Energy Bill [HL]

Lord Lennie Excerpts

Report stage
Monday 17th April 2023 Lords Chamber

[Lord Teverson (LD)]

My Lords, Amendment 59 is about the independent systems operator and planner, which we know as the future system operator. I have three amendments in this group—Amendments 59, 61 and 62—and I shall briefly speak to all of them. It is a big gap in the Bill as written at the moment that the so-called independent systems operator and planner is not actually independent in any way, which is why this amendment is down. I also very much support the amendment in the name of the noble Lord, Lord Lennie. For the ISOP to be independent, I believe it is fundamental that it needs to have an independent revenue stream. That is why my Amendment 61 would enable it to raise its own money; it should not come through Ofgem. We all know that the person who pays the piper calls the tune, and the future system operator needs to be independent of Ofgem. Lastly, Amendment 59 would ensure that the ISOP is a public body. I beg to move.

[Lord Lennie (Lab)]

My Lords, my understanding is that the Minister will confirm the Government’s support for an independent ISOP, as suggested by the noble Lord, Lord Teverson, and this being the case, we know no longer need to divide the House on our amendments. So, rather than listening to me putting forward the argument in favour of achieving this, I think we would be better served to listen to the Minister in his reasoning for an independent ISOP: I thank him for his time over the weekend, when we reached this position.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

Let me first thank all noble Lords for their amendments, and I thank the noble Lord, Lord Lennie, for the time he gave to discussing this matter. As always, there were valuable contributions from all parts of the House.

On the details of the amendments, Amendment 60, tabled by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, seeks to establish an industry-led advisory board for the ISOP. In the original consultation, the respondents strongly indicated that the body should be independent of energy sector interests, and I think that is a view shared by the Opposition. The Government therefore remain concerned that inserting in legislation a formal oversight role, as is being suggested, will place decision-making back in the hands of the energy sector and go against the reasons and mechanism for creating an independent ISOP in the first place. This could make the ISOP risk-averse or unwilling to take action that is potentially challenging to market participants but could be on the side of consumers, even if that action might be beneficial to the system itself.

We are therefore concerned that, rather than enhancing independence, members of such an advisory board would likely hold various energy sector conflicts. There are many ways this could crystallise, including resistance to systemic reform, more strident advice in favour of compensation for energy sector participants, or incumbent bias, for instance seeking to frustrate new market entrants which could stifle the innovation that I think everyone, in all parts of the House, is agreed that we need to reach net zero.

Establishing an industry-led advisory board for the ISOP would be similar to establishing one for, for instance, the Climate Change Committee—an organisation which, in our view, also needs to remain independent of industry interests. I hope noble Lords would agree that we need genuine, independent, expert thinking, rather than vested interests. Thankfully, this amendment is not required to ensure board independence; the Government intend to require that a number of sufficiently independent directors—or SIDs, to use the acronym—sit on the ISOP’s board. A SID is a board member who meets certain criteria to ensure that, as well as being skilled, knowledgeable and experienced, they are impartial, with restrictions including on certain shareholdings in the energy industry. Requirements in the ISOP’s licence will set a minimum number of SIDs to ensure that the ISOP’s board has strong representation from those outside the ISOP and is unconflicted by the interests of the energy industry.

To ensure effective scrutiny of the appointment of the ISOP’s chair, we are also asking the Office of the Commissioner for Public Appointments and the new departmental Select Committee, once established, to conduct pre-appointment scrutiny. Energy sector experts will have opportunities to input to the ISOP’s work, of course. For instance, the system operator’s business plan submissions, assessed by Ofgem, will continue to be open to consultation with market participants, including members of the specific industry forums mentioned in this amendment. Finally, through its price control process, Ofgem will ensure that the FSO is fully resourced to fulfil its objectives and obligations, including the funding of its statutory duties towards consumers, energy security and net zero.

Turning to Amendments 59 and 62, tabled by the noble Lord, Lord Teverson, again we agree with the sentiment of the noble Lord’s amendments, and the Government remain resolute that the ISOP shall be an independent public body. We continue to act to make this so. However, it is critical that the ISOP remains a dynamic organisation capable of adapting and evolving to the future conditions of the energy sector. I therefore hope the noble Lord will agree with me that it is preferable not to constrain the ISOP pre-emptively in legislation at this fairly early stage but to maintain some flexibility. With the rapid deployment expected in the energy sector, reasonable circumstances may arise in which the ISOP is well placed to take on some future energy sector role or interest.

