Renewables Obligation and Electricity Capacity (Amendment) (British Industrial Competitiveness Scheme Excluded Electricity) Regulations 2026

Earl Russell Excerpts

Wednesday 28th October 2026 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I am grateful for the opportunity to put a couple of questions to the Minister. I am also grateful to the Secondary Legislation Scrutiny Committee, which looked at this in a little detail. It gives a figure for the cost of energy per megawatt hour in Great Britain as £61, and compares that to the cost in France of only £2, if I have understood it correctly, and similarly only £10 in Germany. Curiously, we do not have the figures for the real beasts in the field, which are China, the US, Brazil and India. That would have been interesting.

My question relates to how this will be funded. The department said that cost reductions will be funded through a combination of Treasury funding and changes within the energy system, and that these changes include moving the annual adjustment for inflation under the renewables obligation scheme and the feed-in tariff schemes from the retail prices index to the consumer prices index; and, from April 2028, removing a tax on fossil fuels used in electricity generation. My concern is that, if we do not know what the rate of inflation is at any time, how will we know what the funds to cover this scheme are? With those few remarks, can the Minister satisfy me on that point of how this will be funded?

[Earl Russell (LD)]

My Lords, I thank the Minister for introducing these regulations. On these Benches, we recognise the impact that high energy costs are having on businesses and we welcome government measures to provide further support. These regulations implement the British industrial competitiveness scheme which, as the Minister said, is the successor to the British industry supercharger, by exempting eligible manufacturing businesses from the indirect costs of the renewables obligation and the capacity market that suppliers pass on through energy bills. They also allow the Secretary of State once, and before the end of March, to revise the renewables obligation level for 2027-28.

The need for these is clear. The Government’s own impact assessment puts the policy cost for very large industrial users in Great Britain at around £61 per megawatt-hour against £2 in France and £10 in Germany. No manufacturer can compete on those terms. We have long called for more to be done in this space, so we welcome this scheme and its breadth. The supercharger supports around 550 of the most electricity-intensive businesses. This scheme is expected to support more than 10,000 with savings of £35 to £40 per megawatt-hour from 2027. I also welcome the commitment that it will not raise the bills for those who are not eligible.

I have a couple of questions. On timing, I note that applications opened on 1 October and close at the end of play on 30 November. This leaves about five weeks to gather evidence and submit an application that, as I understand it, cannot be amended. What happens to a firm that either misses that deadline or makes an error in its application? Do they need to wait a full year or is there the opportunity to amend, or is a later window available to businesses? What actions are the Government taking to reach the thousands of manufacturers who may not even know that this scheme exists?

Obviously, with any cut-off some businesses are included and by definition some are excluded. Firms must be registered at Companies House, so sole traders and unregistered partnerships fall outside. A site must use at least 33 megawatt-hours a year, and the relief itself is tiered. Those tiers are quite sharp as well, so any firm that falls just below that tier could receive substantially less support. Eligibility also depends on lists of industrial and commodity codes, and that, again, produces edges.

On funding, I note, as has been said, that it comes partly from moving the inflation adjustment on the renewables obligation from RPI to CPI and removing the tax on fossil fuels in generation from April 2028.

Although we welcome this support, we want to be clear that this cannot be the whole answer in terms of government support to industry with energy costs. This is only supporting a small section of our economy. For example, the hospitality sector and small and medium-sized enterprises face the same costs and they sit outside this scheme. Particularly for hospitality and small businesses, the cost of energy is having a real impact on their trade and turnover.

Policy costs are only one part of the problem. Gas still sets the wholesale price at least 60% of the time. Until we build faster, connect the grid sooner, help with energy efficiency or have energy market reform, these problems will persist. Do the Government accept that electricity cost support must reach beyond these sectors, and what work is under way to support SMEs and the hospitality sector outside of this cap?

The support mechanism is also complex to apply for and complex to administer, so I encourage the Government to do more to automate this system, as they are doing with residential electricity costs, so that the better use of data by government can help provide that support.

This is a sensible and long-overdue step. We welcome this regulation but I hope the Government are intending to do more in this space to support industry with the cost of energy.

