Energy Prices Bill

Debate between Lord Foster of Bath and Lord Framlingham

2nd reading
Wednesday 19th October 2022 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, on these Benches we too support the broad thrust of the Bill, but like the noble Lord, Lord Lennie, we wonder what it might look like by the time it gets to us in Committee just next Monday. We also share the concern of the Delegated Powers and Regulatory Reform Committee about the unfettered powers being given to the Secretary of State without any time constraint—powers that enable the Secretary of State to make large changes to the sector without consultation or the right to appeal. As others will no doubt point out, we are concerned that the measures in the Bill treat renewables such as wind and solar less favourably than oil and gas. However, I will concentrate on two issues not covered in the Bill which I believe should be.

The Long Title of the Bill is:

“A Bill to Make provision for controlling energy prices; to encourage the efficient use and supply of energy; and for other purposes connected to the energy crisis.”


So, in addition to pricing and supply, the Bill is also meant to be about the efficient use of energy, yet it is hardly mentioned. Unlike those in many other countries, it seems our Government have no strategic interest in encouraging anyone in the UK to save energy. The International Energy Agency describes energy efficiency in priority terms as the “first fuel”. It reckons that at least half of the improvements needed to deliver net zero by 2050 will come from greater energy efficiency. However, in the UK, far too many people cannot use energy efficiently: their homes leak heat because they are poorly insulated. Around 15 million homes are below energy performance certificate band C. In other words, 15 million homes are inadequately insulated, so they cost more to heat—on average, almost £800 a year. Yet in the absence of a clear national programme, home insulation work has plunged by 50% over the past year, leading Doug Parr of Greenpeace to say:

“It’s frankly astonishing that this dip in insulation rates comes at exactly the time we should be ramping up this proven, long-term solution to the cost of living crisis.”


Even the Conservative-inclined Sun newspaper said in August:

“Householders faced with astronomical heating costs need lagging for their homes, not a government lagging behind.”


So, measures to improve energy efficiency should be a top priority for the Government, with a clear strategy and evidence of real commitment.

As the Minister knows, I have spoken many times about the need to establish the Government’s own energy efficiency targets in law. I have argued that it is the retrofit industry that will deliver the Government’s energy efficiency targets, but the industry has lost confidence after being let down by numerous failed schemes. The industry has shrunk, and the amount of energy efficiency work has fallen dramatically. The industry itself argues that to persuade it now to invest in research, training and equipment, it needs the confidence that putting targets into legislation would give. Conservative Ministers, including the current Chancellor, have claimed numerous times to believe in doing just that—enshrining targets into law. A Defra document states:

“A legally binding long-term target gives a clear signal to industry of the direction of future government policy. This may increase investor confidence and encourage industry to invest in infrastructure and research that will drive innovation”.


The Government have two main targets: for all fuel-poor homes to be EPC band C by 2030; and for all remaining homes to be EPC band C by 2035. However, to date, the Government have refused to put those targets into law to make them legally binding as the industry has requested. I have received no credible explanation for this failure, so I will table an amendment to the Bill in Committee. Last night, your Lordships agreed an amendment to the Social Housing (Regulation) Bill which did at least put an energy efficiency target for social housing into legislation. I hope noble Lords will agree that all the Government’s energy efficiency targets should follow suit. I hope the Minister will explain in detail the Government’s plans in relation to energy efficiency and why it is absent from the Bill.

I now turn to another issue I recently raised which I believe should form part of the strategy to improve the supply of energy: the role that solar energy can play. Residential solar systems are already very popular, reducing bills and often being able to supply excess energy back to the grid at times when it is under pressure. I recently installed solar panels on my own home, adding to the 1.2 million homes that have done the same. Together, these domestic solar PV systems have the same generation capacity as the forthcoming nuclear plant at Hinkley Point. We should be encouraging more households to do the same and helping those with existing systems to get them working more efficiently.

In the March Spring Statement, it was announced that certain energy-saving materials would be eligible for a 0% rate of VAT on both labour and parts, and I welcome that. Solar panels and batteries, which store energy from solar panels for later use, are covered if fitted at the same time, but any battery added separately at a later date is not covered. Retrofit batteries will continue to be subject to VAT at 20%. Modern solar systems usually include a battery, but many systems installed just a few years ago do not. With more efficient and cheaper batteries now available, it makes sense for those with older systems to add a battery. The solar energy their panels generate can be used far more efficiently to the benefit of the home owner and the country overall. However, the 20% VAT rate is likely to deter many. I believe that retrospectively added batteries should also benefit from zero VAT and will bring an amendment to that effect in Committee.

Indeed, there are many other energy-saving items such as double glazing and draught excluders which are not covered by the zero VAT rate. Their take-up would increase were they to be included, which would again be to the benefit of the home owner and the country. I hope the Minister can share his view on this proposal.

[Lord Framlingham (Con)]

I am listening to the noble Lord’s speech with great interest. I understand that there are thousands and thousands of acres of factory roofs in this country. Would it not be a very good idea for them all to be encouraged to have solar panels?

[Lord Foster of Bath (LD)]

Indeed. The noble Lord is absolutely right. I was going to come on to that point. The UK Warehousing Association says that if we could get solar panels on all its warehouses, we would get 15 gigawatts of energy. The difficulty—perhaps the Minister can comment on this—is that there is difficulty in many cases with connecting to the grid. We need to find ways to help them achieve that for the benefit that the Minister just mentioned. I hope we can hear the Minister’s views on these issues, without him just shrugging them off as he has in the past, saying that this is a matter for the Chancellor.

Just like warehouses, other forms of non-domestic solar are vital; solar farms provide one such example. But we hear from media reports—the Minister can perhaps confirm whether this is true—that the Environment Secretary wishes to prevent new ones being built on the apparent basis that they are a threat to food security. Yet solar farms are a major UK success story that does not require subsidy. The chief executive of the trade association Solar Energy UK told the Financial Times last week that there is more than £20 billion of private capital in the project pipeline—investment, as well as the jobs and extra finance to support farmers it would bring, that would be lost under the Environment Secretary’s apparent plans. Yet there is no serious evidence to suggest that solar farms present a threat to food security. In fact, the opposite is true. Land around and under solar farms can and does support the UK’s nature recovery and biodiversity targets with wildflower meadows, ponds and wetlands. Solar farms drive investment, create jobs and generate clean electricity. I hope we will hear from the Minister that what we hear about the Environment Secretary’s views is incorrect.

As I said at the beginning, we support the main provisions of the Bill, but believe it is a missed opportunity to, for example, set out a clear strategic plan for addressing energy efficiency and expand and make better use of solar energy.