Oral Answers to Questions
Amanda Solloway Excerpts(7 months ago)
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Mrs Sheryll Murray (South East Cornwall) (Con)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
The price cap has fallen by 60% since the start of last year, and the Government are taking a comprehensive approach to bring down future energy bills for consumers. That includes reforming electricity markets to make them more effective, investing across the energy system to make it smarter, and investing in energy efficiency to reduce costs for households.
Andrew Rosindell
I thank the Minister for her answer, but I want her to understand that for constituents such as mine in Romford energy prices are becoming completely unaffordable, and the Government need to do more. My constituents are also very concerned about the cost of net zero, and we need to know what that will cost them in years to come. Surely the Government need to take the British people with them on these policies, but at present there is a great deal of scepticism.
Amanda Solloway
That is certainly one of the Department’s aims. We are very conscious that we must get that energy security while also helping all the vulnerable households—and non-domestic businesses—that need our support.
Steve Tuckwell
A significant number of households in my constituency who are experiencing the continued impact of Russia’s illegal invasion of Ukraine and unrest in the middle east have received help in the form of the Government’s cost of living support payments. Those payments are welcome, but does the Minister agree that this important support should continue, along with more information about the help that is available and how to gain access to it?
Amanda Solloway
My hon. Friend is a great champion for his constituents, and of course I agree with him about the importance of ensuring that householders know where to obtain information about what they may be able to receive, especially as we are providing them with £108 billion between 2022 and 2025. I recommend that they visit the Help for Households web page on gov.uk to find out what support they may be entitled to.
Simon Baynes
Many rural properties on the Welsh borders—including those in Clwyd South and in neighbouring north Shropshire—are not connected to mains gas and therefore use oil or liquefied petroleum gas for heating, and many of the residents are unaware of the support that is available to help with their energy bills. Can the Minister tell the House what support the Government are providing for those residents?
Amanda Solloway
My hon. Friend has raised an important issue. We are, of course, helping all those households. The Government supported about 3 million households using alternative fuels with the £200 alternative fuel payments in the winter of 2022-23, and although energy prices, including alternative fuel costs, have fallen significantly since then, we are nevertheless committed to supporting all households with that £108 billion package between 2022 and 2025.
Mrs Murray
I have just had some solar panels fitted to my roof and I am pleased to report that they are reducing my bills, but what more are the Government doing to encourage people to produce their own electricity by means of renewables, in order to reduce the pull on the grid and also reduce bills?
Amanda Solloway
I am delighted to hear that my hon. Friend has had those solar panels fitted. She will be interested to hear that the Government are considering options to facilitate low-cost finance from retail lenders to help households with the up-front costs of installation, and to drive rooftop deployment and energy efficiency measures.
Janet Daby (Lewisham East) (Lab)
I know of too many cases in which people whose properties are connected to heat networks are paying extremely high energy bills. I welcome the Department’s response to the consultation on heat networks, but the Energy Act 2023 only allows for Secretaries of State to introduce a price cap, at their discretion. Some of my constituents are paying bills that are 13 times the level of the cap. Will the Minister consider a mandatory cap to ensure fair prices for heat network customers?
Amanda Solloway
The hon. Lady makes an important point. Of course, the price cap is an issue for Ofgem. However, I would be interested to hear some of her suggestions and I am always happy to have a meeting on that particular subject.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Fuel and extreme fuel poverty across the highlands and islands is higher than anywhere else in the UK, yet families there are forced to pay the highest electricity standing charges in the UK—50% more than in London, for example. That is despite the region exporting in excess of six times the amount of renewable electricity that it uses. When will the Government introduce a highland energy rebate to ensure fairness for people across the highlands and islands?
Amanda Solloway
The hon. Gentleman will know that we have had many conversations about this subject. One of the things that the Secretary of State and I have been doing is talking to Ofgem to make sure that it is looking at the standing charges. That has led to a call for input, which has recently had over 30,000 responses.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
My constituent Beverley Scott, who has cancer, suffered from poor work carried out under the Government’s ECO4 scheme. This included leaving her without heating and damaging her internet. She eventually had to go to the small claims court to get redress for shoddy work, and I know of other people who have had to follow the same route. Given that provider companies, enabled by Government strategy, leave vulnerable householders with no option but to go to court, does the Minister not agree that there should be better oversight and a simpler remedy for people like Beverley Scott?
Amanda Solloway
The right hon. Lady makes an incredibly important point. Of course, one of the things that we are determined to do is make sure that those installations are carried out in the correct manner. In fact, we have new regulations in place to make sure that that happens going forward.
Christine Jardine (Edinburgh West) (LD)
The Minister will know that I am concerned about the level of standing charges in my constituency, as I have discussed this issue with her before. One of the problems is that people with pre-payment meters often find that, when they go to add the payment, the standing charges wipe everything out. Can the Government and Ofgem find a way to provide more support for those on pre-payment meters to avoid that problem?
Amanda Solloway
The hon. Lady and I have had many conversations about this issue. One of the things that we have done is make sure that people who are on pre-payment meters are not unfairly penalised.
Dr Alan Whitehead (Southampton, Test) (Lab)
The Minister and her colleagues have repeatedly said today that they care about cutting bills for families, but a recent report by the Resolution Foundation found that the onshore wind ban has hit the poorest households’ income six times harder than that of the richest. Such households have been forced to pay additional electricity bills as a result of the total failure to build onshore wind in England. How on earth can Ministers continue to sit there and claim that they stand up for working families when they continue to block the cheapest form of clean energy there is, which could cut bills for families who desperately need help? Before she leaves office, will the Secretary of State pledge to put this right so that onshore wind can be built again and customers can save money on their future bills?
Amanda Solloway
That is absolutely not the case. We stand here incredibly proudly as Ministers in the Department for Energy Security and Net Zero, and we have made a commitment. We are doing more than has ever been done on renewables and offshore wind, and we have done more to help people with the affordability of their bills.
Sir Desmond Swayne (New Forest West) (Con)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
The social housing decarbonisation fund is upgrading to EPC C a significant amount of the social housing stock that is currently below that standard. We have already committed over £1 billion of Government funding, with a further £1.25 billion already committed for 2025 to 2028.
Sir Desmond Swayne
By how much has the Minister increased the level of insulation, and what significance does she attach to it?
Amanda Solloway
I thank my right hon. Friend for his brevity, as always. The amount of social housing that is well insulated has gone up from just 24% in 2010 to 70% today. For housing overall, we have gone from just 14% in 2010 to 50% today.
Mr Ben Bradshaw (Exeter) (Lab)
I welcome, through the Minister, the admission by the Secretary of State last week finally that this flagship scheme is failing, although the words she used were that it has been
“a bit slow on the uptake”.
They have had 14 years to devise the most cost-effective way of reducing carbon emissions and people’s bills, making homes warmer and creating good new skilled jobs. When will we have a scheme that actually works?
Amanda Solloway
I respectfully say to the right hon. Gentleman that we do have schemes that are working. I remind him that the Department for Energy Security and Net Zero has launched a £1 billion Great British installation scheme, which aims to upgrade around 300,000 of the country’s least energy-efficient homes.
Dave Doogan (Angus) (SNP)
The Scottish Government are working at pace to replace polluting heating systems and improve energy efficiency in Scotland’s building stock, with £1.8 billion being invested in this parliamentary Session towards heat and energy efficiency measures and £600 million towards new affordable housing. With the Climate Change Committee stating that the Scottish Government’s heat in buildings Bill could become the template for the UK, helping Scotland to decarbonise faster than anywhere else in the UK, would the Minister like to visit the Scottish Government in Edinburgh? I can arrange that for her, so that she can see climate leadership in action.
Amanda Solloway
I reiterate that energy efficiency is incredibly important to us on the Government Benches and to the Government. I would be happy to come on a visit to Edinburgh. Indeed, I have already visited there.
Dave Doogan
Slightly more enthusiasm might have been welcomed by people living in England in cold and draughty houses. Nevertheless, it is not simply our extensive ambition that leaves the UK behind Scotland, but our delivery, too. Since 2007—[Interruption.] Those on the Government Benches might want to listen to this. Since 2007, per person, the SNP has built 40% more homes than Tory England and 70% more homes than Labour Wales and ensured 65% of the Scottish social rented sector has an energy performance certificate rating of C or above. Insulation levels in Scotland are way higher than in England. It is clear that the UK Government have materially failed to abate the demand side of the energy system to any meaningful extent. What will the Minister do, in the few weeks they have left in office, to atone for this glaring betrayal of bill payers?
