Draft Climate Change (Targeted Greenhouse Gases) Order 2022

Alan Whitehead Excerpts

Wednesday 11th January 2023 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Davies. I think we can be brief in our discussions.

As the Minister has stated, nitrogen trifluoride is an unbelievably potent greenhouse gas—17,000 times as potent over a 100-year period as carbon dioxide—but it is not at present on the inventory list in the Climate Change Act 2008. That is partially because, particularly at the time of the passing of that Act, it was not recognised quite how potent nitrogen trifluoride was.

As the Minister says, nitrogen trifluoride is not used to an enormous extent in industry, but it is overwhelmingly human made, with very little occurring in nature. Pretty much all of it is a result of its manufacture for industrial processes. That was known about shortly after the Climate Change Act came into place; indeed, it was included in the greenhouse gas protocols in about 2013, with the requirement that countries should introduce it into their national inventories.

We absolutely welcome the addition of nitrogen trifluoride to the list of designated greenhouse gas substances in the Climate Change Act, but there is a slight question mark as to why it has taken this long. It really should have been designated a number of years ago, albeit I appreciate that there has been a process of discovery about nitrogen trifluoride over a period.

I am slightly concerned that nitrogen trifluoride is still being used to some extent in the UK for industrial processes. I hope the Minister will join me in saying that, particularly as a result of this designation, under no circumstances should nitrogen trifluoride continue to be used in industrial processes anywhere in the UK. I say that because there are perfectly good alternatives for the purposes for which it was historically manufactured and used, albeit possibly at slightly greater expense to industry. We face a position in which industry is possibly using nitrogen trifluoride simply for cost purposes, when its greenhouse gas potential is now well known and, as of today, clearly designated in the Climate Change Act.

I hope the Minister will say that we are not just recording the use of nitrogen trifluoride but earnestly pursuing its non-use in this country for the future, and that we look forward to the time when, although it is designated in the Climate Change Act, there will actually be no emissions of the gas to record as far as the UK base is concerned.

Prepayment Meters: Self-Disconnection

Alan Whitehead Excerpts

Thursday 15th December 2022 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) on securing this debate—it is essential that we have it—and on her tenacity in also introducing a ten-minute rule Bill. I also congratulate her on her optimism; apparently, she really does think that the Government might do something about this issue in the near future. I wish I shared her optimism.

[Anne McLaughlin]

I thank the hon. Member for his kind words. I should probably clarify that I was always brought up to believe that if someone thinks and acts positively, they will get positive results. I also think, when I am asking for something as important as this, that it is probably best not to start off by being hyper-critical. I will wait to see what the Minister says and I might change my view, but I think that positive thinking will lead to positive results.

[Dr Whitehead]

I thank the hon. Member for emphasising her optimism; let us see how we get on this afternoon.

Hon. Members have added to the debate positively by setting out where we are on prepaid meters and a number of issues relating to their present operation, as well as where we need to go for the future. About 15% of UK households are on smart meters for electricity and 14% are on prepaid meters for gas. That may well have gone up since those figures were last calculated. As hon. Members have mentioned, about half a million warrants to place people on to prepaid meters have been successfully passed through the courts since the beginning of the covid pandemic in 2021, so the figure is likely to be higher.

The situation is, frankly, a snapshot of the way in which the have-nots in our society are treated, as opposed to the haves. We need to keep that centrally in mind, because overwhelmingly, a substantial number of people in vulnerable circumstances, on lower incomes and in poorer housing are on prepaid meters, whereas people who are not in those circumstances have accounts. As the hon. Member set out, that means that there is a two-tier arrangement on energy debt. On one side, those with accounts can manage and work their way through very large amounts of debt. On the other side, those on prepaid meters simply cannot do that, for the simple reason that as soon as they go over the credit limit, they are out—their meter has, effectively, been switched off—and they have no more energy. Let us be clear: from the point of view of energy supply companies, that is the most efficient way to get rid of the problem that they might face, under other circumstances, of having to pursue customers for debt. Companies can simply put people on prepaid meters and they then self-disconnect, ending the problem for the energy supply companies.

As my hon. Friend the Member for York Central (Rachael Maskell) and other hon. Members said, in a recent court case in the north of England, about 496 warrants were agreed in a very short period for people to go on to a prepaid meter despite what they wanted to happen. Some people like the way that prepaid meters operate, in terms of balancing the family budget, but I would suggest that they are in a minority. Most people are on prepaid meters because they have to be and their circumstances do not allow them to do otherwise. However, it is not really the case that the courts can just rubber stamp warrants. It would be very difficult to rubber-stamp 496 warrants in three minutes—that was the speed at which the warrants were recently dealt with in that particular court case. A conveyor belt of warrants for prepaid meters is currently going through the courts, adding up to the enormous figure that I mentioned.

As hon. Members have said, there is already a differential with prepaid meters. The have-nots pay more and the haves pay less on tariffs, standing charges and so on. That is remarkable because, prepaid meters are a very good thing for the cash flow of energy companies and for getting money in up front, which I would have thought would lead to lower rather than higher charges for prepaid meters.

[Catherine West]

Does my hon. Friend agree that this is yet another example of rip-off Britain?

[Dr Whitehead]

That is right. We are allowing a group of customers to be ripped off much more easily than other people in the energy sphere. It is good that we have shone a light on that this afternoon, because this needs urgent action. For the short term, I hope that the Government will say that there should be a moratorium on further warrants to put people on to prepaid meters, at least for duration of the energy crisis. That would at least mean that, as hon. Members have already said, we would not be putting more people into a situation in which they face impossible choices in their household management. In a number of instances, people literally cannot reactivate their systems when they have been disconnected, or have self-disconnected. They simply do not have the wherewithal to get back on the prepaid meter horse, as it were, because—among other things—the standing charges continue to ratchet up.

People are also paying grossly inflated prices when they are not the direct bill payer. I am thinking of people in park homes and in various other circumstances where the landlord has a meter-charge arrangement that bears no relation to what that should be, were the money to go into the meter. So, given the energy crisis, there are a great many areas in which the Government must take action in the near future in recognition of the fact that people with prepayment meters are at the coalface when it comes to energy poverty.

[Anne McLaughlin]

May I ask, for the purpose of clarification, whether Labour supports at least a moratorium on so-called self-disconnection, so that no one with a prepayment meter can be disconnected, at least over this winter?

[Dr Whitehead]

Yes, indeed. I said it a few moments ago, and I am happy to repeat it. That, I think, is the minimum that needs to be done at this point, given the crisis faced by people with prepayment meters. However, as has already been pointed out this afternoon, a number of other actions need to be taken in the longer term to ensure that people with prepayment meters are at least on a level playing field when it comes to their energy supplies, and I hope the Government will think about that very seriously. There are a number of ideas that Labour could offer for how that long-term level playing field might be achieved, and I should be happy to work with the Government to bring it about. However, what is most important is for the Government to understand and recognise the present dire situation, and for the Minister to confirm this afternoon that they will take the necessary action to put it right so that people are no longer in such a desperate position—in so many circumstances —and are, at least, not in a “have/have not” situation.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 29th November 2022 Commons Chamber

[Graham Stuart]

The provisions in the Energy Prices Act have been superseded by the announcements made by the Chancellor in the autumn statement, and therefore I do not think that they strictly apply any longer, as the right hon. Gentleman has suggested.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Does the Minister accept that the inability of local energy providers to trade within their local community remains one of the biggest obstacles to the development of community energy overall? If he is not willing to take on board the provisions of the community energy Bill that is presently being promoted by community energy supporters, does he have any other ideas as to how that problem could be overcome in the context of the Energy Bill, which I am delighted to see has resumed its parliamentary process today?

