies are often time-critical, since the enterprise may need the subsidy urgently if it is not to go out of business. The final specific category of subsidies is those that are explicitly conditional on relocation. Such subsidies are prohibited entirely, unless they have a beneficial effect on economic or social disadvantage in the UK as a whole. Subsidies in that category are subsidies of interest if they are £1 million or below, and subsidies of particular interest if above that value.
The regulations also apply to subsidy schemes. A subsidy scheme will set out the parameters under which subsidies may be given. The assessment of compliance with the subsidy control requirements will be carried out for the whole scheme, rather than for each subsidy given under that scheme. As such, if a subsidy of particular interest can be awarded under a scheme, that scheme is a scheme of particular interest and is subject to the referral procedures. The same applies to subsidies and schemes of interest. The referral can occur once, at scheme level. Subsidies given under schemes will never be referred to the SAU.
Mr John Baron (Basildon and Billericay) (Con)
I thank the Minister for bringing these matters to our attention. Now that we have left the EU, where does all this fit into the big scheme of things? Do we now have greater freedoms with regards to state subsidies, or is an element of liaison still required to ensure we meet our obligations?
Kevin Hollinrake
That is a good question, and I thank my hon. Friend for it. The trade and co-operation agreement includes some oversight; clearly, we made some commitments in that agreement regarding subsidies, which is what the statutory instrument and the previous legislation have both sought to address. However, we believe that the approach we are taking to subsidies is far more effective and quicker to deliver than the European Union one. Under that approach, we would have to take a scheme to the European Union, have it approved and then have it come back, which might take several months. Our approach sets out a broad set of principles: a local authority or central Government can set out a scheme and, as long as it adheres to these principles, the subsidy can be delivered far more quickly. In our view, that is a far more effective process.
Finally, a distinct approach will apply to tax schemes. All tax schemes will be schemes of interest and may be referred to the subsidy advice unit. The cumulation rules will apply differently to subsidies given under tax schemes. Only subsidies given as part of the same tax measure within the last three financial years will count towards the cumulative threshold for subsidies of particular interest.
John McDonnell
If I am being dim here, I apologise, but I have gone through the explanatory notes to find out the definition of a sensitive area, and it is not there. The schedule to the regulations contains a table showing the various industries—copper, aluminium and so on— but regulation 6 does not explain how a sector becomes defined as sensitive. The Minister can write to me on this question if an explanation is not forthcoming, but I am curious how that list was compiled. Does it come from the primary legislation? I could not find a definition there either. For example, aviation is referred to separately in the main body of the legislation, but that might well be defined as a sensitive area. Obviously, I have a natural interest in this issue.
Kevin Hollinrake
It is experiential; it is based on the record of international trade policy disputes and evidence of global overcapacity. Automotive may sit within that.
Kevin Hollinrake
That is how they have been defined. I am happy to write to the right hon. Gentleman with further detail.
John McDonnell
Simply, the legislation before us does not seem to describe the principles or the process by which a definition can occur. I might have got it completely wrong, but it would be useful to understand that at least.
Kevin Hollinrake
It is a fair point. In the interest of time, I will consult on this and write to the right hon. Gentleman.
In conclusion, the regulations set out the definitions and criteria for the categories of subsidies and schemes that will have greater potential to lead to undue distortion and negative effects on competition or investment in the UK or on international trade or investment. These subsidies and schemes will be subject to an additional layer of scrutiny in the form of referral to the subsidy advice unit. That is crucial to the effective functioning of the UK’s new subsidy control regime, which will give public authorities the flexibility and freedom to deliver bespoke subsidies that meet the needs of the UK economy. I commend the regulations to the Committee.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr Gray. This statutory instrument fills important gaps left by the Subsidy Control Act 2022, which received Royal Assent earlier this year. It defines subsidies or schemes of interest or particular interest. It is an important instrument, and we support it. I think we all agree that it is in the interests of levelling up, place-based prosperity, national growth and our green transition that the Act becomes operational as soon as possible.
I am surprised and sorry that the Act leaves unanswered crucial questions that I and Labour colleagues raised during its passage—having had four Secretaries of State and four Ministers may have something to do with that, but the Minister may have a different view. As we made clear, Labour recognises the need for a new statutory framework for subsidy control. It is required by the trade and co-operation agreement that the UK entered into with the European Union and by our wider international commitments as a World Trade Organisation member.
Subsidies, when effectively used, are an essential element of industrial strategy for businesses large and small, but they need to be effective, fair and accountable. We need Government to get behind the businesses and industries that will deliver growth, jobs and prosperity in every part of our country in the years ahead, and to deliver on national missions and a long-term plan that will help provide confidence for investment. At the same time, we need rules and processes to ensure that that is done in a fair and transparent way, so that fair and beneficial competition is preserved and not distorted, businesses and industries are not unfairly disadvantaged, and public money is not spent on the basis of personal favours or improper political considerations.
In short, we need a clear focus on impact, transparency and value for money. The regulations provide much-needed clarity and criteria on issues that were not resolved by the 2022 Act and that were left for secondary legislation. Those specifically concern the definitions of subsidies and schemes of interest or particular interest under the Act. Part 4 of the Act provides for certain subsidies or schemes to be referred to the Competition and Markets Authority. A public authority must request a report from the CMA on a subsidy or scheme of particular interest before the subsidy or scheme is given or made. A public authority may request a report from the CMA on a subsidy or scheme of interest before the subsidy or scheme is given. In each of those cases, the CMA must advise the Secretary of State whether the subsidy or scheme is consistent with the subsidy control principles and whether there are any changes to its design that could ensure better compatibility. I will come back to the issue of the recommendations from the CMA being non-binding.
As the Minister said, the instrument sets the minimum threshold for subsidies and schemes of particular interest at £1 million. A subsidy or scheme will be of particular interest where the total value given to a business exceeds £10 million in three financial years, regardless of which public authorities have given those subsidies; where the total value exceeds £5 million in three financial years but the business is in a sensitive sector, we will also come back to that briefly; where it is provided to restructure an ailing or insolvent business; or where it is conditional on the beneficiary relocating and has a value of over £1 million. Other subsidies between £5 million and £10 million, individually or cumulatively, will be subsidies of interest.
The challenge is ensuring that thresholds are set at a level that captures cases that merit the specified level of scrutiny, without imposing burdens on the CMA or ultimately frustrating much-needed initiatives, perhaps needed at speed to strengthen businesses in particular industries or places. We must be careful that the standard thresholds identified do not capture too much in some areas and too little in others. It would be helpful to understand the process for reviewing the impact, transparency and value for money. The CMA will, I think, report initially after three years on the whole process, but it would be helpful to understand whether the Minister or the Secretary of State will request earlier reports. We support the introduction of thresholds, but it would be helpful if the Minister expanded on the Government’s reasoning for setting the threshold at £1 million. Did respondents to the Government’s initial consultation—I have a copy here—recommend and agree to such a threshold?