Amanda Solloway
Unlike the hon. Gentleman, we have not abandoned our targets, and there has been good progress and improved household energy efficiency. Around half of our homes—48% in England—have now reached the Government’s 2035 target of achieving an EPC rating of C, up from 14% in 2010.
Dan Carden (Liverpool, Walton) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
The energy suppliers are responsible for paying compensation. They have carried out 150,000 assessments so far, with 2,500 customers due compensation. A total of 1,502 payments have been made, with 1,000 more planned.
Dan Carden
Despite the energy ombudsman ruling that one of my constituents should not have been placed on a prepayment meter due to her vulnerabilities, she has not been awarded a penny of compensation under the scheme. As the Minister has just outlined, only 1,500 people, out of 150,000, have had any compensation awarded at all. That is 1%, so why is the number so small? Could it be that the energy suppliers themselves, overseen by Ofgem, are deciding who is entitled to these payments? Both sat idly by as agents forced their way into people’s homes to install the prepayment meters.
Amanda Solloway
I thank the hon. Gentleman for his question and for the opportunity to provide clarity. The forced installation of prepayment meters is clearly unacceptable, and the Government have done everything we can to counteract it. However, I reiterate that 150,000 investigations were carried out, in 2,500 of those cases compensation is due and, instead of 1%, the actual figure on compensation is 60%.
Keir Mather (Selby and Ainsty) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
The policy on fuel poverty is devolved. Statistics for England estimate that 3.17 million households were in fuel poverty in 2023, which is more than 1.5 million fewer than in 2010.
Keir Mather
The best way to cut fuel poverty is through a nationwide home upgrade scheme, but the Secretary of State seems unaware of the reality when it comes to home upgrades. Her officials said in recent documents given to the High Court that progress to decarbonise the UK’s building stock has been slow, that policy gaps remain and that the Government are lagging behind. Why will she not admit in public what her Department tells her in private?
Amanda Solloway
This Government are committed to making sure that we not only get energy efficiency but support people with their energy bills.
Vicky Ford (Chelmsford) (Con)
Thanks to Government grants, a social housing provider in my Chelmsford constituency, CHP, has made some great investments in social housing to help energy efficiency, reduce bills and lower fuel poverty, but it would like to go further. Will the Minister discuss with me the ways in which we can help to share the benefits of those savings so that some of them can be invested in improving energy efficiency and lowering bills in even more homes?
Amanda Solloway
My right hon. Friend makes the important point that energy efficiency is crucial to lowering bills. That is why we have the social housing decarbonisation fund, which supports local authorities and housing associations in upgrading social housing stock below energy performance certificate level C.
Justin Madders (Ellesmere Port and Neston) (Lab)
Dr James Davies (Vale of Clwyd) (Con)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
My hon. Friend makes an important point and is right to pick up on this matter. I reassure him that I have encouraged and pushed Ofgem to do more on this issue. Electricity standing charges include network costs, which reflect the cost of maintaining and upgrading the transmission and distribution networks across the country. I am of course happy to meet him to discuss this subject further.
Patricia Gibson (North Ayrshire and Arran) (SNP)
Amanda Solloway
A social tariff means lots of different things to different people, but what it ultimately means is ensuring that we support all vulnerable people. The hon. Member will be aware that the Government are doing many things to support people; there is the warm home discount, the cost of living payment, which is £900, and a variety of other measures.
Mark Eastwood (Dewsbury) (Con)
Dan Carden (Liverpool, Walton) (Lab)
Amanda Solloway
We are ensuring that energy businesses are able to survive, and not just through the price caps. This is also a matter for Ofgem.
Chris Clarkson (Heywood and Middleton) (Con)
My constituency is home to Scout Moor, one of the largest onshore wind farms in Europe, but the north-west also has amazing potential for offshore wind; an example is the Morgan and Morecambe development off the coast of Lancashire. Such projects require huge amounts of infrastructure to be realised. Notwithstanding the reassurances that my right hon. Friend has already given, will she ensure that community consent is part of any infrastructure projects of this kind?
Richard Foord (Tiverton and Honiton) (LD)
Amanda Solloway
The hon. Gentleman’s question covers a few issues. One of the most important things is to look at how the standing charges are made up. That is why we have encouraged Ofgem to answer our call for input. Insulation schemes are incredibly important as well, which is why the Government are committed to supporting so many of them.
Alexander Stafford (Rother Valley) (Con)
Hydrogen is the only viable alternative to natural gas for a balanced, reactive and carbon-zero electricity grid. The UK has 32 gas power plants, all of which could be cheaply and easily retrofitted to burn hydrogen as a natural gas. What is the Department doing to encourage this sort of retrofitting, so that we can allow technologies to decarbonise electricity generation and take advantage of the many benefits of hydrogen?
Marion Fellows (Motherwell and Wishaw) (SNP)
In the last 12 months, one in five households, or one in four young households, in energy debt have turned to illegal money lenders to help pay for bills and everyday essentials. The End Fuel Poverty Coalition has stated that the crisis could mean that young households spend years at the mercy of these loan sharks. What assessment has the Minister made of the merits of working with Ofgem and energy suppliers in order to introduce support to alleviate this record-high energy debt?
Amanda Solloway
The hon. Member makes an incredibly important point, and I have had many conversations with her on this matter. I can reassure her that I meet Ofgem regularly to discuss this, as the issue is very close to my heart—hence the call for input. To give her further reassurance, I can tell her that earlier this week, I met energy suppliers, and I also have ongoing meetings with Citizens Advice and other stakeholders.
Sir Jeremy Wright (Kenilworth and Southam) (Con)
Like others, I welcome what the Government have already done to extend the permitted development rights for rooftop solar and car park canopies, but may I encourage my hon. Friend to tell others in Government who have responsibility for planning that there are considerable benefits to car park canopies, particularly in hotter summers?
Mr Gregory Campbell (East Londonderry) (DUP)
There has indeed been a significant increase in domestic insulation schemes in recent years. However, will the Minister agree to increase the number of conversations with devolved institutions, so that we can see a genuinely nationwide revival of insulation schemes that, individually, can do more to reduce the dependency on high energy costs for those at maximum risk, in social housing and elsewhere?
Amanda Solloway
Clearly, energy efficiency is incredibly important, which means that making sure that we get the correct insulation schemes is also incredibly important. I give the hon. Gentleman my assurance that we are doing everything we can to ensure that that insulation takes place.
Cherilyn Mackrory (Truro and Falmouth) (Con)
Given the floating offshore wind manufacturing investment scheme funding recently awarded to Wales, can the Minister please advise me on when A&P Falmouth, which is to be a vital part of the supply chain for the only successful project in allocation round 4, will be put on the reserve list? The Minister has promised to meet me on several occasions. Can I ask that we expedite that much as possible?
Alison Thewliss (Glasgow Central) (SNP)
My constituent from Govanhill is being passed backwards and forwards between Utilita Energy and the Department for Work and Pensions. He receives income-related employment and support allowance and should be entitled to the warm home discount, but neither Utilita nor the DWP is able to give him the money he is entitled to. He applied in September last year. Will the Minister intervene and make sure he gets the money he is due?
Amanda Solloway
I encourage the hon. Lady to write to me on this particular issue and I will look into it.
Alicia Kearns (Rutland and Melton) (Con)
I put on record my heartfelt thanks to the Secretary of State and the Minister for Nuclear and Renewables for the action they took last week to put food security, alongside renewable energy, at the heart of local planning decisions. What are the Government doing to ensure that all councils immediately enact that policy, because it is both for local councils and for Government? Will existing soil assessments stand for nationally significant infrastructure projects, or will they be redone?
Innovation Centre for Energy Transition: Peterborough
Amanda Solloway Excerpts(7 months, 1 week ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
As always, it is a great pleasure to be here under your chairmanship, Sir George. I sincerely thank my hon. Friend the Member for Peterborough (Paul Bristow) for securing this incredibly important debate, for articulating with such passion and feeling how much he cares for the constituency of Peterborough, and for championing the potential of clean technologies and the significant benefits that they will bring to the UK economy.
Before I get on to the specific topic of the innovation centre, I would like to make special mention of the work that the city of Peterborough is doing, and its green ambitions. Last month, two Peterborough organisations scooped the top prizes at the east of England energy efficiency awards. The first is a cause close to my heart, because green energy is vital to our economy and to the future of our planet, but it is also really important to help vulnerable consumers and to ensure that we are helping on the affordability agenda. The second organisation was Peterborough City Council, which won local authority of the year. The council has helped more than 700 households become more energy efficient in the past year.
When I hear that people are trying to make a difference, I am reminded that the energy transition is all about the opportunities. It is about opportunities for lower bills for customers, opportunities for warmer homes for the vulnerable, and opportunities to create jobs, skills and resilient communities—all of which my hon. Friend mentioned—all while protecting our planet against the worst effects of climate change.