[Graham Stuart]

I thank the hon. Gentleman for his question, and for his close interest in this field and knowledge of it. I look forward to sharing with the House further thoughts on how we can deliver precisely that more dynamic situation going forward. As he rightly says, there are provisions in the Energy Bill, which I am delighted to announce is resuming its passage through Parliament.

Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (England and Wales and Scotland) Regulations 2022 Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022 Energy Bill Relief Scheme Pass-through Requirement (England and Wales and Scotland) Regulations 2022 Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Northern Ireland) Regulations 2022 Energy Bill Relief Scheme and Energy Price Guarantee Pass-through Requirement and Miscellaneous Amendments 2022

Alan Whitehead Excerpts

Monday 21st November 2022 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Murray. We seem to be meeting far too frequently these days.

These regulations put right a substantial loophole in the arrangements set out under the energy price assistance schemes. This loophole concerns people who do not pay their energy bill directly—where, for instance, it is paid through an intermediary, such as occupiers of park home schemes. The park home scheme will pay the bill and also get the relief from that bill. It also applies to district heating operators, which are essentially retail companies that pass on to their customers what they have managed to negotiate for the cost of the heat and bill them accordingly, as an intermediary.

All those categories of consumer are in danger of not getting the relief that should be guaranteed under the energy price support schemes and, for businesses, under the energy relief scheme. These instruments attempt to rectify that loophole across the board. It is quite right we should do that and pass these regulations through, and they should operate as soon as possible. These are to come into force the day after they have been laid, so hopefully those schemes can get going as soon as possible.

However, the design of the SIs is really not good enough to deal with the problems that I am sure hon. Members have already heard about, having received letters and correspondence from their constituents. People in very vulnerable circumstances, such as those in park homes or sub-let rented accommodation, have not had a penny of the money that is supposed to be coming their way, and they are still waiting for it. Often they are in very difficult circumstances.

How do the SIs make the payment work? They place a requirement on the intermediary to pass through the payments that it may have received, so that they go to customers in the end. I am talking generally about the regulations, because there are slightly different ways of doing it in different regulations. In general, they require the intermediary to provide a “fair and reasonable” pass-through of what it has received for bills in the first instance. It is not necessarily the whole amount, but a “fair and reasonable” amount, which is not defined in the regulations. That potentially gives rise to enormous complications, because it is not clear what a “fair and reasonable” difference is between what an intermediary has received and what a customer will actually get in the end.

It may be that “fair and reasonable” means that the intermediary has tried to protect the customer from the full increase in the bills in the first place, and could therefore say, “As far as ‘fair and reasonable’ is concerned, I am deducting what I have already protected you, the customer, from in terms of the increase and what I have charged you, and I am going to keep some of that for myself. What I give to you is fair and reasonable.” However, it is very difficult to determine accurately what is “fair and reasonable” under those circumstances, what administrative costs the intermediary has removed from the process in order to be “fair and reasonable”, and so on. There is potentially a big difficulty in implementing the scheme.

From a legal point of view, the second big difficulty arises from the way that the schemes have been set up, because there is no sanction on the intermediary for failing to do what it is supposed to do. According to the regulations, it is supposed to pass the costs through, but if it fails to do so, the customer’s only redress—certainly according to the EPRS part of the schemes—is to take civil action through the courts. The Department has kindly produced some standard letters that customers in that position can send off, but it is difficult to easily conceive of an efficient method for people who are perhaps dealing with a dodgy landlord, who may have, as the Secondary Legislation Scrutiny Committee in the other place calls it, an inequality of force of arms. It is very difficult to imagine that there will be any sort of an equal contest between the owner of a park home scheme and a person who has not received any money at all, or who has perhaps received some of the amount but has been brushed off on the grounds that it is “fair and reasonable” to give them only a proportion of the money that is passed through.

It is difficult to see how redress through the civil courts would work in practice. Even though they theoretically have the possibility of redress, the person at plot 38 in a park homes scheme may be no more likely to sue their own landlord for that money than to fly to the moon. There is no sanction as such in the regulations, so the intermediary can probably get away with it while those sums are coming forward to various people. They may face no real sanction for that money not passing through, other than various people saying, “You really ought to pass the money through over a period.”

The way the regulations are structured does not fill me with confidence that they will close the loophole about which we are all concerned. However, in the case of district heating arrangements, the intermediary is in a different position from the intermediary in the case of park home owners, landlords of multiple-occupied houses, and so on. In district heating arrangements, the intermediary receives money under the energy bill relief scheme—that is, the non-domestic, commercial part of the scheme. What is passed on to the customer will therefore not be determined by the energy price cap, but the customer should have passed on to them an appropriate element of what the intermediary in the scheme received.

That, again, is difficult to determine, which may be why, in that particular scheme, recourse in the first instance is to the energy ombudsman rather than legal action through the courts. That is a provision of that particular part of the overall schemes, but there is no reference to the energy ombudsman in the main scheme: a person either gets their amount of relief, or applies through the courts. I do not know why that distinction has been made. It may be because of the nature of the scheme, that is, the indeterminate amount of money that a person might receive, the reference to the business scheme, and the resulting relationship of the intermediary to the final customer. Perhaps the Minister will say that there is a particular part of this scheme that enables the Government to bring the recourse of the ombudsman’s office to bear on this part but not on the other part of the scheme. It may be that the Government have just forgotten to include that recourse in the other scheme, or it may be that there are good reasons for not doing so. I would be grateful if the Minister was able to provide clarity on that. It may be necessary to write to me, but if the Minister has a great inspiration, that would be good.

Frankly, this scheme is unlikely to solve all the problems of pass-through that we have been discussing. It therefore behoves the Government to monitor very closely how the scheme is working in its early days or months, so that we can see at an early stage whether things are going wrong, the pass-through is not happening or people are wilfully using the “just and reasonable” clauses of the arrangement to deny customers proper pass-through. If those abuses are happening, we should be able to pick them up very quickly and take action to stop them by either changing or extending the scheme. Does the Minister have any plans to do that? If not, can he assure me today that the Department will monitor the scheme and report back to this place at an early stage so that between us we can see whether it is working as well as it should? If it is not, we can work out better remedies to make it work in the long term.

We are not opposing the measures today because it is important that they get going, but we reserve our position on whether they will be a great success. We wish to see the Government recognise that there might be problems in the scheme as we go ahead and that, if necessary, they are prepared to do something about it.

--- Later in debate ---

[Kevin Hollinrake]

I thank right hon. and hon. Members from across the House for their comments. I will address the points made by the shadow Minister first. He is right to point out some of the deficiencies in the scheme, in that there is great diversity in the number and type of intermediaries. Ideally, we would have liked one ombudsman that covered every sector; instead, we have park home site owners, landlords, electric-vehicle-charger operators and heat-network operators all having different ombudsmen, or sometimes an absence of any ombudsman. That is the challenge behind the measures we are putting in place.

The other challenge is having to design a scheme of such complexity at pace, with a diversity of suppliers and intermediaries. I gently challenge the shadow Minister on the point about park home residents, or people from a different cohort, not having got a penny yet. That should not be the case. Most landlords and park home site operators are decent people who will be doing the right thing and trying to help their residents through a very difficult time. This instrument just legalises and formalises the process. Often in this place we try to legislate to ensure that everyone is responsible for doing the right thing.

The shadow Minister asked about vulnerable customers, as did some other Members—not least my right hon. and learned Friend the Member for North East Hertfordshire. We have engaged extensively with consumer groups, representative organisations, Citizens Advice, local authorities, food bank operators, faith groups and some of the operators behind the park home associations to try to ensure that people are aware of the requirements on them to pass on the support provided.