Regarding the specifics of Amendment 62, I believe there are already significant controls and limits upon the Secretary of State in acting as the sole shareholder. These will include limits in the framework agreement, which we will of course make public. These controls will ensure that the ISOP’s operational independence is protected.

Legislating for the ISOP to “be independent” does not, in my view, appear to offer a material benefit beyond the controls already established in Part 4 of the Bill and the framework documents, but it risks preventing the intended corporate composition of the ISOP, thereby undermining its effectiveness.

Finally, on Amendment 61, also tabled by the noble Lord, Lord Teverson, the Government agree that it will be important to ensure that the ISOP is fully resourced to fulfil the objectives and obligations set out in its licence. In our view, the most effective funding mechanism to achieve this and realise our vision for an independent ISOP is for it to be funded by consumers through price control arrangements, much like the current gas and electricity system operators are today.

Levies placed on licensed bodies can be expected to filter through to consumers. However, we are concerned that the requirement to establish an audit board risks duplication with the current well-understood and transparent regulatory model established under Ofgem. Without a price control process run by the regulator, there is also a risk of poor consumer value for money. As with other regulated bodies in this sector, the ISOP will have the operational freedom it needs to manage and organise itself to effectively deliver its roles and objectives. We also intend the ISOP to sit outside the regime of Cabinet Office controls on spending, which bodies funded by taxes and levies are required to operate under.

With the explanations and reassurances that I have been able to provide, I hope that noble Lords will agree not to press their amendments.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, I have attached my name to a number of amendments in this group in the names of the noble Lords, Lord Whitty and Lord Teverson. The arguments on prepayment meters put by the noble Lord, Lord Teverson, are very clear; we have seen that all over the media.

The noble Lord, Lord Whitty, referred to the fact that this is a long-term issue, but it is worth highlighting that, since we debated this in Committee, the Government’s own figures have come out. They show that the fuel poverty level in the UK increased to 13.4% over the course of 2022 and predict that it will reach 14.4% by 2024.

Of course, these figures use the highly questioned government definition of fuel poverty, which does not allow for anyone living in a home above D classification to be classed as fuel poor even if they simply cannot afford to heat that home. According to the National Energy Action definition of fuel poverty—households spending more than 10% of their income after housing costs on energy bills—there were 7.39 million households in that condition in 2022, and the NEA estimates that this year, after April, 8.4 million people will be in households in fuel poverty.

These measures would be highly targeted to address the poorest. They are simply common sense, enabling people to live and be healthy in our society.

[Lord Lennie (Lab)]

My Lords, this group of amendments from the noble Lord, Lord Teverson, my noble friend Lord Whitty and the noble Baroness, Lady Bennett, consider the circumstances of some of the vulnerable customers in the energy market, and the actions the Government might take to protect them from the vagaries of the market. Such actions range from a social tariff through to inhibiting the exploitation of current prepayment meter customers and a prohibition on the installation of prepayment meters unless specifically requested by a customer. These amendments would collectively offer protection for these customers, who are often regarded as problems by billing companies.

As was said by the noble Lord, Lord Teverson, Ofgem recently announced a stop to companies forcing their way into premises to fit prepayment meters. This practice was commonplace and saw such customers paying more in energy costs as companies passed on the costs associated with the fitting and maintenance of prepayment meters. The ban was originally due to last until the end of March and has now been made indefinite.

The call for a social tariff has been advocated by Citizens Advice and is supported by the Social Market Foundation. It comes in a report that follows a long period of consultation with industry leaders, civil society and the general public. Last year, National Energy Action also argued for a social tariff for low-income households, highlighting the double bind of energy costs and rising bills coupled with paying more due to the poverty premium. A targeted social tariff would limit the impact of these circumstances, as well as help accelerate a fair transition towards net zero. I repeat the question asked by my noble friend Lord Whitty: are the Government able to give an indication that they might review the current tariff structure with a view to making it fairer, in favour of vulnerable customers, including prepayment meter customers?

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, this group covers amendments tabled regarding support and protections for the most vulnerable energy consumers. First, I thank the noble Lords, Lord Whitty and Lord Teverson, and the noble Baroness, Lady Bennett of Manor Castle, for their amendment to introduce a social tariff for vulnerable energy customers.