Earlier this month, at the Innovation Zero awards ceremony, I addressed a room of hundreds of innovative people and companies about the multiple benefits of the net zero transition. There is no better place for net zero innovation than the United Kingdom. We have attracted £300 billion of private and public investment in low-carbon sectors since 2010, with £100 billion more anticipated by 2030. That is why I was so pleased to hear about the potential establishment of an innovation centre in the city of Peterborough.
It is apt that we find ourselves talking about hydrogen and its immense potential in the energy transition. The Government see low-carbon hydrogen as a critical component of our broader strategy to deliver net zero and energy security, as well as to create economic growth. We have been delivering our 2021 hydrogen strategy through our £240 million net zero hydrogen fund to provide capital support to low-carbon hydrogen projects, and the hydrogen production business model to provide revenue support.
We have set out our plans to deliver up to 10 GW of low-carbon hydrogen capacity in the United Kingdom by 2030, subject to affordability and value for money. That is why the green industries growth accelerator—GIGA—exists. With funds of over £1 billion, it supports the expansion of strong and sustainable clean energy supply chains across the United Kingdom, including carbon capture, utilisation and storage, hydrogen, electricity networks, nuclear, and offshore wind. GIGA’s ambition is to grow the supply chain for the clean technologies we need for the future. By growing local supply chains, it will increase local skills, as my hon. Friend mentioned, along with the prosperity of the region. From what I have seen already, businesses are clamouring to find, train and keep highly skilled individuals, especially in rapidly growing sectors. To tackle emerging and future workforce demands, we are working with the green jobs delivery group, which will produce a green jobs plan for publication in the first half of 2024.
As my hon. Friend rightly observes in his proposals for the innovation centre, transport and infrastructure are crucial to creating a hydrogen economy. In the British energy security strategy, we committed to designing by 2025 new business models for hydrogen transportation and storage infrastructure, which will be essential to growing the hydrogen economy. My Department is developing business models at pace to provide the necessary support to bring forward that infrastructure investment. Alongside that, we are assessing the growing evidence on emerging hydrogen transportation and storage network needs to determine what infrastructure is required, where and when.
I recognise the role of the proposed innovation centre and its support for the sustainable aviation fuel industry. Building domestic SAF production capacity represents not only a significant economic opportunity, but a way to decarbonise aviation. The UK’s SAF programme is one of the most comprehensive in the world. We have committed to a target of 10% SAF in the United Kingdom aviation fuel mix by 2030. Our jet zero strategy sets out how we plan to achieve net zero emissions from UK aviation by 2050 while continuing to support the growth of this important sector.
Leadership is often said to be the ability to translate a vision into reality. The United Kingdom’s leadership in research and innovation is clear, and it will help us to secure the opportunities from the energy transition. My hon. Friend asked for a meeting across Departments, and I am very conscious that we need to do that; it is very important to achieving our net zero ambition and to supporting ideas such as the innovation centre. I commit today to facilitate that meeting.
I thank my hon. Friend again for organising this incredibly important debate and for reminding us of the importance of this innovation and of how we think about the future of our economy, the climate and our planet. I look forward to hearing further views on this topic.
Question put and agreed to.
Draft Contracts for Difference (Sustainable Industry Rewards) Regulations 2024
Amanda Solloway Excerpts(7 months, 3 weeks ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
I beg to move,
That the Committee has considered the draft Contracts for Difference (Sustainable Industry Rewards) Regulations 2024.
I apologise in advance for my loss of voice, which is a result of being rather enthusiastic at a Derby County football match on Saturday. The draft instrument was laid on 21 March 2024, and I acknowledge the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee, which have provided a helpful review of the regulations and have not drawn them to the special attention of this House or the other place.
The instrument amends regulations underpinning the contracts for difference scheme, which is the Government’s main mechanism for supporting new low-carbon electricity generation projects in Great Britain, and which has been hugely successful in driving down deployment costs. The amendments are about providing extra funding support through the CfD scheme so that we can better support offshore and floating offshore wind supply chains. This critical industrial sector has been hit hard by inflationary pressures and supply chain disruption resulting from the Russian invasion of Ukraine. Consequently, necessary investments in manufacturing and infrastructure have been delayed or abandoned altogether.
The CfD scheme currently focuses on only the price of deployment and no other factors, so offshore wind developers are incentivised to use the cheapest supply chain options available, regardless of where in the world they are or how dirty their means of production. We are therefore introducing sustainable industry rewards, or SIRs, to rebalance the CfD scheme so that it may help to address some of the supply chain challenges already causing bottlenecks in the supply chain, further increasing costs and slowing down deployment.
This policy intervention has been welcomed by supply chain companies and is intended to take effect for the seventh CfD allocation round, which should take place in 2025. So how does it work? The regulations require all offshore wind and floating offshore wind CfD applicants, as a condition of entry to the CfD, to obtain an SIR statement from the Secretary of State. Applicants who obtain an SIR statement will obtain additional revenue support through the CfD—a top-up, as it were—for investing in the economic, social and environmental sustainability of their supply chains.
SIR statements are obtained if the applicants make successful SIR proposals that fulfil one of two sustainability criteria:
“Investment in shorter supply chains in UK deprived areas”,
which means investing in manufacturing in the most disadvantaged places in the United Kingdom, or
“Investment in more sustainable means of production”,
which means investment in manufacturers that have signed up to the science-based targets initiative for the reduction of carbon emissions. The mechanism to allocate SIR funding will be a competitive auction just before the main CfD auction. An applicant who obtains SIR funding will then be contractually obliged to deliver their commitments. Undelivered commitments will be subject to a system of performance adjustments.
The Government are conscious that the extra support for offshore wind will have an impact on consumers’ electricity bills as SIRs—like the rest of the CfD scheme —will be funded through the existing electricity supplier obligation levy, which electricity suppliers pay. The actual budget for SIRs is still being discussed with the Treasury, but we estimate that it will be in the region of £150 million to £300 million a year for no more than three years, subject to the number of applicants. The impact on the consumer will be small, in the region of about £2 a year per consumer. Hopefully, hon. Members will agree that that is a small price to pay for the benefit that sustainable industry rewards could bring to UK communities by creating new and cleaner manufacturing facilities and highly skilled jobs in deprived areas and carving out opportunities for businesses to become part of the offshore wind supply chain.
To further ensure that the policy does not become a permanent burden on consumer bills, the intervention is time-limited for three years—it is there to address a specific market failure. CfD SIRs also complement other Government support for renewable supply chains, such as the £1 billion green industries growth accelerator, which runs to a similar timeframe. The explicit, detailed rules of the allocation are set out in the draft SIR allocation framework released in parallel with the regulations, which replace the current supply chain plan process for offshore wind and floating offshore wind. I commend the regulations to the Committee.
Amanda Solloway
I thank the hon. Members for Southampton, Test and for Angus for their contributions. I will endeavour to answer the questions as fully as possible, but if I fail to answer them all, I am incredibly happy to have further meetings on the subject, as suggested, although this issue is not in my portfolio.
All companies need to meet a minimum standard of investment before they bid into the CfD, so there is a level playing field for everybody. Companies will know if they have been allocated an SIR before they bid in. If they fail to get a CfD, their budget will be reallocated to those who were successful. As I have indicated, however, if I have not fully understood the question, I am happy to clarify further.
On the point raised by the hon. Member for Angus, the UK does not manufacture all the components required to build a wind farm. We do not expect to make everything, and it would not be legal to mandate UK content. Where investment goes beyond the UK, we want that to go to cleaner, net zero-consistent firms that support our net zero commitments.
The contracts for difference are a key pillar for our energy security, but they need to adapt to changing market conditions. We are determined to make offshore wind deployment a success story and we are willing to take innovative steps to make that happen. Sustainable industry rewards have been deployed with industry input. They will provide much-needed support to an industry that has faced a tough economic environment and supply chain disruptions.
That support should trigger significant investment in expanding the supply chain’s capacity and capability in many deprived coastal areas around the UK and in new, cleaner manufacturing processes. The investment will help to deliver our levelling-up agenda and will positively impact communities that host large infrastructure projects by providing new, well-paid, high-tech manufacturing jobs, as well as by maintaining existing jobs. New offshore wind manufacturers from Britain and overseas are already looking at the UK, thanks to our package of supportive measures. It is true that the measures will have an impact on consumer bills, and we are talking to the Treasury to get the balance right between what realistic sustainable industry rewards can achieve, through targeted revenue support to get investment in the supply chain back on track, and the cost to the consumers.