Heat networks are a separate cohort and an exception in this whole discussion because they are already covered by the energy ombudsman; it is therefore easy to make them accountable to the energy ombudsman. Landlords do not have that kind of relationship with the energy ombudsman, or with any ombudsman. The Government have put forward a consultation and they intend to ask all landlords to be members of a redress scheme. I would have welcomed that move because it would have made the scheme far easier to implement. But at the moment that has not happened, so we have to make these measures subject to the courts. That is the only available method.

[Dr Whitehead]

I am a little puzzled by this. The ombudsman to whom we are referring is the energy ombudsman, and the energy ombudsman has standing as far as all matters pertaining to energy are concerned. Although I agree that the particular circumstances of intermediaries are different, they are all bound by the fact that the issue is about energy, so the energy ombudsman should have traction as far as those different cases are concerned. My concern that the energy ombudsman appears to act where heat is concerned, but not where electricity is concerned, has not been assuaged. Can the Minister expatiate any further on why that difference is there?

[Kevin Hollinrake]

I share the hon. Member’s concerns, but I can only reiterate that the energy ombudsman does not cover landlords. Landlords are not regulated by the energy ombudsman, so there is no recourse to the energy ombudsman. There has to be a relationship between the two. As I have said, moves are afoot to deal with the issue, but if the Opposition have ideas on how we do this more effectively they should write to us, and we can write back to them to say why not.

The shadow Minister asked for sanctions for people who do not comply, but we do not see any way to impose sanctions without regulations having been in place before the scheme was brought to bear. For all those reasons, I think it is not possible to do what he wishes, but as I say, if he has some ideas on how we might, he should write to us.

My right hon. Friend the Member for North West Hampshire made some very good points about care homes, and how their residents will benefit from the scheme. If service charges include energy provision, it would be just and reasonable to pass on the benefits of the EPG or EBRS to those residents. Although we do not want to see residents having to take landlords or the people who provide their accommodation to the courts, I think the courts would take a very dim view if the support had not been passed on to those residents.

My right hon. Friend the Member for North West Hampshire made another good point. What about if someone had been parsimonious and reduced their energy use? Would they still see the benefit? The Government support, as he knows, is provided on a per kilowatt-hour basis, so we would expect support to be passed over on that basis. If someone has done the right thing and reduced their energy use, they should see the full benefit of that, both in terms of the reduction— the energy they have not used—and the cost covered by the various schemes that apply.

On the point about “as soon as reasonably practicable”, I would expect the courts to take a dim view of somebody who had pocketed the money for 60 days and let the interest pile up.

--- Later in debate ---

[Kevin Hollinrake]

My hon. Friend raises an interesting additional complexity, which I am not sure is dealt with in the regulations. However, again, there will still be a requirement for the administrator to pass on the benefit in that circumstance, I guess. That might be something I can discuss with officials and write to my hon. Friend about, if he is sufficiently concerned.

My right hon. and learned Friend the Member for North East Hertfordshire made a point about engagement with landlords. As I have said, we have done that, and we are certainly very concerned about the passing-through in all these schemes, particularly to the vulnerable. That is why we are working with organisations such as Step Up, Citizens Advice, charitable groups and food banks to make sure those people are sufficiently supported and that benefit is passed on to individual residents.

[Dr Whitehead]

I suspect the Minister has moved on from addressing my particular concerns, but one question I did raise was the extent to which the Department is monitoring the success or otherwise of these changes. What actions might the Department take to indicate whether they consider the scheme to be a success or not, and if not, whether they want to do anything about it? Is the Minister able to say tonight that after, say, a two or three-month period, he will make a statement to the House—not necessarily an oral statement; it could be a written statement—about what the Department thinks is happening with these schemes and, if it finds adversely as far as their success is concerned, what it might do about it?

[Kevin Hollinrake]

The hon. Gentleman makes a very fair point. We will always keep this matter under review, and there are many different ways he can choose of holding the Government’s feet to the fire for doing that through their Departments. There are many different mechanisms for that, which I do not need to outline to him. However, I can absolutely make a commitment to the hon. Gentleman that myself and my colleagues in the Department will make sure that these measures are effective and do what we want them to do. Of course, we always have the opportunity to refine our approach through legislation if we do not feel it is working as it should.

In conclusion, the regulations protect those who are most exposed to high energy costs. The pass-through requirements allow cost savings to reach the people that the Government intend to support, such as tenants and other individuals. Importantly, the regulations also provide routes for end users to benefit from the discount they are entitled to in scenarios where intermediaries are not meeting their legal obligations. I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (England and Wales and Scotland) Regulations 2022 (SI, 2022, No. 1101).

ENERGY BILLS SUPPORT SCHEME AND ENERGY PRICE GUARANTEE PASS-THROUGH REQUIREMENT (ENGLAND AND WALES AND SCOTLAND) REGULATIONS 2022

Resolved,

That the Committee has considered the Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022 (SI, 2022, No. 1102).—(Kevin Hollinrake.)

ENERGY BILL RELIEF SCHEME PASS-THROUGH REQUIREMENT (ENGLAND AND WALES AND SCOTLAND) REGULATIONS 2022

Resolved,

That the Committee has considered the Energy Bill Relief Scheme Pass-through Requirement (England and Wales and Scotland) Regulations 2022 (SI, 2022, No. 1103).—(Kevin Hollinrake.)

ENERGY BILL RELIEF SCHEME PASS-THROUGH REQUIREMENT (HEAT SUPPLIERS) (NORTHERN IRELAND) REGULATIONS 2022

Resolved,

That the Committee has considered the Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Northern Ireland) Regulations 2022 (SI, 2022, No. 1124).—(Kevin Hollinrake.)

ENERGY BILL RELIEF SCHEME AND ENERGY PRICE GUARANTEE PASS-THROUGH REQUIREMENT AND MISCELLANEOUS AMENDMENTS REGULATIONS 2022

Resolved,

That the Committee has considered the Energy Bill Relief Scheme and Energy Price Guarantee Pass-through Requirement and Miscellaneous Amendments Regulations 2022 (SI, 2022, No, 1125).—(Kevin Hollinrake.)

Energy Bill Relief Scheme Regulations 2022 Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022 Energy Bill Relief Scheme (Northern Ireland) Regulations 2022

Alan Whitehead Excerpts

Monday 14th November 2022 General Committees

[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—

[Ms Ghani]

I am not sure that is in scope.

[Dr Whitehead]

I hope it is in scope, because—

[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.

--- Later in debate ---

[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.)

Public Ownership of Energy Companies

Alan Whitehead Excerpts

Monday 31st October 2022 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Thank you, Mrs Murray.

Before we go any further in this debate, we ought to be clear about what the petition is calling for. I congratulate the petitioners on bringing forward the petition, which has received over 100,000 signatures, 500-plus of which are from my city of Southampton. I congratulate the petitioners on bringing it forward because it really underlines just what a dreadful state we are in at the moment with our energy provision and energy markets. I take the petition to mean that the Government should effectively expropriate all generation, all transmission, all distribution and all retail energy; place it, with compensation, in the public sphere; and then run a fully nationalised energy system, as was the case 30 to 40 years ago, before the privatisation experiment came into being.

I can see why many people consider that that is the brief solution to the awful mess that we are in the moment. They see that they are paying sky-high energy bills and that, at the same time, a number of energy companies are making sky-high profits not from their ingenuity in suddenly developing new ways of delivering energy, but from doing what they have always done: supply gas to the UK market for the production of power, for which retail customers are paying sky-high prices.

Those customers scratch their heads about why that has happened: “How is it that we are paying absolutely out-of-the-window high energy prices while companies are making such enormous windfall profits?” They scratch their heads when the Government spend such a long time deciding whether to alleviate some of the problems caused by those sky-high bills by introducing any form of windfall levy on those companies, and when the Government put an enormous loophole in the windfall tax so that the companies get back most of what they would have paid in windfall tax if they are, so they say, in a position to undertake further gas and oil exploration. The grotesque result is that Shell has not—

[Mrs Sheryll Murray (in the Chair)]

Order. I remind the hon. Gentleman that he should address the Chair.

