Draft Warm Home Discount (Scotland) Regulations 2022

Greg Hands Excerpts

Wednesday 7th September 2022 General Committees

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I beg to move,

That the Committee has considered the draft Warm Home Discount (Scotland) Regulations 2022.

I welcome you to the Chair, Mr Efford. It is a pleasure to serve under your chairmanship.

The draft regulations were laid before the House on 29 June 2022. We have already passed legislation for the warm home discount scheme in England and Wales. The Scottish Government have devolved powers under the Scotland Act 2016 to design and implement a warm home discount in Scotland, while the Secretary of State for Business, Energy and Industrial Strategy reserves certain powers. Earlier this year, Scottish Ministers requested that the UK Government make provision for a continuation of the scheme in Scotland. In May, the UK Government consulted on such proposals, which were supported by most respondents.

This draft statutory instrument extends and expands the warm home discount scheme in Scotland until March 2026. The scheme will be worth about £49 million per annum in Scotland, an increase of some £13 million. About 280,000 vulnerable Scottish households will receive a rebate, which is 50,000 more than last winter. The apportionment of spending to Scotland—9.4% of the total—is based on the number of domestic gas and electricity meters across Great Britain. The proportion of spending in Scotland will exceed Scotland’s share of the population.

The scheme participation threshold for energy suppliers is lowered to 50,000 domestic consumer customer accounts in 2022-23 and to 1,000 from 2023-24. As requested by Scottish Government Ministers, the scheme will largely be a continuation of what was in place previously.

Under the core group, about 90,000 pensioners in receipt of pension credit guarantee credit will continue to receive their rebate automatically. Under the broader group, about 190,000 low-income and vulnerable households will receive a rebate following an application to their energy supplier.

[Nick Smith (Blaenau Gwent) (Lab)]

I wonder whether the Minister would help me. The explanatory notes state that the

“process requires data matching activities by DWP which can only take place once the instrument is in force and takes several weeks before suppliers can start to provide the rebates.”

This could be a complex process, so has he got an estimate for when the rebates will be applied, please?

--- Later in debate ---

[Greg Hands]

I thank the hon. Gentleman for that intervention. This aspect of the scheme is, I believe, unchanged. The experience of the scheme over some years, since its introduction about 10 years ago, has been very satisfactory in that regard. I am not aware of a wide range of problems with that matching exercise leading to a delay in payments. The answer is that the payments will be able to be made from November, at the finishing of the matching exercise, which I do not believe is fundamentally different from previous years.

Each energy supplier’s obligations under the scheme will be set according to their market share in Great Britain to ensure a fair spread of the cost. The Government recognise that there are differences in the proportion of customers that each energy has in the different Great British nations. To make allowance for that, suppliers with few broader group customers in Scotland may transfer up to 100% of their broader group target to industry initiatives, subject to Ofgem’s approval. Such approval will mainly be based on each supplier’s market share in Scotland relative to Great Britain as a whole. Only energy suppliers with a disproportionately low number of Scottish customers are likely to be permitted that flexibility.

Industry initiatives, which are an established part of the scheme going back some years, include provision of energy advice, benefit entitlement checks, financial assistance and energy efficiency measures. The cap on spending will increase to £7 million per annum, broadly proportionate to the spending expected in England and Wales in 2025-26. No caps have been imposed on financial assistance spending. Suppliers whose broader groups are oversubscribed will be able to direct customers to that form of help.

The warm home discount remains a source of critical support for low-income households across Great Britain. This year, it will complement other large-scale support that the Government are providing on energy and the cost of living totalling, to date, £37 billion. The regulations ensure that more help is provided in Scotland for at least the next four winters, and show the UK Government’s commitment to the most vulnerable in Scotland, with both a 36% increase in spending and a 22% increase in the coverage of vulnerable households. I therefore commend the regulations to the Committee.

--- Later in debate ---

[Greg Hands]

I thank the members of the Committee who have made some fair points in support of the scheme. If I hear it correctly, the scheme has support right the way across the Committee, which is very welcome. Let me deal with some of the points that arose in the debate.

The hon. Member for Southampton, Test always lives up to the name of his constituency, with a set of testing questions. First, are the Scottish Government happy with the proposal? Yes, we have shared and agreed the proposals in the consultation and in this SI. He rightly asked about the reconciliation regulations; I know that he reads these things assiduously, as a good Opposition spokesman should. The reconciliation regulations are being prepared and the process will run to the same timetable as in previous years.

The hon. Gentleman asked why there are differences between England and Wales and Scotland, and I will come back to that in response to the hon. Member for Paisley and Renfrewshire South. The warm home discount scheme overall is devolved, but there are reserved aspects within it. The main reason why there are differences is the difference in the databases. The reforms that have been carried out in England and Wales this year, which we debated as part of an SI in the spring, could not be implemented in Scotland in the same way. That is because the Valuation Office Agency holds data on all households in England and Wales but not in Scotland, where the data is held by local assessors. Therefore, we have a fair amount of the overall annual funding for the warm home discount scheme in Scotland and we are implementing a continuation of the current scheme, as specifically requested by Scottish Government Ministers.

The hon. Member for Paisley and Renfrewshire South is not right to say that the warm home discount scheme is reserved. A couple of aspects of it are reserved, including approving any scheme for Scotland; she is right in that sense. However, I remember the design of the scheme during the negotiation that I did with John Swinney in 2015-16, and the Scotland Act shows that it is clearly a devolved aspect. However, in relation to setting the value of the rebates and setting the supplier participation threshold, because the energy market is essentially a Great Britain-wide market we have to make sure that certain aspects of the scheme have some common characteristics for those who are supplying energy in Scotland, England and Wales. That is why the supplier participation threshold is a reserved aspect.

On fuel poverty, I invite the hon. Lady to have a word with the Scottish Government, because she knows that fuel poverty is devolved. There are different ways of calculating fuel poverty in Scotland. If she has a particular problem with fuel poverty data in Scotland she may be better connected to the Scottish Government than I am, and she may feel better placed to make that representation to the SNP-led Government in Edinburgh.

[Mhairi Black]

Would the Minister accept that the idea of fuel poverty in Scotland is itself ridiculous, given that Scotland provides more energy for the whole of the UK than anywhere else does?

[Greg Hands]

The hon. Lady tempts me to go down the road of a wider debate. I am always happy to take on the SNP in any forum, but I point out the big advantages that we have with the Great Britain-wide electricity and energy market: the degree of depth and breadth, not forgetting that a huge amount of our new energy is being supplied not just off the coast of Scotland, but from England and the Celtic sea; our nuclear capabilities; and all of the things that bring a Great Britain-wide approach to energy.

Although energy efficiency measures provide long-term assistance in reducing energy bills—we recently increased the size of the Great Britain-wide energy company obligation scheme to over £1 billion per annum—there remains a clear need for direct financial support now. The Government have implemented the largest expansion of the warm home discount scheme across Great Britain since it began in 2011. In 2021-22, the spending envelope was worth £354 million. In 2022-23, that is rising to £523 million. In Scotland, that will ensure that 280,000 low-income and vulnerable households receive a rebate on their energy bill each winter until at least 2026. The Government remain committed to helping low-income and vulnerable households right across Great Britain with heating their homes. That is demonstrated by the Government’s support of over £37 billion with energy bills and the cost of living this year to date, and today by the extension and expansion of the warm home discount in Scotland. Therefore, I ask that the Committee approve the regulations.

Question put and agreed to.

Energy Update

Greg Hands Excerpts

Monday 5th September 2022 Commons Chamber

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

The Government recognise that this is a deeply worrying time for households and businesses, as we see renewed highs in energy prices. These are of course largely a result of Vladimir Putin’s illegal and barbaric invasion of Ukraine, as we discussed at the G20 meeting of Energy Ministers on Friday. The surge in the global wholesale price of gas meant that Ofgem announced on 26 August that the default tariff cap level from 1 October will rise to £3,549 for a typical household paying by direct debit. This represents around a £1,600 per year increase on the current level, and around a £2,300 per year increase on last winter’s level. We see no reason to believe that gas prices will fall any time soon; prices will continue to be driven by geopolitical instability, with energy bills likely to remain high for some time to come.

The future outlook is uncertain, but we know that we need to support UK energy consumers to manage the impacts in both the short and longer term. That is why the Government have taken decisive action, including introducing a £37 billion package of support, which is targeted at those who are most in need of support. This includes a £11.7 billion energy bill support scheme, which is worth up to £400 for around 29 million households. In addition, targeted support includes more than 8 million households on means-tested benefits receiving a payment of £650. Over 8 million pensioner households that receive the winter fuel payment will also receive a £300 cost of living payment. Six million households that receive disability support will receive a £150 disability cost of living payment, and there is a £144 million discretionary fund for local authorities to distribute to those identified as being in need.

The Government are also focused on delivering a programme of work to tackle energy efficiency in order to target longer-term energy bill reductions. We are investing £6.6 billion in energy efficiency and heat decarbonisation over this Parliament. We will deliver upgrades to over half a million homes in the coming years through our social housing decarbonisation fund, home upgrade grant schemes and energy company obligation scheme, delivering additional average bill savings of £300.

We must continue to decarbonise, reducing our dependency on expensive, imported fossil fuels and bolstering our energy security through clean, home-grown energy. A net zero economy is not just critical to tackling climate change; it is also in our strategic interest as a means to reducing our reliance on global energy markets. That is why the Government’s British energy security strategy, published in April, set out a series of bold commitments, which put Great Britain at the leading edge of the global energy revolution.

The Government are delivering on this, for example, in our latest renewables auction, awarding contracts for difference to a record 93 new renewable energy projects, which will total almost 11 GW of new generating capacity for Great Britain—enough to generate sufficient electricity to power around 12 million homes. The UK is already a world leader in offshore wind, with the biggest installed capacity in Europe, generating 12.7 GW of electricity, enough to power around 10 million homes. We are continuing to increase this with another 6.8 GW in construction and a further 7 GW in preparation. We are increasing our nuclear ambition with the construction of Hinkley Point C and Government investment into Sizewell C, both of which could power 6 million homes. We are also launching Great British Nuclear, a body tasked with developing a resilient pipeline of new build nuclear projects. We have launched a major review into Britain’s electricity market design, to radically enhance energy security, and to help deliver our world-leading climate targets, while reducing exposure to international gas markets.

We have facilitated the uptake of new products and services such as time of use tariffs, which reward consumers financially for using energy when demand is low or when excess clean electricity is available—for example, on sunny or windy days and nights. The Government also recognise the impact that rising energy prices will have on businesses of all sizes. We are in regular contact with business groups and suppliers, to understand the challenges they face, and explore ways to protect consumers and businesses.

We are determined to secure a competitive future for our energy-intensive industries, which are, of course, most vulnerable to energy price rises. We have therefore extended the energy-intensive industries compensation scheme for three years, and are considering further measures to support businesses, including increasing the renewable obligation exemption to 100%.

However, this Government recognise that we need to go further still. These measures were brought forward when estimated annual energy costs were expected to rise to £2,800. It is now clear that we are looking at a challenge on a greater scale. The Government are working closely with Ofgem and other stakeholders to ensure that consumers and businesses are protected from the volatile energy prices this winter and beyond. I know that tackling this issue will be at the top of the incoming Prime Minister’s inbox, as we look to address both the short-term shocks and longer-terms needs of the UK energy system.

When it comes to energy security, this Government have an excellent record. When it comes to energy prices, we will once again be rising to the challenge of ensuring that British consumers and businesses are given the support that they need for this winter. I commend this statement to the House.

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

I thank the Minister for his statement and for the brief advance notice that we had.

I think that we can all agree that this is a statement of astonishing vagueness and complacency. I had, for example, anticipated that the Minister might have a bit more urgency on the consequences of Russia’s decision to cut off Nord Stream 1 today, and the effects that that will have on gas prices. I thought that he might have come to the House to tell us about that. We are closely tied to European markets. Does he accept that this announcement today puts an even greater sense of urgency on the need to protect the price of gas from outside the UK, both for businesses and for domestic customers, and what measures are the Government undertaking to make that happen?

For domestic customers, there is certainly an energy bill crisis in this country. We need urgent action now.

The Minister talked about funding for the last round of price cap increases, not the one we have now. I know that we have a new Government coming in, but we have heard nothing from the Minister or the Prime Minister about what the plans might be. In fact, all we have heard from the new Prime Minister is that there will be an announcement, but nothing about what the announcement might be. A clear and obvious announcement already exists, however: Labour’s fully funded plan to freeze energy bills this winter, paid for by a further windfall tax on the oil and gas giants making record profits on the back of the energy crisis.

The Minister has an opportunity today to put flesh on the bones of any announcement. He should tell us whether he thinks that the Government should freeze energy prices. Also, does he think that the Government should implement the further windfall tax on the oil and gas giants, and if not why not—and if not, does he want just to protect the profits of the oil and gas industry as a whole?

As well as short-term support for households, we need a long-term answer to this crisis. We on the Opposition side of the House are clear that the best way out of a fossil fuel crisis is to get off fossil fuels. That is why Labour has called for a national clean energy sprint for renewables and a national home insulation plan. The Minister mentioned home insulation and talked about the Government’s existing schemes, but he knows that, in relation to real need, they do not touch the sides. Does he recognise that we urgently need a national warm homes programme to insulate 19 million homes, and is he prepared to commit to that today at the Dispatch Box?

On future energy, the Government could fix many of the problems we face if they decoupled the price of electricity from that of gas. The Minister said in his statement that there is a very leisurely process of consultation and discussion, which I see from the discussion document “Review of Energy Market Arrangements” would not be enacted until 2025. Does he accept that that is a ridiculously long timescale for an urgent change we need now? Is he prepared to commit to decoupling the price of electricity from the price of gas now, particularly given the weight that renewables now have in the market? The Minister talked about offshore wind, but why has he not removed the Government’s ludicrous ban on onshore wind, and does he intend even at this late stage to decide it is time we actually did that?

Finally, the incoming Prime Minister is obviously a fan of fracking, but the Minister told the House on 15 March:

“We are clear that shale gas is not the solution to near-term issues. It would take years of exploration and development before commercial quantities of shale gas could be produced.”—[Official Report, 15 March 2022; Vol. 710, c. 761.]

Does he stand by that statement and will he be communicating this view to the new Prime Minister?

[Greg Hands]

I thank the hon. Gentleman for his engagement, as ever. Let me try to deal with each of his points in turn.

First, on the Russian decision to cut off—or, as they put it, repair—Nord Stream 1, it is worth reminding ourselves that we are not dependent on gas from Russia, as the hon. Gentleman knows. Last year less than 4% of our gas came from Russia, and this year there have been no deliveries of gas from Russia since March—50% of our gas is domestic, and 30% is from Norway. He is right that this has an impact on prices, however, and that is being discussed at the moment and I would expect to hear more from the new Prime Minister and her team in the coming days, as he well knows.

The hon. Gentleman asked about any future windfall tax. Again, I do not want to speculate on what might happen, but I will say what happened when Labour last proposed a windfall tax. The measure that we introduced—the energy profits levy—is projected to raise twice what Labour’s proposal for a similar move would have raised at the time, and it has led to greater support for the most vulnerable customers. Labour’s proposals would have raised about £600, but the Government’s proposals raised twice that amount—about £1,200 for the most vulnerable households—and, as I said in the statement, there will be more to come on this.

The hon. Gentleman asked a very reasonable question about decoupling the electricity price from the gas price. Of course, this is one of the measures being looked at in REMA, as he rightly pointed out, and it will also be something of active interest for the Government. He asked about onshore wind, and he will know that the local partnerships scheme announced in the British energy security strategy in April has exactly mapped out how we see the changes in the onshore wind regime in England. There is no change as yet in Government policy on fracking, but that will obviously be a matter for the soon-to-be new Prime Minister.

Overall, the Opposition seem to make three central points: the Government failed to invest in renewables; the Government failed to invest in nuclear; and the Government failed to invest in energy efficiency. They are wrong on all three. On renewables, under this Government we have quintupled the percentage of electricity generated from renewables, from 7% of our electricity mix when they were in power to 40% in 2021, which is a very strong achievement. On nuclear, the Labour party’s 1997 manifesto said there was

“no economic case for the building of any new nuclear power stations”

in Britain. Twenty-five years later, we have reversed that. We are building Hinkley Point C, and on Friday the Prime Minister was at Sizewell C announcing his support for that power station. On energy efficiency, we have actually increased the percentage of homes that reach the band C level of energy efficiency: we have trebled that from 14% of our homes in 2010 to a strong 46% today. When it comes to matters relating to energy—prices, taxation and energy security—this Government will take no lessons from the Opposition.

[Sir Desmond Swayne (New Forest West) (Con)]

The Minister said that the rise in price was a result of the attack on Ukraine. It is much more than that: it is a deliberate part of the attack on Ukraine. Is not the essential ingredient of any scheme that the Government bring forward that it encourages customers to reduce their consumption?

[Greg Hands]

My right hon. Friend of course makes a very strong point about Russia’s deliberate weaponisation of energy in this conflict, which we wholly deplore and our international partners also very strongly deplore. On our energy use, my job is to make sure that we have the energy supply that this country needs, and I am confident in our energy supply and the energy security measures we already have in place.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call the SNP spokesperson.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The only aspect of this rehashed statement to welcome is the acknowledgment from the Minister that the current proposals are insufficient to avoid a catastrophe. What we should be getting today is a proper updated statement on energy security and a net zero update that would reflect additional investment in renewables such as pumped storage hydro, Peterhead carbon capture and storage, what is happening with the Rough gas storage facility, the decoupling of renewables from gas, and grid upgrades.

The reality at the moment is that 6.5 million households are in fuel poverty, and if the energy cap increase goes ahead as planned, then 9 million households will be in fuel poverty. What is the Minister’s red line for the acceptable number of households that will be left in fuel poverty? What does he say to the businesses that have had no support to date? Does he agree with Make UK, which says that 60% of manufacturing businesses are now at risk? What assessment has he made of the impact on agriculture and the food and drink industry, and does he agree that the tax cuts proposed by the incoming Prime Minister will adversely help the rich and do nothing for the lowest-paid workers? The incoming Prime Minister has talked of scrapping the green levy. Has he explained to the incoming Prime Minister that there is no single green levy, and that doing so would not actually be a solution for reducing household bills?

On nuclear, will the Minister confirm that Hinkley Point C is now nearly 50% over budget and is years late, and that EDF now wants a delay to the payment start dates? For Sizewell C, will he confirm that the upper estimate for construction and finance is £63 billion? That is £63 billion to be added to bill payers’ bills, and it will not actually reduce energy bills in the future. In 2019, the Nuclear Decommissioning Authority’s estimate for the nuclear clean-up cost was £131 billion. When will we get an updated figure? Surely that in itself indicates that we need to end this nuclear folly and madness.

Finally, does the Minister agree that his Government need to introduce a freeze in the energy cap and urgent support for businesses, and to review budget allocations to councils and devolved Governments, so that energy cost pressures on schools, the NHS, transport and care services can be properly funded during this time of emergency?

[Greg Hands]

I commend the hon. Gentleman on his ability to squeeze in so many questions. On additional investment in renewables, the Government are moving to annual allocation rounds on our renewable options. That is a strong achievement. The Government have invested a huge amount in renewables, particularly through the contracts for difference system, which I would urge him to support. He will know that we made an announcement recently on where we are with Centrica and Rough gas storage, and that continues to proceed.

I remind the hon. Gentleman that fuel poverty is a devolved matter, so he may wish to have a word with the Scottish Government, which I have reason to believe he may be close to. He also mentioned businesses, and I remind him that the cost of energy for businesses is right at the top of the in-tray of our new Prime Minister. He mentioned the food and drink sector, and I am sure that is also the case for that sector. He asked about tax, and that will be a matter for the Treasury and for future announcements.