These measures will also put us on an equal footing with our direct competitors in the EU and the US, who are investing heavily in their offshore wind supply chains. Considering how much deployment and potential we have, it is only right to try to attract and support as much of the supply chain as possible. It is key, though, that we provide the support in a targeted, proportionate way.
As many hon. Members will know, allocation round 6 of the CfDs is now live. The budget for allocation round 6 was announced as part of the Chancellor’s spring Budget. At over £1 billion, it is four times larger than for the previous round.
Dr Whitehead
The Minister is giving a good response to this afternoon’s debate, but I do not think that she addressed the detail of the particular point that I raised. It is not a question of reallocating CfDs but of how we go about a competitive allocation round if we have people in different circumstances, albeit with an SIR, leading up to that allocation round. I would appreciate an opportunity—outside this Committee, if possible— to get to the bottom of that particular problem.
Amanda Solloway
I would, of course, be delighted to facilitate that, either with me or the relevant Minister.
Although that budget does not include the SIRs, it is none the less a crucial step in our renewable energy deployment plans and demonstrates the Government’s commitment to ensuring that the UK remains one of the world’s leaders in renewables. The Secretary of State will decide in due course whether to increase the budget later this year. I commend the regulations to the House.
Household Energy Debt
Amanda Solloway Excerpts(8 months ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
It is a great pleasure to serve under your chairmanship, Sir George.
I thank the hon. Member for East Lothian (Kenny MacAskill) for securing this debate on such an important issue, which I care deeply about. He mentioned what it is like to live in fuel poverty. I assure him that I personally understand exactly what that is like, having known the difficulty as a child of using something as simple as a washing machine, and latterly having a mother with chronic obstructive pulmonary disease and having to make decisions about using oxygen. I reiterate that I fully understand the situation that we are talking about, which is why I take this matter incredibly seriously as the Minister for Affordability.
As the hon. Member for East Lothian pointed out, levels of consumer energy debt have risen in recent years, which the Government recognise as an important and growing problem. Energy debt can harm consumers in several ways. It can encourage them to self-ration energy, leading to cold or damp homes, or cause households to cut back in other ways. The Government expect suppliers to do all they can to support customers in debt, particularly vulnerable customers. I encourage anyone who is concerned about keeping up with bills to contact their supplier. They should also contact organisations such as Citizens Advice, which may be able to provide support.
Last year, I met energy suppliers to outline our expectation that they do all they can to support those in debt and to help other consumers avoid falling into debt. I also meet regularly with stakeholders such as Citizens Advice to discuss how we can work together to best support consumers. I welcome Ofgem’s ongoing call for input on affordability and debt. For the reasons that the hon. Member for East Lothian set out, it is right that Ofgem takes a detailed look at the issue. I look forward to understanding its next steps to ensure that consumers can be better protected and that the debt burden does not leave us in an unsustainable position.
Despite high levels of consumer debt, energy prices have fallen significantly since last year. The price cap has fallen by nearly 60% since it peaked last year, including by £238 in April. Over the last two years, the Government have demonstrated a commitment to supporting vulnerable people with one of the largest support packages in Europe. Taken together, the total support provided between 2022 and 2025 to help house- holds with the cost of living will be worth more than £108 billion—an average of £3,800 per UK household.
Millions of vulnerable households have received up to £900 in further cost of living payments, with an extra £150 to those eligible for disability benefits. These payments are in addition to the established financial support available to low-income and vulnerable households through the winter fuel payment and the cold weather payment, which provides £25 during very cold weather. An extra cost of living payment of up to £300 was paid to pensioners’ households through the winter fuel payment, while the Government continue to provide support through the warm home discount, which provides low-income households with a £150 rebate off their energy bill every winter.
Although the Government are doing a lot to help households, I am concerned that some customers remain in energy debt. Suppliers should do all they can to support these households and ensure that consumers do not fall into debt. Last year, Energy UK announced a voluntary debt commitment with 14 energy suppliers, which collectively committed to go above and beyond current licensing conditions to help households with energy bill debt over winter. Those energy suppliers committed to providing immediate assistance to those in debt, as well as arming people with knowledge and resources to empower them to manage bills more efficiently. However, this is an ongoing issue, and it is also important that suppliers provide quality customer service to support consumers before they fall into debt, and quickly help those who are already in debt.
The hon. Member for East Lothian raised the issue of prepayment meters, which, of course, can be a useful tool for some consumers and their energy suppliers to manage their debt. It is important, however, that the rules around their use are sufficient to protect consumers and are enforced properly. Involuntary installations should be used only as a very last resort. Ofgem has strengthened its licensing conditions for suppliers to conduct involuntary prepayment meter installations, with exemptions in place for households with vulnerable individuals, such as people who are 75 or older.
The hon. Gentleman’s constituents will also have been in contact about standing charges, which, as he will know, remain a matter for Ofgem. Ofgem launched a call for input on standing charges, which ended in January and received just over 30,000 individual responses. It looks at how standing charges are applied to energy bills, and at the alternatives that can be considered. Ofgem is currently analysing those responses and will publish its response in due course. In March, the Secretary of State and I wrote to Ofgem to outline the Government’s expectation that standing charges should be kept as low as possible, or reformed if necessary, to make them fairer for consumers.
The Government have already committed to further support for households. In the autumn statement, we announced the biggest increase in the national living wage, which is worth around £1,800 for a full-time worker and will benefit around 2.7 million workers. We also announced the next generation of welfare reforms, with benefit payments increasing by 6.7% and pensions by 8.5%. In the spring Budget, we also cut national insurance by a further 2%, meaning that someone on an average wage has the lowest personal effective tax rate since 1975. We have also extended the household support fund until September 2024, with an additional £500 million in funding, and we have been working across Government and with Ofgem and suppliers to better identify customers who are getting into problem debt and to ensure that households are properly supported. I understand that this is a complex matter, and one that is very important to the hon. Gentleman.
Kenny MacAskill
Would the Minister clarify whether there is an element in an individual’s bill that is factored in by Ofgem that relates to the debt servicing of suppliers?
Amanda Solloway
The hon. Gentleman makes a good point. He will know that there was an announcement of a one-off price cap adjustment of £28 per household for direct debit and standard credit customers. As I mentioned earlier, we are looking at the standard charges system as a whole and whether it should be reformed.
I am happy to meet the hon. Gentleman. I am always very keen to meet hon. Members across parties, to work across Departments—for example, with the Department for Work and Pensions—and to meet stakeholders, because we can only really tackle this issue together. To reiterate, we must remember that we are talking about individual people and their individual lives, so I am incredibly happy to meet and discuss it further.
This is a complex matter, which is important to the hon. Member for East Lothian and other hon. Members. I hope that I have provided some reassurance about the action that is being taken by the Government, Ofgem and suppliers to help all consumers. I give my assurance that, as the Minister for Energy Consumers and Affordability, it is uppermost in my mind that we should never be making vulnerable people more vulnerable. I thank the hon. Member for East Lothian again for bringing forward this debate.
Question put and agreed to.
Oral Answers to Questions
Amanda Solloway Excerpts(8 months, 1 week ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
As previously stated, fuel poverty is devolved. Statistics for England estimate that there were 3.17 million households in fuel poverty in 2023, over 1.5 million fewer than in 2010.
Mary Glindon
April’s new price cap will see 6 million households across the UK in fuel poverty and National Energy Action estimates this figure will include 8,800 households in North Tyneside alone. The Government promised their household upgrading scheme would help 100,000 households but in nine months it has helped fewer than 5,000 and only 15 in my constituency. Can the Minister account for the abysmal failure of the flagship policy?
Amanda Solloway
I stand by the Government’s record of support on fuel poverty: we have helped with affordability and with insulation and energy efficiency. We have given unprecedented support to 350,000 households, who were kept out of fuel poverty at the energy peak in 2022.
Ian Lavery
Electricity standing charges for people in the north-east are 71.2p per day while those in the south pay 40.79p per day. Can the Minister explain why the people in the north-east, the area experiencing the highest levels of fuel poverty in the country, are paying 75% more than those in other regions simply for the privilege of being connected to the grid?
Amanda Solloway
The hon. Gentleman makes a reasonable point on standing charges, which is one reason why we have urged Ofgem to gather information on them. We have had over 30,000 responses and will be looking at this in due course.
Dominic Raab (Esher and Walton) (Con)
In the Office for National Statistics and House of Commons data, fuel poverty in England was 13.5% back in 1996. It rose to 22% by 2010 and, as has already been mentioned, it fell back to 13% in 2023. Does the Minister agree that that shows that Conservatives deliver energy policy with environmental and economic good sense and have done a lot better than the last Labour Government?