[Lord Blencathra (Con)]

My Lords, I too thank the Minister for introducing today’s amendment. His Majesty’s loyal Opposition welcome this measure, which expands the scheme introduced by the now leader of the Conservative Party when she was Business and Trade Secretary. The British industry supercharger was set up to promote the international competitiveness of Britain’s strategically important industries, exempting industries such as steel and chemicals from certain costs linked to renewable energy policies, including the renewables obligation and the capacity market.

The scheme currently supports roughly 550 businesses and over 500,000 skilled workers. This expanded British industrial competitiveness scheme could reach up to 14,000 businesses and several times more employees. That is a welcome development, not least because it shows that the Government agree with the Conservative Party that the renewables obligation and similar net-zero policies are holding back business and will be better off scrapped. As my noble friend Lord Fuller said, we do not need lots of fancy schemes; we just need to cut the electricity costs and—Bob’s your uncle—the rest falls into place.

Royal Mail

Earl Russell Excerpts

Monday 8th June 2026 Lords Chamber

[Lord Stockwood (Lab)]

I appreciate the comment on my hard work—it is now noted. I cannot agree with the noble Lord on that particular point. It is unfair to think about an individual tax application on the investment in this specific case. There is £500 million of committed capital from the new investor, EP Group, and that is a non-trivial undertaking that has been committed on an £8 billion business. At the moment, we are proud, as a Labour Government, that we are shoring up the fiscal rules and the economic prospects of this country, so that we can invest in the public services that we rightly believe we need to.

[Earl Russell (LD)]

My Lords, I want to ask the Minister about future access to Post Office counter services now contained in TGJones stores. What steps are the Government taking to ensure that those counters are not closed, particularly in deprived urban areas and rural areas, and are the Government considering requiring minimum coverage standards?

[Lord Stockwood (Lab)]

It is really important not to conflate Royal Mail delivery and the Post Office, but Ofcom is committed to the universal post offering and the targets, so I will have to write to the noble Lord on this particular question, because this was the extent of what I researched for this particular Answer.

British Industrial Competitiveness Scheme

Earl Russell Excerpts

Wednesday 22nd April 2026 Lords Chamber

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right that there are many thriving and growing businesses, industries and sectors in the country. Not all of those are going to be covered by the BICS. In the eligibility consultation that we put out before this confirmation, that was one of the questions that we consulted on. We expanded the scope, from the beginning to the end of the consultation, from what we thought was going to be about 7,000 businesses to 10,000 businesses. The focus of the scheme is on the strategic manufacturing sector supporting frontier industries, as the noble Lord mentioned, and foundational manufacturing industries. We are looking carefully at supply chains—for example, fertiliser availability and cost—as we monitor the impact of the current situation in the Middle East.

[Earl Russell (LD)]

My Lords, I thank the Minister for her response. I pick up on a point that my noble friend made as part of her formal response to the Statement in relation to the retail energy market. The Minister may need to go away and think about it, and that may well be the answer. Does the Minister admit that there is scope for further action to make sure that the retail energy market is more competitive and that SMEs are able to secure good energy deals, there is competition in that market and they have access to the ombudsman scheme?

[Baroness Lloyd of Effra (Lab)]

The noble Earl has raised the question again and he is right to draw my attention to the fact that I did not address it the first time round. This scheme will be subject to the Subsidy Control Act and the necessary declarations. That detail is set out in the consultation paper that we published. On his specific question about the CMA and the retail energy market, I will revert to him.

AI Growth Lab

Earl Russell Excerpts

Thursday 26th March 2026 Lords Chamber

[Baroness Lloyd of Effra (Lab)]

As the noble Viscount knows, we published our report and impact assessment on AI and copyright and we have outlined three or four specific areas we will be taking forward, including digital replicas, AI labelling and looking at mechanisms for creatives to control their works online. It is clear that we need to keep considering the approach and we have not as yet found a solution that will address all the concerns.

