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

Lord Fuller Excerpts

Wednesday 28th October 2026 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, this instrument was laid on 7 September 2026. I acknowledge and thank the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee for their work in scrutinising these regulations.

This instrument delivers one of the Government’s flagship commitments of the industrial strategy: the British industrial competitiveness scheme. BICS is a central part of our drive to engineer the reindustrialisation of Great Britain. BICS will address the persistent competitiveness challenges facing British manufacturers by reducing electricity costs for eligible businesses. It will drive investment and economic growth in strategically important sectors across Great Britain. BICS is expected to cut electricity costs by up to 25%, or £40 per megawatt hour, for over 10,000 manufacturing businesses. It will support frontier manufacturing industries within the IS-8 sectors and foundational manufacturing industries, which provide key inputs to their supply chains. This includes eligible businesses in the automotive, aerospace, clean energy industry, life sciences, chemicals and steel sectors and more.

For too long, British industries have faced some of the highest industrial electricity prices in Europe due to a combination of structural factors and policy costs. Eligible businesses will begin receiving support from April 2027, when they will be exempt from paying the indirect cost of the renewables obligation and the feed-in tariffs, and receive a further exemption on their capacity market costs from October 2027 onwards. Eligible businesses will also receive an additional payment in 2027 related to the amount they would have received had the scheme been in operation in 2026. The policy costs are paid for by the electricity suppliers, who typically charge them to their domestic and non-domestic customers via their electricity bills.

This instrument implements the renewable obligation and the capacity market exemptions, and it enables the renewable obligation level for the 2027-28 obligation period to be revised in light of BICS. It also provides for how the level of discount for the BICS eligibility criteria will be calculated and other elements of scheme design. An instrument to exempt eligible businesses from the indirect cost of the FIT—the feed-in tariffs—will also be made.

In conclusion, BICS will support British manufacturing businesses to be more internationally competitive by reducing electricity costs to support and drive investment and economic growth across Great Britain. I beg to move.

[Lord Fuller (Con)]

My Lords, we discussed this scheme in the Chamber some months ago, so I will not repeat all the points here or be so churlish not to recognise that any help for the materials economy that employs so many people—especially the chemical industry, which in turn produces the raw materials that other manufacturers can use for their output—is all to be welcomed.

However, the problem is that the sums of money we are talking about here are insufficient to make a real difference. They are no substitute for reducing energy costs, so that we at least stand a chance of competing in the global race. Of course, the industry is on its knees, suffering the highest energy costs in the western world. A relatively small number of businesses will benefit from BICS, leaving tens of thousands to fend for themselves and continue to pay for the feed-in tariffs, renewables obligations and capacity market obligations. If we just stopped all these well-meaning but counterproductive regulatory layers, we would not need BICS, which does not even start until next year.

With gas prices 12 times higher than the US NOLA benchmark, and TTF gas—upon which ammonia and other raw materials are produced—at €90 per megawatt hour, the need for help is now. Instead, only today, the Government announced a consultation on extending CBAM to refinery products, which will just drive up the cost of industrial raw materials even more. We will never get rich by erecting a high-tariff wall around our economy to keep everyone else out. We do not need more policy money-go-rounds like BICS; we just need energy costs that are comparable with those of our competitors. I hope only that the businesses that stand to benefit from this measure will be around to receive it on 1 April. Until then, we and they will just have to hold our breath.

[Baroness McIntosh of Pickering (Con)]

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

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

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For example, since the year 2000, the United Kingdom’s fertiliser output has halved, driven largely by those high energy costs. We have only one large-scale fertiliser producer remaining, which itself now uses imported ammonia after the two largest ammonia plants in the UK were shut down in 2022 and 2023. UK fertiliser use has fallen by 19% in the 10 years up to 2024, making UK-produced foods more expensive because it discourages farmers from using it, lowering crop yields. It is industries such as this, which should be competing internationally and growing Britain’s economy, that are currently being oppressed by ideological carbon taxes.

[Lord Fuller (Con)]

I declare an interest as I am in the fertiliser industry, and I agree with just about every word my noble friend has said. The consequences of the lack of ammonia production in this country are not just harming our farmers, bad though that is, but are reducing the ability for us to produce energetics, explosives and weapons, because as we face a dangerous world, we need to think about our national security as well as our food security. The energy security policies of the Government are making us more vulnerable in a dangerous world than we otherwise would have been.