[Dr Whitehead]

I apologise, Mrs Murray—I will face the right way from now on.

The grotesque result is that Shell has stated that it has not actually paid any windfall levy because it has got it all back through that loophole. Customers see that the regulation of the system is so dreadful that they are paying enormously high prices for their power as if all of it came from gas, even though half of it now comes from much cheaper renewables. That is because the market is regulated in such a way that the marginal cost of gas provides the whole of the price for the market, and it is a substantial part of the reason why prices are so high. In short, customers have seen for themselves a thoroughly broken energy system in operation. They have perhaps concluded that the privatised norm of the last 30 years has failed, and that placing energy back in state hands is the relatively straightforward answer.

What a delight it is to see so many Conservative Members in the Chamber to support their Government’s response, which states:

“The Government does not agree that nationalisation of energy assets is the right approach. Properly regulated markets provide the best outcome for consumers as a driver of efficiency and innovation.”

Wouldn’t it be nice if proper regulation did drive energy efficiency and innovation? We know that it simply does not; the failure of proper regulation is at the heart of the many problems in our energy markets. We also know that the Government themselves have recently resorted to measures that might be compared to nationalisation.

As my hon. Friend the Member for Wirral West (Margaret Greenwood) said, Bulb—the seventh largest retail energy company in the country—went bust a little while ago, along with 40 other retail energy companies. Bulb, however, was regarded as too large to fail and was effectively nationalised by Government. It was put into special administration and has sat there for quite a while, at a cost to taxpayers of about £3.5 billion. It has just been sold for scrap, as it were, with its customers being transferred to Octopus Energy for, we think, several hundred million pounds—far less than the amount that taxpayers put in as a result of the Government’s reaction to appallingly bad regulation. Does the Minister have further information on exactly how much Octopus paid for the remains of Bulb, so that we can get an accurate grip on how much money has been retrieved from that episode?

An energy Bill that was recently mysteriously withdrawn by the Government proposed that the operator of the national transmission system be fully detached from National Grid and placed in the public sector. That means that it would no longer be a part of National Grid, even at a distance. As set out in the Bill, the future system operator would have full power to plan the system, commission investments in it, and run and balance the system overall as a public sector organisation. However, as I say, that Bill has mysteriously disappeared, but I would be interested to know whether the Minister continues to support the idea that the future system operator be a company in the public sector, not the private sector. I would also be interested to hear when that energy Bill will return to Parliament, if at all. It contains a great deal of things that could lead to better regulation of the energy system, which is exactly what the Government are saying is the alternative to nationalising it.

Although it is true that part of the answer to the problems we face in the energy system at the moment is proper regulation—and the Government have an enormous amount of work to do get it properly regulated—we also have to give careful consideration to where our energy system is going now, because it will not be successful in reaching its targets, particularly in the low carbon context, if we simply continue the privatisation experiment of the past 30 years. Of course, the energy system is changing before our eyes. All the old considerations about 80 or so power stations providing power for the grid and then to customers through retail sales are effectively disappearing. We now have about 1.5 million inputs that are owned by all sorts of different people. Indeed, some of that input is from companies and bodies that are not in the private sector, but are community owned or locally owned. There are all sorts of generators providing a different form of input to the grid.

Of course, the grid itself is changing rapidly. National Grid Electricity System Operator, the forerunner of the future system operator set out in the energy Bill, considered in a recent holistic design plan that accommodating the new way in which the energy system is going to work, and making sure that it works well in future, would require a huge recalibration of the grid system, both onshore and offshore, at the probable cost of about £62 billion. An enormous amount of investment is needed to make the future energy system secure, and to get the green and low-carbon generators into it for the future. We will not sort that out by just hoping that somehow the market will come to the rescue and provide all the investment for the future based on our current regulation and system. My hon. Friends the Members for Wirral West, for Leeds East (Richard Burgon) and for Ilford South (Sam Tarry) both pointed to how that needs to be done. Perhaps we should not have to rely on the private sector to come to the rescue and sort out the future system.

The Labour party wants a Great British energy company —a publicly owned company at the heart of investment and driving forward, planning and managing that new energy system. As my hon. Friends have pointed out, that company would stand alongside companies elsewhere in Europe that have already started that energy revolution with investments not just in their own countries but on an international scale. Companies such as Vattenfall in Sweden, which owns the largest onshore wind farm in the UK, Ørsted in Denmark, Equinor in Norway and a number of others across Europe are making investments in the future system and, moreover, keeping the equity in those investments for the people of the countries on whose behalf they are working. Either individually or in partnership with the private sector, they are turning over those investments for those people, and keeping their equity in them.

In this country, as members of the public and customers we are spending enormous amounts of money each year on providing energy transmission and distribution companies with the means to invest in the grid system—the assets of which stay with those companies, even though we the public have paid for those assets. That is also the proposal for the new nuclear programme—we pay the money, they get the asset—but a Great British energy company would put a stop to all that. The assets would stay with the public and the money would come back to the public purse. That is the right approach. Our investment ought to go towards producing our future energy system.

I reject the Government’s idea that this will all happen via better regulation—though it would be nice if that did happen—and the operation of the market. We need to be much smarter than that. I do not agree that we should nationalise the energy system as it stands. Among other things, if a lot of the junk and clapped out stuff in the energy market were nationalised, the people who own those stranded assets would be delighted to have them put out to grass and taken off their hands as the energy system changes, so that they could run off with the compensation money.

We have to think smartly about the future of our systems. They will certainly not be funded, run or sorted out on the basis of the failed privatisation experiment of the last 30 years.

--- Later in debate ---

[George Freeman]

No, I am going to make some progress. Since privatisation, the UK’s energy sector has attracted around £20 billion a year of private capital investment into our energy infrastructure. That money would otherwise have had to come from higher taxes or additional borrowing. Those are policies that the Opposition may prefer, but we prefer to secure private capital to secure those public goods.

The cost of transporting a unit of electricity has fallen by 17% since the 1990s, while investment has increased. Energy efficiency has gone up. Reliability has increased. Customer service has improved—though it is still not perfect. The number of power cuts has almost halved. These are the real lived experiences of people over the last 30 or 40 years of privatisation. Finally, current market arrangements have allowed for massive decarbonisation of our energy system, with dramatic drops in the cost of renewables.

It is worth making the point that between 1990 and 2019, we grew the UK economy by 76%, and we cut our emissions by over 44%, decarbonising faster than any other G7 country. That is an extraordinary achievement, secured by the private sector working in partnership with Government. There is more. In the last 15 years, not only have we led the way in decarbonisation; we have also led the way in many of the specific areas of clean energy. We have put it at the heart of the UK’s commitment to reduce emissions as we expand our economy.

Personally, having arrived here following the 2010 election, I would have liked to have seen the coalition and the Lib Dem-run Department of Energy and Climate Change take the opportunity of a “buy one, get five free” nuclear deal and double and modernise our nuclear capacity. The Lib Dems were religious in opposition to anything nuclear—a position seemingly mirrored by the SNP—but they also thought it would take too long to come on stream. I have news for listeners. It would have been on stream now. We would have had a high-quality, green, resilient supply of nuclear energy for one more generation, guaranteeing clean and green resilience, and many jobs in Scotland, and we would have been able to use this period to invest in the range of renewables that hon. Members have hardly mentioned. I will come to those in a minute.