[Earl Russell (LD)]

My Lords, the Government have conspicuously rebranded their AI Safety Institute as the AI Security Institute and have been shifting their language from “safety” to “growth”. Can the Minister confirm that safety obligations will be among the regulatory red lines that can never be modified in the sandbox, and, if safety is genuinely protected, why are the Government so reluctant to bring forward safety duties in a proper AI Bill?

[Baroness Lloyd of Effra (Lab)]

There will indeed be safeguards built into the AI growth lab. Modification powers would operate with robust safeguards to protect fundamental rights and safety. The lab’s design must balance the need for rapid reform and, as both noble Lords have mentioned, the importance of retaining public trust and confidence in the UK’s high regulatory standards.

Built Environment Sector

Earl Russell Excerpts

Tuesday 28th October 2025 Lords Chamber

[Baroness Lloyd of Effra (Lab)]

I thank my noble friend for his active interest in this area. The nationally significant infrastructure projects regime is separate from other planning regimes and operates under different legislation. My noble friend will recognise that the Planning and Infrastructure Bill will speed up and streamline the delivery of new homes and critical infrastructure, supporting delivery of the Government’s plan for change milestones, building 1.5 million safe and decent homes in England, and fast-tracking 150 planning decisions for major economic infrastructure projects by the end of this Parliament.

[Earl Russell (LD)]

My Lords, we welcome this important report. It has highlighted the skills shortage of between 100,000 and 170,000 jobs needed annually to ensure that this sector continues to grow. As well as welcoming the Minister to her post, I ask her specifically what further actions the Government are taking to ensure that these skills gaps are filled, so that our economy can grow.

[Baroness Lloyd of Effra (Lab)]

The noble Earl makes an extremely important point. He will recall that, at the Spring Statement, the Government announced a £625 million package to boost construction skills. This aims to deliver up to 60,000 additional skilled workers and includes everything from foundation apprenticeships, the expansion of skills boot camps specially tailored for the construction industry and the establishment of construction technical excellence colleges. This will all be overseen by the Construction Skills Mission Board, which is a collaborative partnership.

Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2024

Earl Russell Excerpts

Tuesday 5th March 2024 Grand Committee

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

My Lords, as a matter of good practice, I refer the Committee to my interests. I do not believe that there is any conflict with these specific measures.

The Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2024, the Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024, the Energy-Intensive Industry Electricity Support Payments and Levy Regulations 2024 and the Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2024 were laid on 23 and 24 January this year. I acknowledge that the Joint Committee on Statutory Instruments provided a helpful review of these instruments and did not draw the special attention of this House or the other place to them. I also acknowledge that the Secondary Legislation Scrutiny Committee has reported these statutory instruments as instruments of interest to Members.

Together, these four instruments make up the British industry supercharger, which aims to support our most energy-intensive industries with the cost of electricity. Energy-intensive industries, known as EIIs, include important foundational manufacturing sectors such as steel and metals in Port Talbot, for example; chemical manufacturers; paper, glass, ceramics and so on. As foundation industries, these businesses are critical in the development of new projects including offshore wind. They therefore play an important role in the transition to net zero.

The British industry supercharger also provides relief for new and emerging industries such as battery manufacturers, which are critical to electric vehicles and manufacturers of semiconductors, which are critical to the high-tech economy. Due to their nature, these industries require significantly more electricity use than other sectors. As a result, they are disproportionately impacted by high electricity prices.

The Government already provide some electricity price support to these industries, but there remains a competitive gap with other nations. In the UK, our electricity prices for medium and large industrial users were the highest in western Europe in 2019, so these regulations importantly seek to close that gap, ensuring that British industry can thrive and grow, attracting new investment rather than losing out to cheaper production overseas, and helping to mitigate the risk of carbon leakage due to cheaper energy costs elsewhere.

This existing support was put in place in 2017 and, since then, over 370 businesses have benefited from an 85% exemption from certain renewable energy levies. Under these new measures, those business that are eligible for the exemption scheme will not only see an increase in the value of their exemption, up to 100%, but benefit from a new exemption from capacity market charges, as well as receiving compensation for a proportion of their network charges.