I am all too aware of the context for the noble Lords’ amendments, as energy bills have dramatically increased for all households over the past 18 months. This, coupled with the wider cost of living, has put the budgets of vulnerable households under considerable pressure. Noble Lords will be aware that the Chancellor set out in the Autumn Statement that the Government would work with consumer groups and industry to explore the best approach for consumer protection from April 2024. He also said that the Government would assess options, including a social tariff. These discussions are already well under way and are ongoing.

As set out in Powering Up Britain: Energy Security Plan, the Government have committed to consult this summer on options to provide better targeted support for those who need it most. In addition, the Chancellor announced in the Spring Budget that the energy price guarantee will be extended at £2,500 for an additional three months to the end of June 2023. This is in addition to the expanded warm home discount scheme, which has been extended until 2026 and which provides £475 million in support per year in 2020 prices.

The amendments tabled by the noble Lord, Lord Teverson, and the noble Baroness, Lady Bennett of Manor Castle, relate to the smart prepayment meter rollout and the restriction of the use of prepayment meters. The Government want to see the highest possible levels of smart meter coverage across the country, including for prepayment. Energy suppliers are each being set annual minimum installation targets and large suppliers are required to publish their performance against those targets, broken down by credit and prepayment.

This amendment would go further, effectively mandating the replacement of legacy prepayment meters by the end of 2025. This would present significant logistical challenges, including the need for energy suppliers to obtain warrants to enter consumers’ homes. I think we can all agree that that would not be a satisfactory outcome. Prioritising the replacement of legacy prepayment meters may have the unintended consequence of creating disincentives for suppliers to install smart meters for vulnerable credit customers. Data from Ofgem indicates that around 70% of those with disabilities pay by direct debit and may therefore benefit from the automated readings which smart meters deliver.

I understand the sentiment that lies behind the noble Lord’s calls for measures aimed at ending self-disconnections, such as a social tariff. However, his amendment is not the way to achieve this. The best way is through the work under way to explore the best approach for consumer protection, which I outlined earlier.

Regarding the noble Lord’s second amendment, the Government agree that the recent findings in the Times in relation to customers of British Gas having prepayment meters forcibly installed were both shocking and unacceptable. It is critical that our most vulnerable energy users are protected, and that is why the Government acted quickly to tackle this issue of inappropriate prepayment meter use. The Secretary of State wrote to energy suppliers insisting they revise their practices and improve their action to support vulnerable households.

Following that, all domestic energy suppliers have agreed to cease the forced installation of prepayment meters, and the remote switching of smart meters to prepayment mode, while Ofgem and industry agree and implement a code of practice to improve consumer safeguards. Ofgem will then start a formal statutory consultation process to modify suppliers’ licence conditions in line with the code, which will allow Ofgem to use its full enforcement powers to enforce compliance with the code.

I am pleased that the Chancellor has acted through the Budget to remove the premium paid by prepayment meter customers. That will happen from July initially, through the energy price guarantee, with Ofgem bringing forward options for longer-term solutions to be implemented by April 2024.

Prepayment meters can continue to play an important role in the market. They are a useful tool for some customers to prevent debt building up, and a complete ban on prepayment meters would likely see a move to using debt enforcement via the courts and bailiffs, which is not a desirable outcome. However, it is important that the rules around their use are sufficient and properly enforced. That is why Ofgem is undertaking a review to consider how prepayment meters are handled across the market. The Government will continue to review progress to ensure that these processes lead to positive changes for vulnerable consumers.

Amendment 74 tabled by the noble Lord, Lord Whitty, relates to protecting heat network consumers. Robust consumer protection rules are of paramount importance, which is the primary reason that the Government are regulating the heat network sector. Schedule 16 provides for regulations to make the regulator’s principal objective to protect the interests of existing and future heat network consumers. That mirrors Ofgem’s principal objectives regarding existing and future gas and electricity consumers.

I would like to provide more detail on what that principal objective will mean in practice. It will ensure that the regulator prioritises enforcing rules that ensure that heat network consumers receive fair prices and reliable supplies of heat. The regulator will have powers to investigate and intervene where prices appear unfair or are significantly higher than comparable heating systems. The regulator will also introduce heat supply standards of performance, including adequate compensation for consumers who experience outages. That will ensure that heat network consumers receive comparable standards to gas and electricity consumers.