Nobody can look back and say that this was all easy. A lot of mistakes have been made, but the truth is that our net zero strategy is the most comprehensive of its kind. The British energy security strategy sets out extra ambitions to those we set out in 2010. It is on track to secure 480,000 well-paid jobs by the end of the 2030s, unlocking £100 billion in private investment by 2030 and mobilising £30 billion of Government investment. That is not the free market with no support from Government. It is a massive programme of Government in partnership with the private sector, and that is why we have driven down emissions at the fastest rate in the G7.

[Dr Whitehead]

Does the Minister agree that, as has been suggested in this debate, quite a lot of the investment that has been achieved for future energy—indeed, it is coming in now—is from companies representative of other states in Europe putting forward that investment, so we could say that he would be happy to have publicly owned investment in this country, provided it is not from the UK? Is that the right conclusion to come to?

[George Freeman]

I am not totally sure I understand the question. The point is that we live in a modern global economy. I do not think anyone other than political dinosaurs would think we can ring-fence all investment to only one country. We live in a global economy, and that is all to the good. This country benefits hugely from that investment. A huge risk of the proposed renationalisation is that, internationally, it would destroy investors’ confidence in the UK, and that is something we have to think seriously about. We do not have a right to attract international investment. We need to be competitive, and this debate has lacked that point.

We are a world leader in offshore wind, with an ambition to deliver up to 50 GW of offshore wind power by 2030, including 5 GW of floating wind. That is something to be proud of. In my part of the world in East Anglia, the southern North sea is rapidly becoming the Saudi Arabia of wind energy. With proper interconnected offshore grid connectors, we will be able to use off-peak energy to generate green hydrogen. That is an exciting development and it has all been provided by the market—not the free and untrammelled market of the profiteering stereotype, but businesses investing in partnership with Government.

We continue to break records in renewable energy, which has more than quadrupled since 2010, with low-carbon electricity overall now giving us more than 50% of our total generation. It would have been nice to hear Members at least pay tribute to that achievement, rather than attack the profiteering businesses that have been at the frontline of delivering it.

We have installed 90% of our solar capacity in this country since 2010, which is enough for 3 million homes. That has happened—

[George Freeman]

No, I am going to make some progress.

That capacity has happened by harnessing the power of the market. I do not think anyone would suggest we have had an untrammelled free market. I am not here to make that case; others may. It has been a partnership of the private and public sector. That is why the Government continue to believe in properly regulated markets.

I have written and spoken widely about the opportunity Brexit gives us to set our own regulatory standards—not in a race to the bottom, but in a race to the top—and to set the standards in the smart grid, in digital energy and in new forms of energy. There is a huge opportunity for us to use that freedom to incentivise private capital to invest in the energy system, provide the best outcomes for consumers, and promote market competition as the drivers of efficiency, innovation and value.

My party believes profoundly that private ownership of energy assets, properly regulated, improves performance and reliability, and offers consumers greater choice and higher standards of products and services. No market is perfect. There are always pay-offs and balances, but it is very difficult to see how nationalisation would work, particularly as it has been set out this afternoon, with no detail, vague assumptions that there will be lots of money, which would come in the end only from taxation or borrowing, and very little understanding of how it would be done. Anyone listening to this debate has not heard a serious proposal for how nationalisation would happen. They have simply heard a ragtag of arguments against the private sector and against business.

The argument becomes even more important when we look at the global market and the international energy market in which we find ourselves. These days, no energy market exists in isolation. We do not exist in a vacuum. The pandemic and the war in Ukraine have revealed painfully the interdependence of our global energy supplies. We are not in a position where we can unilaterally declare independence from the global markets. Any renationalised energy company would still have to buy its gas on the global market at the same price—there is no way round that. But it does heighten the urgency of reducing our dependency on foreign actors, hostile states and those who might use their energy power to exercise geopolitical influence on us.

We are absolutely committed, as we have set out, to diversifying our energy supply and resilience. We understand that sky-high global energy prices, caused by Russia’s appalling invasion of Ukraine, are having real consequences for consumer bills across the country, exacerbating the consequences of the pandemic shutdown of the global economy and its refiring up and opening, which has driven inflation into the system. European gas prices soared by more than 200% last year, and coal prices by more than 100%, leading to an inevitable increase in the cost of energy, which drives the cost of living across our economy.

That is why, through our British energy security strategy, we are absolutely committed to—and are already implementing—support for diverse sources of home-grown energy to provide greater energy security in the longer term. Let me unpack that: we have set out, first, a comprehensive long-term plan, just as today’s motion calls for, to 2050 for our energy system in 2020’s 10-point plan for a green industrial revolution and the energy White Paper. It needed doing and it has been done. Secondly, the British energy security strategy, published in April this year, charts a pathway to reducing our vulnerability to international energy prices by reducing our dependence on imported oil and gas.

We will achieve our ambitions by accelerating the deployment of wind, solar and new nuclear energy, supercharging our production of low-carbon hydrogen, and within my portfolio supporting next-generation energy sources including fusion and small modular nuclear. We will support North sea oil and gas in the near term for security of supply, and the important work that is being done in Scotland, particularly on the North sea transition, to turn that infrastructure into the infrastructure for clean, green energy.

Thirdly, we will ensure a more flexible and efficient system for both generators and users, undertaking our comprehensive view of electricity market arrangements to ensure that consumers fully benefit from the next phase of our energy transformation. That is why we have committed to publishing, with Ofgem, a strategic framework this year on how networks will deliver net zero. Fourthly, not only are we thinking about reforming energy supply, but we have an ambitious programme of energy efficiency measures to lower demand, and to bring down bills and emissions.

Nationalisation, however, will not solve or help to tackle those challenges, for a number of reasons. First, as I have said, nationalised energy companies would still have to buy gas on the international markets. There is no price reduction that comes with being nationalised. Secondly, if a Labour Government, or perhaps more likely a Labour-SNP-Lib Dem coalition, who were committed to renationalisation came into office, their measures would mean that the British taxpayer would have to compensate directors, shareholders and creditors to the tune of tens of billions of pounds—money that would otherwise be spent on schools, hospitals and public services. Thirdly, the sort of nationalisation that has been talked about blithely but not explained would hugely damage our ability to attract the international investment that I have set out, which is key to delivering net zero.

[Dr Whitehead]

The Minister is either not hearing what is being said by the Opposition, or he is going out of his way to put it in an entirely different light. Neither the Scottish nationalists nor the Opposition have said that we want to renationalise the whole energy industry; we have said that different ways of working from the complete market fetishism that has been going on would be much better for attracting investment from the private sector. A reliable partner in Government could, among other things, bring the cost of capital down. That is very different from what he is talking about.

[George Freeman]

It is. It is also different, as the record will show, from what Opposition Members said. For an hour, I listened to a reheated hash of the same old anti-capitalist, anti-business, easy—

--- Later in debate ---

[Dr Whitehead]

Did you?

[George Freeman]

Yes, I did, and the record will show it. Those interested in how we might build a modern energy economy will observe that there was very little detail on how nationalisation will be done. Very little was said about innovation, new sectors, or how we create exciting areas of innovation, use the smart grid, create a network of incentives, penalties, rewards and points, and empower consumers. There was none of that. It was a litany of the same old Labour and SNP anti-business, anti-capitalist talk of profiteering companies. Those are, by the way, the same companies that pay dividends into the pension funds of our constituents—and probably the trade union barons who are lobbying for this nationalisation. It is old-fashioned economics that has been proven not to work. I was hoping to come this afternoon and hear—

--- Later in debate ---

[George Freeman]

The hon. Lady makes an important point about the particular circumstances of those people on prepayment meters and those who are most prone to energy poverty and vulnerability. Again, I am not the energy Minister so, with permission, I will allow the Minister for Climate, my right hon. Friend the Member for Beverley and Holderness, to follow up that point with her.