[Lord Blencathra (Con)]

I thank my noble friend for his intervention. I am disappointed that he only agreed with nearly every word I said, not every word, but he is absolutely right. I merely cited farming as one example of an area which is suffering because of high energy costs and reducing our capacity to produce fertiliser. In order for the scheme to successfully remove costs and benefit these industries, it must provide help to firms large and small, wherever they fall in the supply chain.

There is scepticism as to whether the policy achieves that. Specifically, the fact that the BICS will be available only to eligible businesses that use at least 33 megawatts per hour of grid-supplied electricity a year raises concerns. Small businesses—firms with under 50 employees—use up to 25 megawatt hours annually. For microbusinesses, that number is only 15 megawatt hours. The Government acknowledge that the renewable obligation certificates and capacity market costs asymmetrically damage British companies’ competitiveness, but it is the smaller firms, which do not necessarily have the same margins to deal with that cost, that are relatively the most affected by these policies. There is a chance that the scheme misses these businesses entirely. Surely the Government should be focusing on protecting them and promoting their competitiveness as a priority. Will the Minister commit to keeping these smaller firms, which are just as important to supply chains, under review as well?

I want to make a more general point. Implicit in this expanded scheme is the Government’s recognition that certain net-zero policies are economically damaging. They recognise that we are lagging behind when it comes to global competitiveness, and that much of the costs are the result of the policy they themselves support. The impact assessment calls the BICS

“part of the Government’s package for reindustrialisation.”

I have criticised that already, but it is tantamount to acknowledging that reindustrialisation is impossible, or at least markedly difficult, when policy costs are piled on industry.

British Industrial Competitiveness Scheme

Lord Fuller Excerpts

Wednesday 22nd April 2026 Lords Chamber

[Baroness Lloyd of Effra (Lab)]

I thank my noble friend for her question. The BICS will bring down electricity costs in line with other economies in the EU14, cutting costs by £35 to £40 per megawatt-hour, which will enable businesses to compete. The scheme is open to businesses of all sizes in Great Britain and is aligned with all the support that is going into the industrial strategy, including investment in skills and people.

[Lord Fuller (Con)]

My Lords, in a survey of its members, which produce the essential chemicals that drive our manufacturing economy, the Chemical Industries Association reports that those members are suffering from increased energy costs and raw material costs, that output is down and that whole branches of the industry are at risk of closure. For food businesses, protective atmospheres are at risk. For medical businesses, vaccines are harder to produce. For defence businesses, ballistic protection, clean energy and nuclear safety are at risk. Does the Minister accept that the BICS money is spread so thinly as to be irrelevant for the largest energy users? Does she agree that these large businesses need help now, not in 12 months’ time? The 1,000 jobs a month that are being lost in my noble friend’s area, Aberdeen, in related energy businesses cannot wait for the Government’s BICS.

[Baroness Lloyd of Effra (Lab)]

This is a long-term support programme to support industries in line with the industrial strategy. I have heard calls to expand and deepen the scheme. We have designed the scheme to support about 10,000 businesses that are aligned with the manufacturing frontier industries and the foundational industries, such as chemicals. They will get that support. We have heard the calls to act sooner and for transitional relief. That is why there will be a payment next year, reflecting the situation had the scheme been applied this year.

Employment Rights Bill

Lord Fuller Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Stowell of Beeston (Con)]

My Lords, I support the amendments in this group and endorse most of the arguments that have already been advanced. I will focus just briefly on tech scale-ups.

Noble Lords will, I hope, remember that the Communications and Digital Select Committee published a report just a few months ago on AI and Creative Technology Scaleups. These businesses are incredibly important to our economic growth. They represent the innovation that comes out of our universities and the talent that exists in this country, but they need a huge amount of support to get from being start-ups to scale-ups. However, if they are successful, the return that they then deliver to our economy is huge.

Our inquiry found that the UK is, in effect, an incubator economy. What we are seeing now is that increasingly the kinds of businesses that have the potential to turn into unicorns, or indeed become unicorns, are galloping away. They are doing so because of many things. Sometimes it is about access to capital growth and to highly competitive workforces. But one of the biggest challenges that we face is that our regime, whether it is regulatory or investment, is not supporting risk-taking. As my noble friend Lady Noakes said a moment ago, the measures in the Bill about day-one rights on unfair dismissal, along with many other things, are undermining risk takers.