The hon. Gentleman mentioned nuclear budgets, and I am getting a bit fed up with the SNP’s obsessive anti-nuclear behaviour. It is exactly that kind of no-saying that got us into the problem of not having enough nuclear power in this country. Thankfully, earlier this year the Prime Minister rectified that with the British energy security strategy, making sure that we get to 24GW of nuclear power by 2050. As for the cost of Hinkley Point C, the hon. Gentleman will find that the strike price, which was negotiated by the then Chancellor of the Exchequer, George Osborne, and by me, as Chief Secretary to the Treasury, compares very favourably with energy prices today.

Finally, I think I heard a complaint from the hon. Gentleman about budget allocations to councils, which was extraordinary, coming from the SNP. It is the party that has been hammering council budgets in Scotland, and then expecting them to collect the rubbish with vastly decreased levels of budgetary contribution. I again urge him to have a word with his friends in Edinburgh who are running the Scottish Government, to see whether they might be able to do something to improve the budget allocations for Scottish councils.

[Anna Firth (Southend West) (Con)]

I welcome the Minister’s statement and the support for individuals and businesses, but may I raise with him the issue of schools? Southend West is home to 30 excellent schools, and many heads have been in contact with me, concerned that they will not be able to pay the utility bills. One has even trailed in the local press the possibility of opening for only four days a week. Can he assure me that it is the Government’s priority to make sure that our children’s education does not suffer as a result of the energy crisis, as it did as a result of the coronavirus crisis?

[Greg Hands]

I thank my hon. Friend for that contribution. Schools are certainly at the forefront of our thinking for the coming winter. She is right that we need to make sure that schools are properly supported, and there are lessons to be learned from the pandemic as to how that was done. I am sure that her words will be well heard by Ministers, HM Treasury and the Department for Education.

[Stephanie Peacock (Barnsley East) (Lab)]

A year ago I asked the Government why they had closed the Rough gas storage facility off the Yorkshire coast, leaving the UK with just 1.7% of storage for annual demand. The Secretary of State for Business, Energy and Industrial Strategy, the right hon. Member for Spelthorne (Kwasi Kwarteng), told me that the question was irrelevant, and accused me of inducing panic and stoking alarm. Given the reports that the Government are to U-turn and reopen the facility, will the Minister now admit that the closure was a mistake?

[Greg Hands]

The closure was a commercial decision, made by Centrica, not a decision made by the Government.

[Mark Pawsey (Rugby) (Con)]

The Energy Minister has a well-deserved reputation for getting things done, and I thank him for the prompt responses he has given to inquiries that I have made to his office, especially in respect of businesses. I sense that he understands the challenges, such as for the small engineering business I visited last week whose energy bill is £13,000 a year currently, and which has had a range of quotes between £37,000 and £68,000 for the renewal of its contract. The staff tell me that means that in the coming year they may not be able to replace a machine or take on a couple of apprentices as they would like to do. He has told us about the details that will be coming on short-term support—I am sure businesses will welcome that when it arrives—but I wonder whether he would say a little more about the long-term proposals to decouple the electricity bills from the gas price.

[Greg Hands]

I thank my hon. Friend for that question. He is truly a champion of businesses in his constituency and across the country; I know the important work he does on the Select Committee on Business, Energy and Industrial Strategy, for example. He is right, in that most of the energy of businesses in this country is dealt with through long-term contracts. That is an advantage in giving certainty, but when it is time for the long-term contract to be extended or renewed that can lead to a very concerning rise in the price of that contract. The Government are keenly aware of that and it is absolutely something that our new Prime Minister and the team overall will be looking at.

[Tahir Ali (Birmingham, Hall Green) (Lab)]

The Minister’s statement was nothing but full of hot air. In the midst of a cost of living crisis, the worst in living memory, many of my constituents are struggling to pay their energy bills, as are others across the country. The words of wisdom from the outgoing Prime Minister were for people to buy a kettle for £20 and save £10 a year. Does the Minister agree that the Government are out of touch with struggling families and that the suggestion of a new kettle is not only insulting, but derisory?

[Greg Hands]

Look, that is not what the Prime Minister said; he did not say that the answer to the energy crisis was to buy a new kettle. He used the new kettle to provide an analogy as to how we have dealt with nuclear power in this country, further to the points I raised earlier, with the failure to have a long-term view as to how to save money on energy costs overall. The hon. Gentleman is wholly misrepresenting what the Prime Minister said—I suspect he is wilfully misrepresenting it—in his speech on Friday.

[Tracey Crouch (Chatham and Aylesford) (Con)]

Pubs, grassroots sports clubs and an indoor play centre are examples from the local hospitality and leisure sector that have been in touch with me in the past few weeks to highlight the astronomical price rises they are expecting, putting their businesses in a perilous situation. These sectors are often an afterthought for Government support, yet their importance in our communities should not be underestimated. So will the Minister place on the record that this Government recognise the value of the hospitality, leisure and indoor play sectors, and that they will be given the support they need to survive the winter?

[Greg Hands]

I thank my hon. Friend, an extremely well-regarded former Sports Minister, for her commitment to the sector. She is right to say that pubs, the hospitality sector in general, sports facilities and outdoor play facilities are vital parts of the social and economic fabric of this country. The Government are keenly aware of the importance of the impact of rising energy prices on businesses, and, as I have said, I am sure this is right at the top of the new Prime Minister’s in-tray as we go forward.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Last Wednesday, the Business Secretary tweeted his winter energy security update, a plan that fails even to mention energy efficiency, despite the BEIS Committee, the CBI and charities all calling for immediate action on insulation to keep homes warm and to cut bills. The Minister did at least mention efficiency in his statement, but there is still no sense of urgency and no plan at the scale required. We need a retrofit revolution. Why are the Government not tackling demand-side measures with far more urgency? Will he finally get on with a local authority-led, street-by-street home insulation programme?

[Greg Hands]

On energy-efficiency, the Government have extensive programmes in place, which I outlined in the statement. We have £6.6 billion going in over the course of this Parliament. It is important to recognise not only the amount of money going in, but the results we have had. In the 12 years of this Government, the percentage of homes rated A to C for energy efficiency has increased from 14% to 46%, which is a trebling of the amount of homes rated energy-efficient. Of course there is further to go, because 54% are insufficiently energy-efficient. A lot of work is still to be done, but the trebling of the number of homes well rated for energy efficiency is a real achievement of this Government.

[Mike Wood (Dudley South) (Con)]

I thank my right hon. Friend for visiting my constituency to meet industrial energy users. It is good that the energy-intensive industries compensation scheme is being extended, but firms in many sectors, such as engineering, glassmaking, ceramics or hospitality, do not qualify for the scheme despite relying on large amounts of energy for their core business, with many facing bill increases of 500%, 600% or 700%. What can be done to help them survive and to protect the jobs that my constituents rely on?

[Greg Hands]

I had a helpful and productive day in August, partly spent in my hon. Friend’s constituency, and he and I ran a session for industrial energy users with Andy Street, the brilliant Mayor of the West Midlands Combined Authority. It is important to recognise that many businesses in this country are not in classic energy-intensive industries and therefore do not qualify as such, but are nevertheless big users of energy. We need to ensure that support is available so that such businesses can get through this coming winter. That is exactly the opinion that I have reflected within Government as we move forward.

[Naz Shah (Bradford West) (Lab)]

According to Electric Radiators Direct, Bradford ranks highest in the country for the difference between average resident income and average yearly energy bill. Friends of the Earth claims that 52% of neighbourhoods in Bradford are among the worst affected across England and Wales.

Everybody in the country knows and we in this House know that the energy profits levy is in fact a windfall tax—a Labour idea. We have another suggestion for the Minister: freeze energy prices. The Government can name it what they want. We have the ideas, and we are handing them over. What is stopping the Minister freezing energy bills?

[Greg Hands]

I am not quite sure about Labour’s position. On the one hand, it says that we copied its windfall tax proposal, but it also says that what we have done is somehow inadequate. The energy profits levy is projected to raise twice what Labour’s proposal was ever projected to generate.

When it comes to Bradford, that is exactly why we are ensuring that the assistance is as targeted as possible and goes to the most vulnerable and in-need households. That is why we have offered the one-off payment of £650 to more than 8 million households on means-tested benefits, the cost of living payment to 8 million pensioner households, and the £150 disability cost of living payment to 6 million households. In addition, we have the £144 million discretionary local authority fund for distribution to those identified as being in need. A huge amount of Government action has already taken place, and more is to come.

[Scott Benton (Blackpool South) (Con)]

My right hon. Friend will be aware of Blackpool residents’ strong objections to fracking, which has already been explored at the Preston New Road site a few miles outside my constituency. Fracking should take place only where it is supported by local communities and only if people can feel the benefit directly in their pockets. Does he agree that a few thousand pounds off energy bills would be quite an inducement for people living close to a fracking site?

[Greg Hands]

My hon. Friend, as ever, makes a telling contribution on Blackpool’s behalf that I am sure the Government will study closely. We are also studying the British Geological Survey report into this matter, to which the Government will respond in due course. Over the past year that I have been Energy Minister, I have heard my hon. Friend stick up for and make a strong case for Blackpool on several occasions in relation to fracking.

[Ellie Reeves (Lewisham West and Penge) (Lab)]

Lewisham Council’s energy bill has already doubled from £7 million to £14 million a year, with bills set to go up further. But instead of setting out a plan of support, the Tories have spent this summer fighting among themselves and have even claimed that rising costs should be found from existing public sector budgets—budgets that have already been decimated over the last 12 years. We need serious leadership and a plan now, so will the Minister commit that, in any emergency Budget, public services will be properly supported with rising energy costs?

[Greg Hands]

Public services have always been well supported by this Government throughout the 12 years that we have been in power. When it comes to future taxation, that is, of course, a matter for the Treasury and the Prime Minister.

[Jacob Young (Redcar) (Con)]

I am grateful to the Minister for his answers on support for energy-intensive industries such as those in my area. He knows that Teesside is the centre of the green industrial revolution in the UK, with our nuclear power station at Hartlepool, wind power manufacturing on both the north and the south side of the river, and large-scale carbon capture, utilisation and storage and hydrogen production in Redcar and Cleveland. As well as looking at new measures to increase such supply, we must tackle demand. Does he agree that we should invest further in energy efficiency and retrofitting homes, as many families could save hundreds of pounds on their energy bills by simply insulating their homes properly?

[Greg Hands]

My hon. Friend is always a strong voice for Redcar and Teesside. I think that every single question he has ever asked me has included hydrogen somewhere. He is auditioning, I think, to be the UK’s Mr Hydrogen. He has mentioned CCUS as well, which is a big priority of ours, and he is absolutely right to say that energy efficiency is so important. If we can reduce the amount of energy that is used to create the same level of heating in people’s homes, clearly that is a massive gain. That is why we have invested £6.6 billion over the course of this Parliament in energy efficiency.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The annual energy costs of a bar on my patch in Shoreditch—it is part of a large chain—have gone up from £30,000 last year to £120,000 this year. All energy contracts are now being renegotiated, with some experiencing an uplift of at least 300%, and since the pandemic some electricity suppliers are refusing to supply the hospitality sector. The Minister has given warm words, but there are two issues there. Will he give us comfort that he will act on at least one of them by talking to the energy suppliers about making sure that more of them can at least compete for the business of these important hospitality businesses?

[Greg Hands]

As ever, the hon. Lady raises an important and telling point. It is worth reminding ourselves, as I said earlier, that businesses tend to have long-term contracts for their energy bills. Prices were lower but they are now rising. There is an advantage in being locked into lower prices for a longer term, but there is, of course, a disadvantage when that long-term contract rolls off and they have to replace it. She is quite right about that. I am happy to look into the specifics of the bar that she mentions. There is no obligation currently on energy suppliers to supply businesses, unlike their obligation to provide to consumers, but I am happy to look into the specifics of the bar that she mentions in her constituency.

[Danny Kruger (Devizes) (Con)]

There is clearly consensus across the House about the need to decouple the price of electricity from the cost of gas. I very much welcome the Minister’s remarks that that is being actively looked at in government. May I encourage him to go a little further, given that we are in this little moment of an interregnum, exploit his licence and tell us what might be the obstacles to doing that quickly and, if we wanted to do it, how fast it could be done?

[Greg Hands]

My hon. Friend invites me to go down a road of policy speculation. What I will say is that many markets and many countries are looking at this specific issue. There are various proposals out there. We are looking carefully at this issue domestically, and we are also looking to see what other countries, other markets and other jurisdictions are doing in this space.

[Alison Thewliss (Glasgow Central) (SNP)]

I met a range of organisations during the recess. Most recently, I met David Findlater, the managing director of Calder Millerfield in Dalmarnock, which has been making bakery and butchery products in the area and employing local people for over 60 years, supplying supermarkets and fast food establishments. Its annual prices have gone up from £160,000 for electricity and £30,000 for gas to £712,000 for electricity and £80,000 for gas. It does not know how it will keep going as a business and meet those bills. It wants to hear urgently from this Government that help is coming. Will the Minister give it that assurance?

[Greg Hands]

I thank the hon. Member for her question. I share, and I think we all share, the concern about the rising prices facing not just consumers, but businesses up and down the UK. The Government are keenly aware of the issue, as I said; it is right at the top of what the Prime Minister will be looking to do, and I am sure that announcements will be forthcoming.

[Dame Diana Johnson (Kingston upon Hull North) (Lab)]

I listened to Edwina Currie this morning telling people to put foil down the back of their radiators to improve energy efficiency. She seemed to miss the point that many of my constituents are not even thinking of switching their radiators on in the first place. I just wonder about those in the left-behind neighbourhoods—the very poorest. In my patch, in Orchard Park, 29% of households are in fuel poverty before we even start, against the national average of 13%. What will the Minister do for those people on Orchard Park who are not able to switch their radiators on this winter?

[Greg Hands]

Obviously, we are very concerned to make sure that consumers are supported through the coming winter. That is absolutely at the heart of the existing Government’s policy, and I am sure it will be part of the incoming Prime Minister’s policies as well.

I ask the hon. Member to tell her constituents to have a look at what the Government have already done—the £39 billion-worth that we have already announced this year, not all of which has taken effect yet. For example, the £400 payment for 29 million households has not yet actually come in. I urge the hon. Member to relay to her constituents that the Government are on their side, have already committed large amounts of public funds to this and, I am sure, will be committing more in the coming months.

[Sammy Wilson (East Antrim) (DUP)]

I thank the Minister, his officials and Treasury Ministers and officials for ensuring that the discount on electricity bills will be paid directly to consumers in Northern Ireland rather than having to go through the Assembly and the Departments, which quite frankly would not have been capable of administering it.

I am disappointed, however, that in the Minister’s statement today there was no mention of exploiting the resources that we have on our doorstep, namely the abundant supply of gas in the north-east of England, which could give a very quick supply of additional gas to the UK network. Is he not concerned that his increasing dependence on renewables—for which much of the infrastructure is dependent on the supply of rare earth metals, 60% of which are controlled by China—will leave us as dependent on China in future as Europe is on Russia today?

I have a more immediate question. The Minister has announced 93 contracts for difference. How will he ensure that the companies that get those contracts will not simply—as they are doing at present—refuse to activate them and sell electricity as if it were generated by the most expensive gas?

[Greg Hands]

I thank the right hon. Member for that list of important questions. He will know that the new taskforce has already started meeting to extend the energy bill support scheme, or provisions thereof, to Northern Ireland; that is welcome news.

I think the right hon. Member said that fracking would lead to quick supplies. I am not as convinced that he is that it would be quick, but as I said, we will be responding to the British Geological Survey in due course.

On dependence on renewables, the right hon. Member is right that a number of elements used in creating renewable energy resources are dependent on critical minerals, but that is exactly one of the reasons why the Government have recently launched the critical minerals strategy. We will be talking to all our international partners, as I do, about critical minerals and making sure that we have a diversity of sources of supply for them going forward.

[Clive Efford (Eltham) (Lab)]

I do not get any sense of urgency from the Minister about the plight of businesses negotiating energy contracts. I have been contacted by a family-run independent craft bakery that is about to celebrate its centenary and has been run by six generations of the same family. It employs 20 people in my constituency, but is facing at least a 300% increase in the energy costs in its contracts. We cannot leave businesses in that situation hanging. We have no date yet for the Government to come forward with a set of proposals. When will those businesses have some idea what support they will get from this Government? Businesses in that situation are just not going to survive for very long.

--- Later in debate ---

[Greg Hands]

Let us be absolutely clear: the new Prime Minister has said that there will be announcements very shortly on the support that will be there. The hon. Gentleman throws his hands up in the air, but he was first elected, if I am not mistaken, under the last Labour Government. When it comes to acting quickly, it took that Labour Government more than 10 years to reverse their policy on nuclear energy, so perhaps he might like to reflect on how quickly Governments can move, and see that this Government have moved incredibly fast to react to changing circumstances on both energy prices and energy supply.

[Wera Hobhouse (Bath) (LD)]

To continue the theme, small businesses will be among the worst hit by the soaring energy bills. Bath Aqua Glass is one of many businesses in my constituency that have told me their energy bill will go up 10 times—not 10%, but 10 times. The company’s bill will go from £14,000 to £130,000. The whole energy sector is completely out of control. We Liberal Democrats have called for emergency covid-style support for small businesses. What are the Government doing, not just in the short term to support small businesses, but in the long term to fix the broken energy sector?

[Greg Hands]

I have already said that this is a priority for the new Prime Minister, and I would expect there to be announcements shortly on what is being done. Businesses are the core of our concern here in relation to energy prices. There is of course no energy price cap for businesses, and we recognise the challenges that businesses—particularly small and medium-sized enterprises that do not qualify as energy-intensive industries but nevertheless use a lot of energy—face at this time. That is exactly the sort of thing the Government are actively looking at.

[Mike Amesbury (Weaver Vale) (Lab)]

On Friday, I visited a pub called the Ring ‘O’ Bells in the Frodsham area of my constituency. I spoke to Phil, the landlord, whose projected bills are going up by several thousand pounds per month. Then I went along to the Devonshire Bakery, a family business that has been operating in my constituency for a considerable number of years, and which is facing a 400% rise in its energy bills. I say to the Minister that we need now to urgently step up and support businesses, not only in my constituency, but up and down the country, and we certainly need to hear that urgently from the new Prime Minister.

[Greg Hands]

I have already said that I think we will be hearing very soon from the new Prime Minister and her team, but the hon. Gentleman could say to Phil the landlord that this Government has had an excellent track record, when it comes to the pandemic, of providing support for businesses. I think that has been universally acknowledged as being an extremely strong element of support—£40 billion overall for businesses over the pandemic—and, if I were the hon. Gentleman, I would say to Phil, “Judge the Government on their actions.” There will be more to come, but I ask him to report to Phil the confidence that he should have in the Government’s excellent record of supporting businesses through the pandemic.

[Mick Whitley (Birkenhead) (Lab)]

The incoming Prime Minister has promised to deliver a plan to address the energy price crisis and is now thought to be considering freezing energy bills. In my Birkenhead constituency, however, people are already struggling to pay their bills, with many fearing that they will be plunged into destitution this winter. Does the Minister agree that urgent action is needed to cut energy costs now and that no option should be off the table in tackling this crisis, including renationalisation, which has allowed the French Government to cap rises at 4% while bills in the UK have risen by 54% already this year?

[Greg Hands]

The French analogy is a bit of a misnomer, and the hon. Gentleman and I probably disagree on it. I think he is celebrating the nationalisation of the French energy industry, but I am not sure that is a good answer either for this country or for others. He says that further action is needed, and that is what I have pledged at this Dispatch Box. I ask him to look at the amount of money—£37 billion—that this Government have already put in to assist consumers with energy bills; I think it compares favourably with other European countries, up until the previous rise in prices.