Amanda Solloway
As I said, we are incredibly proud of our record on heading towards net zero and ensuring energy security so that never to have to go through the cost of living crisis that we have recently gone through.
Richard Fuller (North East Bedfordshire) (Con)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
The Government offer grants of £7,500 to those wanting to install a heat pump, or £5,000 to install a biomass boiler, under the boiler upgrade scheme. Support for energy efficiency upgrades and low-carbon heat is also available through our help to heat schemes.
Steve Double
Cornwall has a very large number of off-grid properties. One way they can decarbonise their heating is through the use of renewable liquid heating fuel. Last year, the Government said there would be a consultation on promoting and supporting the use of that fuel in the coming months. However, in response to a recent written question it was suggested that it would not be launched until at least September this year. Will the Government bring forward the consultation as soon as possible, so we can help people to decarbonise through the use of renewable fuels?
Amanda Solloway
The Government recognise the potential for renewable liquid fuels to play a role in decarbonising heat where heat pumps are unsuitable, and we are working at pace to develop a consultation that will explore that role in more detail. We will be issuing a consultation in September, in line with commitments made by Ministers during parliamentary debates on the Energy Act 2023.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
I support the cause of the hon. Member for St Austell and Newquay (Steve Double). The transition to hydrotreated vegetable oil is far cheaper than heat pumps; we are talking about a conversion that be done in an hour for about £500. I urge the Government to proceed on that with haste.
Amanda Solloway
It is important to note that we are taking this matter incredibly seriously. We are also providing funding to tackle fuel poverty and reduce carbon emissions through the energy company obligation, the home upgrade grant and the social housing decarbonisation fund.
Chris Clarkson (Heywood and Middleton) (Con)
Dr Luke Evans (Bosworth) (Con)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
We will publish the Government’s response to the recent Pumpwatch consultation as soon as possible, and we continue to work closely with the Competition and Markets Authority, and the sector technology companies, to launch Pumpwatch this year. Of course, my hon. Friend makes an incredibly important point that, when we launch this, we will of course make sure that everybody knows about this valuable resource.
Simon Jupp (East Devon) (Con)
Amanda Solloway
The initial phase of heat network regulation, including transparency rules, will come into force in 2025. Some requirements, such as pricing regulation and guaranteed performance standards, require more market data and will be introduced in the second-phase regulation in 2026.
Helen Morgan (North Shropshire) (LD)
Amanda Solloway
I could not agree more that these pubs are at the heart of our communities, which is one reason why I have regular meetings with UKHospitality to think about how we can look at bills, including things such as blend and extend.
Virginia Crosbie (Ynys Môn) (Con)
On Ynys Môn, companies such as Mona Lifting in Llangefni, supported by the Green Digital Academy, which has been funded by £2.7 million from the community renewal fund, are working hard to use their businesses to help to deliver net zero with the installation of solar panels and charging points. Does the Minister agree that it is thanks to the UK Government that innovative, forward-thinking companies such as Mona Lifting are leading the way so we can deliver net zero?
Stephen Morgan (Portsmouth South) (Lab)
Amanda Solloway
Clearly this is an issue that concerns us in the Government, which is why we are striving to do everything that we can to make sure that we are solving the issue.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Forty per cent. of properties in this country do not even have an energy performance certificate, and of those that do in the private rented sector, and in the private ownership sector, only 30% are EPC C rated. Last year, we made an improvement of only 1% on this. EPC C is the standard, so when does the Minister expect that we will ever get to 100% EPC C in our housing stock, and what are the Government doing to increase the speed of the process?
Amanda Solloway
The pace of delivery of the Great British insulation scheme is accelerating quickly, with the rate of delivery doubling over the past three months. We have a proud record on energy efficiency. In 2010, we inherited a situation in which only 14% of homes were well insulated, but now we have that figure up to nearly 50%.
Cavity Wall Insulation
Amanda Solloway Excerpts(8 months, 3 weeks ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
It is the greatest of pleasures to be here under your Chairmanship, Mrs Latham. I thank the hon. Member for Halifax (Holly Lynch) for raising this incredibly important debate, and all hon. Members who have partaken in it and shared some heart-moving stories. It is dreadful for consumers to be in the situation described in those stories and I have every sympathy for the people affected. All Members who have spoken have made their points incredibly well. We need to remember the impact this situation has on people’s lives, which has been portrayed very clearly.
As the hon. Members for Tiverton and Honiton (Richard Foord) and for Southampton, Test (Dr Whitehead) have stated, insulating homes properly is one of the most impactful and cost-effective things we can do, which is why we have a number of schemes ongoing to install cavity wall insulation.
As the hon. Member for Halifax has said, the Solicitors Regulation Authority is already working with the Financial Conduct Authority and the Royal Institution of Chartered Surveyors to look into the conduct of the firm in question, but these bodies are independent of Government and it would be inappropriate for my Department or the Ministry of Justice to intervene.
The Ministry of Justice, as the Department responsible for legal services regulation, will continue to closely engage with the SRA and Legal Services Board to understand the action being taken and the timeframes for investigation. However, I am concerned to hear from the hon. Member for Halifax and the hon. Member for Blackburn (Kate Hollern) about how companies such as SSB Law may have targeted people. We will ask the SRA, as part of their ongoing investigation, to consider how SSB Law were able to do that. I also acknowledge the points raised by the hon. Members for Bradford East (Imran Hussain) and for Southampton, Test on this subject.
I do not want to see this issue passed around like a football, because this is an urgent matter for the households impacted. I therefore guarantee that I will be writing to the Ministry of Justice, asking them to encourage the SRA to accelerate the investigation for affected homeowners, as they deserve to have this matter addressed swiftly.
Imran Hussain
While the Minister is writing to the Ministry of Justice, can she please kindly request that her colleagues there respond to the letters from MPs and organise an urgent meeting?
Amanda Solloway
I thank the hon. Member for the intervention. Of course, I will pass on those remarks.
I encourage Members to write to the Department for Energy Security and Net Zero about specific cases. If there is a guarantee in place, my officials will engage with the guarantee agency to see if there is anything that we can do about that particular situation.
The range of Government-backed schemes to install cavity wall insulation are ongoing and lessons have been learned from the complaints that we are discussing today. These complaints, thankfully, are not representative of the experiences of thousands who have used our existing schemes. As I said earlier, in certain circumstances in suitable properties, cavity wall insulation is one of the most cost-effective measures for energy saving. For a relatively small outlay in costs, we know that cavity wall insulation, which costs between £1,000 and £3,000, can save homeowners up to £300 a year.
The hon. Member for Halifax is aware that the Government have made improvements to installation standards as a result of earlier findings. I will summarise the changes we have made, because any response to the problem must include preventing it from happening again. That is why the energy efficiency measures installed under all current Government schemes must be in line with industry best standards established by the British Standards Institution. All installers must be certified to the publicly available specification 2030 standards for any energy efficiency measure that they carry out, including cavity wall insulation, and must demonstrate a high level of competence. The latest revision to the standards was published at the end of September 2023, so I can assure hon. Members that this is a live issue for us and that we continue to refine and improve.
The Department published guidance in October 2019 for consumers who suspect they may have had faulty cavity wall insulation installed in their homes. We urge consumers to follow the guidance to help them avoid becoming victims of fraudulent cavity wall insulation claims.
Outside of Government-funded schemes, I urge all consumers to check the certifications claimed by their installer and what protections or warranties installers can offer before going ahead with work. TrustMark is the Government-endorsed quality mark for retrofit, so its “find an installer” web search will be a good place to start for any consumer, whether the work is Government-funded or not.
As the Minister for Affordability and Skills, I am glad we are discussing this matter today because I think there is a double injustice. People who did the right thing by wanting to install insulation to lower their energy use have suffered from insulation that has failed. That emphasises why we are now required to use the PAS certificate and TrustMark-registered businesses in Government schemes.
A legal firm that was recovering the costs has now collapsed, leaving affected households wondering how this will finally be resolved. That is why I am grateful to the hon. Member for Halifax for bringing the cases in her constituency to my attention, as have other hon. Members. I encourage Members who were unable to attend today to write to the Department about specific cases. My officials will follow up with the relevant guarantee agency to ensure that all due process has been followed.
Draft Strategy and Policy Statement for Energy Policy in Great Britain
Amanda Solloway Excerpts(9 months ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
I beg to move,
That the Committee has considered the draft Strategy and Policy Statement for Energy Policy in Great Britain.