The instrument also specifies areas of economic activity termed “sensitive sectors”, which my right hon. Friend the Member Hayes and Harlington raised, where levels of scrutiny will automatically be higher because there is thought to be, according to comments to the consultation, greater risk of subsidies distorting competition or damaging industrial development. The sectors specified are primarily in the areas of metals production, including iron and steel; transport manufacture, including aerospace and automotive; and electricity production. Why is that important categorisation not subject to wider debate, as we called for during the passage of the Subsidy Control Bill?
The consultation outlined some of the criteria, including that there might be a record of international trade disputes or evidence of global overcapacity, but I note concerns raised in the Government’s consultation that some sectors included in the category might be disadvantaged relative to their close competitors in other countries. Others have called for sectors to be added to the list, including transport, ports, airports and air carriers. It would be interesting and helpful if the Minister expanded on the Government’s reason for including certain sectors in this category and not others that were raised, and on the likely impact of being in or out of it.
I highlight the additional level of scrutiny provided for any intervention aimed at supporting the relocation of activities in any sector. We argued during the passage of the Subsidy Control Bill that addressing local or regional disadvantage should be explicitly recognised as an important policy objective—something that a Government who claim to be committed to levelling up opportunities and living standards across the country should have as a key focus. Again, it is essential that the provisions around relocation do not act as a barrier or have a deterrent or chilling effect on initiatives that may be undertaken—by devolved authorities, for example—to attract investment and support job creation in every part of the country.
We raised numerous critical questions during debates on the subsidy control regime, but they have not been answered in the Minister’s speech or in the documentation. During the passage of the Bill, we called for greater powers for devolved Administrations so that they could challenge schemes that they believed might put their visitors and communities at an unfair disadvantage. Does the Minister have any further response to that? The Government’s consultation states that the Scottish and Welsh Governments have not formally responded to it, but that they will instead be providing their views directly in correspondence; I believe that Northern Ireland Ministers have been unable to respond because of the suspension of the Executive Committee. Do we have confidence that the views of the devolved Administrations have been taken into account? Importantly, what dialogue is ongoing with devolved Administrations about the subsidy regime?
We also called for the Competition and Markets Authority to be given more power to proactively investigate subsidies and schemes of concern, addressing the accountability gap that experts have identified in the framework. This SI addresses the question of which subsidies and schemes will be, or can be, referred to the CMA to report on. However, unless the Minister wants to correct me, the recommendations of these reports will still be non-binding, whether or not they relate to schemes of interest or schemes of particular interest. Will the Minister provide examples of instances when the CMA might advise against a proposed subsidy or scheme being given, but it is appropriate for the Secretary of State or another public authority to act against that advice? If he cannot think of such a situation, will he reconsider whether the CMA’s advice should be binding, particularly for schemes and subsidies of particular interest? It would be helpful to understand that.
It would also be helpful to be clear about how we—as taxpayers, as members of the public and as Parliament—will know if a public authority chooses to proceed with a subsidy or scheme of interest or particular interest without taking into account the CMA’s recommendations. Will that be reported on for the sake of accountability and transparency to Parliament, and will the reasons for disagreeing be published?
The impact assessment suggests that the cost is likely to be around £15 million, largely for the subsidy advice unit at the CMA. Will the Minister clarify whether those resources have already been allocated, or whether he might expect them to be? It would be helpful to understand that. I think he will recognise the words “legislation without implementation”, and we can all agree that that is of no help to anyone. I am sure he will be helpful in clarifying that.
We had some debate about tax subsidies during the Bill’s passage. Will the Minister clarify why, as far as I can tell—perhaps he can confirm this or correct me—all tax subsidies will be subsidies of interest, not subsidies of particular interest? Why has that decision been made?
Finally, I note that we have no idea what the Government’s overall plan for business support and industrial strategy is. The 2019 Conservative manifesto was full of promises and ambitions, but nearly three years later what do they have to show for it? The Industrial Strategy Council has been disbanded. There has been a succession of Secretaries of State, most of whom have fallen out of favour. There is still no sign of the Government living up to their rhetoric on levelling up or any sign of the investment we need to put us on track for net zero.
During the passage of the 2022 Act, Labour consistently called for the Government to state or release their strategy for subsidies. The new statutory framework of the subsidy control regime should provide the Government with an opportunity to introduce a comprehensive strategy for subsidies and industry as a whole and for that to be part of a long-term plan for growth, yet we are still waiting.
Although we support this instrument, I would welcome answers from the Minister to the questions I have raised. I urge the Government to match Labour’s ambitions for business and industry by implementing a proper industrial strategy for our country’s economy that will also help provide direction and strategy for public authorities seeking to make subsidies in line with the intentions under this legislation.
Kevin Hollinrake
I thank the shadow Minister for her comments, and all Members for their thoughtful contributions. I begin by reminding the House what the regulations aim to do. They set out clear definitions and criteria for two categories of subsidies and schemes that have been identified as having greater potential to lead to distorting effects. These are subsidies and schemes of interest or particular interest.
Public authorities giving or making subsidies or schemes of interest will have the option of referring these to the subsidy advice unit established within the Competition and Markets Authority, while those giving or making subsidies or schemes of particular interest must refer them to the unit. The definitions and criteria set out in the regulations are based on clear monetary thresholds as well as specific categories of subsidy. I am confident that they strike the right balance when it comes to providing protection from undue distortion or negative effects on competition or investment within the UK or international trade or investment, while being administratively simple for public authorities to apply.
I have committed to write to the right hon. Member for Hayes and Harlington with more detail on the categories of subsidy; the shadow Minister also addressed that in her remarks. She will be aware, having read the consultation, that we consulted in full on the question of sensitive sectors and published accompanying analytical information. The Government’s response to the consultation sets out a rationale for the selection of these particular sectors, but I am very happy to write to her too.
John McDonnell
There is a difference between clarity in a consultation paper and clarity in legislation. I would like to hear about the legislation.
Kevin Hollinrake
I take that point and commit to writing to the right hon. Gentleman about that.
On the shadow Minister’s point about the non-binding nature of judgments from the SAU, they are obviously subject to a potential legal challenge. If a public authority declined to accept the recommendations of the SAU, which seems quite unlikely, it would open itself up to legal challenge, either by a competitor or organisation in receipt of subsidies, another country or the EU, for example. It seems an unlikely state of affairs, but we believe the public authority should be able to use its judgment, obviously while heeding the advice of the SAU.
In terms of scrutiny, any referral to the SAU is published on its database, showing what referrals have been made, and any recommendations by the SAU are published. That provides for scrutiny over the decisions made by either the SAU or the public authority.