[Stephen Flynn (Aberdeen South) (SNP)]

In Scotland, we produce six times as much gas as we consume, yet the energy price cap has already increased by 40%. In Scotland, gas accounts for just 14.4% of electricity production, yet the energy price cap is about to increase by a further 80%. In Scotland, our annual electricity production comes almost entirely from renewables, yet households and businesses are being crippled. Surely even the Minister must accept this blatant failure of UK energy policy. Is it not time we recognised that Scotland does not just have the energy; we badly need the power?

[Greg Hands]

The hon. Gentleman will not be surprised to hear that I strongly disagree. When it comes to energy, it is the UK Government’s reserved energy policy that is working well for the people of Scotland. Had we followed the SNP’s energy policy of being against both nuclear and Scottish oil and gas, we would be in a terrible position and would probably be dependent on the good will of Vladimir Putin.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

Forgive me, Minister, but it is already too late for some businesses. Alexandros, a very popular restaurant in my constituency, has announced that it is closing while it assesses whether it can afford to carry on with a £13,000 increase in its energy costs. This is going to be brutal for small businesses on our high streets, isn’t it, Minister, without appropriate intervention?

[Greg Hands]

I have already said that this is a matter of very active consideration by the Government and that it is right at the top of the new Prime Minister’s in tray. I remind the hon. Gentleman of the amount of support the Government have given businesses during the pandemic and over other matters recently. We have an incredibly strong record of supporting businesses, which is one reason we have such an excellent record on creating jobs and making sure that, by working with businesses, we have a robust employment sector in this country.

[Anne McLaughlin (Glasgow North East) (SNP)]

Mr Deputy Speaker, if you, I, the Minister or anyone on these Benches were to stop paying our energy bills, we could be cut off or disconnected from gas and electricity, but it would take a long time because the company would have to go through a number of different procedures and we have rights. Not so those people on prepayment meters. In the statement, the Minister has talked repeatedly about those most in need of support. If people are on prepayment meters, it is almost always because they are on a low income and need more support. They already pay more than the rest of us, but all they can do is get into £10 of debt. The minute they go over that £10 emergency credit, they are disconnected. Is that fair? If he does not think it is fair, will he join my campaign to outlaw so-called self-disconnection? If not, are we to believe that he thinks we deserve better rights than our constituents who are really struggling financially at the moment?

[Greg Hands]

The hon. Lady is right to raise the matter of prepayment meters and prepayment customers. She is, of course, right to raise the issue of the most vulnerable, which is exactly where the Government’s overall package is targeted. The £37 billion goes hugely to disadvantaged people and households.

Ofgem has taken a number of actions on prepayment meters in recent times. It warned suppliers in June 2018 that prepayment meters should be installed only as a last resort for debt collection. It banned forcible installation for vulnerable customers in 2017. In December 2020, it introduced new licensing conditions, including an ability-to-pay principle and the obligation on suppliers to identify self-disconnection and self-rationing by prepayment meter customers proactively. A number of measures have been taken by Ofgem. Of course it will keep these things under review, and I am sure the Government will look at them as well. If there are more actions the hon. Lady thinks should be taken, I am happy to hear from her.

[Alex Cunningham (Stockton North) (Lab)]

Many industries on Teesside and beyond that are dependent on natural gas as a feedstock are being ruined. CF Fertilisers has already ceased ammonia production in Billingham, while a second major local company told me that a decision could be taken within weeks unless something comprehensive is done, and it will close. The company has written to the Prime Minister. I await a response to my urgent letter to the Business Secretary on Friday, telling him that hundreds of jobs are at risk at that one company. The Minister spoke of some support to help energy-intensive industries, but it is totally inadequate to meet the needs of industry on Teesside and beyond. Will he please outline what assistance will be available for non-qualifying energy-intensive industries? Will he go away again and find another way to help the balance of industries, or is he prepared to see thousands of people lose their jobs?

[Greg Hands]

The Government are never prepared to see thousands of people lose their jobs, which is why we have taken such strong action in the last few years to make sure that our employment situation remains as robust as it is. Beyond that, the hon. Gentleman is asking me to make commitments that will be made by the incoming Prime Minister. He mentions CF Fertilisers, which is a company that we are keenly aware of. We have interacted with the company over a long period of time and will continue to do so.

[Daisy Cooper (St Albans) (LD)]

Like many Members of this House, I am receiving desperate messages not only from individuals, but from hospitals, care homes, schools and small businesses. The energy bill for one pub in my constituency, Dylans-The Kings Arms, is due to rise from £22,000 to £124,000—a sixfold increase, or an increase of £100,000. One care home in my constituency emailed me today and said its gas bill alone will have a 15-fold increase, rising from £40,000 to £600,000. If a pub has no heating, patrons will not visit. If a care home does not have heating, vulnerable people become ill and possibly die. The Minister has already indicated that he does not know when an announcement will be made, but will he please give us an assurance that straight after this debate he will go straight to the new Prime Minister and encourage her and her new Cabinet to make an announcement this week—not just for individuals and households, but for businesses, care homes and schools?

[Greg Hands]

I do not think that the hon. Lady will have long to wait. I say to her that we absolutely share those concerns. All Government Ministers, at least in the Commons, are obviously constituency MPs as well, and we have these kinds of cases in our constituencies, including in my constituency. We are well aware of the big rises in energy prices being faced by many businesses at the end of their contract when taking up a new contract.

[Wayne David (Caerphilly) (Lab)]

Manufacturing in this country is facing a truly terrible crisis. For example, OGM Moulding Innovation employs 220 people in England and Wales, including in my constituency of Caerphilly, and it faces a massive increase in its energy costs. Unless something is done urgently, it faces closing three factories. It does not qualify for special support, because it is not deemed an energy-intensive company. Nevertheless, it uses a huge amount of energy. My plea is very simple and straightforward: will the Government give a commitment that they will come forward in the next few days with comprehensive packages to help companies such as OGM Moulding Innovation?

[Greg Hands]

I thank the hon. Gentleman for his question and for his concern for his constituency-based business. As I said in answer to the previous question from the hon. Member for St Albans (Daisy Cooper), we are all keenly aware of the difficulties that many businesses are in. On the other engagement that we have had with the sector, the Secretary of State has been meeting energy suppliers. The Chancellor of the Exchequer has heard loud and clear from the Confederation of British Industry, the Federation of Small Businesses, Make UK and others. The Government are of course keenly aware of the situation, and I do not think the hon. Gentleman will have long to wait to hear the response.

[David Linden (Glasgow East) (SNP)]

About three hours ago I spoke to Deborah Linton, who is the operations director of Dentec Hillington, which is a body repair shop just off London Road in my constituency. Its energy bills alone will rise by £54,000 this year, and the message that she wanted me to bring to the Minister is that businesses need action and need it now. I have a simple question for the Minister: will the Government have announced action when I visit the company on Friday?

[Greg Hands]

The hon. Gentleman is inviting me to speculate on the date of future Government announcements, which I am not able to do, but I will say that I do not think he will have long to wait.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

The issue around energy costs for businesses was a key priority for businesses I met in July. We know that business insolvencies are at a 60-year high at the moment. I am also getting a lot of feedback on the doorstep, when I meet constituents, who are concerned about how they will manage with the forthcoming energy price increase. We know that the new Prime Minister is not keen on handouts, but if there is not a reasonable offer from the new Prime Minister, what would be the Minister’s assessment of the increase in debt, homelessness and insolvencies and, as a consequence of all that, the increase in excess deaths?

[Greg Hands]

I thank the hon. Lady for that question. I have already said how well aware we all are of the increase in costs for businesses, but I think she paints an unhappy picture that goes beyond the reality of what businesses are facing in this country. If we consider the amount of support that the Government gave during the pandemic, and the level of employment in this country, including a record high in payroll employment, we see some really good economic figures coming out of that. Of course, we recognise that businesses are facing those big increases in energy costs, which is why I expect announcements to be forthcoming quite soon.

[Stephen Farry (North Down) (Alliance)]

I am grateful to the Minister for his update on the £400 payment to households in Northern Ireland. Of course, if we had had an Executive going back as far as February, we could have done that ourselves. As he knows, the Northern Ireland energy market and system is very different from that in Great Britain, so in the event that the next phase of Government support has large elements that apply only to Great Britain, but with large Barnett consequentials for Northern Ireland, what contingency steps are the Government taking to ensure that, in the absence of a functioning devolved Executive, businesses and households in Northern Ireland have the same access to support as their counterparts in Great Britain?

[Greg Hands]

The Chancellor of the Exchequer convened the Northern Ireland taskforce with the specific objective of making sure that Northern Ireland does not miss out on UK Government support for consumers and businesses in future. I cannot give the hon. Gentleman more of an update than that, but it is a strong area of Government action to ensure that Northern Ireland, quite properly, is treated as part of the UK when it comes to all these matters, including, especially, Her Majesty’s Government support for consumers and businesses.

[Paul Blomfield (Sheffield Central) (Lab)]

In the Minister’s statement and in many of his answers he has focused on what the Government have already announced, but does he recognise that that does not come close to meeting the depth of the crisis that we now face? Does he accept the need for a freeze on domestic bills and action to match his words on businesses? Across my constituency, hundreds of small businesses, particularly in the hospitality sector, are at risk. Thousands upon thousands of jobs are threatened without decisive action. When can we expect it?

[Greg Hands]

The Government have provided enormous levels of support for exactly those kinds of businesses. The hospitality sector was a strong recipient of Government support during the pandemic. The hon. Gentleman is right to point to the £37 billion of support to consumers so far this year. He will not have to wait long to hear what the Government will be doing, but I ask him to judge the Government on their excellent track record in this space—in supporting businesses, particularly in the last few years. As I say, he will not have to wait too long to see further measures.

[Patrick Grady (Glasgow North) (Ind)]

Housing associations that I have spoken to in Glasgow North are, first and foremost, concerned about the wellbeing of their tenants who cannot afford to heat their homes this winter, but leaving the heating off is also bad for the housing stock: damp and mouldy houses will be bad for future generations and will cost more to repair in the long run. Does the Minister understand that as well as a price freeze now, we need a long-term preventive approach to energy security, efficiency and insulation?

[Greg Hands]

That is one of the reasons we are investing £6.6 billion over this Parliament in energy-efficiency measures, which will include the ECO4—energy company obligation—measures that we debated in this House in July. We will have to see what energy-efficiency measures may be forthcoming from the Prime Minister in the coming days.

[Rachael Maskell (York Central) (Lab/Co-op)]

Many of my constituents are already cancelling their contracts with their gas companies. They are absolutely terrified. Churches and charities want to step in, but they are exposed to the commercial rates, with charities often seeing a tenfold increase. They want to provide warm banks to keep their communities safe, warm and well fed this winter. What steps are the Government taking to support charities and churches to ensure they can provide the warmth their communities need?

[Greg Hands]

The hon. Lady makes a strong point that this is not just about consumers and businesses; everybody is being affected by the global rise in energy prices. This is not just a UK phenomenon, but a worldwide one. If she has cases of charities and others being unable to take out contracts or cancelling contracts, I would be happy to look into them with her to find out what is going on and to ensure that those vital services continue to get an energy supply.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

Rising energy prices will disproportionately hit those on the lowest incomes, while tax cuts will disproportion- ately favour the highest earners. Considering the scale of the financial problems about to hit families, with some experts indicating that energy bills could hit £7,000 per annum by next year unless there is some firm Government action, social cohesion should be the cornerstone of Government policy. Would not one way of doing this be to ensure that the broadest shoulders pay their fair share, by increasing the burden on higher and additional rate income taxpayers to support those in need?

[Greg Hands]

The hon. Gentleman is tempting me to go down the road of Her Majesty’s Treasury announcements on tax and other matters, which I am afraid I will have to resist doing. I think he will hear before too long what the Government propose to do on these vital matters.

[Margaret Greenwood (Wirral West) (Lab)]

People are really frightened about how they are going to get through this winter. One of my constituents, who is a widow with long-term health issues, has written to me to say that she will have to cancel insurance for her pets—so if her pet becomes ill she will not be able to take them to the vet—and will get rid of her car, which is vital for her to get to medical appointments. She says that her gas and electricity bill was originally about £85 a month, but she has now received a direct debit statement saying that it will go up to more than £255 a month; her energy costs will basically triple. She is terrified about how she will manage this winter, as are many of my constituents. Will the Minister give us an assurance that he will impress on the new Prime Minister the scale of the catastrophe we face if the Government do not come forward with a major increase in support for people facing these bills?

[Greg Hands]

I am concerned to hear about the hon. Lady’s constituent. Indeed, many of all our constituents are facing difficulties and prospective difficulties at this time. In relation to her constituent’s car, the Government have reduced fuel duty at the cost of about £5 billion to the Exchequer, and that will help people to run their cars. We are acutely aware of the difficulties faced by consumers, but we have risen to the challenge. The £37 billion package announced for this year so far is a considerable amount of public spending to help consumers with bills, and there will be more to come.

[Brendan O’Hara (Argyll and Bute) (SNP)]

Many people across rural Scotland depend on heating oil to heat their homes. Today I spoke to someone who was quoted 110p a litre, with a minimum delivery of 500 litres. Of course, once heating oil is gone—when the tank is empty—it is gone. If people cannot afford to refill the tank, they cannot heat their house. With winter approaching, that is a potential death sentence for vulnerable people in an already economically fragile part of Scotland. What will the Government do to help those people, and what reassurances can the Minister give to those who rely on heating oil that they will be protected from skyrocketing fuel prices this winter?

[Greg Hands]

I thank the hon. Member for that question because many consumers, up and down this United Kingdom, are dependent on heating oil. They are off the gas grid and heating oil is the principle means of heating their home. We need to be keenly aware of that, as the Government are.

It is worth recognising that there is a competitive market for heating oil. I often speak with the UK and Ireland Fuel Distributors Association, which is a trade body, and with consumer groups in relation to heating oil. Obviously, prices have risen; they are closely related to the price of kerosene, for example, which has been quite volatile this year.

I remind the hon. Gentleman that households that have an electricity charging point will benefit from the £400 payment, and others will benefit from the payments to the more vulnerable, so it would not be right to suggest that those who use heating oil are not recipients of Government assistance. There is also the £1.1 billion home upgrade grant, through which the Government have committed to improve funding for energy efficiency and clean heating upgrades for those dependent on heating oil and other liquid fuels.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

Some 60% to 70% of our energy is domestically produced. The price of producing it has not increased at all, so 60% to 70% of the bill increase is theft by the energy companies charging international rates to domestic companies. It is time we had wholesale market reform, to ensure that domestically produced energy is sold at production prices and not inflated prices for fat cats in the City.

May I ask the Minister specifically about the £144 million discretionary fund? Many of my constituents are use remeterage, whereby their landlords have a commercial contract but they are remetered at a higher price and are ineligible for any support. Will the Minister write to councils to confirm that they must offer parity for those people, if they can show they use remeterage and therefore are not eligible for the £400 support?

[Greg Hands]

I might have to write to the hon. Member on the question of remeterage. The £144 million discretionary fund is supposed to be disbursed at the discretion of local authorities, in the right way. I think his question is more about heat networks. In the British energy security strategy, we announced that heat networks will in future be regulated by Ofgem—I say that on the assumption that he supports the Energy Security Bill that is making its passage through Parliament at the moment.

The hon. Gentleman’s point that somehow the UK can declare some kind of unilateral declaration of independence from global energy prices is, I am afraid, simply fanciful. Even Norway, which is one of the world’s biggest domestic producers and almost certainly the largest surplus energy producer in the world, is facing these same challenges of rising domestic energy prices. It is simply not possible for the UK to isolate itself from these global trends. [Interruption.]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I call Patricia Gibson.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

The energy price cap is set to double. Businesses have received no support with energy costs, households have simply not received enough and those in park homes have been completely ignored so far. On top of that, the cost of supplier failures means that the poorest, who use less energy, will continue to be disproportionately impacted by punishing standing charges. Today the Minister has said nothing about any of these issues, because today’s statement is about a zombie Government giving the illusion of activity. When will we see urgent and decisive action to tackle this increasingly painful and in some cases life-threatening crisis for businesses and households on the brink?

[Greg Hands]

There is a lot in that question. The hon. Lady raised a new issue, not raised in these questions so far—the issue of park homes. That is a serious concern, because around 1% of households in this country are not reached by the current £400 scheme, although they are being reached by other schemes. We have said clearly that we will announce measures to assist those living in park homes, houseboats and so on, which are not covered because they do not have a meter point. There will be a scheme announced this autumn to help them, with funding attached, as part of an additional scheme.

[Matt Western (Warwick and Leamington) (Lab)]

Like many Members, I already have a great number of distressed constituents getting in touch with me desperate for some sort of help. Today, though, I want to focus my comments more specifically on businesses, which we have been hearing about from Members around the Chamber. Last Thursday I met with farmers, who might be readily overlooked; it is essential that all sectors across our economy are considered. They have to keep their grain at a certain temperature, for example, to make sure that it is not affected by moisture and so on. I ask the Minister to ensure that all categories of businesses—care homes, farmers and so on—are considered. Specifically, I spoke to pub owners at a roundtable meeting last Friday. There were seven of them. Frankie, Phil, Ricky and Jake joined me. Several of them will be out of business in three weeks when their contracts end. I ask the Minister to implore the Prime Minister to act with absolute urgency on this issue.

[Greg Hands]

On farming, we are interacting regularly with the National Farmers Union, NFU Scotland, NFU Cymru, the Farmers’ Union of Wales and the Ulster Farmers Union to make sure that the voice of farming is heard loud and clear within this Government, including on energy prices. When it comes to wider announcements, as I have already said, I do not think that the hon. Gentleman will have too long to wait.

[Jim Shannon (Strangford) (DUP)]

I thank the Secretary of State for his statement. Like others, I want to make my point on this. On Sunday, just yesterday, one of my constituents closed his family shop, café and restaurant that he had owned for a number of years. It was a family enterprise that employed some 68 people. He said that he had spent much of his life in the village in which he had grown up, but he said that energy costs were so high that he could not continue to trade there. That is a fact of life. It is also a fact of life for butchers’ shops, and I wish to make a plea for them. I have spoken to three butchers in the past 10 days. One of them said that his energy costs will go from £1,850 to £4,000. The contract runs out in September. A second one said that his electric costs will go from £2,350 to £4,500. His contract runs out in October. The third one says that his costs will go from £3,000 to £6,000. Refrigeration is important to them. The costs are already high, and they say that they will not stop there. I just ask the Secretary: what can we do for those people?

[Greg Hands]

I hear the hon. Gentleman loud and clear. Northern Ireland is very much at the forefront of our discussions and our considerations. As I said in answer to an earlier question, the Chancellor of the Exchequer launched a new taskforce in relation to Northern Ireland, recognising its difficult position of not having a Northern Ireland Executive and also recognising that electricity is a devolved matter. We are actively on that case to make sure that Northern Ireland consumers and businesses do not miss out on the support being given by the UK Government, quite properly treating the United Kingdom as a whole.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the Minister for his statement.

Net Zero Strategy: High Court Ruling

Greg Hands Excerpts

Thursday 21st July 2022 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to provide a response to the High Court ruling that the net zero strategy is unlawful.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

Over the past three decades, the UK has driven down emissions by more than 45%— the fastest reduction of any G7 country. We have one of the most ambitious carbon-reduction plans in the world, pledging to reduce emissions by at least 68% by 2030 and by 77% by 2035, compared with 1990 levels, before of course reaching net zero by 2050. Our track record speaks for itself: the UK overachieved against the first carbon budget and exceeded the second by nearly 14%. The latest projections show that we are on track to meet the third carbon budget as well.

In its judgment on the judicial review of the net zero strategy, the High Court found that Government had not complied with Climate Change Act 2008 in relation to some specific procedural issues and the level of analysis published as part of the 164-page net zero strategy. I stress that the judge has made no criticism about the substance of our plans to meet net zero, which are well on track. Indeed, even the claimants in the case described the net zero strategy as “laudable”. The independent Climate Change Committee described the net zero strategy as

“an ambitious and comprehensive strategy that marks a significant step forward for UK climate policy”

and as

“the world’s most comprehensive plan to reach Net Zero”.