The past few years have brought unprecedented changes and uncertainty to Great Britain’s energy system, but we have remained resilient. Last year, we laid the foundations for an energy system fit for the future with the landmark Energy Act 2023, the largest piece of energy legislation in the United Kingdom in a generation, which is world-leading in legally mandating net zero. The changes in that Act, including the powers to establish a National Energy System Operator—NESO—and new duties for Ofgem, mean that now is the right time to reaffirm the Government’s strategic priorities and policy outcomes in this strategy and policy statement.
The Strategy and Policy Statement for Energy Policy in Great Britain is developed according to part of the Energy Act 2013. The SPS sets out in clear terms the Government’s strategic priorities and other main considerations for energy policy, the policy outcomes to be achieved, and the roles and responsibilities of persons involved in implementing that policy. The Secretary of State, Ofgem and the National Energy System Operator —a new independent public corporation responsible for planning Britain’s electricity and gas networks and operating the electricity system—will be required to have regard to the strategic priorities set out in the SPS.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Can the Minister give us a timescale for when NESO will be operational as an independent body, in the way envisaged by the Government?
Amanda Solloway
I will come on to that in a moment.
The Secretary of State and Ofgem must also have regard for the policy outcomes contained within the SPS, and both parties must carry out their respective regulatory functions in the manner which they consider best calculated to further the delivery of the policy outcomes.
NESO is expected to be established this year. The SPS serves an additional purpose of setting out and clarifying the roles and responsibilities of NESO alongside Ofgem and the Government. The SPS is intended to provide guidance to the energy sector on the actions and decisions that are needed to deliver the Government’s policy goals, and places emphasis on where the Government expect a shift in the energy industry’s strategic direction.
As the independent energy regulator for Great Britain, Ofgem cannot be directed by the Government on how it should make decisions. Similarly, NESO is being set out to be operationally independent and free from day-to-day Government control. However, the SPS will provide guiding principles for Ofgem and NESO when it is established. The strategic priorities and policy outcomes within the SPS do not include the creation of any new policies or duties.
Theresa Villiers (Chipping Barnet) (Con)
I would be very interested to hear how the SPS will focus on the switch to renewables. That seems to have been one of the big successes under the current Government, with the proportion of our electricity generated from renewables somewhere near 40%. Obviously, we want that progress to continue.
Amanda Solloway
Absolutely. That is the very reason we are doing this—to make sure that we achieve our net zero targets.
The statement will support strategic alignment between the Government, Ofgem, NESO and the industry, by making clear what the Government want to achieve in the energy sector. The legal framework of the Energy Act 2013 requires that Ofgem, NESO and the Secretary of State all have a duty to have regard to the strategic priorities within the SPS.
Ofgem must publish a strategy showing how it will further deliver the policy outcomes and its annual report must assess its contribution to deliver those outcomes. The SPS also acts as a tool to promote alignment between Government, Ofgem, NESO and industry. As per the Energy Act 2013, the SPS has completed two consultations. The first was undertaken with Ofgem and the Welsh and Scottish Governments, and the Government worked with all parties to make sure views were correctly captured before moving on to the second public consultation, which was held last summer.
Alan Brown
I refer the Minister to the 16th report of the Secondary Legislation Scrutiny Committee, which was published earlier this month on 7 March. It details the fact that there was consultation with Scottish and Welsh Ministers, as the Minister said. However, additional information provided by her Department makes it clear that the Welsh Government asked for the Welsh net zero targets to be included in the SPS, and that the Scottish Government asked for the same for the Scottish net zero targets and also for the networks section to be strengthened. According to her Department, information was added to the introduction for the Welsh and Scottish net zero targets, but I cannot find it in the introduction. I wonder if the Minister could provide clarity on where that was included in the documents.
Amanda Solloway
I will have a look at that information and see if we can get that to the hon. Member if it is not included.
The feedback throughout both consultations was generally positive, and stakeholders were keen to see the SPS implemented to give guidance to the sector on the roles of Ofgem, NESO and the Secretary of State in delivering the Government’s priorities for the energy sector. Since the consultation was concluded, officials have worked through feedback and, where appropriate, used that to inform the current iteration of the SPS before us. The Government are confident that this SPS reflects the right strategic priorities and policy outcomes for energy policy for the whole of Great Britain. The SPS reaffirms the Government’s commitments and priorities for the energy sector and, in doing so, acts as a tool to support strategic alignment between Government, Ofgem, NESO and industry. I commend this draft statutory statement to the Committee.
Amanda Solloway
I thank all right hon. and hon. Members for what have been, in all cases, heartfelt contributions. I also thank them for their scrutiny of the draft of the document. Some of the issues in hand fall outside my portfolio but within the Department. If there is anything I am unable to answer in this speech, I will respond in more detail to right hon. and hon. Members in writing.
I am confident that the strategic prices and policy outcomes in the SPS clearly establish what the Government are trying to achieve in the sector and why that is important. It demonstrates how smaller policy outcomes contribute to broader priorities, so stakeholders can be reassured about how their role fits into the bigger picture. I also hope the SPS sets out a clear description of the roles, responsibilities and remit of Government, Ofgem and particularly NESO in delivering the objectives. We have tried to provide enough information on NESO’s remit to give confidence in its role when established, while also recognising that its responsibilities will evolve over time.
As well as reaffirming our ambitions, the SPS will give encouragement to Ofgem to utilise the full range of its powers to ensure that those ambitions are realised, and that stability and confidence are restored across the sector. I am pleased that most right hon. and hon. Members welcome the SPS. I want to go into further detail in response to some of the questions posed today.
The hon. Member for Kilmarnock and Loudoun asked when NESO would be operational. Our aim is for it to be operational later this year, depending on a few factors, including agreeing timelines with key parties. We continue to work closely with National Grid plc, National Gas and other stakeholders to enable efficient transition while maintaining the safety and ability of the operation of the energy systems.
In response to the hon. Member’s question on Scotland’s net zero targets, I should say that the SPS notes that Scotland and Wales have established their own net zero targets. Then, on a further point, Ofgem is established as a non-ministerial Government Department so, like other Government Departments, it is accountable to Parliament. I will write to the hon. Member if I have failed to address any other queries.
Alan Brown
I would just like a wee bit more detail on what “accountable to Parliament” really means and what that looks like overall, in terms of Ofgem and its responsibilities.
Amanda Solloway
The hon. Member will understand the parliamentary protocol around how regulatory bodies operate. Ofgem is set up as a Government body. On the scrutiny, he will know that a Select Committee, for example, would be able to talk to Ofgem.
My right hon. Friend the Member for Chipping Barnet asked how the SPS will focus on the switch to renewables. The SPS is clear that driving a net zero transition by achieving Government targets for renewable and low-carbon deployment is a strategic priority for Government.
I turn to the questions from the hon. Member for Southampton, Test. NESO will take time to reach full maturity as a new organisation, so we have kept references to NESO at a high level in the SPS. NESO is being brought into existence and its roles are still in development, including spatial energy and regional system planning. We instead plan to reflect how best to cover NESO in its substantive role once it is established. The Government have the power to review and revise the SPS in preparation for or in connection with NESO’s designation and will therefore consider the future when it is appropriate to do so.
I thank my right hon. Friend the Member for Suffolk Coastal (Dr Coffey) for our previous conversations on what I know is an important issue. The SPS does not create new policy, but reaffirms Government’s existing priorities and sets out the roles of Government, Ofgem and NESO in delivering them. It is Ofgem’s role as the independent regulator, and NESO’s role as an independent system operator and planner, to decide how to go about achieving strategic priorities contained within the SPS. Their approach should be balanced in line with their duties.
In total, we received 140 unique responses to the SPS public consultation. The document summarising the responses, which was laid in the House alongside the SPS, details how we responded to that feedback. The SPS was cleared by the Home Affairs Committee and the parliamentary business committee before it was laid in Parliament on 21 February, and it is not a national policy statement for energy. The national policy statement for energy was published on 22 November 2023 and came into force on 17 January 2024.
With regard to the strategic spatial energy plan, we believe NESO has a key role to play in strategic planning for the energy system. The expertise of an independent NESO will be invaluable in creating the SSEP, but it is important that the plan is underpinned by proper democratic accountability. It will be produced through close working between the UK Government, the ESO, NESO—once established—and Ofgem. We will set out the full and clear expectations on governance and arrangements for each stage of the process in our commission to NESO.
Ultimately, we anticipate that the SSEP will cover the whole energy system, land and sea, across Great Britain. However, producing a comprehensive, multi-vector plan that effectively meets our future energy needs will naturally take time to get right. We are therefore commissioning the ESO, ahead of becoming NESO, to produce the first iteration of the SSEP, covering infrastructure for electricity generation and storage, including relevant hydrogen assets. That will foster a more efficient electric system design, promoting anticipatory network investments to enable the reduction of the waiting times for generation and storage projects to connect to the grid.