This is a long journey. It is one that we, as a country, started on a little late, but we have led the world in moving at pace, and that is a tribute to all the parties involved, to be fair. The last Labour Government before 2010 began some important measures; we in the coalition took things forward; and the Conservative Governments have pursued things at pace since. I believe that we are on the road to success and I have no doubt that consumers will be at the heart of Government policy every step of the way.

Right now, that means we are focused on doing all we can to support consumers through the very difficult winter ahead, but nationalisation is not the right solution. I will just say that it has been rather extraordinary for me this afternoon to see how strongly the old anti-capitalist politics of the hard left have been shown to continue to thrive in the Labour party and the Scottish National party. We have heard aeons about anti-business millionaires and profiteering, and there has been no talk about companies generating the profits that drive dividends that supply pensioners with revenue, or public sector workers with their pensions, or, for that matter, the trade unions with their pensions.

We have heard nothing serious from the SNP about how it would pay for independence, which has traditionally been based—on its own assumptions—on the revenues from oil and gas. The SNP is anti-nuclear—it appears to be anti-everything that will score a point—but there is no serious and costed plan for how Scotland could be in the vanguard of the new energy economy. The Liberal Democrats, who are not present here today in Westminster Hall, have described Labour’s policy of nationalisation as “pointless and costly”.

[Dr Whitehead]

We have not got a policy of nationalisation. The Minister is not telling the truth.

[Mrs Sheryll Murray (in the Chair)]

Order.

[Dr Whitehead]

Sorry—I am getting very annoyed about this.

[George Freeman]

Thank you, Mrs Murray.

We have heard nothing today about the really exciting opportunities in our energy sector: the new renewables, including those in marine, tidal, geothermal, hydrogen and fusion, that this Government and I, as Minister with responsibility for research, are supporting. There are also opportunities for the UK’s cleantech sector—the small and large companies that are in the frontline of developing global solutions for new energy. We have heard nothing about the smart grid, the importance of incentives or the digitalisation of the grid to create a micro-market and bring net zero down to the ground in different communities. We have heard very little about energy use. We have heard a lot about generation, but very little about how transport and agriculture—the two big industries on the frontline of energy usage—are making huge strides in decreasing their reliance on energy. Instead, we have heard quite a lot of the old dogma of decline.

To be honest, I think that explains why there are so few colleagues from other parties here this afternoon; most of them are more interested in trying to develop practical solutions. I honestly think that the 100,000 people who petitioned for a proper debate about long-term energy strategy deserve something slightly better than we have heard today, and the Government are determined to provide it.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 25th October 2022 Commons Chamber

[Jackie Doyle-Price]

The hon. Lady is absolutely right—businesses deserve certainty, and we will give that to them as soon as we can, and well before the end of the scheme. It is important that we make sure, because this is a very expensive scheme for taxpayers, that we give that support where it is needed, at best value for the taxpayer. That means that we need to target it at those businesses that are at most risk of being damaged. I hope that that gives the hon. Lady some reassurance in the meantime—we are determined to give some advice before the end of the year.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The Minister has announced what will happen if businesses have fixed-term energy contracts running into the period of the support scheme, but she has not said anything about what would happen where businesses are forced to sign new fixed-term contracts during the term of the scheme that run on after it has ended. Many businesses and firms might face ruin if they sign new, sky-high fixed-term contracts for which they know that there is support only for perhaps a few months of it. They need assurances now, not at the end of April. What assurances can the Minister give that proper measures will be urgently put in place to support businesses under such circumstances?

[Jackie Doyle-Price]

I repeat that we will announce conclusions before the end of the year, which provides sufficient notice before the end of the scheme. The hon. Gentleman will appreciate that we need to give support that is as targeted as possible, given the cost of the scheme. In respect of the point that he made regarding contracts, Ofgem will play a key role in making sure that energy suppliers behave honourably in the scheme. It remains our intention that businesses should receive the support that they deserve and that pricing is fair.

Floating Offshore Wind Projects

Alan Whitehead Excerpts

Tuesday 18th October 2022 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

We have had what I would characterise as one of the most sensible debates that I have heard in quite a long time in this place, and I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on bringing that debate to us. I also congratulate him on covering all the bases on offshore wind because the debate is not about pie-in-the-sky reflections on something that might be. It is about something that can make an enormous contribution in pretty quick time to the UK’s energy requirements, and do so in a way that unlocks a lot of resources that we have in this country, but which have hitherto been rather set aside because we have been concentrating on other technologies in other parts of the country.

Floating wind in particular is the energy answer for the western side of the UK, just as offshore fixed wind is the answer for the east coast. As far as the east coast is concerned, we have the great benefit of having an only slightly drowned large offshore island called Doggerland to come to the aid of wind. Offshore has successfully been planted in sea depths of 50 feet or less, but of course that is not the case for the west coast of the UK. Floating offshore wind is the answer to that problem: it can be established in much greater depths, and—as we know from the Scottish floating wind farm that has already been established—its efficiency level is far higher than fixed offshore. An efficiency level of 57% has been recorded for the Scottish floating offshore wind farm, compared with an average of about 40% for fixed offshore wind.

We in the Labour party are completely convinced that floating offshore not only can but will play an enormous role in the ambitious targets that we are now setting for wind overall to supply a very large proportion of our future energy needs. We have heard important and thoughtful contributions, not only from the mover of the resolution, the right hon. Member for Preseli Pembrokeshire, but particularly from my hon. Friend the Member for Aberavon (Stephen Kinnock). He concentrated on the things we need to do to really get offshore floating wind underway, particularly in the Celtic sea. Those include what we do about fabrication, the installation of floating offshore wind—because the techniques for installation are quite different between floating and fixed—and how we land the power we are going to get from floating offshore and integrate it into the grid system generally. We will have to address all those issues very quickly if the potential of floating offshore wind is to be realised as well as we hope it will be.

The industry has its own targets that it thinks it can install: about 18 GW of floating offshore by the early 2030s. Those are realistic appraisals, including supply chains and all sorts of other factors. To give Members an idea of the contribution that would make, that is 1.5 times the present installed capacity of all the offshore wind we have at the moment—which, as I say, is mainly fixed. An enormous contribution can be made, and I personally think that our targets—the original 1 GW target for 2030, now increased by the energy security strategy to, I think, 5 GW—can be easily exceeded over the immediate coming period.

However, as the hon. Member for North Devon (Selaine Saxby) alluded to quite substantially in her contribution, we need a great deal of anticipatory investment to make sure we can secure the potential that we know is there. That means proper investment in port infrastructure. From my hon. Friend the Member for Aberavon and the right hon. Member for Preseli Pembrokeshire, we heard that there is an opportunity for joint arrangements between Milford Haven and Port Talbot to secure fabrication, servicing, assembly and so on in areas where we have the resources to do so. That will service what is beginning to be a tremendous opportunity in the Celtic sea for floating offshore wind. It is a tremendous opportunity not only within the UK. As hon. Members have mentioned, it is an opportunity to be an international leader in floating offshore wind: sited in the UK, using UK components and perhaps exporting not just to countries around the Celtic sea, which are also beginning to think about floating offshore, but to a much wider canvas.

The UK component element of the task, which includes getting the Crown Estate around the table and giving them a good talking to about the UK content in bids, is not important just because bringing some industry to the UK is a nice thing to do. It is important because, by developing all the supply chains, skills, know-how, fabrication and so on in the UK, we can become an international leader in floating offshore in the way that, as hon. Members have mentioned, we failed to do in previous iterations of offshore wind. I want to see us supplying floating offshore wind to Denmark, rather than Denmark supplying us with offshore turbines and various other things, as it has so successfully over many years.