We are now considering the implications of the Court judgment and deciding whether to appeal. As we do this, our focus will remain resolutely on supporting people in the face of globally high energy prices and on boosting our energy security. Our recent British energy security strategy—launched by the Prime Minister—which puts Great Britain at the leading edge of the global energy revolution, will deliver a more independent, more secure energy system and support consumers to manage their energy bills.

[Kerry McCarthy]

Let us be clear: we are here because the High Court has ruled that the Government’s net zero strategy is unlawful and is in breach of the Climate Change Act. The Climate Change Committee, which the Minister cites, said only a few weeks ago that the Government

“will not deliver Net Zero”

on current projections. Not only have the Government failed to set out the detail of how they will reach net zero, but Ministers cannot even do basic maths, because, as the High Court made clear, adding up the emissions cuts in the strategy will leave a 5% shortfall. How embarrassing that his Department must be dragged to court to hear what we have known for months—that the numbers simply do not stack up.

This week has made it clear why we have to act now. The country has suffered through a sweltering heatwave causing fires across the country and infrastructure failure. But at a crucial time, this Government are directionless and collapsing in on themselves. The High Court has ordered that a revised strategy must be presented by next March. That will be under a new Prime Minister. Yet the current candidates have made their views on net zero clear. One has spent two years in the Treasury blocking climate action that might have saved the Government this embarrassment; the other wants to scrap green levies.

So forgive me if I have little faith that the situation is set to improve—but it has to. We need to insulate millions of homes to slash emissions and bring down bills. We need a green sprint for renewable energy to wean ourselves off expensive fossil fuels. Labour will deliver that, and more, with our £28 billion climate investment pledge. That is what the public want and what the planet needs, so will the Government get their act together, meet their legal obligations, and finally deliver the green future that we need?

[Greg Hands]

I thank the hon. Lady for that set of questions. Let me first stress that the net zero strategy—I have it here—is a very comprehensive document with pages and pages of annexes as well. It would be well worth all Members re-reading it today. It is a comprehensive plan for meeting our climate targets, outlining measures to move to a green and sustainable future. The Court found that we had not complied with the Climate Change Act only in relation to specific procedural issues and the level of analysis published as part of the strategy. The judge agreed that it did not need to contain measures with quantifiable effects to enable the full 100% emissions reductions required. [Interruption.] We are talking here about a strategy for the next 28 years. Inevitably, there will be some evolution in the strategy, and inevitably there will need to be some flexibility in a strategy with a 28-year timeframe.

The hon. Lady asked about the Conservative leadership candidates. In all the hustings that I have been to—and I think I have been to almost all of them—all the candidates made strong commitments to meet net zero, including at the hustings chaired by her near neighbour, my right hon. Friend the Member for Kingswood (Chris Skidmore).

When it comes to net zero and climate change, I am not going to take any lessons from Labour, which is the party that said in 1997:

“We see no economic case for…new nuclear power stations.”

That has set us back decades. There is a reason why 11 of our 12 power stations are coming off-stream before the end of this decade: the decisions, or non-decisions, by the last Labour Government, who increased our dependence on gas from 32% to 46% of our electricity generation—which could only have cheered Vladimir Putin. On energy efficiency, we inherited a position where 14% of properties in this country were rated A to C. We have increased that to 46%. When we took office, renewables made up only 7% of our electricity generation mix. That is now at 43%. So I am going to take no lessons from Labour. It is this Government who are taking the tough decisions, including on Sizewell yesterday, and moving forward on renewable energy and nuclear—not any of the Opposition parties.

[Mr Speaker]

We now come to SNP spokesperson Deidre Brock. [Interruption.] I am sorry. I did not think anybody was standing. I call David Duguid.

--- Later in debate ---

[David Duguid (Banff and Buchan) (Con)]

Thank you, Mr Speaker. I did wonder if I had managed to catch your eye.

Will my right hon. Friend confirm that this Government, whoever leads them after the summer, will remain committed to the net zero by 2050 target, given that, as he rightly said, in successive hustings, all candidates confirmed their commitment to maintaining that target? Will he also confirm that the UK oil and gas companies are at the forefront of driving forward the energy transition through so many different initiatives, such as carbon capture and storage, which will be so important to the St Fergus gas terminal in my constituency?

[Greg Hands]

My hon. Friend is correct. He is always a strong voice for all the industries in his constituency, whether they be traditional oil and gas or those making the transition to carbon capture, utilisation and storage, hydrogen and so on. All these technologies will be crucial. The Climate Change Committee itself has said that carbon capture, utilisation and storage is “essential” to the achievement of our net zero goals. We remain on course to reach net zero by 2050 as a world leader, particularly under the COP presidency of my right hon. Friend the Member for Reading West (Alok Sharma).

[Mr Speaker]

I call the Scottish National party spokes- person, Deidre Brock.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

The judge ruled that the Minister could not have “rationally” reached the conclusions he did or made the decisions he did as a consequence of his lack of information in making the policy. If, as the judge ruled, the Minister could not have “rationally” made his decisions, on what irrational basis did he make them?

What confidence has the Minister that his Government’s climate policy can be fixed when both candidates for his party's leadership are at best lukewarm on climate issues, and at worst willing to sacrifice net zero? The Foreign Secretary said this morning that she would scrap the green levies, for example.

It is estimated that Scotland is missing out on 2,500 green jobs owing to the languid pace at which the UK Government are developing the renewables sector. Does the Minister agree that the UK Government should devolve financial powers to Scotland so that the Scottish Government can push forward renewables and clean technologies where the UK Government have failed to do so?

In 2020, the Met Office conducted a hypothetical thought experiment to determine what the weather would be like in 2050 if climate change accelerated as expected. Several of those projections are coming true now, 28 years early. Does the Minister not agree that it is vital for our plans to fight climate change to be up to the job, and that the next Prime Minister must remain completely committed to that fight?

[Greg Hands]

It is entirely wrong to say that any of the candidates to be the next Prime Minister are lukewarm on climate issues. On the contrary, the commitment to net zero from all the candidates—well, both the candidates in the last round—is absolute. I am a little surprised by the Scottish National party at times: this is the UK Government who brought COP26 to Glasgow and brought it to the attention of the world, and all that the SNP has done in the last year is snipe from the sidelines.

The hon. Lady mentioned jobs. There are already 430,000 people across the United Kingdom working in low-carbon businesses. The British energy security strategy will increase the number of clean jobs in the UK, supporting 90,000 jobs in offshore wind, 10,000 in solar power and 12,000 in the UK hydrogen industry by 2028. I think it is about time the SNP got behind our energy transition—supporting, for example, the move to nuclear power, which is a key part of decarbonised electricity generation—and got behind what the UK Government are doing on behalf of the people of Scotland, as well as the rest of the UK.

[Dr Caroline Johnson (Sleaford and North Hykeham) (Con)]

I attended nearly all the hustings as well, and I was pleased to hear all the candidates support the net zero target and express their commitment to climate change. One of the challenges that we face, however, is the fact that the homes of people in rural areas are less likely to be well insulated and less likely to be easy to insulate. Furthermore, we have no mass transit systems—which, indeed, would be impractical in most rural areas—so we rely much more on fuels for our cars. What can the Minister do to ensure that, as we move towards climate change as a country, we do so in a way that does not penalise those in the countryside most financially, but spreads the risk and the penalty evenly?

[Greg Hands]

My hon. Friend is a continuous and doughty champion on behalf of her rural constituents, and she has raised with me previously issues relating to properties that are off the gas grid and the costs of heating oil and liquefied petroleum gas. I am looking at these matters very closely, and have held roundtables both with Members of Parliament and with the industry. I urge her to engage—in fact, I am sure she has already done so—with the trade body, the UK & Ireland Fuel Distributors Association, which will make a strong case that there is a competitive market there. Obviously prices are high—driven by the high global prices of energy, particularly oil—but a price cap, for example, would be an inappropriate means for those companies to use.

I strongly agree with my hon. Friend that the commitment of this party and this Government to net zero is absolute, and one of the strongest in the world.

[Richard Burgon (Leeds East) (Lab)]

Oil and gas giants have driven the climate crisis, yet one Cabinet Minister banked £1.3 million from an oil company while a Back-Bench MP, and another has accepted £100,000 from a firm run by an oil trader. I will be tabling a Bill to kick oil and gas money out of politics. Is it not time we did just that?

[Greg Hands]

That is a familiar refrain from the hon. Gentleman, and he ignores a lot of evidence that those same companies are big contributors to our world-leading renewable energy programme. We have Europe’s largest installed offshore wind capacity, we are moving into tidal, we are increasingly moving into onshore wind and we are ramping up our solar ambitions. A large part of our hydrogen production and our carbon capture, utilisation and storage is being done by energy companies. I look forward to seeing whether the Labour Front Bench supports his Bill.

[Wendy Chamberlain (North East Fife) (LD)]

The Climate Change Committee has warned that the Government are on track to cut only 40% of the emissions required to reach the 2050 net zero target. The reality is that the Secretary of State for Business, Energy and Industrial Strategy is not sufficiently senior to co-ordinate the Government’s net zero response. Does the Minister agree that, perhaps as part of the evolving strategy he has described, we should have a Department and a Secretary of State for climate change, as there used to be, so they can be held accountable for delivering on that net zero target?

[Greg Hands]

That is a slightly curious question. The hon. Lady said the Secretary of State for Business, Energy and Industrial Strategy was insufficiently senior to take the decisions, but she then appeared to propose halving the size of his Department, which would probably make him less senior.

On the hon. Lady’s central point about the net zero strategy, this country remains on course to deliver net zero by 2050. Nobody ever said it would be straightforward or easy. The strategy set a 29-year path at the time of publication, and we are on good course. I have every confidence that the strategy will be the blueprint as we move forward.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I do not recall so much complacency oozing from the Government Front Bench in a very long time. I do not know about the Minister’s background, but when I studied economics, I was impressed by what John Maynard Keynes said:

“In the long run we are all dead.”

I believe the heat over the last few days means that 2050 will be too late for much of our population. We have to revise the target and move faster. There are some good things coming, but there are still so many closet climate change deniers in the Government and in the country. It is about time they opened their mind to the fact we now have to move faster and firmer.

[Greg Hands]

I am afraid to say that is an extraordinary attack, even by the hon. Gentleman’s standards. Actually, this Government were the first to introduce a net zero target. At COP26, we saw our Prime Minister and our COP President leading the world on action against climate change—action that others now seek to copy.

[Barry Gardiner (Brent North) (Lab)]

The UK has the lowest tax take in the world from offshore oil and gas. Even with the temporary energy profits levy, the tax take will still be six percentage points lower than the global average, and the new investment allowance announced by the Government will compensate companies 91p for every £1 they spend on new oil and gas projects. Will the Government look carefully at the fiscal regime and abolish the obscene subsidy that is distorting investment into outdated fossil fuels instead of new renewables, which do not qualify for that investment allowance?

[Greg Hands]

I return to what I said earlier. The situation we inherited from the last Labour Government is that renewables provided only 7% of our electricity mix; it is now 43%. When it comes to oil and gas taxation, the Government’s energy profits levy—the hon. Gentleman will know this, as I very clearly remember him debating it in the Chamber—is set to raise £5 billion this year, which is considerably more than the tax proposed by the Labour Front Bench, which he backed.

[Rachael Maskell (York Central) (Lab/Co-op)]

I just remind the Minister that it was Labour’s Climate Change Act that called for those targets to be set—in section 4. However, it seems that this Government were asleep at the wheel, knowing that there is a 5% deficit in terms of being able to attain—this is what the judgment said—their net zero target. Therefore, the Government’s inaction has led to the decision of the courts. The Government’s inaction is also leading to the absence of a new green deal for York. We have been promised that by his Department, which supports 4,000 jobs and the upskilling of 25,000 people with a new green deal, yet the Minister has not come forward with the money. When are we going to get that?

[Greg Hands]

I was referring to the adoption of net zero, of course, which was by this Government in 2019. I answered a question earlier about the jobs being provided through our action on climate change and our move into renewable energy, which I would hope the hon. Lady supports. The hon. Lady suggests that this Government and this party are not taking the tough action that we need and not putting the money there, but we have pledged £30 billion to combat climate change over this spending review. That is a considerable sum and a considerable political commitment by this Government.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

The High Court ruling that the Government’s flagship policy on climate change is unlawful is a clear warning that this UK Government are not doing enough on climate change. They should embrace that criticism and do something about it urgently, but instead they try to dodge it. The Minister mentioned the Climate Change Committee. It has said that nuclear will take too long; there needs to be a rush for electricity through renewables, and carbon capture and storage needs to be developed more quickly too. Why are the Government lagging behind and not taking this advice to deal with this important issue?

[Greg Hands]

As I said, we are considering our options in the aftermath of the Court ruling, but let me deal with some of the substance of what the hon. Gentleman is saying. He is saying that nuclear will take too long. The SNP has been opposed in principle to nuclear power since its very existence. So on the one hand he is saying he does not want it, but on the other hand he is saying it is taking too long. That makes no sense at all. The hon. Gentleman will remember that on the very day we published the net zero strategy we also announced the programme to move forward with carbon capture, utilisation and storage—we are on good track there.

On renewables, the whole of the UK is taking part in our huge move into and boost for renewable energy. Scotland is a vital part of that, which is why we have announced the first ever tidal contracts in the contracts for difference regime, as well as the first floating offshore wind deals. We are making sure that the whole of the UK benefits from our offshore wind assets, including, for example, in the Celtic sea between Wales and Cornwall, as well as off the north-east coast of Scotland, the North sea and the Irish sea.

[Olivia Blake (Sheffield, Hallam) (Lab)]

I am surprised by the right hon. Gentleman’s response to this debate, because the summary of the findings highlights that the net zero strategy

“did not reveal that the quantitative analysis put before the Minister left a shortfall against the reductions required by CB6”.

Does the Minister agree that this House should have known that and also known how the Government planned to mitigate that? Are they not embarrassed that they felt that they could hide such an omission from this House, where we hold them to account?

[Greg Hands]

We have to understand the context, which is setting out where 95% of emissions will come from in carbon budget 6. CB6 covers the years 2033—not 2023—to 2037. If we were to have gone back 30 years and asked, “How will we do our emissions over the next 30 years?”, I venture to suggest that that would not have been an entirely accurate exercise. I think that 95% is very credible for CB6, which covers 2033 to 2037. It is worth pointing out again that the court judgment was on this very narrow aspect—it is not about the net zero strategy as a whole. It sounds as though the hon. Lady has read part of the net zero strategy, and I strongly commend that she goes through the whole thing in more detail.

[Ian Mearns (Gateshead) (Lab)]

The Minister refers back to the Labour Government in 1997. Can I just point out to him that that was 25 years ago, and that for the last 12 years his Government have been in power. So in those 12 years, what has been done to rectify this particular problem, apart from possibly one of the major things: a moratorium on land-based wind generation, which has been a complete and utter disaster from that perspective? Has the Minister been asleep at the wheel, or is he only just remembering 1997 now, not in 2010?

[Greg Hands]

The Opposition cannot have it both ways. The hon. Gentleman is saying that he is going back to decisions made by the last Labour Government 25 years ago, but somebody else in the Opposition has said that new nuclear will take too long. It is worth thinking for a moment about the connection between those two. One of the reasons why 11 of the 12 nuclear power plants in this country are going off generation over the course of this decade is the failure to make the decisions in the 1990s and the first part of this century to replace them. He will be delighted to hear—he will have been in the Chamber to listen to this—that we have rectified that by approving Hinkley Point C and yesterday announcing the planning approval for Sizewell C, and also through the strong numbers in the British energy security strategy to move forward to 24 GW of nuclear by 2050. It is this Government who are making the tough decisions that were ducked by the previous Labour Government.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

There are two zero-emission policies that the Government could adopt to comply with the High Court’s request for a deliverable plan. One is a zero-emission home strategy. Since this Government have been in power, 1 million homes have been built without those standards in place, which makes a huge contribution to carbon outputs. The second is onshore wind, as my hon. Friend the Member for Gateshead (Ian Mearns) has already mentioned. Why have the Government not taken on board the carbon savings that we could have if a significant amount of new growth in onshore wind could be invested in?

[Greg Hands]

When it comes to wind, I just do not know what would satisfy the Opposition. We are No. 1 in Europe when it comes to our offshore wind capacity—[Hon. Members: “Onshore wind!”] I hear Members shouting about onshore wind. We have even more onshore wind than we have offshore wind. When it comes to energy efficiency, it is worth pointing out that when we took office only 14% of homes in this country were rated in bands A to C—the most energy efficient. We have increased that to 46%—a trebling of energy-efficient homes—and we have allocated £6.6 billion in this Parliament for energy efficiency. So I would say that we have answered the hon. Lady’s questions and we have raised them, in terms of the capacity of offshore wind, onshore wind and energy efficiency.

[Liz Twist (Blaydon) (Lab)]

The Climate Change Committee recently said that the Government had credible plans to reduce only 39% of UK emissions and that the UK was not on track to meet net zero. Now the High Court has said that the net zero strategy is unlawful. Is it not simply the case that the Government need to grasp the nettle, accept responsibility and just get on with making those detailed plans? When will the Minister do that?

[Greg Hands]

The court did not say that the net zero strategy was unlawful; I refer the hon. Lady to my earlier remarks. The Climate Change Committee praised this Government for the moves we have made on electricity decarbonisation. As I say, we are a world leader in this space, and I think she should show a little bit more pride in the efforts that the country is making, including off the coast in the North sea near her constituency, and also in our efforts on electric vehicles. There is a great deal for us all to take pride in across the whole country in terms of our net zero strategy and decarbonisation.

[Peter Grant (Glenrothes) (SNP)]

This week, Conservative Members have given both a full vote of confidence and an enthusiastic standing ovation to a Prime Minister who deliberately missed an emergency Cobra meeting to plan for the heatwave emergency because he was away playing at “Top Gun” with the RAF—playing the part of Maverick, I understand. How can anyone take seriously the climate change credentials of a party that so wholeheartedly supports a Prime Minister who, like some latter-day Nero, chooses to fiddle with his joystick while London burns?

[Greg Hands]

Well, I do not know quite where to start. I am not sure whether there was really a question embedded there. [Interruption.] Now that I have the hon. Gentleman’s attention, let me say that it is about time that SNP Members started to talk to the Scottish Government, with whom, I have reason to believe, they may have some influence, about why they have an ideological opposition to new nuclear. Nuclear is absolutely the way to provide the baseload zero-carbon energy for the future. Why is his party, and the Scottish Government, fundamentally opposed to it? His time would be spent more usefully on engagement with them than on watching what the Prime Minister was up to at the weekend.

[Jim Shannon (Strangford) (DUP)]

The Minister will agree that we need to strike a balance. Will he outline how he intends to address concerns in the agri-industry sector in Northern Ireland about the fact that livestock numbers in Northern Ireland would have to halve if we are to meet the net zero target by 2050? That would put 113,000 jobs at risk. Can he outline the steps that will be taken to ensure that the demands being made will not have that result?

[Greg Hands]

I always welcome questions from Northern Ireland. In my previous job at the Department for International Trade, I enjoyed greatly my interactions with the Ulster Farmers Union, with the hon. Gentleman, and with colleagues on behalf of agriculture in Northern Ireland. It is an important sector for the whole country. We are making sure that Northern Irish agriculture can access markets around the world. I would be delighted to pass on his comments to the Department for Environment, Food and Rural Affairs, though obviously agriculture is devolved to Northern Ireland. On trade in particular, we will make sure that Ulster farmers can access markets.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Calculations have been made to quantify the emissions cuts that will result from the policies in the Government’s strategy. The cuts do not add up to the reductions required to meet the sixth carbon budget; there is a 5% shortfall. That is equal to 75 million tonnes of CO₂, which is nearly the total amount of emissions in a year from car travel in the UK. What measures will be implemented to ensure that in future, calculations as crucial as these are informed by those with expertise, and are checked thoroughly before they are relied on in national policy?