Taken together, the Government estimate that this support could be worth, on average, around £24 to £31 per megawatt hour, closing the competitive gap between UK industrial energy prices and those faced by international competitors.

These savings are funded by spreading the cost widely among all other electricity consumers, which is estimated to add between 5 to 10 pence per week to the average domestic bill, and increase electricity costs for non-domestic consumers by about £1 a megawatt hour, once all measures have been fully implemented by 2025-26. These are clearly estimates, since the energy market is highly volatile, but these are our projections and it is important to understand the scale of the effect.

The sectors eligible for the British industry supercharger support scheme employ around 400,000 workers and account for more than a quarter of total UK exports. Many are located in areas of economic disadvantage and provide good, high-paid jobs. This carefully crafted support will mean strategically important UK industries remaining competitive on the world stage. We will back these businesses to keep on growing our economy and delivering into the UK both high-quality jobs and investment as well as the products that we rely on for our everyday lives and work.

I shall summarise for noble Lords. These regulations amend the Electricity Supplier Obligations (Amendment & Excluded Electricity) Regulations 2015, which make provision for indirectly exempting eligible energy-intensive industries from the full costs of funding the contracts for difference scheme as set out in the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014. They amend the Electricity Capacity (Supplier Payment etc.) Regulations 2014 to make provision for indirectly exempting eligible energy-intensive industries from the costs of funding the capacity market. They make provision under the Energy-Intensive Industry Electricity Support Payments and Levy Regulations 2024 for electricity support payments to be provided to energy-intensive industries for the purpose of alleviating the impact of electricity costs under the proposed network charging compensation scheme. They amend the Renewables Obligation Order 2015 to allow the Secretary of State for the Department for Energy Security and Net Zero to revise the renewables obligation level for the 2024-25 scheme year; this will allow the implementation of the increased EII exemption rate under this scheme from 1 April 2024 onwards.

In conclusion, this suite of regulations will help bring electricity costs down for the most energy-intensive and trade-intensive industries—such as steel, chemicals, glass and battery manufacturers—to a level similar to those of their European counterparts. In my view, this is crucial in helping UK-based firms remain competitive, incentivising investment and a move towards decarbonisation through electrification. With that, I beg to move.

[Earl Russell (LD)]

I thank the Minister for introducing the regulations. Before I start, let me say that I will not speak for longer than I would do if we were dealing with just one set of regulations; I will treat all the regulations together and not go through them individually. I will conclude by asking just a couple of questions. I apologise in advance if any of my questions are wrong. These are quite complicated regulations so I offer any advance apologies as necessary.

These four draft instruments propose to implement jointly the key aspects of the British industry supercharger, a package of measures that the Government announced back in February 2023. It aims to make strategic energy- intensive industries, or EIIs, in the UK—for example, steel production, cement production and glass manufacturing, as well as other areas including critical national infrastructures such as steel and chemicals—more competitive. This is to be achieved by closing the gap in electricity prices between the UK and our competitor countries, especially in the European Union. I note that these measures apply only in the UK and not in Northern Ireland.

Despite the technical names of these regulations, there is a back story to all of this, with the war in Ukraine, Covid and our continued reliance on importing energy. We know the impact that this has had on the increase in energy bills in the domestic sphere. These measures are the equivalent of saying, “It’s a question of the Government supporting these energy-intensive industries to make sure that they can continue, survive and flourish in a market where energy prices are rising”. However, I want to be clear: they water down some of the reforms to our carbon markets that have previously been agreed.

I understand that the impact of these measures will be that the cost of emitting 1 tonne of carbon under the UK’s emissions trading scheme will fall from almost £100, as it was a year ago, to about £47. I also understand that the costs will be borne by bill payers, be they domestic consumers, small and medium-sized industries, charities, the health sector or the education sector in this country. I understand that, for these industries, the percentage of their operating costs that is represented by the cost of energy has risen; in some cases, it has risen from 3% of their operating costs to 10% or in some cases 15%. So I recognise that these instruments are important and necessary. I will not go through them individually; I had a sentence on that but, in the interests of time, I will cut that out.