We are introducing these measures through secondary legislation and authorisation conditions, as with gas and electricity consumer protections, to ensure that rules can be updated more easily as the market matures and decarbonises. The Government will consult on the specific consumer standards that need to be met, and I encourage the noble Lord to consider that consultation once it is published later this year.

I hope that noble Lords are reassured by this explanation and feel able not to press their amendments.

--- Later in debate ---

[Baroness Altmann (Con)]

My Lords, I support these amendments and the concept of improving energy efficiency. I probably cannot express the rationale for that better than the noble Baroness, Lady Hayman, and my noble friend Lord Deben.

I would like to ask my noble friend the Minister if there are particular issues in the wording of these amendments that the Government have a problem with. Is it the EPC ratings or the six months? If there are such issues, would the Government consider coming back at Third Reading with their own version of what seems, universally across the House and across the country, to be so sensible? Given the Government’s excellent record and excellent intentions in improving the energy performance and net-zero performance of the British economy and our country, would they consider these measures?

[Lord Lennie (Lab)]

My Lords, these welcome amendments in the names of the noble Baroness, Lady Hayman, and the noble Lord, Lord Foster, are concerned with energy efficiency in homes and non-domestic premises. As the noble Lord, Lord Deben said, the Government have set statutory targets aimed at reducing carbon emissions, achieving net zero and improving energy efficiency in homes.

There is consideration under way in the Minimum Energy Performance of Buildings Bill to move EPC ratings for rental properties from band E to C by 2025. The original plan was to ensure that all tenancies were in that band by 2025, but after much lobbying by landlords and others, DESNZ decided to scrap the 2025 target and now have until 2028 to achieve that target.

I want briefly to set out some facts: energy-efficiency measures are now 20 times lower than under the last Labour Government; the UK has the least energy-efficient homes in Europe; domestic energy-efficiency measures have fallen 95% since 2012; and the Resolution Foundation estimates that 9 million households are paying an extra £170 a year as a result of these failings. So we support these amendments, and should the noble Baroness, Lady Hayman, test the opinion of the House, we will support her in that vote.

--- Later in debate ---

[Lord Teverson (LD)]

My Lords, I certainly echo the question that the noble Baroness asked about the timing of the boiler scheme. There has been a big debate in the past on the use of frying oil, and getting the fiscal measures and the subsidy right so that it can be used as a transport fuel. Those arguments went on for a long time. However, I believe that there needs to be fiscal-incentive neutrality between the different types of renewable fuels, whether they are used within transport or indeed off grid.

[Lord Lennie (Lab)]

My Lords, I will briefly thank my noble friend Lord Berkeley for this amendment, which is asking the Government to introduce renewable liquid heating fuel obligations that mirror the renewable transport fuel obligations as a choice available for decarbonising heating. I do not know—perhaps the Government know—whether there is any reason why they cannot accept this proposal, given that these fuels can be produced and distributed using industrial facilities that seem to already exist, and in turn using local raw materials, making it possible to diversify the energy base of the country in order to keep moving forward and achieve energy independence. Would it work? If so, why not give it the go-ahead?

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I too thank the noble Lord, Lord Berkeley, for his amendment, and the noble Baroness, Lady Young, and the noble Lords, Lord Ravensdale and Lord Teverson, for their contributions to this debate. Decarbonising buildings off the gas grid—and I should perhaps declare an interest in that I, too, live in a house that is off the gas grid—using fossil-fuel heating is a key priority for the Government, as they use some of the most polluting fuels. Action on these buildings will help us to reduce our dependence on imported oil and protect consumers from high and volatile energy prices, while keeping us on track for net zero.

In 2021, we consulted on a policy of phasing out the installation of fossil-fuel heating systems in homes, businesses and public buildings in England off the gas grid during the 2020s. We will issue the government responses to these consultations in due course, setting out our plans regarding these policies. I am afraid that I cannot be more specific than that on the timing.