Seema Malhotra
The Minister is right that referrals made to the SAU and its reports will be published, but the question was whether a subsequent disagreement would be published anywhere. If a public authority chooses not to go along with the recommendations, is there any transparency over that?
Kevin Hollinrake
There is certainly transparency in terms of any referral, which would be on the public record. The response from the SAU would also be public. I do not understand the hon. Lady’s further point. It is a decision for public authorities, at that point. If they choose to ignore the advice, on their head be it.
Seema Malhotra
I thank the Minister for his generosity in giving way again. For example, as part of the process, a public authority that disagreed with the recommendations in a report within 30 days from the SAU could need to send it a letter to say, “We have taken your report, but have chosen to disagree with the recommendations.” That would then be on the public record.
Kevin Hollinrake
That is a fair point. I will take it away and write to the hon. Lady.
I mentioned sensitive sectors in my previous points. On what was and was not in the Bill—the hon. Lady raised that earlier—the reason we did it this way around is to allow for feedback, and not just from parliamentarians debating the sensitive sectors, for example. We think that it is important to get feedback from the sectors themselves—the stakeholders. We published our position in January, had a consultation from March to May, then introduced draft regulations that we believe deal with the issues raised.
It is true that the devolved Administrations said that they would not contribute directly to the consultation, but they have engaged with us to a great degree, including through correspondence and in a number of meetings. Their positions were all points of clarification. No objections were raised to the measures. I do not know whether the resources that the hon. Lady referred to have been allocated, but will happily write to her on that. The way we are dealing with tax subsidies mirrors how the EU dealt with them. We felt that that was appropriate, rather than doing something different. There are specific reasons for that, particularly with regard to how the Treasury operates.
I thank hon. Members on both sides of the Committee for their valuable contributions to this excellent and informative debate. The draft regulations are crucial to the effective functioning of a new UK subsidy control regime. They define the small proportion of subsidies and schemes that will have greater potential to lead to undue distortion and negative effects, and should be subjected to additional scrutiny by the SAU. As such, I commend the draft regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022.
Russia (Sanctions) (EU Exit) (Amendment) (No. 15) Regulations 2022
(1 year, 5 months ago)
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The Minister of State, Foreign, Commonwealth and Development Office (Anne-Marie Trevelyan)
I beg to move,
That the Committee has considered the Russia (Sanctions) (EU Exit) (Amendment) (No. 15) Regulations 2022 (S.I. 2022, No. 1100).
The statutory instrument was laid before Parliament on 28 October under powers provided by the Sanctions and Anti-Money Laundering Act 2018, and makes amendments to the Russia (Sanctions) (EU Exit) Regulations 2019.
Let me say first that we have spotted a minor mistake in the drafting of the SI, owing to the unprecedented pace of our sanctions work. The export prohibitions on the products in new schedule 3I to the 2019 regulations, “Russia’s vulnerable goods”, will come into force on 1 January 2023, at the same time as the ban on the import of liquefied natural gas. We expect this to have minimal impact on the effectiveness of the measure, and we corrected documents associated with the SI to reflect this on 11 November.
In co-ordination with our allies, the United Kingdom has introduced the largest and most severe economic sanctions package that Russia has ever faced. Through these new measures, we will apply further pressure on Vladimir Putin and his regime. They will further isolate Russia’s economy and target key industries that support Putin, undermining his ability to fund his illegal war in Ukraine. The measures ban UK exports of hundreds of items that are critical to the functioning of Russia’s economy, particularly in the manufacturing sector, of critical importance to Russia’s industrial and technological capabilities. These items will be added to previously sanctioned goods to form an extended “Russia vulnerable goods” list.
This latest package applies to trade in previously unsanctioned goods worth £201 million in exports and £925 million in imports in 2021. The statutory instrument also bans additional imports from Russia, including gold jewellery, and Russian gold that has been processed in third countries, further strengthening the import ban on Russian gold that we introduced in July.
The SI prohibits imports of Russian liquefied natural gas from 1 January 2023, but it does not prohibit supply and delivery to third countries, in order not to impact their energy supply and security. The Government’s approach to energy sector-related sanctions is to increase the pressure on Russia’s economy by choking off a valuable source of income, while protecting other countries’ energy supply. We have reduced our imports of LNG, with only one shipment received, on 2 March.
The SI also bans the import of other specified goods that generate revenue for Russia, including vodka, vinegar, beverages and food waste products, and it prohibits the provision of services in technical assistance, financial services and expertise, and brokering sectors.
In total, the UK has wholly or partially sanctioned £20 billion, or 96%, of pre-invasion trade in goods. As with all our sanctions, this latest package has been developed in co-ordination with the UK’s international partners, and we will continue to work in concert with our allies to identify any potential gaps in our sanctions packages.
The UK remains resolute in our response. We will continue to stand with the people of Ukraine. The UK Government will not hesitate to bring forward further sanctions to target those who participate in, or facilitate, Putin’s illegal war of choice. I commend the regulations to the Committee.
Catherine West (Hornsey and Wood Green) (Lab)
It is a pleasure to serve under your chairmanship, Mr McCabe. I thank the Minister for her remarks, and I thank all the staff at the Foreign, Commonwealth and Development Office and the Treasury who are working so assiduously to devise and implement the sanctions that make up our regime.
I am aware that there is a general debate on Ukraine taking place in the Chamber later today. I associate myself with the comments by the shadow Defence Secretary and the shadow Foreign Secretary, my right hon. Friends the Members for Wentworth and Dearne (John Healey) and for Tottenham (Mr Lammy). We are now over eight months into a brutal and illegal war that President Putin expected to be over in days. Instead, here we are, with Ukrainian flags once again flying over Kherson and Russian troops in chaotic retreat from territories that they illegally annexed. We cannot overstate the significance of this victory, and I am sure that all Committee members would join me in expressing solidarity with President Zelensky and the Ukrainian people at this critical juncture in the conflict. [Hon. Members: “Hear, hear.”]
However, I am sure that the Committee will also agree that this is no time for complacency. British support for the Ukrainian advance has been critical, and if we are to demonstrate to Putin that his illegal war is doomed to fail, we must keep the pressure up. The sanctions regime, and its continued expansion and evolution, is integral to pushing Putin back and isolating Russia from the global economy and the international community.
We in the Labour party have been clear since before the Russia report was released that we should take a tough line against President Putin’s aggression. My colleagues and I on the Front Bench have consistently called for the widest-ranging sanctions to be applied to halt Putin’s aggressive rhetoric and warped imperial notions. Labour therefore welcomes the designations and sanctions announced today, which place additional trade restrictions on goods and commodities essential to the Russian economy.
The announcement of a further expansion to the prohibition on loans to certain companies is also welcome, although I have some minor questions for the Minister. What assessment has been made of the revenue loaned to Russia-connected persons and companies since the start of the war in February? Given that it has taken eight months for the change to be made, it would be useful for the Committee to know how much Russia-connected entities have obtained, monetarily, since the onset of the war through securing loans in that way. In other words, have we missed an opportunity?