We also recognise the importance of protecting our environment and will ensure that any decisions on scale and location of infrastructure consider possible effects on the environment. The SSEP will go through an onshore and offshore strategic environmental assessment or an equivalent assessment under the environment outcomes report system, once it is in force. We also intend the SSEP to carry out a plan-level habitats regulations assessment. Planning policy will continue to take full account of legislation to protect the environment and habitats. As I said earlier, I will write to my right hon. Friend on other points she has raised.
In response to my hon. Friend the Member for Kettering, given Ofgem’s new roles, legislated for in the Energy Act 2023, and the establishment of NESO, now is the right time to publish the SPS. The SPS will give further guidance to the energy sector and support strategic alignment between Government, Ofgem, NESO and industry by reaffirming our priorities and commitments. Ofgem and NESO have a statutory duty to have regard for strategic priorities set out in the SPS, which makes it different from previous Government strategies.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Strategy and Policy Statement for Energy Policy in Great Britain.
North Lincolnshire Green Energy Park: Development Consent Application
Amanda Solloway Excerpts(9 months, 1 week ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
This statement concerns an application for development consent made under the Planning Act 2008 by North Lincolnshire Green Energy Park Ltd for development consent for the construction and operation of a combined heat and power-enabled energy generating development, with an electrical output of up to 95 megawatts (MWe), incorporating carbon capture, associated district heat and private wire networks, hydrogen production, ash treatment, and other associated developments on land at Flixborough Industrial Estate, Scunthorpe.
Under section 107(1) of the Planning Act 2008, the Secretary of State must make a decision on an application within three months of the receipt of the examining authority’s report unless exercising the power under section 107(3) of the Act to set a new deadline. Where a new deadline is set, the Secretary of State must make a statement to Parliament to announce it. The current statutory deadline for the decision on the North Lincolnshire Green Energy Park application is 15 March 2024.
I have decided to set a new deadline of no later than 10 May 2024 for deciding this application. This is to ensure there is sufficient time for the Department to conclude its assessment of the additional information that has been supplied through consultation.
The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent.
[HCWS337]
Energy Rebates: Highlands and Islands
Amanda Solloway Excerpts(9 months, 2 weeks ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
It is a great pleasure to serve under your chairmanship, Mr Paisley. I thank the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) for securing this incredibly important debate, and I thank other hon. Members for attending. Although we are a small group, they have made their cases very powerfully.
I will go through the main issues one by one. Standing charges have been the thread running through the debate. The hon. Member made a powerful point about how standing charges for residents of the highlands and islands are too high. As hon. Members will probably know, the setting of standing charges associated with each tariff is a commercial matter for suppliers, which have flexibility to structure tariffs. However, Ofgem has launched a call for input on standing charges, which closed in January and has so far received more than 40,000 responses. We are looking at how standing charges are applied to energy bills and at what alternatives should be considered. Ofgem is currently analysing the responses and will publish in due course.
It should be noted that suppliers can offer low or no standing charges. As wholesale energy prices are coming down, competition is coming back to the market and consumers are able to access different tariffs.
Once the findings have all been put together, I am very happy to get together to further discuss how we can use them. I recognise that the price of standing charges for highland and island households is an important issue for all hon. Members, and it would be useful to discuss that in more depth on an ongoing basis. The importance of discussing these matters with Ofgem was mentioned earlier; I assure all hon. Members that I have been putting pressure on Ofgem to address all these important issues.
Drew Hendry
The Minister is always very thoughtful and considerate about these issues, and she wants feedback, but people in the highlands and islands need action. I think I am hearing from her that she agrees with the principle that it is fundamentally wrong that people in the highlands and islands are paying more in this way. Is that indeed what she is saying? Is she determined to address that injustice and to get something done about it with Ofgem?
Amanda Solloway
The point I am making is that we are looking at the standing charges, which are the one thread that has run through everybody’s speeches and comments today. We need to ensure that the standing charges are fair. We do not know what the findings will be, but I suspect that among the 40,000 responses— I think it is probably nearer to 44,000—there will be a lot to take into account, including looking at how we adjust the standing charges.
Ian Blackford
I say respectfully to the Minister that this is about fairness, and it is about what should be a universal market. We cannot have people being penalised to this extent. It is simply a matter of the Government saying to Ofgem that this is not right. There should be a universal market; people should not be penalised on the basis of where they live. It is a simple question, and the Government ought to provide leadership.
Amanda Solloway
To give assurance again, that is exactly what I am saying: I have been tasking Ofgem with looking at the issue. We are waiting for the consultation results to come through.
Amanda Solloway
Once we have all the responses and have looked at them, I will be very happy to welcome views on the findings.
I turn to transmission and distribution charges. Electricity network charges are the costs that users pay to connect to and use the electricity network. These are charged to suppliers and generators, so eventually the costs are passed on to consumers in their energy bills, some of which is reflected in their standing charges.
As an independent regulator, Ofgem is responsible for setting the electricity network charging methodology. Government officials are working closely with the regulator to understand these charges. Electricity network charges must be cost-reflective, so that those who pay them are charged in a way that reflects the cost that they are placing on the network.
Transmission charges are based on the costs that different users impose on transmission by connecting in different locations. That means that there are higher charges for those whose use of the network results in longer distances of electricity transmission. As hon. Members will know, Scotland is a net exporter of electricity, so transmission costs for Scottish consumers are lower than those for their counterparts in England and Wales.
Mr Carmichael
The Minister describes locational charging. That made a degree of sense in the days of generating electricity from hydrocarbons, because there was an element of transmission loss, so we wanted to encourage transmission closer to the point of consumption. As we move to renewables, that argument simply no longer stands, because we are not wasting a non-renewable resource in order to generate and then transmit electricity. Why has the approach not been changed?
Amanda Solloway
I thank the right hon. Member for his intervention. These are the kinds of things that we are working through as we respond to the net zero challenge.
Hon. Members have quite rightly talked about the geographical challenges of electricity supply in northern Scotland, such as the area’s size, poor weather conditions, sparse population, mountainous terrain and the need to supply multiple islands. Inevitably, these challenges mean that the costs of distribution are much higher than for other regions in Great Britain. Hon. Members have made that point very clearly.
I also acknowledge that the highlands and islands produce high levels of renewable electricity, although that does not remove the challenges of distribution. We will be looking at that issue.
The hydro benefit replacement scheme provides annual assistance of about £112 million to reduce distribution charges for domestic and non-domestic consumers in the region. That equates to a reduction of about £60 annually per household.
Drew Hendry
The Minister knows what I am going to say: with the bills that we are talking about, the £60 that she is talking about does not touch the sides for the people affected. I know she knows that, because I have said it to her before. What we need is an overhaul. We need a rebate that actually makes sense to people and has an impact on their bills. That is exactly what this debate is about: getting a highland energy rebate. If the Government want to use the scheme as a basis for doing so, that may be workable. I hope that the Minister will take that point away. Every little helps in a way, but the scheme really does not touch the sides for the people who are suffering this injustice.
Amanda Solloway
The hon. Gentleman is right. He has made that point clearly on several occasions, and I am prepared to discuss more fully the highland energy rebate paper that I have been sent.
I turn to energy prices and support. Despite the rise in standing charges, energy prices have fallen significantly since the winter of 2022-23. The 2024 quarter 2 price cap of £1,690 is 60% lower than the 2023 quarter 1 price cap peak. It is important to note that the Government reacted quickly to support households last winter. About £40 billion was delivered to support households and businesses, an average of £1,500 per household between October 2022 and June 2023. We delivered £40 billion to support households and businesses last winter, with a typical household receiving £1,500 in support between October 2022 and June 2023. Many highlands and islands households off the gas grid also benefited from the £200 alternative fuel payment schemes.
Despite the fall in energy prices since the winter of 2022-23, the Government have continued to support households. We are delivering a package of support worth £104 billion—an average of £3,700 per household—between 2022 and 2025.
Debt is an incredibly important challenge at the moment. Although we are doing a lot to help households, we know that some have fallen into energy debt. We want to support them to ensure that consumers do not fall into further debt. Last year, Energy UK announced a voluntary debt commitment: 14 energy suppliers announced their collective commitment to go above and beyond the current licensing conditions to help households with their energy bill debt. Those energy suppliers will aim to provide immediate assistance to those in debt and will arm people with knowledge and resources to empower them to manage their bills more effectively. For assurance, I regularly meet stakeholders such as Citizens Advice to discuss what can be done to address consumer debt. I welcome further input from hon. Members on the issue.