The noble Lord’s amendment seeks to impose new obligations on heating fuel suppliers, to encourage the supply and use of renewable liquid heating fuels. I appreciate his intent to increase the role of renewable liquid fuels in heating to help with the transition to clean heat off the gas grid. However, a number of questions must be answered before we can make decisions on what role renewable liquid heating fuels should play in the future heating mix and develop the policy framework which would support such a role. As he will be aware, sustainable biomass is a limited resource. We will need to prioritise its use in sectors that have the fewest options for decarbonisation and the most potential for emissions reductions. Indeed, the Climate Change Committee argues that the use of biofuels in heat should be minimised as far as possible to enable best use of biomass across the whole economy. Overcommitting in heating risks having effects in other sectors, such as transport, or driving up the prices paid for these fuels. The forthcoming biomass strategy will review the amount of sustainable biomass available to the UK and will then consider how this resource could be best used across the economy to achieve net zero. Policy decisions on the role of renewable liquid fuels will need to reflect this strategy.

Energy Bill [HL]

Lord Lennie Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I offer Green support for the amendments in the names of the noble Lord, Lord Teverson, and the noble Baroness, Lady Sheehan. The economic arguments for why hydrogen as a home heating mechanism makes no sense at all have already been very clearly made. I aim not to repeat anything that has been said but simply to add a couple of points to it. I very much agree with the point made by the noble Baroness, Lady Worthington, about prepayment meters; that was written in very large letters on my paper, but I have now crossed it out since it has already been covered.

In this debate we have not perhaps highlighted the degree of physical disruption. The noble Baroness, Lady Worthington, referred to receiving many expressions of distress from the affected villages; I have also received those. In the Government’s own terminology, research shows that it will

“undoubtedly result in some physical disruption to the property.”

Those are the Government’s own words. What that actually means is that we will have to see pipework surveyed and possibly changed; gas meters replaced; boilers, gas hobs and gas cookers replaced, as well as four-inch ventilation holes in the area of the boiler and the appliance to make it compatible for 100% hydrogen. The biggest challenge of all, perhaps, is the small in-house pipes that may frequently be embedded in walls or underneath floors. Think about the kind of disruption in an older house; just tracking those down, finding where they are and establishing whether they are adequate for hydrogen is massively disruptive. Every home will have to be checked and double-checked to make sure it is safe before hydrogen can be piped into it.

The other safety point that has not been raised yet, but I think really should be, is that burning hydrogen in the air produces nitrous oxides, which are a pollutant in their own right. It is often said that when you are using hydrogen, water is the only by-product, but that is the case only when hydrogen is used in fuel cells. Nitrogen dioxide is a key air pollutant that is harmful in its own right and is a precursor to other concerning materials including fine particulate matter and ozone.

I have just one final thought. I understood the considered narrative of the noble Baroness, Lady Worthington, about how we got to where we are, but when I go around your Lordships’ House and see the people who are propounding the idea of hydrogen for home heating, I notice that it is of course the existing industry and the vested industry interests. That cannot be how we decide our energy future, in so many areas but perhaps particularly obviously in this one.

[Lord Lennie (Lab)]

My Lords, I thank the noble Lord, Lord Teverson, and all other noble Lords and Baronesses who have spoken. While I may agree with the noble Lord, Lord Teverson, that these trials are not a good thing, they are upon us and therefore we have to deal with what we face rather than what we might not have faced had we stopped the trials in the first place. I do not think the Government are about to abandon the plan, and therefore we have some concerns about the plan as it goes ahead.

Clause 111 makes certain modifications to the Gas Act 1986 so that the person running the trial has clear grounds to enter property. That causes me concern that they can carry out essential works and safety checks and disconnect gas supply. Can the Minister deal with some questions? He may not be able to deal with them tonight and may want to write to me later. When can property be entered? What safeguards will be in place? What burden of proof will be applied on entry? When can a property not be entered? Will future guidance be published and, if so, when can we expect it to be with us? The Labour amendment

“requires the Secretary of State to take a number of steps with regard to the areas and people affected by hydrogen grid conversion trials and to make arrangements for Ofgem to provide information, alternative heat sources and offer the right of opt out (which would disapply the right of gas transporters to enter premises to disconnect). It would also require the Environment Agency to monitor and report on hydrogen escape, and the Health and Safety Executive to monitor safety implications.”