While we welcome the widening of the scope of the regulations to include companies outside Russia, including UK-based companies, the explanatory memorandum cites a phasing-out period for the existing category of loans. How long does the Minister expect that process to take?
Labour fully supports the prohibition on the import of liquified natural gas, which is integral to Russia’s economy, and welcomes that commitment. However, will the Minister please account for why that measure does not come into force until next year? What will happen between now and 1 January? Will we be importing Russian LNG until then? What assessment has been made of the effect of that delay on the short-term impact that we need the sanctions to have? The period until Christmas is crucial because of where we are at in the conflict.
As with the other sanctions and measures that we have debated over many weeks and months, the official Opposition do not oppose the regulations, and we will not divide the Committee. We welcome the steps taken to expand the UK sanctions regime, make it more robust and remedy any cracks in it. However, we must do so with expediency and as part of a whole-Government approach to not only shut off the streams that feed Putin’s war machine but decisively end the Kremlin’s influence in our economy and our politics.
For years now, my hon. Friend the Member for Wigan (Lisa Nandy) and my right hon. Friend the Member for Tottenham, as Labour shadow Foreign Secretaries, and the shadow Minister, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), have raised the Intelligence and Security Committee’s Russia report. It made many prudent and practical recommendations, but, unfortunately, the Government have rather dragged their heels in implementing them, seemingly without reason. There has been no real answer forthcoming from the Minister, or her team, as to why those recommendations have not been adopted in full. Some gaps still remain.
I am also particularly concerned about the pace of action to tighten up the provisions on the overseas territories and the transparency of their institutions. While progress has been made, organisations such as Transparency International continue to raise concerns that anonymous companies registered in Britain’s offshore financial centres are being used to evade UK sanctions, weakening the comprehensiveness of the UK’s sanctions list.
Furthermore, could the Minister update the Committee on the Companies House revisions that we recently discussed in the House? What implications does she think they might have for the sanctions that we are debating? Surely, once people have to declare their identity and come clean with Companies House about who owns what companies, there will be much work to be done to root out underlying irregularities relating to businesses in the UK that may be aiding and abetting President Putin’s cronies.
Having reviewed the Office of Financial Sanctions Implementation’s annual report, I am struck by the changes that have taken place this year across the Department, and I commend the staff there for their work and diligence in enforcing the UK’s sanctions regime. For quite some time, Labour has been calling for the Treasury to be more campaigning, in the way that the US Treasury acts, around sanctions and taking a political position on certain countries that we do business with. I noticed in the report that staffing numbers are forecast only to the end of the year, despite there being every reason to believe that they might need to exceed 100. The projections for the long term need to be in place now, with a commitment from the Treasury that the funding is there should we need it.
Will the Minister provide the Committee with her long-term expectation for the number of full-time staff that OFSI will need? We all know that the war could rage on for some time, and that might have a resource implication. I accept that, as an FCDO Minister, she will not want to commit a Department that is not hers, but it would be helpful for the deliberations of colleagues and officials in the Department to know that there could be an expectation of increased need for resource.
Additionally, what conversations has the Minister had with the new Chancellor of the Exchequer regarding the long-term funding of OFSI to ensure that staffing will not be quietly reduced over time? The Government’s capacity to implement sanctions at pace must be commensurate with the scale of the challenge before us. I hope that the Minister will be able to provide the Committee with answers on that.
Since the last time our regime was expanded, what further thought has been given to the permanent seizure and repurposing of frozen Russian assets? To date, excluding property revenues, £18.3 billion-worth of assets have been frozen. Let us think of the impact that that amount of money could have on Ukraine’s short and medium-term humanitarian needs and its long-term recovery if it was repurposed. One must only look to Kherson’s critical infrastructure to recognise how much it is going to take to undo the damage that the war has done. Is that something the Government are currently considering? What steps, if any, have been taken to repurpose those assets?
To see Kherson and other towns and villages liberated by Ukrainian forces is deeply moving and is testament to the courage and resilience of the Ukrainian people. Labour is committed to working with the Government in supporting Ukraine in the difficult winter ahead and well into the future, and to the widening of our sanctions regime. Ukraine will win, and, with our support, we can ensure that its victory ends the Kremlin’s cycle of warmongering for good.
Stella Creasy (Walthamstow) (Lab/Co-op)
It is a pleasure to serve under your chairmanship this afternoon, Mr McCabe. I rise to speak in support of the comments made by my Front-Bench colleague, my hon. Friend the Member for Hornsey and Wood Green, on the importance of addressing the gaps that might exist.
These measures are welcomed across the House; there is strong support for sanctions against Russia and for cracking down on what had previously been a stain on our international reputation. The challenge for all of us is in the gaps that many companies and entities use to undermine the sanctions. I am struck by the fact that the Minister talked strongly about things we could do in the UK. She will have heard my colleague on the Front Bench talk about the Crown dependencies, where many of the cracks and fissures in the sanctions regime can be found, and it is important that we see action taken. It is in the secrecy of ownership in the Crown dependencies that the Russians have found the friends that they do not find among ourselves and other nations on the world stage.
It is worth looking at just how big those gaps are. A piece of work by Transparency International last year discovered 237 large-scale corruption and money laundering cases that involved six out of the 14 UK overseas territories—countries in which we have direct control and influence. That amounted to £250 billion-worth of funds diverted from some of the world’s poorest people to these entities by around 1,200 different company measures. Many of the cases involved former Soviet states, so we know the connection to what we are talking about today.
My hon. Friend set out some strong questions, and I will add to them. What conversations has the Minister had with the overseas territories about this SI and about the need for a comprehensive designation of all these companies so that there is nowhere to hide money in the way in which we see right now, which undermines the sanctions regime that we are all trying to strengthen? What progress has been made on public company registers in those Crown territories?
We all want to see a speedy end to the conflict in Ukraine. We stand firmly with President Zelensky, but we cannot do that if we turn a blind eye to the gaps in our current legislation that allow companies to flourish and money to be diverted. I know the Minister shares that concern, but we need to set out on the record what we are going to do about it. If she wants to find cross-party agreement on the need to go further, faster in closing those gaps, she will find it in this place.
Anne-Marie Trevelyan
I thank Committee members, and I thank the hon. Member for Hornsey and Wood Green for her insightful and generous support for what we are doing. I will do my best to answer her questions. If I miss any, I apologise; my team will write to her with any details that I miss.
The OFSI annual report was released just last week, and it shows the value of the assets frozen since the start of Putin’s illegal invasion: over £18 billion of Russian assets have been reported to OFSI as being held by or on behalf of persons designated under the Russia sanctions regime. That is a gargantuan increase from the £44 million of assets reported as frozen a year ago. I think we all agree that that underlines the scale and impact of our response in targeting Putin and his regime. We will continue to monitor how, if we need to, we can do more.