Kerry McCarthy
This week, I met some academics who are doing some research into debt levels. As I understand it, the average is about £1,000 per household, but I do not know the extent to which some people are in only £100 or £200 of debt and others are in five-figure debt. Do the Government have analysis of that? Does the Minister have figures she could share with me or put in the House of Commons Library?
Amanda Solloway
It is important that we consider the different levels of debt. It is quite complicated to get those figures because the suppliers have them, but I have pushed to see whether we can get a flavour of them. One of the things that I would advise households struggling with their bills to do is to speak to their supplier before going into debt, to receive help and support as soon as possible.
We have talked about prepayment metres, which can be a useful tool for consumers to manage their budgets and for energy suppliers to manage debt. However, it is important that the rules around their use are sufficient to protect consumers and are properly enforced. Involuntary installations should be used only as a last resort. Ofgem has strengthened its licence conditions for suppliers to conduct involuntary prepayment metre installations with exemptions in place for households with vulnerable individuals, such as those with people over 75 or children under the age of two.
The Government have already committed to supporting households past April 2024. Though I obviously cannot comment on today’s Budget, in the autumn statement we announced the biggest increase to the living wage and an increase to benefits of 6.7%. Earlier this year, we also cut national insurance for 27 million people, worth £450 for the average worker. As hon. Members have noted, in the autumn statement we also committed to giving communities living nearest to electricity transmission infrastructure up to £1,000 off their electricity bills for the next 10 years. That will apply across England, Wales and Scotland, including the highlands and islands, and they may be able to benefit from the scheme. We will also publish guidance this year on the wider benefits for local projects and provide an update on the electricity bill discount scheme.
As hon. Members have mentioned, many households in the highlands and islands are off the gas grid, which means they rely more on electricity. I also understand that many highlands and islands residents will use more energy and subsequently pay more for their energy bills due to the inclement weather, colder temperatures and poor insulation, but also due to having older and larger properties, which are harder to heat. To address that, the Government have already introduced several domestic energy efficiency schemes for all households in Great Britain to help lower bills and reach net zero targets. As an example, the Great British insulation scheme is delivering low-cost and free insulation to the least efficient homes in lower council tax bands, including many vulnerable households. The scheme will run until March 2026 with a value of £1 billion.
Since it was launched in January 2013, the energy company obligation has delivered around 3.8 million measures in approximately 2.5 million homes. Across ECO schemes, around 31,600 measures have been delivered to 23,100 households in local authority areas in the Scottish highlands and islands since 2013. As hon. Members will know, fuel poverty is devolved, with the Scottish Government responsible for the matter in Scotland. However, the ECO and the Great British insulation scheme are delivering energy-efficient measures to the least efficient low-income homes in Scotland. We are currently reviewing the fuel poverty strategy for England and will engage with the devolved Administrations as part of the process.
I understand this is a complex matter and one that is important to all hon. Members here. I thank them for bringing it to the debate. I would be happy to meet people further to today’s discussion. Finally, I want to touch on lived experiences and the impact on health. Having been brought up in a household that was fuel-poor, I know what it is like. I know the impact that that can have on someone’s health, especially as my mum suffered with chronic obstructive pulmonary disease and we found it incredibly difficult to manage all those challenges. My commitment is therefore to do the very best I can to support all those energy-poor households.
Draft Energy Bills Discount Scheme (Amendment) Regulations 2024
Amanda Solloway Excerpts(9 months, 2 weeks ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
I beg to move,
That the Committee has considered the draft Energy Bills Discount Scheme (Amendment) Regulations 2024.
The Government responded decisively to the unprecedented rise in energy prices by delivering critical support to households and non-domestic energy consumers facing significant increases in their bills. More than £35 billion has been spent on supporting households via the energy price guarantee and the energy bill support scheme, and £8 billion is expected to be spent on non-domestic customers via the energy bill relief scheme and the energy bills discount scheme.
The energy bills discount scheme provides a discount on energy bills between 1 April 2023 and 31 March 2024 for those on non-domestic tariffs. It includes a higher level of support for heat suppliers with domestic customers, which reflects the fact that heat networks typically purchase their energy through commercial contracts and then sell it on to their domestic customers. That meant that heat network customers were not supported by the energy price guarantee as other domestic customers were.
The Energy Bills Discount Scheme Regulations 2023 require all heat suppliers that have eligible heat networks with domestic customers to apply for the higher EBDS heat network rate and then pass on to their customers the benefit that they receive. Without that support, domestic customers on heat networks would have been exposed to the full impact of high wholesale market prices. The support that we have provided through the EBDS regulations is estimated to be worth £180 million in total, and £1,200 for the average supported heat network customer.
Our intention in amending the EBDS regulations is to provide a finite window within which heat network operators can apply for EBDS support. The EBDS regulations allow rules to be made about the scheme, including rules about the time within which a heat supplier must comply with the duty to apply for the scheme. However, the duty to apply does not come to an end if heat suppliers fail to apply within the deadline imposed through the rules. The regulations and rules do not currently impose any end date to the requirement to make an application. The result is that a qualifying heat supplier that has failed to comply with the rules must still apply for support even after the end of the scheme, which means that the Government would retain a legal obligation to process applications indefinitely and would therefore need to maintain and pay for the administration of applications indefinitely.
The Department’s policy is to provide for an end date after which further applications cannot be made. The final date on which an application can be made is to be specified in rules, which will be made and published if the draft regulations are approved. The intention is for the deadline to be 31 March 2024, to align with the end of the period covered by the EBDS. The 31 March end date has been widely publicised to the sector.
There will be a limited exception to the 31 March deadline: a two-week limited extension for cases in which the duty to apply arises so close to the deadline that it would be unreasonable to expect a heat supplier to be capable of applying. Those heat suppliers would have until 14 April to apply.
The most important aspect is the impact of the scheme on the individuals and families who are facing pressures on their bills right now. It is right that we introduce the deadline to ensure that consumers receive the benefits of the scheme in a timely manner. It is also essential that support reaches as many people as possible, so my Department has conducted extensive engagement to encourage all eligible networks to apply.
It is important to note that the creation of the deadline via the rules will not close down routes for consumers to seek redress. Dispute resolution through the energy ombudsman remains open to customers beyond the deadline imposed by the amending regulations. Further-more, customers can pursue their claim in the civil courts if necessary.
In conclusion, the draft statutory instrument will amend the EBDS regulations so that the duty to apply for the support is a duty to apply before a deadline. It is an essential step towards ensuring that we support customers while taking measures to draw in public spending as pressures from energy prices ease. I commend it to the Committee.
Amanda Solloway
I thank the hon. Members for Southampton, Test and for Glasgow South West for their valuable contributions. As has been stated, this was an incredibly complex matter to work through. I give an assurance that customers have been at the heart of all that we endeavour to do.
The non-domestic point is not particularly related to this instrument, which is quite narrow. I can give an assurance that we are working with UKHospitality and other organisations to think about how we talk to suppliers about blend-and-extend contracts and about third-party intermediaries, but that is probably a matter for a different debate.
Through the EBDS, the Government have provided essential energy bill support to heat network customers to help to avoid unnecessary financial pressures during the energy crisis. To date, we have paid out £50 million in support and have approved nearly 12,000 applications to ensure that those who are exposed to volatile energy prices are supported.
The hon. Member for Southampton, Test asked whether we are considering support for customers on heat networks. He also raised an important point about customers getting a pass-through discount. Customers on heat networks are not protected by the same regulations as other domestic customers, so the Government are introducing a new regulation for heat networks. Alongside protections around service quality, it will give Ofgem powers to investigate and intervene on networks where prices for consumers appear to be unfair.
A scheme developed in haste, in response to the energy crisis, was never going to be perfect, but we have tried to ensure that as many people as possible have been reached. I am glad that through the scheme we have helped hundreds of thousands of people when they needed it most. We continue to target communications towards heat suppliers with vulnerable customers, including housing associations and local authorities. I have been keen to ensure that we use all available methods to reach out to as many consumers and customers as possible.
The Government are also helping with £6 billion of investment in energy efficiency improvements. It is expected that regulations will introduce back-billing rules for heat network providers, like those that already exist to protect gas and electricity customers. Our ambition is that consumer protections will be regulated from next year, with price regulation beginning in 2026.
The amendment that the draft regulations make to the EBDS regulations is necessary to ensure that the Government are not legally obliged to accept applications to the scheme indefinitely. It also balances our responsibility to limit the fiscal burden on the taxpayer.
From next year, we will have new consumer protections in place, provided through the Energy Act 2023. Regulations created via the Energy Act will give Ofgem powers to investigate and intervene on networks if prices for consumers appear to be unfair, or if prices are significantly higher than for comparable heating systems.
Once again, I commend the draft regulations to the Committee.
Question put and agreed to.