As part of our inquiry—before the Bill was published—witnesses told us, in the context of hiring, that the costs of hiring and firing are already much higher in the UK than anywhere else, which is putting UK businesses at a disadvantage. In the context of the Bill and the day-one rights around unfair dismissal, the Startup Coalition, which represents the start-ups, talked in its briefing note about the chilling effect that these day-one rights around hiring and firing would have on start-ups, seriously undermining their potential for growth. TechUK, which represents tech businesses of all sizes, has raised a lot of concerns about some of these day-one rights, but in the context of unfair dismissal, one of its concerns, which I do not think we have heard much about so far, is the risk of fraudulent claims.

In the Government’s response to our report—while I am on my feet, I add a bit of advertising: the debate on the report is on Friday 13 June, so I urge any noble Lords who are interested in this to sign up and contribute—they referred a lot to their AI action plan and the forthcoming industrial strategy, saying that jobs will be “at the heart” of that strategy. If that is the case, I urge the Minister to think again in the context of what I have just argued. If jobs are to be at the heart of that strategy, and the Government are as keen to support tech scale-ups as they have declared themselves to be and have put this part of the economy centre stage in all their growth plans, but these kinds of measures are making it impossible or so difficult for these businesses to be willing to take the risks to hire in the way that they need to in order to scale, then the Government are introducing measures which are self-defeating and which will undermine their own objectives.

[Lord Fuller (Con)]

My Lords, I shall speak to Amendments 104, 105, 106 and 107, but particularly Amendments 107A and 108, relating to day-one rights.

Getting into work helps people make the best of their lives and reach their full potential. It is good for them and their families, and, of course, employment helps businesses and, through the taxes that everybody pays, helps sustain our state. You would expect that it was a core role of the state to incentivise the creation of jobs in pursuance of economic growth, personal fulfilment and a reduction in the costs of worklessness. It sounds so obvious, but the Government need to be reminded of those simple truths, because the facts are that the well-meaning and superficially attractive suggestion that employees should have full rights from day one is full of perverse consequences that will reduce the appetite to take on staff and will particularly benight those with few qualifications and limited experience. Furthermore, it does not reflect the way in which the economy is changing and the world of work is altering, as people choose to work in different ways.

Taking on new employees is not something that organisations do lightly. For the most part, there is an application and interview process, and we have heard about this from other noble Lords. For most employees, applying for and getting a new job is a well-trodden path, as someone builds a career, gains experience and seeks promotion. But that is not how it is for the part of the workforce that does not have formal qualifications. We have heard about ex-prisoners and people without experience or a strong track record in a particular field. People get on the ladder only when an employer takes a chance on them. The muddled thinking behind this Bill will result in the perverse outcome of increasing not only the cost of taking somebody on but the risk of getting it wrong. The consequence will be to make a business think twice before taking a chance on the person with limited experience, people at the beginning of their career, or those with an impaired employment record. These people need the greatest help.

It is not just the youngsters who may suffer from these well-meaning but counterproductive proposals. Many people prefer a portfolio of part-time jobs nowadays, because it suits their lifestyle. The facts are that the relationship between casual, agency and temporary work in the UK suits those engaged in it for a variety of reasons. The temporary agency, Adecco, tells me in a briefing that 79% of UK temporary and agency workers rate the flexibility it gives them most highly, and two-thirds say that temporary or part-time work helps their work-life balance.

Because much of the temporary work is variable and unpredictable, it is incompatible with some of those other day-one rights, such as the offering of guaranteed hours over a reference period. Some of the employment that might fall under this ambit is weather-dependent work—there is not much call for an ice-cream seller on a wet bank holiday weekend in a seaside town, for example. Seasonal work—harvesting, for example—often depends on the weather. It has been very dry recently, and harvest is going to be earlier this year. If you think about the reference period, there is more likely to be work up until 30 June, rather than in the normal quarter, which would have been the successive quarter reference period. There is casual work, such as waiting at a wedding or manning the turnstiles at a stadium concert or event, for example. All of these are temporary things, and it is going to be very difficult on day one for the employer to commit to some of these rights, because it is out of the employer’s control.

There is another perverse consequence that relates to the wider umbrella of agency and temporary work, such as supply teachers and supply nurses—I notice that the noble Baroness who was the chief nurse is no longer in her place—and locum and sickness cover, where the employee determines their availability, not the employer, as it suits them. We see that some of these rights are actually going to put the employee in a worse situation, because they are going to lose their bargaining power.

I will move on, because I am conscious of the time. All I will say is that codifying many of these things will make it harder for people to take advantage of temporary opportunities and will counterintuitively reduce their bargaining power, removing the labour market liquidity that makes the economy work for all parties, and particularly the taxpayer.