On the question of LNG prohibitions, the last shipment of Russian LNG came into the UK on 2 March, and since then UK companies have effectively been self-sanctioning. I am proud that we are the first European country to sanction LNG. We hope that others will follow as they feel they can. Other countries are in a more difficult, energy-dependent situation. We are very fortunate. British companies have been very robust and have taken a strong stance, which is to be commended.
I hope that the measures in the Economic Crime and Corporate Transparency Bill will address some of the concerns about Companies House. Companies House reform will bear down on the use of thousands of UK companies and other corporate structures to facilitate international money laundering, including, as the hon. Member for Hornsey and Wood Green mentioned, Russia-linked illicit finance and wider illegal activities.
Brendan O’Hara (Argyll and Bute) (SNP)
On money laundering, is the Minister aware that the BBC and Finance Uncovered recently revealed the use of English limited partnerships among Putin’s inner circle, and the fact that the oligarchs are almost undermining the sanctions regime by using them? Will she ask her officials what can be done to tighten up the loopholes in those partnerships? We guarantee cross-party support for the regulations, but we do have to tighten up these loopholes where they are identified.
Anne-Marie Trevelyan
The hon. Gentleman is right. Measures in the Bill will tackle the misuse of those limited partnerships. It will help to increase transparency and will force them off the register under specific conditions, but I take his challenge and we will continue to make sure that we are doing all we can. The Bill is a huge step forward and a key part of our wider Government approach to tackling economic crime.
The hon. Member for Hornsey and Wood Green is right that I would not dare to speak on behalf of His Majesty’s Treasury, but on the questions about OFSI and the staffing levels, the office has doubled in size in this financial year and will continue to grow to try to meet the challenges of the sanctions regime, the introduction of which we all support. The recruitment of new and permanent staff is continuing and we will keep a close eye on that. I know that the Treasury will too. There is a very clear focus on the human capital required to make sure that we can hold all of this in place.
On asset seizures specifically, we are considering all options for seizing Russia-linked assets that could be used to support the people of Ukraine, including to fund humanitarian efforts and contribute towards the reconstruction of the country, which will be a gargantuan effort. Law enforcement agencies can currently seize UK-based foreign assets with links to criminality or unlawful conduct through the Proceeds of Crime Act 2002. The FCDO is working closely with other Government Departments and law enforcement agencies to identify all possible options to seize Russia-linked assets in the UK that could be used to pay for reconstruction. We will continue to explore all possible options to seize Russia-linked assets to pay those reconstruction costs while respecting our legal obligations and responsibilities.
The question about Crown dependencies was important, because we all want to ensure that sanctions are implemented effectively in our Crown dependencies and overseas territories. UK sanctions regimes apply in all UK Crown dependencies and overseas territories either by Orders in Council or through each jurisdiction’s legislation. Orders in Council make the necessary changes to ensure effective implementation of the measures and the UK Government are working regularly with the governors and elected leaders to discuss implementation and the impact of those sanctions.
I hope that that helps to answer the questions I have been asked. If I have missed anything, I apologise, and I know that my team of officials will make sure that we provide the answers. I hope that these measures give confidence that we continue our wave of sanctions, because we are determined to ensure that Putin feels the damaging consequences of his choice to invade a democratic state illegally. We are committed to going further and we will continue to do so until Putin ends this war of aggression. I commend the regulations to the Committee.
Question put and agreed to.
Energy Bill Relief Scheme Regulations 2022
Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022
Energy Bill Relief Scheme (Northern Ireland) Regulations 2022
(1 year, 5 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Science and Investment Security (Ms Nusrat Ghani)
I beg to move,
That the Committee has considered the Energy Bill Relief Scheme Regulations 2022 (S.I. 2022 No. 1100).
The Chair
With this it will be convenient to discuss the Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022 and the Energy Bill Relief Scheme (Northern Ireland) Regulations 2022. At the end of the debate, I will put the Question on the first motion and then ask you, Minister, to move the remaining motions formally.
Ms Ghani
It is a pleasure to serve under your chairmanship, Sir Roger. I am doing my best to represent my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), who is the Minister responsible for this brief. On a good or a bad day, I might look like him; I am not quite sure.
I will give some background to the regulations. The energy bill relief schemes, which I will collectively refer to as EBRSs, and the energy price guarantee—the EPG—have been introduced at pace to protect the public from the effects of soaring wholesale energy prices. The ERBSs are intended for those on non-domestic tariffs and the EPG for those on domestic tariffs. Unconstrained high prices would put significant financial pressure on UK businesses, charities and public sector organisations such as hospitals and schools. They would significantly increase the cost of living for households too. The wider negative effects of such economic pressure would be severe and materialise very quickly in the absence of an intervention of this kind.
The EBRS regulations for Great Britain, the EBRS Northern Ireland regulations and the EPG regulations have been created under the Energy Prices Act 2022, which gained Royal Assent on 25 October 2022. The regulations are essential secondary legislation required to implement the schemes.
I now turn to the detail in the EBRS GB and EBRS NI regulations. The regulations set out that, with few exceptions, all non-domestic customers with electricity and gas contracts from licensed non-domestic energy suppliers will be eligible for a discount. The discount will be applied to the wholesale price element of the bills, and the regulations set out how the discount has been calculated. The regulations cover the process by which the energy supplier is reimbursed by the Secretary of State for the discount. The regulations also give powers to the Secretary of State to delegate this function where appropriate. Further provision is included to prevent suppliers or customers from deriving greater benefit than is intended, to protect the integrity of the schemes. The regulations provide for an additional reduction to be applied for qualifying financially disadvantaged customers, who are supplied under the so called “deemed” or “out of contract” contracts.
The EBRS NI regulations prevent end users outside Northern Ireland from receiving a discount to their bills. Finally, the regulations cover essential operational matters including information, a reporting obligation, enforcement powers and powers to impose civil penalties in respect of missing or defective declarations.
Ms Ghani
Perhaps if the hon. Gentleman allows me to continue, I will answer his question. To accompany the regulations, we have published a suite of legally binding rules and non-statutory guidance, which provides further detail on how the schemes work.
I turn to the energy price guarantee. The EPG schemes in both Great Britain and Northern Ireland are intended for customers on domestic tariffs. The Energy Prices Act 2022 set out that EPG NI schemes are to apply to those with domestic electricity and gas supply. The EPG regulations define domestic electricity supply and domestic gas supply for Northern Ireland. Those definitions will mean that some non-domestic premises will be in scope of the energy price guarantee electricity scheme in Northern Ireland. That includes some places of worship that have similar metering and tariff arrangements to domestic premises.