[Greg Hands]

To put this in context, what the hon. Lady describes as a 5% shortfall is not, if I read the judgment correctly, a doubt that the Government can reach the target; it is simply a criticism of why we had laid out only 95%, rather than 100%, of the measures that are needed. I remind her that we are talking about carbon budget 6, which is for the years 2033 to 2037. There is a reasonable case—it was made by the Government in court—for saying that it is commendable that they could outline 95% of the journey that we are intending to make in 11 years’ time.

Office for Nuclear Regulation Post-Implementation Review: Publication

Greg Hands Excerpts

Wednesday 20th July 2022 Written Statements

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

Together with the Parliamentary Under-Secretary of State for Work and Pensions (Baroness Stedman-Scott), I am today laying in Parliament the post-implementation review of Part 3 of the Energy Act 2013. The review was commissioned in March 2021 by the Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng), as required by Section 118 of the EA 2013—the Act that established the Office for Nuclear Regulation, the UK’s independent nuclear regulator. The review concluded in March 2022, and the full report has now been laid in Parliament. The full report, alongside the summary report and the joint Government response, will be published on www.gov.uk.



The review was led by an independent reviewer, supported by a dedicated review team from across the Department for Business, Energy and Industrial Strategy and the Department for Work and Pensions, as the Departments responsible for the policy and sponsorship of the ONR. Evidence was collected from documentary reviews, extensive discussion with the ONR and interviews with external stakeholders. I would like to thank all of those who contributed to the review.



The review found that the objectives of Part 3 of the EA 2013 are being met: the ONR is effectively delivering its regulatory purposes, enabling the safe and secure use and storage of nuclear materials at civil nuclear sites. The review noted that the ONR is seen domestically and internationally as a strong example of principles-based regulation and is respected for its technical ability and regulatory performance.



Having a strong and effective independent regulator is essential to ensuring that civil nuclear facilities and activities are safely and securely operated at all times. This includes robust regulation of the UK’s nuclear legacy, current generating fleet, new nuclear, transport of civil nuclear and radioactive materials, and civil nuclear safeguards.



There are 14 recommendations and 29 suggestions within the review. These support the Government’s strategic priorities, notably our commitment in the British energy security strategy to work with the nuclear regulators to understand the potential for any streamlining or removal of duplication from consenting and licensing. More generally, the recommendations support the ongoing improvement of the regulator’s approach to innovation, proportionality and consistency, and efficiency.



The Government and the ONR welcome the report. The findings will help to ensure the ONR remains a modern, transparent regulator delivering trusted outcomes and value. The findings are aligned with the Government’s public sector reform agenda, supporting effective relationships between public bodies and Government Departments in the interests of the citizens they serve.



An implementation plan has been agreed between DWP, BEIS, and the ONR. BEIS will complete a formal review of progress to be completed and published within 24 months of the review’s publication.

[HCWS241]

New Pylons: East Anglia

Greg Hands Excerpts

Tuesday 19th July 2022 Westminster Hall

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

It is a pleasure to serve under your chairmanship, Mr Stringer, and I begin by congratulating my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) on securing this important debate. I offer my sincerest condolences on the death of his mother. I knew my hon. Friend’s father, who was a distinguished former Environment Secretary, and I feel sure I met his mother in connection with his father. I know how tragic the death of a parent can be, and I genuinely send him my deepest condolences at this difficult time.

My hon. Friend has continued to be a champion for his constituents on this topic. He said that he has never received as many emails as he has recently on this issue. I will be sure to continue to engage with National Grid on this matter, and I will ensure that it engages with my hon. Friend.

I congratulate my right hon. and hon. Friends on their engagement. It is always impressive to see MPs closely in touch with their communities. I am glad that yesterday they met National Grid—NG ESO and NG ET—and Ofgem. If I am not able to respond on all the points that they raised in the 15 minutes available, I am sure we will meet again.

My hon. Friend the Member for South Suffolk (James Cartlidge) wrote to me just over a week ago, and I want to address the questions and concerns in his letter. I will begin by introducing the topic and setting out the wider context. The British energy security strategy sets out bold plans to scale up and accelerate affordable, clean and secure energy, made in Britain for Britain, so that we can shift decisively away from expensive fossil fuels. That includes the ambition for 50 GW of offshore wind by 2030.

In the fourth contracts for difference auction earlier this month, five offshore wind projects totalling 7 GW won contracts at a record low strike price of £37.35 per megawatt-hour. To put that in perspective, on 7 July—the very same day as that result—the prevailing wholesale electricity day-ahead price was £230 per megawatt-hour. My hon. Friend the Member for Waveney (Peter Aldous) made the point well that we are No. 1 in Europe in terms of our offshore wind capacity, and the contributions to the local economy in East Anglia should not be underestimated. That confirms the fact that positioning offshore wind as a central pillar of our energy security strategy is the right call, and accelerating its deployment will be key to addressing Britain’s long-term energy needs.

I welcome the support of my hon. Friend the Members for Broadland (Jerome Mayhew), my hon. Friend the Member for South Suffolk and others for the strong contribution that offshore wind makes to the UK’s energy needs. Currently, it produces 11.4 GW. However, connecting that cheap, green energy and transporting it to where it is needed in East Anglia and across the country will require more electricity network infrastructure, both onshore and offshore, than we have today. We need that infrastructure to be built more quickly. Timescales for delivering transmission network infrastructure can be as long as 11 to 14 years—often far longer than the time taken to deliver the generation that is being connected. That constraint is already biting: about 5% of wind generation is curtailed, which means that its output is reduced because there is not enough capacity on the network to transport it. That could increase to 15% to 20% in the mid-2020s as wind generation increases.

How do we connect that energy? Unfortunately, placing all new infrastructure offshore is not feasible, as I think we would all agree, as ultimately the electricity needs to get to where the demand is, which is onshore. Therefore, even with offshore cables, infrastructure such as substations is required onshore at landing points.

Let me be up front with my right hon. and hon. Friends: the new projects proposed in East Anglia, such as East Anglia GREEN, are considered nationally significant infrastructure projects, as defined in the Planning Act 2008. Any project of that nature comes to the Secretary of State for Business, Energy and Industrial Strategy, who will consider a broad range of planning matters. That is a quasi-judicial process, of course, and I am sure that my right hon. and hon. Friends will understand that I cannot comment on specific points, which will almost certainly be submitted during the planning process, but I will try to deal with as many points as I can in the available time.



My hon. Friend the Member for Harwich and North Essex called it a patch and mend approach. I disagree with that, but there is a big transformation coming up through the Energy Security Bill, which was published only last week and is due to have its Second Reading in the House of Lords today. It includes within it a future system operator, which will take a long-term view of the whole energy system. That is one of the key reforms in the Energy Security Bill that will come before the Commons in the autumn. Two of the four pathfinder projects that have come out of the holistic network design process, which is part of the offshore transmission network review, which I will come on to explain, are actually located in East Anglia.

My hon. Friend the Member for Bury St Edmunds rightly pointed out that there is a presumption in favour of overhead pylons, but there are still broad overall factors involved in making these decisions. Those broad factors include the environmental impacts, the community impacts, the cost to bill payers, which I am sure all my hon. and right hon. Friends would agree is a significant factor, deliverability and speed. Those are all relevant factors when this planning is carried out. The significantly increased cost of undersea or underground cables needs to be taken into account, and the environmental impacts of different options need to be carefully weighed up. For example, undersea cabling can have a significant impact on marine life.

[James Cartlidge]

I appreciate what my right hon. Friend is saying—he is being very clear with us—but does he appreciate that what we learned from National Grid yesterday is that it will, over the summer, undertake a detailed assessment of a potential offshore alternative? In other words, yes, a range of factors can be considered, but that cannot have happened in the East Anglia GREEN consultation because there has been no detailed assessment of an alternative. On that basis, I hope he can understand why our constituents feel that the consultation should be reopened.

[Greg Hands]

I thank my hon. Friend for that intervention. Unfortunately I was not able to be at the meeting yesterday, but I will carefully look at a read-out of what was said at that meeting and study it. In any case I need to respond to his letter of 7 July, so I will make sure that I take on that specific point as far as I am able.

In general, my hon. Friend makes the good point that there is undersea cabling around the country. He rightly points out connections, for example, between Scotland and Wales, between Scotland and England and so on, but it is worth pointing out that East Anglia GREEN will deliver 6 GW of extra network capacity. I think my hon. Friend the Member for Waveney made that point. The latest offshore cable technology is capable of carrying up to 2 GW of capacity. When we are looking at the sheer amount of energy that needs to be transmitted, it is not necessarily comparing like with like. To deliver the equivalent of East Anglia GREEN offshore would require at least three 2 GW cables. We can all look at a map and see where connections are, but that does not tell the whole story.

[Jo Churchill]

The nub of it is that we have not been given these options. The Minister spoke about environmental impact and the other considerations that were taken into account, but as the MP trying to help inform my constituents, I certainly have never seen any of that information or data; I do not know whether anybody else has. Yesterday it was definitely inferred that some of this acquiring of information would need to happen in short order.

[Greg Hands]

I thank my hon. Friend for that intervention. I have spoken about yesterday, and I repeat my pledge to hold as soon as I can a further meeting with colleagues to consider what was said and the progression of these matters, while bearing in mind the quasi-judicial planning nature of the Secretary of State’s decision.

In July my right hon. Friend the Secretary of State, when he was Energy Minister, launched the offshore transmission network review, or OTNR, to improve the level of co-ordination in how we connect offshore and ensure that future connections are delivered in the most appropriate way. I think itwas my hon. Friend the Member for Broadland who asked, could we not have foreseen in 2015 the great need for this work? To some extent, that is not an unfair point. In many ways, in this country we are victims of our incredible success with our offshore wind capacity, which is the largest in Europe. It was the largest in the world until last summer, when China overtook us. It really is the envy of the world, and others come to see us. The United States is scaling up its capability and other European countries are coming to see us and so on. So he makes a fair point.

Earlier this month, we reached a significant milestone in the review with the publication of a major deliverable—the holistic network design, to which my hon. Friends have referred. In addition, we recently announced Nick Winser CBE as the UK’s first Electricity Networks Commissioner. He will play a pivotal role in ensuring that we have the right infrastructure to transmit electricity to where it is needed.

I pay tribute my hon. Friend the Member for Bury St Edmunds for always being engaged on all matters environmental during her time at the Department for Environment, Food and Rural Affairs. When it comes to commercial and industrial and energy resilience, which is very important, I refer her to the evidence that I gave yesterday to the Joint Committee on National Security Strategy, which goes into those matters in some detail.

The HND sets out the need for about £54 billion of onshore and offshore transmission infrastructure, new and upgraded, which will be needed to deliver our 2030 ambition. That is the first time that those have been co-ordinated to ensure better outcomes for communities, the environment and bill payers. Although a new requirement for onshore network reinforcement has been identified in the HND, no decisions have yet been taken on how best to do that. All projects that come forward as a result of the HND will be subject to the relevant democratic planning processes to ensure that local stakeholders get a say on the developments and that the impacts are mitigated as far as possible. I have already mentioned the pathfinder projects.

I will deal with three or four other points that arose in the debate. My hon. Friend the Member for Broadland asked whether connection contracts were subject to planning. They are, but of course they are not yet in the planning system. There is a statement from the five projects in East Anglia that are working together on offshore co-ordinated options, as he knows, and utilising changes in the offshore transmission network review process. That will be supported by a £100 million offshore co-ordination support scheme, which will be launched later this year.

My hon. Friend the Member for Bury St Edmunds asked about the NPS, which will be reconsulted on later this year. I expect that that will apply to this project. MPs will have a chance to have an input on the NPS process. I expect both the current and future NPS to provide the flexibility for trade-offs between cost and impact and between offshore and onshore options to be brought forward where appropriate. That is a matter for National Grid Electricity Transmission and Ofgem. My hon. Friend also asked about the environment impact assessment for East Anglia GREEN, which will cover the impacts on agriculture. We expect farmers and landowners to receive compensation for any loss or impact on crop production.

My hon. Friend the Member for South Suffolk wants a study on the offshore grid to be done independently. In accordance with its transmission licence, it is NGET’s responsibility to develop and put forward options to reinforce the network. BEIS is the ultimate decision maker for those nationally significant infrastructure projects.

[James Cartlidge]

NGET could commission an independent expert under its contract.

[Greg Hands]

I am sure that National Grid Electricity Transmission will have noted that point from the debate. If my hon. Friend did not make that point yesterday, I am sure he could make that to them. I must be careful about the role in the quasi-judicial process in relation to NGET’s responsibility.

We have covered the holistic network design and the pathfinder projects, so I will allow my hon. Friend the Member for Harwich and North Essex a couple of minutes in which to respond. I look forward to continuing engagement with my right hon. and hon. Friends on these topics. I will respond in writing to the letter of 7 July as soon as possible. I will also look at what was said yesterday and any other points from the debate that I have not been able to respond to.

Draft Electricity and Gas (Energy Company Obligation) Order 2022

Greg Hands Excerpts

Monday 18th July 2022 General Committees

[The Chair]

Before we start, in view of the weather, Members are advised that they can take their jackets and ties off if they wish.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I beg to move,

That the Committee has considered the draft Electricity and Gas (Energy Company Obligation) Order 2022.

It is a pleasure to serve under your chairmanship, Mr Sharma. This year, we have witnessed an extraordinary and global increase in the cost of energy. The Government recognise that millions of households across the UK need further support with the cost of living this year, which is why we announced additional support worth over £37 billion, including targeted help for those on the lowest incomes.

In that context, the energy company obligation, or ECO, scheme remains key to tackling fuel poverty and helping low-income households with their energy bills. In the sustainable warmth strategy 2021, the Government committed to extending, expanding and reforming the scheme in line with our statutory fuel poverty target. Since 2013, the ECO scheme has ensured much-needed support for low-income households to improve the energy efficiency of their homes. Over the last decade, since it began, it has delivered over 3.5 million energy efficiency and heating measures to around 2.4 million households.

The draft order provides for that expanded and reformed energy company obligation scheme in Great Britain until March 2026, and therefore succeeds the previous energy company obligation order in Great Britain. Its main provisions are, first, the scheme’s extension by four years, to 2026, and expansion from around £640 million to around £1 billion per annum. Secondly, there is an increased focus on support for low income and vulnerable households in the least efficient homes. Thirdly, mandatory minimum energy efficiency improvements will be required. Under the scheme, those in energy performance certificate bands F and G—the least energy efficient homes—will be improved to a minimum band D. B and D and E homes, in turn, will be improved to a minimum band C.

Fourthly, the introduction of a new minimum requirement will see at least 150,000 energy performance certificate band E, F and G private-tenure homes upgraded. Fifthly, the solid wall minimum requirement will ensure that solid wall insulation is installed in at least 90,000 homes. The draft order introduces minimum insulation requirements for all homes receiving any heating measure, subject to certain exceptions, to encourage a fabric-first approach. Broken boiler replacements will continue to be limited but available under the scheme, capped at 20,000 homes, to encourage the transition to renewable heating and align with the Government’s long-term plan for reaching net zero.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I understand what the Minister says about capping the number of gas boiler replacements, which will transition us away from reliance on fossil fuels, but what happens if that cap is reached? How will costs and alternative solutions be managed for other customers who have broken-down gas boiler systems?

[Greg Hands]

If I understood the hon. Gentleman’s question correctly, it is about dealing with people who have no choice but to have a new gas boiler, and what the cost of that might be. We recognise that some homes will not be suitable to be upgraded to something like a heat pump. That is one of the reasons that we are putting these measures in place: to ensure that funds are available to help those who need a boiler upgrade. However, we are saying that ensuring that that is available is not the priority of the Government going forward. The priority is to align with our net zero requirements and make sure that people can be upgraded to heat pumps wherever possible.

[Alan Brown]

What is to prevent companies taking the easy option of the gas boiler replacement to get up to the 20,000 threshold? I am trying to see what checks and measures are in place to make sure that gas boilers are installed only when they are really required and other options have been exhausted.

[Greg Hands]

It would be a matter for the supplier to make sure that the energy efficiency upgrade is carried out in accordance with the scheme and Government policy. It will ultimately be a matter for the supplier under the ECO4 regulations. The Government will of course speak with suppliers to ensure that they are delivering according to the Government requirements. What we are saying is that we are not encouraging gas boiler upgrades, but that if there is no other available source of heat and a consumer is vulnerable, there should be the possibility of upgrading the gas boiler.

The scheme’s eligibility criteria are reformed, placing greater focus on households on the lowest incomes. Households in receipt of means-tested benefits will continue to be eligible. The proportion of a supplier’s obligation that can be delivered under the flexible eligibility element of the scheme will increase to 50%. Under that, multiple options are introduced to encourage improved targeting of low-income and vulnerable households that may not be in receipt of benefits. Those flexible eligibility provisions will enable local authorities, energy suppliers, Citizens Advice and the NHS to work together to identify households vulnerable to the effects of living in a cold home.

A new scoring framework will apply to incentivise multiple measure delivery, along with a series of score uplifts to steer measures and delivery where they are needed most. Installation quality will be governed under the Government-endorsed TrustMark compliance and certification framework. As part of that, the quality of installations, alongside a whole assessment of the property, will continue to rely on independent industry standards, the publicly available specifications PAS 2030 and PAS 2035.

The impacts will be as follows. Thanks to the reforms, we estimate that some 800,000 measures will be installed in around 450,000 homes. Of those 450,000 homes, around 360,000 will be upgraded to EPC bands B and C, removing those households from fuel poverty. We will continue the Government’s excellent record of improving the energy efficiency of people’s homes. The percentage of homes in Great Britain in energy efficiency bands A to C has risen under this Government from 10% to 46% of the total housing stock. That is a quadrupling of the number of homes in the most energy-efficient categories.

Those measures are expected to save £300 on average over the lifetime of the measures and up to £1,600 for those living in the least energy-efficient homes. However, those savings could average around £600 next winter, given future prices—or prices according to the futures market, I should say. That will provide crucial, long-term help when it is needed most this coming winter. To help deal with what might seem to be a gap between the ECO schemes—between the end of the ECO3 at the end of March this year and the start of the ECO4—the order permits measures installed since 1 April to count toward the suppliers’ obligation target.

Those measures are split into two elements. First, there is interim delivery for measures installed between 1 April and 30 June—so over the last three months—to slightly amended ECO3 rules. Secondly, there is early delivery for measures installed to the new rules. Nearly 33,000 measures have already been installed since 1 April. The fact that there might appear to be an interregnum between the ECO3 and ECO4 schemes is no cause for concern. The 33,000 measures have been introduced in those three months will be accounted for either in the ECO3 scheme for the interim delivery or early delivery under ECO4 in that seamless process.

The Government held a consultation on the reforms last summer and published a response in April. The majority of consultation responses supported extending and expanding the scheme as well as the proposals for reform. Government are proceeding with the main proposals, with some key changes in the light of the response received and the final impact assessment. One change is that we have increased the minimum requirement for bands E, F and G from 100,000 to 150,000 private tenure homes.

More of the least energy-efficient properties must be upgraded, focusing more help on those with the highest energy bills. We are providing extra incentives for the installation of measures in rural off gas grid areas in Scotland and Wales, which will be of particular interest to Members representing rural parts of Scotland and Wales. Wales has the largest percentage of homes off the gas grid, and that is the subject of frequent questions to the Department for Business, Energy and Industrial Strategy from my hon. Friends the Members for Brecon and Radnorshire (Fay Jones) and for Montgomeryshire (Craig Williams). They are specific measures in place to help rural homes that are off the gas grid in Scotland and Wales.

England has the separate home upgrade grant, so is covered by an existing scheme. That will account for the extra costs of delivery.