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[Baroness Coffey (Con)]

My Lords, this is one of the most important parts of this legislation, and I am very conscious of the Labour Party’s manifesto and its success in the election last year. However, at the same time, this is the same Government who want to increase the employment rate to 80%, which has not been achieved in a very long time. If we go back in history, we see that the Blair-Brown Government did not make changes to go to zero or day-one rights in the same way. Yes, they changed it from two years to one year. The coalition Government later changed it back to two years.

Yet we are now seeing—as has already been pointed out elegantly by the noble Lord, Lord Vaux of Harrowden, in response to some of the comments raised on the Government Benches—that this is the Government’s own impact assessment. If we look at the Regulatory Policy Committee’s assessment of these proposals, we see that it gives a very strong red rating on this element and suggests that, basically, there is no evidence that they are in any way needed.

There are aspects here of “What is the problem that the Government is trying to address?”. Lewis Silkin solicitors point out that if the only changes to be made were those referred to and we were still to have, as the noble Lord, Lord Hendy read out, the different approaches on fair dismissal in the tribunal, the Government could just put forward a statutory instrument based on the existing power of the 1996 Act. However, they have not done so in the Bill; they are seeking to go much further in a variety of ways in Schedule 3. That is why I share the concerns of many other noble Lords who are worried about the unintended consequences. Nobody can believe that a Labour Government would want to see unemployment rise or more people on benefits, or not tackle the challenge of people not in education, employment or training—

[Lord Fuller (Con)]

Or the most vulnerable.

[Baroness Coffey (Con)]

Or the most vulnerable—and we can just keep going.

However, on whether people take cases to the employment tribunal, as has been referred to, we are not going to debate Part 5 tonight, but in this same Bill, where we have to consider a lot of these things in the round, the Government are proposing to give an unlimited amount of money to somebody to get legal aid or legal support so that they can go to tribunal. In fact, they are going further and saying that the Secretary of State or somebody they appoint can go to court on their behalf. In that case, in Part 5, we are talking about people who have not even started work.

So, rolling it back, on some of the concerns about which noble Lords on the Government Benches are suggesting, “Don’t worry about it, this isn’t going to happen”, actually, the entire Bill is opening that. That is why I hope the Government do not just listen to the real concerns of noble Lords in this House; they should consider their own impact assessment and the representations of all the business organisations that think that this is just wrong.

I support the amendments. There are a variety of them about putting in the Bill a defined time for what should be considered a probationary period. We have already had a separate discussion about apprenticeships but, going further, one thing that surprises me is that in paragraph 2 of Schedule 3, new Section 108A refers to:

“Employees who have not yet started work”.


You may think, “That’s very sensible. How can you have an unfair dismissal?” I have already referred to Part 5, coming somewhat later. Then there is a list in the Explanatory Notes. It is quite complicated—it tries to simplify it, but the legislation is complicated—but here we have one of the answers. A lot of the Bill is basically about trying to make sure that trade union membership goes up—that means more money going into the political fund and having to wait to opt out until the following January, for, in effect, finances. Indeed, paragraph 5(3) of Schedule 3, as a consequential amendment, says that, in effect, the qualifying period for unfair dismissal, before you have even started work, will not apply if you are a member of a trade union. That is what is going on in this legislation. I will read it out:

“Omit section 154 (disapplication of qualifying period for unfair dismissal relating to union membership”.


There are a number of activities here; it goes further in the Explanatory Notes. They include if you are on strike—I do not quite understand how you could be on strike if you have not started work, but perhaps one is on strike if one is in a different job. There are already protections in the disapplication in existing law—it suggests people who are pregnant and similar. There are a variety of things here where there are already protections, but these are now being extended in different ways. Sometimes, the Government Back Benches may not all have necessarily read the full detail of the Bill.

To that end, I support the noble Lord, Lord Vaux of Harrowden, in saying, “Let’s get rid of this clause and this schedule”. There is genuinely a way to start this again. There is still time for the Government to go away and do proper thinking—there is plenty to get through in this debate before we get to Report—to really narrow in on what the Government are trying to do, rather than, frankly, giving a blank cheque to a series of employment situations. My noble friend Lord Hunt of Wirral—happy birthday to him, by the way—has already deemed this to be the unemployment Bill. I know those are not the consequences that the Government are seeking to address, but the experience and the petitioning of business organisations is very clear that that is what will happen.