Subsection (1) provides the Secretary of State with a power to make regulations by statutory instrument to require a person conducting the trial to follow specified steps to ensure consumers are appropriately informed about the trial and the need for them to be disconnected from their gas supply before it happens. This clause also provides the Secretary of State with a power to make regulations to introduce consumer protections for people who are, or are likely to be, affected by the trial, and a list of examples is provided.

Our amendment sets out a number of reasonable steps, ensures that people are not disadvantaged, whether they participate or take an alternative, and ensures an alternative is offered and they can opt out. The trials are much more popular in Redcar, I am led to believe, than they are in Whitby. An exchange of correspondence took place between Graham Stuart, the Minister at DESNZ, and Justin Madders MP and Louise Gittens, who is the leader of Cheshire West and Chester Council. To quote from the letter from Graham Stuart, he said:

“I fully agree that local support for the trial is essential … However, we will only go ahead with a trial in an area where there is strong local support … I do agree it is very important this context is set out clearly, particularly for the communities in the areas across the country served by the gas networks which the networks are assessing.”


If that is true, certainly in Whitby, I do not think a trial will proceed, but I may be wrong. I would welcome the Minister’s assessment of the correspondence and what he makes of it in relation to the trial. It is not so much about cost, although there is a cost, and it is not so much about safety, although there is a safety issue; it is about local democracy and whether they want the thing to go ahead in the first place.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

I thank all noble Lords who have contributed. I start by addressing the point raised by the noble Lord, Lord Lennie. This is a matter for which I have ministerial responsibility, so I am familiar with all the issues. I too am getting, not a massive stream of correspondence, but a lot of correspondence from the people in the two trial areas. I have met Justin Madders, the MP for the Whitby trial area, Ellesmere Port, and of course I know Jacob Young very well from Redcar. The point that Graham Stuart made in that letter is still absolutely valid. We are waiting for the submissions of the two rival networks, which we should receive later this month. A lot is happening this week; it is a busy week. One of the factors that we will carefully take into consideration is precisely the point that Graham Stuart set out in his letter: the degree to which there is local support. Clearly, one way to measure that is to talk to the local Members of Parliament and the local authorities; that will be critical in any decision-making.

Let me also address the question from the noble Baroness, Lady Worthington, on the costs of the trial. I cannot give the noble Baroness an overall cost yet because we have not received the final submissions from the networks, but I can say that consumers in the trial location will not be expected to pay more for their heating than they would have if they had remained on natural gas. They will also not be expected to pay for the installation and maintenance of either any hydrogen-capable appliances or any alternative heating option that they wish to go for.

Let me now address Amendments 53, 54 and 57, tabled by the noble Lord, Lord Teverson and the noble Baroness, Lady Sheehan. As noble Lords will know, decarbonising heat in buildings and industry is essential if we are to deliver net zero. One of the great things about this country, but also one of our problems, is the massive diversity and age of buildings in the UK, as a product mainly of the industrial revolution, and the diverse consumer needs. I think most reasonable people would accept that no single solution can provide the best option for everyone. I agree with the noble Baroness, Lady Worthington, that the majority of the solution will probably be electrification, but there will be some properties for which it is not suitable.

--- Later in debate ---

[Lord Callanan (Con)]

I know the noble Baroness has strong views on electrification but let me reassure her that this is precisely the purpose of the trial. We need to use an existing network to find out what happens to hydrogen in an existing network. Clearly, environmental monitoring and checking for leaks and so on is a crucial part of it. It is one of the reasons we need to do it on an existing network in an existing community, to find out what happens outside of theoretical lab experiments where it is very easy to set up a trial with new pipework, new valves and new equipment. I have visited hydrogen demonstration houses up in Gateshead, my home area. It works very well but these are brand new properties, constructed with hydrogen appliances and new pipework. That is not a very good trial as to how it would work in the real world in existing communities. That is why we need to do the trial. The things that the noble Baroness asked about are exactly what we need to be checking and monitoring to judge the effectiveness of any hydrogen experiments in the real world.

I turn to Amendment 56, tabled by the noble Lords, Lord Lennie and Lord Teverson, and the noble Baroness, Lady Sheehan. This amendment covers several aspects which I fully agree are important for the safe and effective delivery of the village trial. However, I assure noble Lords that the evidence that this amendment seeks to gather through a statutory consultation is already being gathered and will be reviewed by the department as part of our assessment process, following the submission of final proposals at the end of this month. As I said, in May 2022, we sent a joint letter with Ofgem to the gas networks setting out an extensive list of requirements that proposals for the trial should meet. This included requirements mentioned in the amendment, such as local support, costs, environmental impact and consumer protections, as well as many other important areas.