[Alan Brown]

rose—

[Greg Hands]

I know that the hon. Member for Kilmarnock and Loudoun, on behalf of every person in rural Scotland, is about to stand up and welcome the extension for rural homes off the gas grid in Scotland.

[Alan Brown]

I welcome the uplift and the recognition that Scotland and Wales have more homes off the gas grid. How does that impact on the overall budget allocated to Scotland and Wales? By their very nature, they have a greater need, which is recognised. Has the overall budget envelope increased for Scotland and Wales, or is it still done on a per capita basis?

[Greg Hands]

The scheme is Great Britain-wide. One of the key responses from the consultation was to ensure that, wherever possible, the rules across Great Britain are made the same. Exceptionally, Northern Ireland has its own electricity market. On the extra incentives for the installation of measures in rural areas off the gas grid, I will find out for the hon. Gentleman if there is a specific budget allocation—[Interruption.] There is no specific budget allocation set per nation. He will see that the policy is designed to help. We recognise that rural Scotland and Wales are off the gas grid and not eligible for the home upgrade grant—there ought to be devolved equivalents in Scotland and Wales for that. That is why we have taken the action that we have.

The repair of efficient or inefficient oil and liquefied petroleum gas heating systems will be allowed as a last resort in homes that are off gas grid and where it is not possible to install low-carbon heating measures. That will help to ensure that people are not left without a functioning heating system.

The energy company obligation scheme remains important to support low income and vulnerable households to improve the energy efficiency of their homes and help reduce the energy bills of an estimated 450,000 households. The Government can take great pride that we are providing real help and energy efficiency measures for low-income and vulnerable households, as we have for the last nine years and will for the next four. The order extends and expands the scheme, focusing on the lowest-income households living in the least energy efficient homes. The scheme remains a key contributor to meeting our fuel poverty and carbon reduction goals and is consistent with the heat and buildings strategy and the transition to net zero. I commend the draft order to the Committee.

--- Later in debate ---

[Greg Hands]

This has been a good-natured and well-informed debate. I did not hear any opposition to the scheme, so I welcome the support of the Opposition parties for what the Government are doing. I will try to answer as many questions as I can. The hon. Member for Southampton, Test asked why the obligation is set low, but I disagree that it is set low. A £640 million scheme increased to a £1 billion scheme is a 56% increase—quite an ambitious increase.

The hon. Member for Kilmarnock and Loudoun tried to pick holes and asked about inflation. Well, I have news for him: inflation is not anywhere close to 56%. I remember back in the 1970s that it did get into the high teens and to 20%, but we are not anywhere close to that, thankfully. He asked whether the scheme should be more ambitious. I remind him that ECO is only part of the help available. We have other Government schemes designed to improve the energy efficiency of homes, which is why this Government have such an excellent record on that.

I have to correct what I said earlier. I said that, in 2010, 10% of homes were rated A to C on energy efficiency. I checked my own notes, and it is not 10%, but 14%, so I may have been doing the last Labour Government a slight disservice. It is not, I am afraid to say, a quadrupling of the number of homes well rated under energy efficiency; it is in fact only a tripling, so I apologise. Perhaps I have been giving too much praise for the Government, but I none the less think that a tripling in the last 12 years is a record to be proud of.

The hon. Member for Kilmarnock and Loudoun is right that ECO adds to bills, but those who benefit will of course get reduced bills for many decades, which it is important to understand. It is not a simple redistribution from non-vulnerable bill payers to other bill payers. It assists vulnerable bill payers in energy-inefficient homes to get their homes to be energy-efficient, thereby saving them a considerable amount of resources over many years. We are also providing direct help with the £400 energy bills support scheme and other measures introduced by the Treasury this year.

I am glad the hon. Member for Southampton, Test praised the co-operation with the private sector, housing associations, the NHS and local authorities. It is a whole-of-Government effort to improve the energy efficiency of our homes. He said there was an estimated £4 on bills a month, but the hon. Member for Kilmarnock and Loudoun was correct: the estimate is £37 per annum—about £3 a month. I have said that it is not the only scheme available. We have £6.6 billion deployed over the course of this Parliament on energy efficiency schemes, including the £450 million boiler upgrade scheme, the social housing decarbonisation fund, the home upgrade grant, which I have already mentioned, and the public sector decarbonisation scheme, as well as the VAT reductions announced by the previous Chancellor earlier this year.

[Lloyd Russell-Moyle]

Is not part of the problem the myriad schemes that the Minister has outlined? For the normal person in the street, who lives in a shared house where part of it is owned by a person in poverty, another part is owned by someone else and another part is rented, it becomes so difficult for people to match these schemes up and get them in line at the right time, particularly when the Government do not issue guidelines on how the money should be spent for months on end. Is it not better for the Minister to go away and think of a universal scheme to start to tackle those problems, rather than this piecemeal effect?

[Greg Hands]

The hon. Member raises an important point, but an energy consumer does not have to have an encyclopaedic knowledge of the available schemes. The important thing is that the Government provide that assistance, in some cases via energy suppliers, local authorities or social housing providers. If he wants to write to me to suggest which schemes he might seek to abolish in favour of putting it all in one scheme, I would happily receive such a representation.

The hon. Member for Southampton, Test said the solid wall insulation minimal requirement should be higher. ECO4 will focus on the least energy-efficient properties and, as I mentioned earlier, we have introduced a requirement for a minimum of 150,000 band E, F and G private tenure homes to be treated. Most of those will be solid-walled homes and we estimate that around 75% of total scheme spending will go towards improving them to band D or better. We believe the current solid wall minimum strikes the right balance between giving certainty to the supply chain and giving them the flexibility to treat homes in the most important way. The hon. Member for Brighton, Kemptown sought a street-by-street approach—an area-based scheme. We expect area-based schemes to happen as installers involved in ECO also deliver under the home upgrade grant, the social housing decarbonisation fund and the local authority delivery scheme. We already know of installers planning to work in that way.

The hon. Member for Southampton, Test asked why the scheme was delayed. It is worth stating that ECO4 is the most significant reform since the scheme began nine years ago. We have had to ensure that it is fit for purpose until March 2026—it is important to get that right. This has presented new challenges in policy design, modelling and legal drafting. As I have already mentioned, however, nearly 33,000 measures have been installed since 1 April and registered with TrustMark. We expect that number to rise by several thousand because, obviously, there is a time lag between installation and registration. That is not a bad rate. This is a scheme of 450,000 households over four years, so that is roughly 110,000 per annum, so the fact that in three months, 33,000 measures have been installed shows there has been no discernible impact on delivery from the change from ECO3 to ECO4.

The hon. Member read us a long chronology of parliamentary questions and the different points he has made. I will never forget in my first year in Parliament when I asked a point of order to the Speaker. I read out a long chronology relating to a then Labour Minister, who had failed to provide an answer. The then Speaker—the glorious late Michael Martin—replied to me with just one word, “Persevere.” That was all he said to me. I will not urge the hon. Member to persevere. I say to him that at the end of that long chronology, he was not actually able to demonstrate that there had been any deficiency, that anybody had been damaged or that any measures had not been delivered as a result of ECO4 coming in three months after the scheduled end of ECO3. We covered it due to the extension of ECO3 and the bringing forward of measures in ECO4. That has been solved, and the hon. Member should join us in celebrating those 33,000 measures that have been installed just in the last three months.

Moreover, by allowing suppliers to overdeliver against their ECO3 targets—referred to as carryover—at least 40,000 extra measures were delivered earlier than they otherwise would have been. We have engaged with energy suppliers, and the hon. Member for Kilmarnock and Loudoun asked about the supply chain.

[Dr Whitehead]

If the Minister thought all along that because of all the various issues and complexities of this particular scheme, it would take longer than originally anticipated and there would be a gap in schemes, why did he not say so at the time? Why did he give me a series of replies to my questions, which said anything but that being the case?

[Greg Hands]

Sometimes, when we are making a reform, it is not always obvious where that reform process will lead. Let us bear in mind that there was a big consultation and we wanted to hear from suppliers and consumer groups, so we obviously wanted to look closely at the responses to the consultation. I have already mentioned the consultation in response to the point of the hon. Member for Kilmarnock and Loudoun; we want a GB-wide scheme. It was right and proper to wait for the responses to the consultation before laying out our reform measures.

[Katherine Fletcher (South Ribble) (Con)]

I promise to be brief. Part of the technical consultation that the Minister has alluded to for solid walls is really important. Is there a major gain in preventing the latent heat of evaporation by putting a PVA coating on the outside of walls? Do we have to lose space from inside homes that may already be small to provide initial internal insulation? Does he agree that it was important to take time to ensure that the industry and different providers could work out how to get the most bang for their buck to move it forward?

[Dr Whitehead]

But we always knew that.

[Greg Hands]

I am not sure whether the hon. Gentleman is making an intervention on my hon. Friend’s intervention, but my hon. Friend makes a good point about the strong measures that we are taking on solid wall insulation, which are important to get right—the most important thing. I do not think that anybody could point to any damage that has been caused by this; we have continued to deliver a huge number of measures in those three months. We should look at the new scheme and welcome the additional measures that we are taking to help vulnerable households.

The hon. Member for Kilmarnock and Loudoun asked about the solar process; it is a matter for Ofgem to ensure that ECO is protected in that. Obligations are calculated annually and suppliers must fulfil their obligation. Any supplier that went bust would lose the obligation. So far, only very small—or relatively small—suppliers have gone bust. The larger suppliers have continued to fulfil their obligation under ECO3.

The hon. Gentleman also asked about discussions with the Treasury. As you will know, Mr Sharma, it is always difficult to disclose matters relating to a discussion with the Treasury, so I will pass on that.

The hon. Gentleman asked about the negative NPV of £3.8 million; I will have to write to him on the exact details of that. On the 1 million homes that would be left in bands E, F and G after these schemes, we recognise that this scheme will not improve every home in the country. To help with that effort, we have additional schemes in place that I have already mentioned. Of course, some homes will not be able to be upgraded to band C or above, or it would not be cost-efficient to do so, but hopefully that will be a very small number.

[Alan Brown]

The Minister spoke about solar and how the renewables obligation will be protected. Does he know how the renewables obligation will work for Bulb Energy, which is obviously in a special administration regime but still supplying a large number of customers? Will it be eligible to pay RO and will that just be an additional burden that is picked up with the administration costs?

[Greg Hands]

The hon. Gentleman asks a reasonable question. Obviously, that will be a matter for the Bulb Energy administrators. I am happy to write to him with more detail on how they might look at that in terms of ECO4.

[Dr Whitehead]

There are two separate administrators.

[Greg Hands]

Of course, there are separate administrators for different parts of the company. I am happy to write to the hon. Member for Kilmarnock and Loudoun about how the administrators might approach that issue in relation to ECO4.

The hon. Gentleman asks about the back end and risk delivery, which has not happened before with ECO1, 2 and 3. Obviously, however, Ofgem monitors that closely to make sure that there is no risk of suppliers back-ending their obligations. To the best of my knowledge, we have not had that problem in the previous three schemes.

On a budget by nations, I think I am right in saying that Scotland, along with the north of England, has benefited the most of the nations or regions of the United Kingdom from the previous ECO1, 2 and 3 schemes. It has very much been, to date, a scheme where disproportionately Scotland and the north of England have benefited. I know that the hon. Member likes to create grievances here on behalf of Scotland. He is even having a pre-emptive grievance. The scheme has not even started and he is already ratcheting up the grievance policy. I have to say that from my experience of the previous ECO1, 2 and 3 schemes, Scotland has been very well served, as has the north of England. I think we should continue to celebrate that. The hon. Member asked about a biofuels exclusion. There is competition for biofuels, and they may be better used elsewhere, but we also do not want to maintain low-income homes on volatile fuels wherever possible.

The Government recognise that millions of households across the UK may need further support with the cost of living and the extraordinary increase in the cost of energy, which we have witnessed this year. That is why the Government have announced additional support this year worth over £37 billion, including targeted support for those on the lowest incomes. The Government remain committed to helping low-income, vulnerable households to reduce their fuel bills and heat their homes. Improving the energy efficiency of our homes is the best long-term solution to achieve this. Tackling fuel poverty is an essential for our transition to net zero. That is why we are spending £6.6 billion over the course of this Parliament and expanding the previous ECO3 system into a much larger ECO4 scheme, targeted particularly at the more vulnerable and those living in the least energy-efficient homes.

The Government have an excellent record in improving the energy efficiency of homes in this country—from 14%, the level we inherited from the last Government, to 46% today. That still means that 54% of homes in the United Kingdom are rated below band C for energy efficiency. That does not give any cause for complacency. I think we can see with the action taken by this Government that we have improved the energy efficiency of homes gradually and considerably over the last 12 years, and we will continue to do so with ECO4. Therefore, I commend this draft order to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the Draft Electricity and Gas (Energy Company Obligation) Order 2022.

British Glass Industry

Greg Hands Excerpts

Thursday 14th July 2022 Commons Chamber

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I am grateful to the hon. Member for St Helens North (Conor McGinn) for securing the debate and for outlining so comprehensively the importance of glass to the UK. I welcome the opportunity to address the priorities and challenges faced by the UK glass sector, and to explain what the Government have done, and will do in the future, to support it. As the Energy Minister, I can assure the hon. Gentleman that the Department recognises the value of glass manufacturers, and takes their concerns very seriously.

In his excellent speech, the hon. Gentleman pointed out that British-made glass is renowned around the world. I always love a good bit of history, and he took us back to 1773 and the foundation of the British glass industry—indeed, probably the world glass industry—at Ravenhead. Glass has of course been around for centuries, but that was when it was turned into an industry. The hon. Gentleman told us about the 3.5 million tonnes that are produced each year and the 6,000 people employed directly in the industry, but he also talked about the much wider impact of the sector. As a former Exports Minister and a former Investment Minister, I know that it is industries of this kind that will enable global Britain to compete on the world stage and will continue to attract foreign direct investment, which plays such an important role in the hon. Gentleman’s constituency.

Let me now deal with a few of the points that the hon. Gentleman raised. The Department for Environment, Food and Rural Affairs leads on glass recycling and direct deposit schemes, but I will pass his comments on. DEFRA has undertaken extensive engagement with the glass sector, and will do so in the future. I am sure the hon. Gentleman will agree that the Government want to make recycling as easy and efficient as possible, but we need to ensure that that does not include any perverse incentives, or any element that is likely to damage some of our key industries.

The subject of energy-intensive industries will constitute the main part of my response, but I was pleased to hear the hon. Gentleman report that energy efficiency is up 50% in glass furnaces. That is an encouraging sign as we move towards net zero. Obviously some industries will be harder to decarbonise than others, but it is good to hear that glass has made significant progress in that regard.

The hon. Gentleman mentioned HyNet North West. I was delighted to visit some of the participants in the HyNet North West carbon capture, utilisation and storage cluster last autumn. I circled near the hon. Gentleman’s constituency: I was in Runcorn and Warrington. We are moving forward with HyNet in a very good place.

[Conor McGinn]

It was remiss of me not to invite the Minister to St Helens, and I apologise for my rudeness. He should not be afraid to visit us, and perhaps he will visit Glass Futures before the project is completed or come when we open it.

[Mr Deputy Speaker (Mr Nigel Evans)]

On your way to Ribble Valley, Minister.

[Greg Hands]

Gosh, I am getting multiple invitations—was that an intervention on an intervention? In any case, I will happily have a look at the forthcoming visits schedule. It is obviously an important part of the world for our overall energy policy and energy future.

The hon. Gentleman invited me to be drawn on the energy profits levy, but I think I will avoid that for the moment. Not only is it part of a Treasury lead, but I feel that we want to concentrate on glass and energy-intensive industries. He mentioned carbon leakage, and obviously the UK is an important participant in the debate on carbon border adjustment mechanisms, which I also know about from my days at International Trade.

I shall deal in my response mainly with energy-intensive industries, particularly in relation to glass. The Government recognise the wider importance of all EIIs to this country, and their particular significance to local economies and communities, which all of us here today represent. I agree that strong and sustainable EIIs are hugely important to our national economy, particularly as we secure new global opportunities and continue our drive towards a green economic recovery. From offshore wind farms to building electric cars, we know that steel, ceramics and glass are three important EIIs that will play a big part in our low-carbon future and low-carbon industries.

In my time as a Minister in the Department for Business, Energy and Industrial Strategy, I have witnessed at first hand the skills and dedication of workers, and through my and colleagues’ engagement with the various business and trade associations, we have seen their drive to work with the Government to find a sustainable solution for EIIs that works for us all. I am sure we can all agree that the last two years or so have been particularly difficult for everybody, and EIIs have been no exception. Many workers in those industries have been engaged in activities that could clearly only be carried out on site, and in some cases they were operating equipment designed specifically for continuous use without shutdown. I would like to take this opportunity to put on record the Government’s appreciation of all those who work in those sectors in what can be challenging environments ordinarily, let alone in the middle of a pandemic. I would like to thank the essential workers who continued going to work on site and kept production going and sites safe during the pandemic.

The energy price rises that we have seen internationally in 2021 and 2022 have not helped business, particularly those with high energy usage. Increased energy demand globally as lockdown and restrictions lifted, increased demand for liquefied natural gas in Asia, upstream maintenance last year and increased demand for gas for electricity generation on the continent have all contributed to those high prices. Many large energy users will have hedging strategies in place that help to shield them from some of the effects of gas and electricity price rises, while others may be more reliant on spot market prices. We will continue to engage with businesses while higher pricing continues, and thereafter. My ministerial colleagues have regularly met the Energy Intensive Users Group, and we will continue to engage with the impacted sectors.

The energy price rises that have been seen internationally have not helped recovery from the problems caused by the pandemic, and global events in the last year have added yet more pressure—most obviously the barbaric Russian invasion of Ukraine. However, as well as facing these challenges, we are also now in a place where new global opportunities are presenting themselves, and we need to ensure that the UK is at the front of the queue with innovative ideas and solutions. Our energy-intensive industries—and notably glass—are well placed to be part of this.

This Government are determined to secure a competitive future for our EIIs. In recent years we have provided extensive support, including more than £2 billion to help with the costs of electricity and to protect jobs. This support includes electricity price relief schemes for eligible energy-intensive industries such as paper and pulp, glass fibre, iron and steel manufacture and batteries. The energy security strategy, published in April this year, set out how we will accelerate homegrown power for greater energy independence. Among the many proposals in that strategy, we committed to increasing the support we provide for EIIs over the next three years and effectively doubled the financial support that we provide. We will consider other measures to support businesses facing high energy costs, including increasing the renewables obligation exemption for eligible EIIs to up to 100%.

Furthermore, there are several other funds in place to support businesses with high energy use to increase efficiencies and reduce emissions, including the £315 million industrial energy transformation fund. Examples of sectors that have seen benefits have included the ceramics sector, which last year secured £18.3 million for the Midlands Industrial Ceramics Group from the Government’s strength in places fund to help establish a global centre for advanced technical ceramics. That will ultimately lead to the creation of 4,200 new jobs by 2030. The glass sector has also been awarded £15 million from our transforming foundation industries fund to establish Glass Futures, a state-of-the-art glass facility in St Helens, to which the hon. Gentleman referred. The co-operative work being done by Glass Futures and NSG Pilkington is already bearing fruit.

Recent trials using 100% biofuel in the production of float glass has created a product with a reduced carbon footprint of 80%—the lowest-carbon float glass ever made. This is truly innovative and exciting work, which I know the hon. Gentleman celebrates in his constituency. The Government will continue to work with Glass Futures to further support and deliver on our important objectives, and to foster an innovative, cross-sectoral working relationship. We will also continue to engage with the various councils, businesses and the Energy Intensive Users Group to ensure that their priorities are understood. The industrial decarbonisation strategy and the net zero strategy that we published last year outlined existing and new support for industrial decarbonisation that companies would be eligible for.