These non-domestic premises will receive EPG support instead, since there was no timely way for energy suppliers to disaggregate them from traditional domestic premises with similar metering and tariff arrangements. Both the EBRS and the EPG remain a source of critical support for non-domestic and domestic consumers across the UK. The measures in these regulations are crucial for the effective operation of the EPG and EBRS, and the schemes will complement other large-scale support that the Government are providing for energy and the cost of living. I hope that the Committee will support these measures and their objectives.
Alan Brown
On the EBRS, can it be absolutely clarified that the discount is applied to a bill before the non-domestic customers have to pay the money to the supplier, or is it retrospective?
The Chair
Dr Whitehead, you understand that the first set of regulations was moved first, but you can speak to all three sets together.
Dr Alan Whitehead (Southampton, Test) (Lab)
Thank you, Sir Roger. It is a pleasure to serve under your chairmanship.
Having agreed, as we of course should have done, to discuss all these statutory instruments in one go, we have a great deal of ground to cover very quickly in our discussions this evening. I will start my remarks on all the SIs by saying that although the Opposition have a number of concerns about the way the legislation itself was drafted and how the legislation was brought forward—I want to say a few things about that in a moment—we of course understand the pressing need to get the regulations on to the statute book as soon as possible, because of the speed at which all the arrangements have to be undertaken. We therefore do not intend to oppose them this evening, but I have some questions and thoughts for the Minister and I would be obliged if she responded to them, either this evening if she is able to or, if necessary, in writing at a future date.
The first question is about the circumstances in which these SIs have come about. As the Minister will know, they have come about from the Energy Prices Act, but also under particular powers placed in that Act to enable the Secretary of State to do an enormous number of things—to energy licences and various other things—without any further recourse to anybody.
The Minister will be familiar with section 21 of the Act, entitled “Power of the Secretary of State to modify energy licences etc”. It is not clear in that section whether any secondary legislation is required for a number of these modifications, if at all. Consequently, it appears that some of the things that are or should be relevant to our discussions this evening have gone through either in negative SIs—one in particular is on designation of local authorities—or with no reference to this Committee or this House at all.
I accept that that legislation is now on the statute book and it is what we are working with. As the Minister will know, there were suggestions at the time that the elements of the Bill that would allow things in effect to escape secondary scrutiny might at the very least have sunset clauses so that there is recognition of the urgency of the issues that we face at the moment but the provisions do not lie on the statute book for ever; that would enable the Minister to do whatever they wanted at a future date without any reference to anybody.
Considerable concerns have been raised by industry about the nature of these arrangements and what that means for investment certainty. Companies may be concerned that the licence arrangements could be changed—overnight, for example—without any further recourse either to them or to this House. They would consider that potentially to be a bit of a problem in relation to investment certainty for the future. Will the Minister say something not just about the measure we are scrutinising, but about future legislation—
The Chair
Order. I have been listening very carefully, and I am afraid it is not. I understand that the hon. Gentleman has concerns about the legislation; that is a matter of judgment. We are here to debate, very specifically, the regulations before the Committee this evening. Were I to allow the Minister to reply to the questions that I think the hon. Gentleman is now seeking to put, that would be out of order. Dr Whitehead, I have to ask you to be kind enough to stick to the regulations before the Committee.
Dr Whitehead
I will of course accept your guidance and advice, Sir Roger. I only say that there is so much in the legislation, both primary and secondary, that is either not on the Order Paper at all, or is there in such a way that we cannot debate it, that it is very difficult to stay in order and away from a number of issues that we ought properly to discuss. I hope the Minister can offer some general thoughts on the issues I have raised about how we go about secondary legislation. I hope that that will be in order, Sir Roger.
My second question relates to a letter received by the Department for Business, Energy and Industrial Strategy from the trade body Energy UK, in which Energy UK expressed concern about the arrangements made in these statutory instruments for the energy bill relief scheme, making provision for a price cap for a subset of non-domestic energy contracts. The letter, dated 25 October, stated:
“Our interpretation of the Statutory Instrument is that energy suppliers will not receive financial support from Government to cover the difference between the normal unit rates and the capped unit rates. This seems entirely inconsistent with both the drafting and the intent of the EBRS provisions in the Energy Prices Bill.”
I think Energy UK’s concerns were heightened by the fact that discussions with the Department about the legislation and related matters were conducted under non-disclosure arrangements, with the result that Energy UK found it difficult to discuss its concerns with anyone. I say gently that that is not a helpful way to proceed with secondary legislation, and I hope those arrangements will not be repeated for future discussions.
I had a brief meeting with the Minister for Climate, who kindly enabled a discussion about several aspects of the legislation. I understand from Energy UK and, obliquely, from him, that several changes were made between the issuing of the draft legislation, as seen by Energy UK, and what is before us today. I do not know for certain, because it was all under a non-disclosure agreement, but I understand that amendments were made to overcome the problem that several energy companies whose contracts end during the six months of the energy bill relief scheme might not get the relief after the end of their contracts. I believe that the Minister for Climate was able to ensure that that did not happen, but I wonder whether the Minister for Science and Investment Security can enlighten me on that. I have read the regulations fairly carefully, and although I cannot compare them with the draft regulations, it looks as though several of those holes have been filled.
On my third question to the Minister, I carefully state for the purpose of scope that I am referring to the Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022. They relate to a scheme document, which is not in front of the Committee but was published alongside the regulations, and therefore I assume it is an essential part our discussion this evening. It is headed “Establishment of domestic electricity price reduction scheme for Northern Ireland”, and it states:
“The attached document, initialled for identification purposes, is the Scheme Document dated 31 October 2022 for the Energy Price Guarantee for Domestic Electricity Consumers in Northern Ireland”.
Unfortunately, Members will not be aware of the detailed content because although it was published, it was not among the documents that we normally have in front of us, such as impact assessments and explanatory notes.
Schedule 5 of the scheme document states that, for the purposes of regulating and discussing the domestic supply scheme in Northern Ireland, the Government will require suppliers of electricity to hand all meter data over to the Government. That meter data, which will be obtained from smart and not-so-smart meters, will encompass all sorts of things, including people’s use of meters and various related analytics. It will be held by Government for 10 years and may be made available to other Government Departments, law enforcement agencies, regulatory bodies, credit reference agencies, debt collection agencies and various other agencies if the Government consider that it may be useful for their purposes.
The data access and privacy framework was produced when smart meters were first rolled out, and I have in front of me a review of it dated November 2018. That review confirms that the framework document from the time of the initial smart meter implementation ensured that the data relating to smart meters was the property of the customer, and could be disclosed to third parties, which in this instance includes the Government, only with their consent.