Today’s debate has summed up both where we are with floating offshore wind and where we need to be in the not-too-distant future. That leads us to what the Government need to do now to ensure that this revolution can succeed. It means proper anticipatory investment in ports and infrastructure. It means a great deal of anticipatory investment in the grid: both the development of the offshore grid, and the ability to land and incorporate energy properly into the onshore grid. We absolutely must not repeat the mistakes that we made in offshore grid connections: we connected each wind farm separately, just on the basis of the concerns of that particular wind farm, on a point-to-point basis with cabling. We must ensure that the infrastructure is available—in south Wales, Cornwall and Devon—to take the power, and to extend that out into the Celtic sea in particular, so that we are able to develop a collective collection of the resource.

Hopefully, there is a very rosy future for floating offshore wind; Labour is absolutely committed to that rosy future. As my hon. Friend the Member for Aberavon mentioned, one of the vehicles, I am sure, will be the GB energy company that we intend to set up in Government. That will be able to take the anticipatory investment forward, and will be a leading partner in the development of everything that is necessary to make floating offshore wind a great success. I look forward to hearing what the Government’s contribution to this exciting prospect will be. I hope that it will be positive; I am sure it will be. Together, we can then move forward to the rosy future of floating offshore wind.

Energy Prices Bill

Alan Whitehead Excerpts

Committee stage
Monday 17th October 2022 Commons Chamber

[Graham Stuart]

As the hon. Gentleman knows, this legislation lays out the remit of the Secretary of State, under the powers within the Bill, to intervene to protect businesses and consumers. That is its central aim.

Clause 19 ensures that the support schemes I have mentioned reach their intended beneficiaries. The requirement to pass on energy price support will help to ensure that tenants and other end users receive the support they need. Clause 20 will make amendments to the existing price cap legislation to support the delivery of the energy price guarantee. The clause will ensure that Ofgem continues to calculate the cap level to determine what it costs an efficient energy supplier to provide a household with gas and/or electricity. In response to the points made by the right hon. Member for Doncaster North (Edward Miliband), this will not determine the prices that households pay, but it will enable the Government to identify what level of support is needed to deliver the prices in the energy price guarantee. So it has a different purpose, but a useful one, in delivering the EPG. Finally, clauses 21 to 23 provide the power to enable the Secretary of State to modify energy licence conditions urgently, as necessary, and give directions to support the response to the energy crisis.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I am sorry that we have such truncated time to discuss this legislation this evening, because while we have a substantial level of support for the Bill, we have our concerns about sections of it and there are parts of it that should not be in it at all. I did not have the opportunity to commend the excellent speeches on Second Reading by a number of my hon. Friends, who put into context the issues surrounding the Bill very well. I will not go over them again. I want instead to concentrate on what is in the Bill and what it will do to move towards the point that we all want to get to, which is to see the support mechanism for domestic and non-domestic customers placed into legislation and supported as well as it can be.

One of the many things that have occurred by way of recent significant U-turns is the fact that the energy price support scheme is now going to last not for two years but for six months. I appreciate that there are, shall we say, warm words behind that, and measures will subsequently be sought to concentrate help for people, but we need to be clear that this Bill is written as if the previous scheme were still in place. Various parts of the Bill, including substantial elements of schedule 6, talk about a two-year programme, after which, by way of a sunset clause, charges should not be raised on energy generators specified in clause 16.

I do not expect the Minister to make immediate manuscript amendments reflecting the change that has taken place between this morning and this afternoon, but he should reflect on the effect it will have on the Bill and whether, by way of a statement to this House or through subsequent changes in secondary legislation, he will introduce into this Bill a more accurate reflection of where we are now. I would be interested to hear from him on that in due course.

The Bill effectively has three parts. Clauses 1 to 8 essentially establish the energy bill relief scheme in legislation, which is just as well because the energy bill relief scheme has so far been effectively voluntary. It is important that we put the scheme into legislation so that it works properly. Not only do the Opposition have no quarrel with that, but we strongly support it.

As my right hon. Friend the Member for Doncaster North (Edward Miliband) told us on Second Reading, however, there are a number of issues relating to the Bill that are not quite so clear-cut. Clause 16 contains a measure that requires designated energy generators—one assumes they consist mostly of renewable generators not in possession of a CfD, although that is not specified in the Bill—to make payments over a period of time that is now in excess of the six-month energy bill relief scheme in order to support that energy bill relief scheme. There is a difference between the two timescales in place under the Bill.

Nor is there clarity, particularly in clause 16, on what the Government mean by “designated energy producers.” What the Government will designate those producers to be is one of the remaining question marks about the Bill. How will the Government decide what the designation looks like? Who is going to be designated? Over what period? And who, by definition, will be excluded from that designation? When we are talking about renewable and low-carbon energy, it is pretty difficult to define exactly who is doing what, who is or is not making super-profits, and who may therefore be excluded from designation or within designation. We are talking about energy companies that run wind farms with renewable obligation certificates. In some instances, those ROCs are relatively recent, and in some instances they cover a longer period of time. The ROC scheme under which they were founded has very different effects.

[Barry Gardiner]

I agree about the difficulties under clause 16. Does my hon. Friend share my suspicion that, actually, the designated companies are precisely those renewable and nuclear generators that have not previously entered a contract for difference? This is simply intended to be a stick to force them into a voluntary contract for difference with the Government.

[Dr Whitehead]

My hon. Friend makes a good, if somewhat speculative, point. As the Bill mentions, the Government are seeking to regularise the status of various renewable generators into some form of CfD arrangement, but of course the “compensation” one might get varies according to the status of those particular generators that do not have a CfD and are getting their remuneration by other means.

Of course, there are generators in this particular area that are not making super-profits, and indeed are not making profits at all, because in most instances they are community-owned wind farms with a large number of shareholders. The purpose of those shareholdings is, among other things, to keep bills down by paying dividends from the wind farm. Such arrangements should clearly not be designated in the same way as other arrangements, even though these wind farms are perhaps not in receipt of a contract for difference and may look like a number of other arrangements.

My plea is that, first, the Government should define, as soon as possible, what is going to be designated and how it is going to be designated. That should go well beyond what is in this Bill and ensure that those generators that are designated really are those that should pay into a scheme. After reading the Bill, I think it is possible to make those changes so that designation is fair and equitable. I am sure that the Government will, very shortly, want to come out with a scheme that enables that to happen. I will certainly be on the phone to the Minister if it does not happen very quickly.

[Graham Stuart]

That is our intention.

[Dr Whitehead]

I am delighted to hear that, and it is one gain from this evening’s debate.

On the third part of the Bill, I very much concur with a lot of what the hon. Member for Weston-super-Mare (John Penrose) said. The Bill gives powers to the Minister and the Secretary of State that provide for sweeping arrangements not only to intervene in energy markets, but to override Ofgem in various licensing arrangements. There is a power to give direction and a power to change licences, and a whole range of other measures. A number of industry figures are certainly concerned about the stability of investment they can undertake with those powers on the statute book, not knowing whether those changes could take place at short notice and in a way that may affect their investment decisions and the investment landscape for the future.

At the weekend, a senior source at one energy supplier suggested that the Secretary of State had undertaken a power grab “worthy of Henry VIII”. Obviously, our modernist Secretary of State may well be modelling himself on Henry VIII. I do not know whether he is, but this source said that this

“gives absolute power to the secretary of state over all rules governing all aspects of the UK’s energy industry, in perpetuity.”

He continued:

“That means bypassing Ofgem and the entire licensing and regulatory regime without any safeguards or time constraints and no consultation or appeal process for anyone—supplier, generator, networks—affected by any decision.”

So we are very concerned to ensure that those powers taken by the Secretary of State should at the very least have a sunset clause on them when the energy crisis has abated a little. As we can see from the legislation, no such sunset clauses are provided, which leads to a suspicion that this is a potential serious power grab by the Government, and these are powers to oversee the energy process without any of the checks and balances that we have in the system at the moment. If that is the Government’s intention, it is to be deplored. Again, I hope that at the very least the Minister could clarify his intentions on that section of the Bill and how he intends to limit the activity of these things over a period of time.