The Government and my Department are taking a number of steps to address the challenge of ensuring we have a secure supply of energy. We are in constant dialogue with business, National Grid and Ofgem to ensure that we get our approach right. I have outlined the energy intensive industries offering from the Department for Business, Energy and Industrial Strategy. However, many more initiatives across Government aimed at addressing these challenges are set out in the British energy security strategy, which was launched by the Prime Minister in April.

In my capacity as an advocate for British business, I am happy to use my platform to promote the exciting opportunities that are now presenting themselves to UK companies, including in the hon. Gentleman’s constituency. I remain committed to working with stakeholders to understand more about what can be done. I thank the hon. Gentleman and everyone here for participating in the debate, and for providing an opportunity for us to celebrate the contribution made by the British glass industry. We look forward to dealing with some of the energy and other challenges facing the industry, and to ensuring that the industry thrives, exports more and plays its proper part in our global Britain branding.

[Mr Deputy Speaker (Mr Nigel Evans)]

An Adjournment debate that we can all raise a glass to.

Question put and agreed to.

Oral Answers to Questions

Greg Hands Excerpts

Tuesday 12th July 2022 Commons Chamber

[Fay Jones (Brecon and Radnorshire) (Con)]

3. What recent steps his Department has taken to help support the oil and gas sector.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

The North sea transition deal sets out how the Government are working in partnership with the offshore oil and gas industry to achieve a managed energy transition that leaves nobody behind.

[Fay Jones]

I thank my right hon. Friend for that answer, but 66% of my constituents live off the gas grid and rely on heating oil deliveries to heat their home—obviously not in these temperatures today—and I am extremely worried about oil deliveries in the winter. Has my right hon. Friend got his eye on these constituents, who comprise a huge part of rural Britain?

[Greg Hands]

My hon. Friend is absolutely right. Wales is the part of the UK with the highest percentage of those off the gas grid, and I know that her rural part of Wales is therefore likely to be among the areas most affected by the rise in the price of heating oil. We have made sure that those off the gas grid but on the electricity grid will benefit from the £400 energy bill rebate. We have also put £1.1 billion into the home upgrade grant to provide energy efficiency and clean heating upgrades to support lower-income households living off the main gas grid. Obviously, we are continuing to monitor the situation extremely closely, particularly for the most vulnerable, most rural constituents such as my hon. Friend’s.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The UK already has the lowest tax take anywhere in the world from an offshore oil and gas regime, so it is perverse that the Government’s new investment allowance will essentially incentivise yet more oil and gas exploration at a time when we know that we absolutely need to leave fossil fuels in the ground. Given that the Secretary of State himself has said that it will take up to a decade to extract sufficient volumes from fracking, will he undertake to speak to his Treasury colleagues and make sure that fracking at the very least is excluded from this perverse investment allowance?

[Greg Hands]

I must say I find the Green party’s attitude to these issues bizarre: it seems to be resolutely against any oil and gas extraction in this country, which could only mean it would be in favour of imports, and those imports would be higher priced, more volatile, likely to be from more dangerous parts of the world, and come with higher embedded emissions. The embedded emissions of liquified natural gas are about 2.5 times higher than the emissions from the gas we get from the UK continental shelf. The hon. Lady describes herself as a Green party politician, but I find her approach distinctly ungreen compared to that of this Conservative Government.

[Chris Clarkson (Heywood and Middleton) (Con)]

19. What recent steps his Department has taken to help increase the level of research and development spending.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

We are providing the fastest ever sustained uplift in R&D funding, reaching £20 billion per annum by 2024-25. If association to Horizon Europe is not possible in good time to make the most of that programme, we will take forward a bold and ambitious package of UK alternatives.

[Henry Smith]

This country has been world-leading in its covid-19 vaccination programme and so much more in our pharmaceutical industries as well as the health sector. Can the Minister say a little more about what specific research and development investment will go into pharmaceuticals and the health sector? I would particularly like to mention cancer services and Alector oncology in my constituency which is expanding.

[Greg Hands]

My hon. Friend has always been a passionate advocate and defender of business in the Crawley constituency, specifically R&D projects and innovation, and I am glad he mentioned Alector and others, as they are important companies in his constituency. We continue to support investment in R&D through a vibrant research and innovation system that attracts private sector investment and drives up productivity across the UK, including in Crawley.

[Chris Clarkson]

We are on the cusp of a green energy revolution with hydrogen, modular nuclear and now fusion in the mix. What steps is the Department taking to ensure British innovation is in the vanguard of that revolution, thus ensuring our long-term energy security?

[Greg Hands]

My hon. Friend is always on the front foot on low-carbon energy and innovation in Heywood and Middleton. He will know that the Government’s flagship £1 billion net zero innovation portfolio is making those important investments in hydrogen, advanced nuclear technologies and so on. On fusion, we are investing £700 million in research facilities and programmes over the next three years. My hon. Friend will also know that the energy security Bill we published last week includes launch pads for both hydrogen and nuclear fusion.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

That was the very first mention of hydrogen this morning. Does the Minister agree that there is such potential in hydrogen energy? We can already buy heavy goods vehicles and trucks that are hydrogen driven, and a network of hydrogen filling stations is being opened at the moment across our country. If he does agree, why does he not put more research money into hydrogen for every kind of energy use?

[Greg Hands]

We are 14 minutes into Question Time; I do not think that is too bad for the first mention of hydrogen. I realise that on the periodic table, it is No. 1—right at the top left—but that does not mean that it always has to be the first thing mentioned at Question Time.

The amount of money and resources going into hydrogen remains extremely strong. It is a really important part of the net zero innovation portfolio. Just over the past few months, I have been to the Whitelee wind farm just south of Glasgow to see the new hydrogen production facility there. That facility is going to do exactly what the hon. Gentleman wants us to do: provide hydrogen for vehicles, particularly buses. The whole of the Glasgow bus fleet and, indeed, the whole of the Glasgow dustcart fleet will be fuelled by hydrogen from that wind farm.

[Dan Jarvis (Barnsley Central) (Lab)]

We need to increase investment in R&D; we also need to think carefully about where we spend it. In South Yorkshire we have some outstanding translational research institutions—the Advanced Manufacturing Research Centre and the Advanced Wellbeing Research Centre—in two outstanding universities. I know that the Secretary of State is supportive, but will the Minister pledge to work carefully with the Mayor and partners in our region so that we can unlock the huge potential in South Yorkshire?

[Greg Hands]

The answer is yes. We always welcome Mayors with a constructive attitude to working with the Government. If I am not mistaken, I have a meeting with the hon. Gentleman’s colleagues next week. A delegation is coming to see me, led by—I think—the hon. Member for Sheffield Central (Paul Blomfield). It might be a different part of Sheffield; the Chair of the Select Committee on Levelling Up, Housing and Communities, the hon. Member for Sheffield South East (Mr Betts), is the Member I am thinking of.

[Mr Speaker]

Can I suggest that the Minister reminds Ministers in the other place that they are responsible to MPs in this House as well, and that they should meet with them? I hope that will be a clear message to the Lords.

I call Chi Onwurah, the Labour spokesperson.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Despite being critical to our world-beating research and a Conservative manifesto commitment, Britain’s participation in the world’s biggest science funding programme, Horizon Europe, is in peril. Before resigning, the then science Minister, the hon. Member for Mid Norfolk (George Freeman), took to Twitter to lobby the new Chancellor for funding for his plan B, but the Chancellor was busy trying to get the Prime Minister he had just accepted a job from to leave his job. Now, although the former science Minister has asked for his job back, the still in place, though disgraced, Prime Minister is too busy nobbling those going for his job to fill the science job. It is total chaos. Science deserves better, doesn’t it?

[Greg Hands]

I thought that was a rather convoluted question, if you do not mind my saying so, Mr Speaker.

We in the UK Government are absolutely committed to getting a good deal for UK science, whether through association with Horizon Europe or through our plan B Horizon plan, which is also a fully funded approach to making sure that UK science does not lose out. Perhaps the hon. Lady might welcome the big boost in R&D spending in this country, with the most sustained uplift, from £15 billion today to £20 billion in two years’ time—a 33% increase in just two years.

[Laura Farris (Newbury) (Con)]

5. What recent discussions his Department has had with the Competition and Markets Authority on its review of the fuel market.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

On 11 June, my right hon. Friend the Business Secretary asked the Competition and Markets Authority to conduct an urgent review of the market for petrol and diesel. The CMA published its response on 8 July and has opened a market study into the fuel market, as my right hon. Friend requested.

[Laura Farris]

I thank my right hon. Friend for that answer. I know he has been working with the CMA on this issue, and I have read with interest its report on the discrepancy between the price of crude oil and wholesale prices. However, prices at the pumps in West Berkshire are still very high. My constituency is a rural one where people are completely reliant on their cars, so could my right hon. Friend provide an update as to when my constituents can expect to see better value at the petrol pumps?

[Greg Hands]

I pay tribute to my hon. Friend and other colleagues for leading the campaign and for pointing out some of the discrepancies in the market. I am delighted that the CMA is now carrying out a study. It found that rural fuel prices were consistently higher than those in urban areas, which is definitely worth a further market probe, so I urge her as a campaign leader and other colleagues to submit views and evidence to the CMA as it carries out its market study. One thing that was clear is that in the view of the CMA the duty cut put forward by the Government earlier this year was passed on to retailers.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The CMA would be greatly helped in the energy and fuel market, and especially in the production of hydrogen, by fairness in the TNUoS—Transmission Network Use of System—charges for transmission costs in the electricity networks. When will Scottish renewables producers stop paying £7.36 per MWh for transmission, when producers in independent EU countries pay about 46p per MWh—a difference of 16 times affecting the production of hydrogen, an important fuel?

[Greg Hands]

It is good to be back on hydrogen again. The hon. Gentleman will reflect, I am sure, on the answers I gave earlier on the success of hydrogen, particularly in Scotland. I will say two things in answer to his question on transmission charges. First, as he knows, transmission charges are a matter for Ofgem. Secondly, Scottish consumers benefit from transmission charges compared to consumers in the rest of the United Kingdom. He may wish to reflect on all the pros and cons of the policy he appears to be proposing.

[Rachel Hopkins (Luton South) (Lab)]

6. What assessment he has made of the impact of the rise in energy prices on (a) households and (b) businesses.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

The Government recognise the impact that increasing energy prices are having on households, which is why we are providing £37 billion in support for consumers this year alone. The Government are in regular contact with business groups and suppliers to explore ways to protect businesses.

[Rachel Hopkins]

Citizens Advice Luton has seen a 119% increase in local people saying they cannot afford their energy bills after April’s price increase, even after cutting back on other essential spending. I heard the Secretary of State say that the issue is talked about constantly in Cabinet, but does the Minister recognise that the energy price cap increase later this year will push even more families into poverty and hardship?

[Greg Hands]

I completely agree with the hon. Lady in her analysis of the underlying issue: the big rise in global energy prices over the past 12 months. That is exactly why we are taking the action we are taking: £37 billion-worth of support for consumers and bill payers over the course of this year. That is a massive amount of Government support going into ensuring that people get the support they need to be able to pay those bills in the coming months.

[Peter Aldous (Waveney) (Con)]

I am grateful to my right hon. Friend for outlining those measures. I sense it will be a very bleak winter; the energy price cap will play a role, but it would help if it were augmented by a social tariff. Will he advise on whether there have been any discussions in Government about the introduction of such a tariff?

[Greg Hands]

I thank my hon. Friend for that thoughtful question. Obviously, all these things are under review, but I remind him that we replaced the social tariff with other support schemes for bill payers under the coalition. That remains our position, but we—both the Department and the Treasury, and indeed, the whole Government—study these positions and issues very closely indeed.

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is very clear that the rising price of heating people’s homes will be devastating and go well beyond anything the Government have done to help households so far. For people living off-mains who are reliant on heating oil, for example—19,000 households in Cumbria alone—there is no cap whatever. They have seen their prices more than double over the past 12 months. What will the Minister do to ensure people in rural communities like mine are not hit even harder than the majority?

[Greg Hands]

As the hon. Gentleman knows, we reflected on this issue in an earlier question. The Government are providing support for those who are off the gas grid. For example, those who pay an electricity bill will qualify for the £400 reduction this year. We have also put £1.1 billion into the home upgrade grant, on top of the £2.5 billion already deployed, to make sure vulnerable households, which could well include some of his constituents, are able to profit from the energy measures being put forward by the Government. His question on the price cap is a reasonable question to put. The information I have directly from the trade body UKIFDA—the UK and Ireland Fuel Distributors Association—is that a price cap would be extremely difficult for its members, the people in the retail market for heating oil, because it becomes very difficult for a small business to hedge. However, it is something I discuss with MPs, the industry and the trade body regularly to see what more can be done, and the situation is under constant review.

[Katherine Fletcher]

One thing we can do to bring energy prices down is have an absolutely massive expansion of renewable offshore energy, whether that is tidal or wind. Last week, I met National Grid, which will use Penwortham on the Ribble estuary coast as the point to onshore a lot of the electricity that helps to get our fuel bills down. Does the Minister welcome the fact that National Grid has seen the opportunity of Penwortham, and does he agree that we just need to make sure that the environment and the natural Ribble estuary are protected as the cables and the energy come forward?

[Greg Hands]

I thank my hon. Friend for her question and her constant very good and strong engagement on behalf of her Ribble valley constituents. Renewable energy is, of course, part of the solution. That is why we announced the allocation round for the latest auction of renewable energy last week. It was the most successful ever, with 10.8 GW of renewable energy coming to this country through the contracts for difference mechanism. It has been a huge success, and I welcome my hon. Friend’s interest.

[Mr Speaker]

I call the shadow Minister.

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

The Minister knows that, at present, all retail electricity supplies—whether they derive from more expensive gas or cheaper renewables—are charged as though they had all come from gas. He also knows how to decouple prices coming into the retail market, so that domestic and business customers can enjoy considerable reductions in their energy bills by getting the direct benefit of renewable prices. Why is he not legislating to do so?

[Greg Hands]

The shadow Minister raises an interesting and good point about how the UK electricity market is structured. That is one reason why we have launched the REMA—review of electricity market arrangements—process and why we are taking action in the Energy Bill on aspects of the domestic energy system that will yield real gains for consumers, such as the onshore distribution and transmission network, so that there will be more competition in the network. There will be other measures in the Bill, which I very much hope that he and the other Opposition Front Benchers will support in due course.

[Ruth Edwards (Rushcliffe) (Con)]

7. What steps his Department is taking to help support the creation of new low-carbon technologies.

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[Geraint Davies (Swansea West) (Lab/Co-op)]

13. What recent steps his Department has taken to help support the growth of community-owned energy projects.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

We encourage community energy groups to work closely with local authorities to support the development of projects through UK-wide growth funding.

[Geraint Davies]

The Minister knows that community-owned local energy projects will be critical to delivering net zero and national security, and are often best delivered by co-operatives. However, he should also know that the minimum tariff paid by the big suppliers to the small suppliers is often too low to make many smaller suppliers viable. Will he look into that minimum tariff, and also work with the Co-operative party to support and fund the launch of new locally owned community energy projects?

[Greg Hands]

I should be happy to have a look at those tariffs, but I do not think that this would prevent us from supporting community energy projects as a Government. We have a very good track record in that regard, through previous funds and through, for example, the towns fund, run by the Department for Levelling Up, Housing and Communities, which has just awarded more than £23.6 million to Glastonbury Town Council. The projects involved include the Glastonbury clean energy project, whose purpose is investment in renewable energy generation and low-carbon transport infrastructure. There is a great deal going on in this space, but I am happy to look at the tariff question in particular.

[Yvonne Fovargue (Makerfield) (Lab)]

14. When he will bring forward a consultation on the safety of products that are sold online.

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[John Mc Nally (Falkirk) (SNP)]

17. If he will make an assessment of the implications for his policies of the report by the Climate Change Committee, “2022 Progress Report to Parliament”, published on 29 June 2022.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

As required by the Climate Change Act 2008, the Government will respond later this year to the committee’s report and will provide an annual update on the delivery progress of the net zero strategy.

[John Mc Nally]

I thank the Minister for that answer. However, less than a year on from COP26, it is scary watching the Government rolling back climate policies. The Climate Change Committee has said:

“Tangible progress is lagging the policy ambition”.

Examples include cutting support for electric vehicles, a levy incentivising only oil exploration and prime ministerial contenders planning to suspend green levies. Why is the Secretary of State’s party determined to inflict damage on our common home, this planet, at this critical time?

[Greg Hands]

Can I just correct the hon. Gentleman on one thing? The Climate Change Committee’s report was actually full of praise for the Government on electric vehicles and on what we are doing on electricity decarbonisation. On his wider point, this Government have a fantastic record of action on climate, thanks to the COP26 President, my right hon. Friend the Member for Reading West (Alok Sharma). At the start of the year, 30% of global GDP was signed up to net zero targets. That is now 90%, and the UK is leading the way with our own net zero strategy, published just before COP last year.

[Andrew Bridgen (North West Leicestershire) (Con)]

20. What steps he is taking to deliver new and advanced nuclear power in the UK.

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[Paul Blomfield (Sheffield Central) (Lab)]

21. What assessment he has made of the impact of the rise in energy prices on (a) households and (b) businesses.

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

The Government recognise the impact that increasing energy prices are having on households. That is why we are providing £15 billion in additional support to the £22 billion we announced previously. The Government are in regular contact with business groups and suppliers to explore ways to protect businesses.

[Paul Blomfield]

The finance director of Thessco, a successful Sheffield alloy manufacturer, has told me that the company’s electricity bill has increased by more than 300% and its gas bill by more than 400%. It does not qualify for help under the energy intensive industries compensation scheme simply because its raw materials are precious metals. The previous Industry Minister acknowledged this in a letter to me but hoped that, despite not helping, the scheme did

“demonstrate an intent to try to help”.

Extraordinary. Does the Minister agree that small and medium-sized enterprises such as Thessco do not need demonstrations of intent and that they need practical support to avoid being crushed by rising energy bills?

[Greg Hands]

The Government absolutely recognise the challenge being faced by businesses and consumers in relation to the rise in global energy prices. It may be that the business in question qualifies for other things, such as the energy intensive industries exemption scheme, and I will have a look at that, but what is certain is that it will qualify for the business rates relief—totalling £7 billion over the next five years—and the annual investment allowance, which increases from £200,000 to £1 million over the course of this year, as well as some of the other really important measures the Government have put in place to support businesses at this difficult time.

[Mohammad Yasin (Bedford) (Lab)]

22. What recent steps his Department has taken to help support business supply chains.

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[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

T7. Torness power station provides excellent jobs in my constituency and low-carbon power across the UK. Have the UK Government made any progress in convincing the SNP Government of the importance of nuclear power to our future energy needs?

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I have raised this issue continually. I have been in Scotland six times in this role in the past nine months and I have raised the issue repeatedly with the SNP—with Scottish Government Ministers and in this House. They have an incredible disregard for Scotland’s incredible nuclear past. The workers at Torness have taken great pride in providing reliable, zero-carbon energy since 1988, and it is scandalous that the SNP and its representatives here in Westminster want to end Scotland’s brilliant nuclear tradition, which we know has really served the whole of the UK, particularly my hon. Friend’s constituents.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

T4.   When do the Government hope to respond to last week’s West Midlands Combined Authority plan for growth and, in particular, its urgent calls to support the electric vehicle industry by securing a gigafactory at Coventry, the roll-out of electric vehicle infrastructure and support for supply chain transition and diversification?

[Julian Sturdy (York Outer) (Con)]

T9. Given the changing ministerial personnel, will the Government reassure us of their ongoing commitment to generate growth to beat living cost pressures through backing science and technology projects such as BioYorkshire in my constituency, which has already brought some 40 new high-skilled jobs to the constituency with the relocation of Azotic Technologies?