Clearly, as far as Northern Ireland is concerned, this looks like a straightforward breach of that framework. I accept that the Government intend to use the data for verification of the scheme and various other purposes, but it looks as if they have decided to collect the data without the consent of individual meter holders, and to make use of it for purposes that I think many of them would not approve of. That is germane inasmuch as one of the guarantees given at the time of the roll-out was precisely that the data of those who had smart meters was theirs and nobody else’s.
Hon. Members will recall quite a furore, with some rather lurid headlines in newspapers of a certain pedigree suggesting that smart meters were supposed to be the spy under the stairs, and that people should have nothing to do with the roll-out. Those concerns were assuaged by, among things, the framework being put in place—a framework that it appears the Government are about to drive a coach and horses through with their data collection arrangements in Northern Ireland.
I say Northern Ireland because that is the nation to which the scheme document that we are debating refers. We are not debating the England, Scotland and Wales version of the document; however, for the information of hon. Members, the Northern Ireland document is identical to the England, Scotland and Wales document. Therefore the provisions under schedule 5 for England, Scotland and Wales apply exactly as they do under schedule 5 of the Northern Ireland energy price guarantee document. In terms of scope, Sir Roger, I hope that the Minister will be able to respond on what the Government think they are doing with that schedule and the collection of data and, if time permits, stray into matters slightly outside Northern Ireland, so that we can get a picture of what the Government are doing generally on data collection.
Alan Brown
It is a pleasure to serve under your chairmanship, Sir Roger. As the hon. Member for Southampton, Test said, we understand the need for the regulations, because we all want to see support for businesses and people in our constituencies, but there is a reason why this is so back-ended. When Ofgem was predicting what the price cap would rise to in October, with the Tory leadership contest going on, the outgoing Prime Minister said that he could not tie the hands of the incoming Prime Minister, so nothing was done at a critical period when businesses should have been consulted directly and involved. Things could have happened much quicker. Although the outgoing Prime Minister sai that he could not commit money, he committed £700 million of taxpayers’ money for Sizewell C, which will add to our bills.
While researching today’s measures, I came across the Regulatory Policy Committee’s assessment of the various impact assessments that have been undertaken regarding the Energy Prices Act 2022. The RPC report is quite damning. It shows just how much of a rushed job this has been. It rated the impact assessments undertaken for the legislation before us as “not fit for purpose”. Overall, according to the RPC, two categories are classed as red, two as weak and two as satisfactory. One of the things that the RPC highlighted is the lack of an overarching or umbrella impact assessment covering all of the individual impact assessments associated with the Energy Prices Act 2022. Will the Government look at that, and do an overarching impact assessment so that they fully understand all of the different strands that are coming together in these support packages? Ultimately, we can consider this the Government’s flagship policy at the moment, in terms of supporting businesses and people with their energy bills. The EBRS package is estimated at £29 billion in the impact assessment, but if the impact assessment is not deemed fit for purpose the Government need to understand that and quickly, as this is now being rolled out with huge sums of taxpayers’ money.
The RPC also highlights another bigger issue about energy consumption and its impacts: if people or businesses are shielded slightly from the full impact of the energy cost increases, they will actually use more energy as a consequence. There is a risk there. Anybody who heard the previous Prime Minister say, “Nobody will pay more than £2,500” will wrongly think that that is the limit, and may use too much energy. What will the Government do to assess the impact of that?
On the bigger picture of energy security and supply, there is talk that we may have to ration electricity. The National Grid ESO is looking at how to balance the grid, if need be, and reduce demand. The Government need to understand that there is a possible impact on businesses trying to access energy, when they believe it is in their interest because they are being supported, versus the ESO trying to manage peak demand. The RPC say that that is not being looked at, and going forward it is something that the Government must address.
In a similar vein, have the Government considered what will happen if companies and businesses choose to ramp up their business operations toward the end of the scheme? The scheme ends at the end of March 2023, so what happens if a business decides to say, “You know what, I’m going to go gung-ho. I’m going to go flat out. I’m going to ramp up operations, I’m going to ramp up manufacturing. Let’s get as much done as we can, because the Government and the taxpayer are supporting our energy usage, then we’ll slow down come April and maybe give people holidays.” Will that be considered an illegitimate use of the scheme, or legitimate access that would be deemed sound business practice? If it is the latter, how will the Government manage that before it is too late?
Why is there not a greater assessment of the impact of administration and resource costs on Ofgem, which will be heavily involved in monitoring compliance? That does not seem to have been undertaken either. Another issue that the RPC identified concerns landlords. Paragraph 9 of the impact assessment for the EBRS intimates that there will be “pass-through requirements”, where any intermediaries or landlords have to pass on the discount and benefits to the businesses renting the premises. Let us say that a landlord does not do that with the pass-through requirements: what is the mechanism for the Government to take action? What is the enforcement mechanism, and how will the Government do that? How will businesses highlight that? What is the reporting process for reporting to Ofgem or the supplier for the Government to ensure that they get the full benefit intended in terms of energy support for those businesses?
Another key question that I am trying to get my head round is highlighted in paragraph 7.2 of the explanatory notes. If a company has outstanding debt on bills of greater than 28 days it effectively does not qualify. How does that work? If it has any debt with a supplier that it has not managed to address, does it fall out of the scheme altogether, or is that the case only if it is debt on a bill that has had a reduction applied to it? If it still has not paid, will it fork out for future reductions? That is partly why I asked earlier if reductions are applied to the bills, rather than being applied retrospectively, once companies have paid. I am still trying to get my head round what happens about that if companies have debt, because that will be critical. Obviously, companies might have debt now because of cashflow issues, but the worst thing that could happen to a struggling business is that it does not get the support that it should get. That could send that business under.
On page 5, paragraph 10 of the impact assessment, we learn that legislative powers will be utilised to ensure that suppliers “offer reasonable contracts” and ensure that reductions take place. Again, it is a noble sentiment for the Government to want to cover that, but how will that work in reality?
Turning to the energy price guarantee, our constituents who live off the gas grid have been promised £100. I have long argued that the £100 one-off payment is completely insufficient, when the minimum delivery fee to fill a tank is £500 and the cost of filling a tank has more than doubled to roughly £1,200, so people just do not have the money. I have been contacted by an 86-year-old constituent who lives in a rural area. She has two tanks that she has to fill two or three times a year. She is worried about how she will afford that. She does not know how she will get the £100, so it would be good to have an explanation about when the £100 will be disbursed and how people can access it, even though it does not make much difference overall in terms of filling fuel tanks.
What assessment are the Government making of what people’s future bills will look like? The explanatory notes for the Energy Prices Act 2022 said that the support package, which was a two-year package at the time, was to prevent bills going up to an average of £4,200 per household. We now know the EPG ends on 31 March. The Chancellor said that it would be brought back to help vulnerable people, but what will an average bill look like for typical householders going forward? That is a real concern. It is not an exact science and there will need to be estimates for a range of prices, but it would be good for people to have some sort of idea about what the future will look like, because they need to start planning for that.