We have tabled a number of amendments, and as they relate to some of the comments I have made, I shall briefly address them. Amendment 1 would ensure that the full cost of reductions is passed on to customers. Although a passing through arrangement is contained in the Bill to deal with people such as landlords, park home owners and various others who are taking the rebates on bills on behalf of customers and supposedly passing them on but not actually doing so—I very much welcome those clauses—there are other arrangements for third parties in receipt of funds where they are not necessarily required to pass those rebates on to customers at all. For example, the Low Carbon Contracts Company gets money in from contracts for difference but is by no means obliged to pass that back to customers. It is supposed to pass this back to energy companies, but it does not have to do so, and the energy suppliers themselves have no obligation to pass it back to customers. The amendment tries to close some of those loopholes to make sure that all moneys related to this area are passed on to customers.

New clause 2, on the marginal cost of electricity, was mentioned by my right hon. Friend the Member for Doncaster North on Second Reading. The new clause would ensure that we would not be in this situation in the first place. If we had sorted out the whole question of the marginal cost of electricity as it relates to all electricity being effectively determined in retail price as if it had derived from gas and the much lower cost of renewables that we have at the moment in the system being effectively discounted, we would not have some of those renewable generators making “super-profits” and being perhaps subject to the ministrations of clause 16. That is because they would be working in the market on their own prices and looking competitively at a price set by their own boundaries, rather than working through gas in the first place. We think it is important that the Government take action on that quickly, which is what our new clause suggests we do.

I know we are running out of time, but let me come to our amendment on the Energy (Oil and Gas) Profits Levy Act 2022 arrangements. Again, as my right hon. Friend said on Second Reading, they were deplorable, as where fossil fuels are concerned 91% of profits can be returned back to those companies, and do not come to the customer to help reduce their bills, if they have investments in fossil fuels for the future. No such arrangement is provided for in this Bill as far as renewable generators are concerned; it is just a request for payment and nothing else. We want the Government to urgently look at this and bring forward a report on what the effect of reducing that 91% arrangement to 5%, for example, would have on the money that would be coming through to help customers pay their bills for the future.

Finally, as we mentioned on Second Reading, we have tabled a couple of amendments to start the process of payments from September, rather than the end of this year, as is proposed in the Bill. We think that would produce quite a lot more money for customers’ bills to be assured in the process. We understand that the Scottish nationalists are moving a manuscript amendment, new clause 18. It would worry us as it is calling for all the arrangements to be sorted out as far as what happens after six months is concerned within one month. We would prefer that we all united behind new clause 8, which would require full disclosure of the profits and turnover of oil and gas companies and various other generators over the next two years.

[David Linden (Glasgow East) (SNP)]

I suspect the hon. Gentleman is probably only clearing his throat and getting on to his speech, but may I ask him what his objection is to new clause 18? If I heard him properly, he suggested at the beginning of his speech that if the Government had brought forward a manuscript amendment, he would not necessarily be too upset. Given that the SNP has done that, via manuscript and new clause 18, what is the Opposition’s objection to that?

[Dr Whitehead]

We think that most of what is new clause 18 is unexceptionable as far as information that is required. We do not think that all this has to be or should be resolved within one month, as is proposed; getting all that information on the table about the profits and turnover of companies over the next two years is a better way to do this.

[Alan Brown]

New clause 18 is about extending support, because the Government today withdrew that support. It was supposed to be a two-year support package but as of today consumers are receiving support for only six months, not two years. Surely the hon. Gentleman should support consumers getting additional support. On the analysis of fuel poverty levels and protecting the most vulnerable, why does Labour not want to vote to protect these people and make the Government have to come to this House to report on what their policies are doing to fuel poverty?

[Dr Whitehead]

We want to get everything on the table that will be germane to decisions that may have to be made after six months about what to do, particularly about windfall levies and various other such things. That is what new clause 8 concentrates on.

[David Linden]

rose—

[Dr Whitehead]

I am about to finish my remarks, but we might well have a debate about new clause 18—

[David Linden]

Will the hon. Gentleman give way on that point?

[Dr Whitehead]

I am sorry, I cannot give away further because I am right out of time, and I know that the Chairman is encouraging me to bring my remarks to a close, which is precisely what I intend to do.

Subject to what the Minister says, we may wish to divide on new clause 3 and amendment 2. I am anxious to hear what he makes of our various other amendments, but although we probably do not wish to proceed further with them, that is not to say that they do not merit important consideration in our proceedings on the Bill. We hope the Minister will be cognisant of that.

[David Linden]

I am grateful to the hon. Gentleman for giving way—

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Order. Dr Whitehead, are you giving way?

[Dr Whitehead]

I have sat down.

[The Second Deputy Chairman]

I call Peter Aldous.

Draft Warm Home Discount (Scotland) Regulations 2022

Alan Whitehead Excerpts

Wednesday 7th September 2022 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Efford. As the Minister said, this instrument is about the completion across the nations of the warm home discount. As he also said, it applies to Scotland essentially as an extension of the England and Wales scheme, and I will come to exactly what that extension looks like in a moment. I understand the need for speed in completing the SI, which is why it is proposed to come into force tomorrow, so that warm home discount payments can get to recipients before the winter. In response to an intervention from my hon. Friend the Member for Blaenau Gwent, the Minister mentioned that the necessary data can be sorted out by November, which means that those discounts will get to the recipients before winter is seriously upon us, although we do not know what the weather will be like over the next period. Whether November will be mid-winter or mid-summer, we are not quite sure.

The scheme that the Minister has set out is, as I said, essentially a pretty faithful mirror of the England and Wales scheme. He mentioned that the Scottish Government could have designed their own scheme within the overall financial envelope that is available but requested that the UK Government do it. This is, post consultation, the result. The Opposition support not just the SI but the speed with which we need to make progress on it; however, we have a couple of questions about some of the detail of how the scheme will work.

My first question results from the request by the Scottish Government that the scheme be introduced by the UK Government. Can the Minister assure us that the Scottish Government are happy with the outcome of the scheme? The explanatory memorandum, I suspect owing to the speed at which this has to be done, states:

“The Department intends to make a new set of Reconciliation Regulations later this year”—

I assume that “later this year” means November-ish—

“covering both the Warm Home Discount scheme in Scotland and the scheme in England and Wales.”

The fact that reconciliation regulations appear to be necessary later this year sets off some alarm bells in my head, inasmuch as it implies that a number of matters are not at present reconciled, and that some sort of further legislative process is required to reconcile them. I would be interested to hear from the Minister what those non-reconciled elements are and to what extent they may have an impact on the scheme. In other words, are there non-reconciled elements that may get in the way of the efficient operation of the scheme up to the winter and the speed with which we have indicated it should be carried out?

As the Minister said, consultations were properly carried out on this particular proposal. It is true that most people agreed that the arrangements were satisfactorily carried out. However, they noted among other things a number of differences between England, Wales and Scotland in the circumstances the possible recipients of the warm home discount might be in, particularly the considerable difference in fuel poverty between the countries.

The Government effectively disregarded those representations after the consultation. They made no arrangements to change, for example, the relationship between the core scheme and the other parts of the scheme to reflect the difference in fuel poverty. Will the Minister briefly tell us whether that difference was something that the Government considered but disregarded or thought that for the sake of a homogeneous scheme that they were not going to look at? The Minister mentioned that 9.4% of the total goes marginally above what the percentages might have suggested for Scotland. Is that marginal increase in percentage partly due to those differences, or is that just an administrative change that the Government have accommodated?

I am sure the Minister will furnish me will full information on the questions I have raised. Subject to that, we are very happy to see the progress of this SI this morning.