[Greg Hands]

My hon. Friend is a consistent champion for his York constituents, and I assure him that we remain committed to delivering on the fastest sustained uplift in research and development funding, reaching £20 billion per annum in just two years’ time, from £15 billion today. That is a huge uplift, and of course we are going to make sure that all parts of the UK benefit from it. I am sure that part of that will be in and around York.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

T5. Last week, I asked the Secretary of State about support for pumped storage hydro, and he let the cat out of the bag when he responded: “It should be stressed that this is a very specific technology to Scotland.”That was a disgraceful comment. It probably explains why Scotland has been overlooked for carbon capture and storage and excluded from the hydrogen village trials. But we do have the highest grid charges in the whole of Europe and we have contributed £400 billion in oil and gas revenue. Scotland is getting exploited, not supported. Is not that the case?

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[Munira Wilson (Twickenham) (LD)]

T8.   An ambitious nationwide insulation programme is absolutely essential to meeting our net zero target, although I note this morning that the hon. Member for Saffron Walden (Kemi Badenoch) has described that goal as “unilateral economic disarmament”. If she and others hoping to be Prime Minister had attended Sir Patrick Vallance’s alarming briefing yesterday on the climate crisis, she would have understood how important it was to reduce household emissions. So will the Secretary of State create jobs, cut bills and slash emissions by investing in insulation?

[Greg Hands]

That is exactly what we are doing. We have committed £6.6 billion over the course of this Parliament. The local authority delivery scheme, £787 million; the home upgrade grants, £950 million; the social housing decarbonisation fund, over £800 million. These are real, big pieces of taxpayers’ money going into energy efficiency, and it is coming at a good time, when people need it most.

[Dame Nia Griffith (Llanelli) (Lab)]

The Government’s energy security strategy acknowledges that onshore wind is one of the cheapest forms of renewable power but, shockingly, proposes no wholesale changes to planning regulations for onshore wind in England. But we in Wales stand ready to help. What funding will the Minister provide for further research and development into producing greater efficiency in grid transmission, and will the Minister now commit to significant investment in the national grid in Wales?

[Greg Hands]

The hon. Lady will have studied the evidence that I gave to the Welsh Affairs Committee a couple of months ago on the national grid in Wales. When it comes to ensuring that we are equipped in renewable energy, we have just announced the results of last week’s contract for difference auction. I remind her that when she was a supporter of the last Labour Government, only 7% of our electricity was generated from renewables. It is now 43%.

[Jo Churchill (Bury St Edmunds) (Con)]

The east has offshore wind and nuclear to give the nation. London wants its power. Why should Bury St Edmunds, and the broader Suffolk, Norfolk and Essex, have 50-metre pylons tearing across its countryside? Up north, we have routed it under the sea. We in the east want a fair consultation. My right hon. Friend has listened to us; please listen to us again to get to the right answer.

[Greg Hands]

I thank my hon. Friend for her question. She is right that I have met East Anglia MPs to discuss this matter—it has been impressed on me across more than 20 constituencies—and I am sure that I will have further engagements with her. I continue to work with National Grid as part of its processes to ensure that her constituents get the best possible deal.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

The Competition and Markets Authority recently concluded that a lack of competition in key parts of the economy was leading to higher mark-ups from already profitable firms. In short, inflation was being caused in part because Ministers were not doing enough to ensure effective competition across those key bits of the economy. What is the Secretary of State doing about that?

--- Later in debate ---

[James Cartlidge (South Suffolk) (Con)]

Further to the question from my hon. Friend the Member for Bury St Edmunds (Jo Churchill), the fact is that National Grid is committing to 800 miles of undersea cabling to protect countryside in Scotland and the north of England from new pylons, but to only 80 miles off East Anglia, even though we produce so much offshore wind. Why are our constituents not going to get a fairer share?

[Greg Hands]

My hon. Friend and I have met to discuss this issue at least three times, and he continues to be a champion for his constituents. I know he is doing a lot of constituency meetings on this. I will continue to engage and make sure that National Grid also engages with him constantly.

[Valerie Vaz (Walsall South) (Lab)]

The Minister knows that 115 Horizon Europe grants were cancelled last week. Will he commit to ensuring that that money is given to our excellent scientists, just as the previous, excellent, science Minister would have done?

--- Later in debate ---

[Stephanie Peacock (Barnsley East) (Lab)]

I am grateful to the Minister for meeting me to discuss the mineworkers’ pension scheme. I know, after speaking to him last week, that it has been referred to the Treasury for a decision. Given that that decision needs to be made before the House rises next week, may I urge him to chase it up, please?

[Greg Hands]

I am happy to have further conversations with Treasury Ministers. As the hon. Lady knows, the Government’s position on the core issue remains unchanged, but I will ensure that the specific, additional issue she has raised is put again to Her Majesty’s Treasury.

[Richard Graham (Gloucester) (Con)]

Thank you for giving me a second chance, Mr Speaker. May I congratulate the Secretary of State and the Energy Minister on last week’s first ever ringfenced marine energy renewables auction? This is a landmark moment for the UK in generating our own domestic green energy from some of the world’s fiercest tides. When will my right hon. Friend be able to announce another ringfenced pot for marine energy?

[John Cryer (Leyton and Wanstead) (Lab)]

What discussions has the Secretary of State had with local authorities and other Departments about what seems to be a threat to the future of community swimming pools from rising energy bills? Swim UK, the Royal Life Saving Society and other organisations have said that, potentially, hundreds of pools face closure.

[Greg Hands]

I am happy to examine this issue as a former employee of a swimming pool. In 1985, I worked for six months at a German swimming pool, Sommerbad Kreuzberg, which I am happy to read into Hansard for all the staff who still work there. The hon. Gentleman knows that we have provided support for businesses at this difficult time through grants, business rates relief and other reliefs, and we will continue to engage with those facing challenges in relation to energy bills.

Offshore Transmission Network: Holistic Network Design and Pathfinder Projects

Greg Hands Excerpts

Thursday 7th July 2022 Written Statements

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

Today marks a significant milestone for the offshore transmission network review and the British energy security strategy, with the publication of the first major deliverable—the holistic network design, developed by National Grid Electricity System Operator. The full holistic network design and supporting documents and maps can be found at: https://www.nationalgrideso.com/future-energy/the-pathway-2030-holistic-network-design.

The UK Government launched the OTNR in 2020 to improve the delivery of transmission connections for offshore wind. Considering the increasingly ambitious targets for offshore wind deployment, the current approach of delivering individual links for each wind farm is no longer fit for purpose and will not deliver the best outcomes for consumers, the environment or local communities.

More recently, the British energy security strategy set out bold plans to scale up and accelerate affordable, clean and secure energy made in Britain, for Britain, so we can enjoy greater energy self-sufficiency with cheaper bills. This included an ambition for 50GW of offshore wind by 2030.

Holistic network design

Developing the GB network in a timely way is vital. Without it we will waste a significant volume of cheap, green electricity. This will require more network infrastructure than today, both onshore and offshore, but through an upfront, strategic approach to network planning we will ensure that new network infrastructure is minimised, and where it cannot be avoided, it is brought forward in the most appropriate place.

The first step to this new innovative approach is the holistic network design, which has been published on 7 July by National Grid ESO. The HND represents a significant shift in how network infrastructure is planned. It is a first of a kind strategic network design for the upgraded and new onshore and offshore network infrastructure needed to connect 18 offshore wind farms. This will provide the network infrastructure needed to meet our ambition of delivering 50GW of offshore wind by 2030.

The holistic network design, for the first time balances economic factors with consideration of environmental and community impacts. It sets out the need for this infrastructure, not a detailed project plan. No decisions have yet been taken on the route for the network, or how best to do this. All projects that come forward as a result of the HND will be subject to the relevant democratic planning processes. These will ensure local stakeholders get their say on developments and impacts are mitigated as far as possible.

Pathfinder projects

Alongside improving strategic network planning for 2030 and beyond, we are also facilitating innovation for well-advanced projects connecting ahead of 2030. Today, four initial pathfinder projects are being announced—in Norfolk, Aberdeen and South Yorkshire. These projects have voluntarily opted in to utilise changes made under the OTNR to increase network co-ordination and maximise the benefits for consumers, communities, and the environment. NGESO will continue working with developers to progress these projects.

Five projects off the coast of East Anglia have today confirmed their commitment to exploring co-ordinated network designs, with a view to identifying future pathfinder projects. Further information on these announcements can be found at: https://www.gov.uk/government/groups/offshore-transmission-network-review.

[HCWS190]

Home Energy Efficiency: North of England

Greg Hands Excerpts

Wednesday 6th July 2022 Westminster Hall

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Darlington (Peter Gibson) on securing this important debate. As ever, it is excellent to have so much good representation in the north of England from our party.

This Government’s unwavering commitment to decarbonise the country’s 30 million buildings has the welfare of those who most need energy-efficient homes at its very core. Getting to net zero is not just a legal commitment; it is the right policy for this and future generations. Improving the wellbeing and living conditions of northern communities is a key part of the levelling up of all our towns, cities and regions as we build a green Britain that works for every part of the country.

Underpinning all our work in that area is the heat and buildings strategy, a copy of which I have brought to this debate, published at the end of October 2021. It explores different options for low-carbon heating, from hydrogen trials to heat networks and increased use of heat pumps, to meet the challenges of each region of our country, recognising that there can be no one-size-fits-all approach.

At the same time, we are taking a fabric-first approach to retrofit, ensuring that emissions are reduced first, regardless of how buildings are heated. That will be supported through a commitment to invest £6.6 billion during this Parliament, which is funding technology trials and capital schemes such as the home upgrade grant and the boiler upgrade scheme. In the past year alone, we have committed more than £1.3 billion to domestic retrofitting schemes, which was one of the central points raised by my hon. Friend the Member for Darlington and, indeed, other Members.

We have prioritised the worst performing low-income homes to receive measures such as external wall insulation and clean heating systems. That has already lifted thousands of households out of fuel poverty, and future phases of home decarbonisation will upgrade over half a million more. Families who would not be able to afford energy efficiency improvements for themselves will be able to face future winters knowing that they will be warm, sometimes for the first time.

Our local authority delivery scheme and home upgrade grant empower local authorities, which know their communities and housing stock best, to decarbonise local homes according to specific needs. In the north, around £226 million of funding has been allocated to local areas through the latest phases of those schemes. As many Members have said, the north of England has benefited disproportionately from the energy company obligation. Since that scheme started under this Government in 2013, over 13% of homes in the north-west and over 12% of homes in the north-east have received energy efficiency measures. Indeed, 12.2% of households in Darlington have had their homes improved under the energy company obligation, compared with an average of 9% across Great Britain.

My hon. Friend the Member for Darlington, who is vice-chair of two relevant APPGs and knows the engineering heritage of his town so well, made an excellent speech. In researching it, he sat down with local housing providers such as North Star Housing, which quoted some striking sums regarding the costs of retrofitting a home relative to the value of that home. My hon. Friend made some thoughtful arguments about how we should evaluate the cost efficiency of those different measures. He also pointed out that 64% of properties in Darlington are rated below brackets A to C on energy efficiency, which shows that despite the progress we have made on energy efficiency—particularly over the past decade—there is still much work to do. That is why we are investing £6.6 billion over the course of this Parliament.

We had an intervention from the hon. Member for Hampstead and Kilburn (Tulip Siddiq), who is not in her place anymore, to say two things. She attacked the Government’s record on renewables, nuclear and energy efficiency. I found it startling, considering that when the last Labour Government started their period in office, they said that when it came to nuclear, they saw no economic case for new nuclear power stations in this country. That was at the start of their 13 years in office.

On renewables, we have taken the amount of energy generated from renewable sources since 2010 from 7% of the energy mix to 56%. That is an incredible increase in our renewable output as part of our energy mix.

[Margaret Greenwood]

The Minister is right that my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq) is not in her place, but would he not agree, or concede, that it was a Conservative Government that pulled the funding for solar on people’s roofs, stymying an industry and making it much more expensive for people to install solar? Precious years have been lost, and we could have had many more solar panels on our roofs.

[Greg Hands]

I fundamentally disagree. Solar has done incredibly well in this country. We have a big capacity in solar—I think around 14 GW. Our ambition is to grow that to 70 GW. Part of that is thanks to the VAT reduction that we saw this year. I do not remember the hon. Lady supporting that VAT reduction on solar panels. The Government are taking active measures to increase and support solar energy.

On energy efficiency, when we took office in 2010, just 14% of properties in England were rated “energy efficient”. That has risen to 46%, which in 12 years is an incredible increase. However, that shows that 54% of our properties are still not sufficiently energy efficient, so we still have work to do, but we can only do it by making investment. The last Labour Government said there was no money left. Perhaps if they spent a little more on energy efficiency in those 13 years, we would not have been in a position where only 10% of homes were rated A to C when we took power.

My hon. Friend the Member for Darlington asked when the new energy company obligation scheme will begin. I think the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), also raised that same point. A three-month interim delivery phase was introduced between 1 April to 30 June 2022 under the previous scheme rules to enable delivery to continue subject to some measure limitations. Obligated suppliers may choose to deliver under the new scheme rules backdated to April 2022, when the underpinning legislation was put in place. We are pleased to announce that we laid the draft Electricity and Gas (Energy Company Obligation) Order 2022 before Parliament on 22 June. We expect the regulations to be made and come into force in July.

My hon. Friend the Member for Darlington also asked about energy advice. Our simple energy advice service, launched in 2018 in response to the Government-commissioned “Each Home Counts” review, provides homeowners with impartial and tailored advice on how to cut their energy bills and make their homes greener. The service has been accessed by over a million users.

[Dr Whitehead]

rose—

[Greg Hands]

I will make some progress and respond to the points made in the debate. My hon. Friend the Member for Darlington and the hon. Member for Weaver Vale (Mike Amesbury) raised the really important point of skills. I chair the newly established green jobs delivery group with Michael Lewis, CEO of E.ON UK. In 2021 the Government invested £6 million in a BEIS skills training competition, resulting in 7,000 more training places for heat pumps and insulation. The hon. Member for Weaver Vale also commended an event about skills attended by Andy Burnham and Andy Street. It is good to see constructive cross-party work. I only wish that the Mayor of London would follow such a constructive approach to cross-party work, as the Mayors for Manchester and Birmingham often do.

The hon. Member for Stockport (Navendu Mishra) asked about using legitimate builders, not cowboys. All insulations under Government schemes, including ECO, the social housing decarbonisation fund, the home upgrade grant and the local authority delivery scheme, must be completed by TrustMark-registered businesses, adhering to the latest requisite standards. These requirements are based on the recommendation of the “Each House Counts” review, an independent review of consumer protections and standards.

[Navendu Mishra]

rose—

[Greg Hands]

If the hon. Gentleman has a specific case in mind, I would urge him to take that up with the local authority trading standards.

In an excellent contribution, my hon. Friend the Member for Sedgefield (Paul Howell) mentioned fuel poverty, which is actually falling in this country. Last year, it accounted for 13.2% of English households and this year it accounts for 12.5%. Obviously, that is not satisfactory, and we need to keep bearing down on fuel poverty, but that situation is improving. I am glad that he welcomed my ministerial colleague, Lord Callanan, to the north-east; he leads the ministerial team on energy efficiency.

My hon. Friends the Members for Sedgefield and for Darlington referred to retrofitting, as did other hon. Members. Our £1.8 million green home finance innovation fund, which completed in March 2022, was a key early step in supporting the lending community to design, develop and pilot green finance products for homeowners. The Government will provide up to a further £20 million to support the development of innovative green finance products and services that will diversify the green finance market and enable both owner-occupiers and private landlords to decarbonise their homes and improve thermal comfort.

My hon. Friend the Member for Sedgefield asked about VAT. We have introduced a zero-rating VAT for the installation of insulation and low-carbon heating for the next five years, which will give real certainty to the market. That will save between £1,000 and £2,000 on the cost of an air-source heat pump. My hon. Friend also raised the private rented sector, and I can tell him that we consulted on raising the standard to EPC band C for new tenancies from 1 April 2025, and for all tenancies by 1 April 2028. We have analysed the responses and we will be publishing a Government response in due course. In the meantime, we will continue to invest in energy efficiency and support homeowners outside such regulations. We also published the White Paper “A fairer private rented sector” on 16 June 2022, which sets out support for those in the private rented sector, including ending so-called “no fault” section 21 evictions, and giving all tenants a strong right of redress.

The hon. Member for Wirral West (Margaret Greenwood) asked whether we will give money to local regions, such as Liverpool City Council, to retrofit. I can tell her that phase 2 of the local authority delivery scheme allocated £300 million to the five local net zero hubs, which will work with their local authorities to continue to deliver energy efficiency upgrades to up to 30,000 homes across England to those most in need. In this Parliament £6.6 million has been spent on energy efficiency, and a great deal of that has been assigned to local authorities via the home upgrade grant, the LAD scheme and the social housing decarbonisation fund. In LAD 2 funding, the regional allocation of £52.8 million is going to the north-west—the hon. Lady’s region.

The hon. Lady also asked about new-build homes being built to passive housing standards to create lower bills. On new build, the Government have announced that the new future homes standard will be introduced from 2025. That work is ongoing, and in the interim an improvement to part of the loft building regulations came into effect on 15 June 2022.

The hon. Member for Weaver Vale asked about training providers and businesses. As I have already said, we have invested £6 million in the BEIS skills training competition, resulting in more than 7,000 training opportunities.

The hon. Member for Southampton, Test lauded the big increase in energy efficiency across the country. I think he argued that the figures are due to the better energy efficiency of new homes. We are not looking at an average figure—the increase from 14% to 46% of the housing stock—rather we are looking at the percentage of the total number of homes that are rated A to C. The fact that a new home will be particularly, staggeringly, energy efficient will only count as one home in the denominator. The key thing is moving homes in the numerator to make sure that more new homes are created energy efficient and that older homes are retrofitted to get them into the A to C bracket.

The hon. Gentleman asked what the Government are doing to support consumer bills. The Government have acted to protect the 8 million most vulnerable British families through a £37 billion package of support to help those households with the cost of living crisis. That includes at least £1,200 of direct payments this year, with additional support for pensioners and those claiming disability benefits. Three quarters of the total support will go to the vulnerable households who need the most help.

Later this year, the social housing decarbonisation fund is due to launch its second wave of funding to 2025, from the £800 million committed in the heat and buildings strategy to install energy efficiency measures in social homes. The first wave of that funding is investing £63 million in retrofitting around 8,000 homes in the north of England.

Improving the wellbeing and living conditions of northern communities is a key element of the levelling-up agenda that we have embedded across all Departments, with the ambition that by 2030 the number of non-decent rented homes will have fallen by 50%, with the biggest improvements in the lowest performing areas. We know there are significant regional variations in emission levels and communities will face different challenges when meeting net zero commitments. The north accounts for around a quarter of the UK’s emissions, so it is well placed to make a huge contribution to UK decarbonisation.

As Government-funded energy efficiency work rolls out in the coming years, there will be a need to scale up the supply chain and build a skilled workforce, which will take time. To meet that long-term challenge, we have provided £4.7 million of funding to test how we can grow the installer supply chain and a further £2.5 billion in a national skills fund, helping to support hundreds of thousands of green jobs.

The north is in a key position at the centre of net zero innovation, growth and opportunities for green jobs. For example, the new Lancashire Energy HQ, part of Blackpool and The Fylde College provides state-of-the-art training for excellence in energy standards; it was good to hear an intervention earlier from my hon. Friend the Member for Blackpool South (Scott Benton). Centres like that may provide job and skill development opportunities for many in communities benefiting from our domestic retrofit programmes. In fact, we expect the decarbonisation of buildings to support up to 240,000 jobs by 2035, resulting in £10 billion additional gross added value by 2035.

In my Department, we know that we need to remove virtually all emissions from buildings to reach net zero. We also know that we have a duty to protect those who are most vulnerable, and to support consumers and businesses as we decarbonise our buildings. I want to ensure that consumers will benefit from higher energy performance in homes and workplaces, from improved health and comfort and from lower emissions and lower bills. I thank my hon. Friend the Member for Darlington for proposing this excellent and well-informed debate.