Finally, Sir Roger, I want to mention another aspect of the Energy Prices Act 2022: the decoupling of renewable energy generation from prices based on gas. When will the Government come forward with timescales for supernormal revenue proposals? When will we start to see that take shape? Are the Government undertaking an open consultation with energy trade bodies and energy generators? The RPC points out that we need to ensure that they do not disincentivise investment in renewables. We also need to look at what the EU is doing and the impact that EU schemes are having on electricity generation in terms of renewables, and we must make sure the Government understand that and either mirror or improve the EU scheme.
Ms Ghani
I thank hon. Members for their valuable contributions to the debate and for their understanding about the speed required to ensure that support is available in Northern Ireland.
Fundamentally, we are trying to provide a wholesale discount that could halve people’s bills, and that is what we are here to do. It is reassuring to know that the schemes are already in force and are delivering support to households and organisations across the UK. I hope that will go some way to assure the public that the Government are committed to taking decisive action against this energy crisis. We are confident that our non-domestic schemes will seek to avoid firm closures and redundancies, and ensure that vital public services and charities can continue to operate over the winter.
The scheme has been designed to operate robustly, and it guards against fraud and gaming. We will continue to monitor the scheme to ensure that support is provided to the people and businesses it is designed to help. We are committed to reviewing the scheme. We will consider how best to offer further support to customers who are most at risk from energy price rises beyond April 2023.
I will do my best to answer all the very sensible questions that were asked. If I do not respond to them all now, be assured that I will make sure that the appropriate Minister’s Department puts everything in writing. I am also very keen to answer the questions raised by Mr Brown, who normally asks for my resignation. This is a rare moment when he has not.
The Chair
Order. I should gently remind the Minister that even in Committee we still refer to Members by constituency and not by name.
Ms Ghani
Forgive me, Sir Roger; my apologies.
As mentioned, the discount will be applied before the business is billed. Another point was raised about the 28 days in arrears. All eligible customers will be eligible for the EBRS discount. The arrears point applies only to the extra discount. Suppliers will apply those to deemed or out-of-contract tariffs.
A valid question was raised about landlords. The Energy Bill Relief Scheme Pass-through Requirement (England and Wales and Scotland) Regulations 2022 and the Energy Bill Relief Scheme and Energy Price Guarantee Pass-through Requirement and Miscellaneous Amendments Regulations 2022, which were laid before Parliament on 31 October and 4 November respectively, set out the requirements for intermediaries such as landlords to pass through the benefits of EBRS, the GB EPG and the GB energy bills support scheme to end users who, for example, pay for their energy through all-inclusive bills.
Alan Brown
I thank the Minister for giving way. What I was actually seeking was further clarity on the enforcement action the Government can take to actually ensure that that is happening and that those are being passed on. I am happy for somebody to write to me on that.
Ms Ghani
We will make sure that that is in writing. The regulations have been laid, but the hon. Gentleman is absolutely right; we want to make sure that those benefits are passed through.
A question was raised about the £100 payment, which comes on top of the £400 discount. This is what we are here to do today: to make sure that people have all the support they need. The regulations are here to support economic growth and ensure that firms do not close down and redundancies do not happen. The scheme is fundamentally there to support those people and public services. I believe that an impact assessment was published for the overall EBRS scheme across the UK, along with Energy Prices Act 2022. I will make sure that this is emailed to the hon. Member for Kilmarnock and Loudoun, as well, so that he can look at that.
Sir John Whittingdale (Maldon) (Con)
I think the hon. Member for Kilmarnock and Loudoun also wanted further details of how the alternative fuel payment might be distributed, particularly to those who, for instance, rely on heating oil. As Maldon has a number of people in the same position as those in Scotland, I would be grateful if the Minister included me in any additional information that her Department is able to supply.
Ms Ghani
I shall make sure that all the Committee members are copied into all correspondence that is circulated, so that they may be across all the information needed. It is best that we continue that in correspondence.
Let me touch on some of the issues raised. On data, I believe that the quote was “looks like”. Let me be clear: the intention is that the data can be used if required for the purposes of assessing the performance and effectiveness of the scheme, assurance, error checking, and the prevention, investigation, detection or prosecution of fraud. BEIS does not hold or process personal data such as name or address, or communication data such as email addresses, and the Government will ensure that the consumer’s privacy is safeguarded. Any changes to how consumer data is used will be communicated via the privacy notice, which is kept under regular review.
Dr Whitehead
Unfortunately, the privacy notice specifically requires that personalised data, including names, location, meter usage, amount of usage and habits of the person using the meter, be provided. That was in the privacy notice dated in early October and transferred to schedule 5 of the legislation in Northern Ireland, England, Scotland and Wales. That is what the Government are asking to be provided, and that is what I think is in breach of the framework.
Ms Ghani
I do not think it is correct that it is in breach, but I will make sure the hon. Gentleman is written to. The motivation is to ensure that, on a case-by-case basis, we tackle any consumers who are deliberately providing false meter readings, including business customers misrepresenting themselves as domestic customers. Those are the motivations behind this measure, but I will ensure that correspondence is shared so that accurate information is available.
A question was asked about fixed-term contracts and the duration of the scheme. All businesses on a non-domestic contract that are on an existing fixed-price contract that was agreed on or after 1 December 2021, people signing a new fixed-price contract, people on deemed, out-of-contract or variable tariffs, and people on flexible purchase, or similar contracts, will be eligible for support until the end of the scheme.
A point was made about the level of engagement and a meeting that took place with the Minister for Climate. I will ensure that any updates are provided in writing. I was not privy to that meeting, but it is good to know that Business, Energy and Industrial Strategy Ministers are making themselves available to all Members from across the House.
A question was asked about wider energy prices. The Energy Prices Act 2022 makes clear when various aspects of it can be used: namely, in response to the current energy situation or directly in relation to the Act. The vast majority of the powers in the Act are time-limited, including the powers to make regulations and any other decisions.
Fundamentally, the Government remain committed to ensuring that consumers receive help with the rising energy costs. These regulations are vital in ensuring that support is delivered this coming winter.
Question put and agreed to.
Resolved,
That the Committee has considered the Energy Bill Relief Scheme Regulations 2022 (S.I. 2022 No. 1100).
ENERGY PRICES (DOMESTIC SUPPLY) (NORTHERN IRELAND) REGULATIONS 2022
Resolved,
That the Committee has considered the Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022 (S.I. 2022, No. 1105). —(Ms Ghani.)
ENERGY BILL RELIEF SCHEME (NORTHERN IRELAND) REGULATIONS 2022
Resolved,
That the Committee has considered the Energy Bill Relief Scheme (Northern Ireland) Regulations 2022 (S.I. 2022, No. 1106). —(Ms Ghani.)