After the gas networks submit their proposals for the trial—later this week, as I said—the department will undertake a thorough assessment against the full list of requirements set out in the letter. That process will involve expert input from the various statutory bodies involved, including the Health and Safety Executive and Ofgem. We will publish the result of that assessment later this year, including the relevant evidence to explain our decision, and that will be available to all noble Lords. I reassure the House that we fully understand the importance of conducting the trial properly.

I touched on this earlier but the noble Lord, Lord Teverson, raised the point about local support for the trial. I reiterate that we will go ahead with a trial only in an area where there is strong local support. The gas networks are working closely with local authorities, communities and Members of Parliament as they develop their trial proposals. My officials also meet regularly with the relevant local authorities. Final proposals for the trial will need to contain evidence of strong support from the local community, validated by an independent external source, such as a local council. Again, I am happy to meet the local Members of Parliament.

The networks are extensively consulting local residents to develop an attractive consumer offer tailored to the community. They have opened drop-in centres in both Whitby and Redcar where anyone can engage directly with them and ask questions about what the project means for them, and have held a number of public events.

Safety is of course fundamental, which is the point made by the noble Baroness, Lady Sheehan. Before any community trial can go ahead, the Health and Safety Executive will need to be satisfied that the trial will be run safely. No trial will go ahead until all necessary safety assessments have been successfully carried out. I hope noble Lords will accept my reassurances on that.

If it goes ahead, the trial will start in 2025 and provide vital evidence that will be required to enable the Government to make decisions in 2026 on any potential future role for hydrogen in decarbonising heat. I hope noble Lords will accept that undertaking another formal consultation would duplicate the work that the department and the gas networks are already doing, and could delay important milestones for ultimately meeting net zero.

I agree that the trial must be conducted properly, and I have already spoken about the additional consumer protections that will be in place for the trial. Those protections, which must be met by the gas networks, also mean that the trial must be delivered with minimal disruption to consumers.

I hope I have been able to reassure noble Lords that the department will carefully consider all these factors in coming to a decision on the trial. Importantly, we will be closely examining the evidence and outcomes of the gas networks’ engagement with local authorities and consumers in the trial areas. I hope that, with the reassurances that I have been able to provide, the noble Lord, Lord Teverson, will consider withdrawing his amendment.

[Lord Lennie (Lab)]

Could the Minister please write to me about the questions I asked about entering properties and whether further guidance will be published and available?

[Lord Callanan (Con)]

As I said, the powers that we propose to provide are essentially similar to those that the networks already have on the basis of essential safety works. Still, I am happy to provide the noble Lord with further information and details.

Energy Bill [HL]

Lord Lennie Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[Lord Teverson (LD)]

My Lords, perhaps for the purpose of the whole of Report, I should declare my interest at chair of Aldustria Ltd, which is concerned with battery storage.

I liked the speech by the noble Lord, Lord Ravensdale, today, as well as the speeches he gave on the levelling-up Bill debate yesterday evening. There is an important need for an understandable programme that moves us forward—a route map that works, rather than just targets and slogans. Of course, we will have Green Day on Thursday. When the Minister replies, could he give us a few clues as to what will be said then? The House would be all ears and grateful for the advance information. I thought that the net-zero report, commissioned by the Government and produced by his honourable colleague, Chris Skidmore MP, was an excellent document. I hope that the Government can say that we will be moving ahead in a comprehensive way in much of the area under discussion.

I will speak mainly about the three amendments that we have around Ofgem. It is just stark staringly obvious that Ofgem, our regulator for the energy industry, should have a net-zero objective. I cannot see how you can argue against that, for all the reasons that the noble Baronesses, Lady Hayman and Lady Altmann, have gone through so well. If there was one example of that to me, it is that Ofgem has clearly been very effective in its own mind at making decisions for customers of today but has been utterly unable to make decisions for customers of future generations. That area of the grid is now utterly incapable of delivering; whether it is offshore, onshore or developments on the residential side, those connections and that grid are unable to help us to move towards those net-zero objectives. On connection dates, I know one of 2035, which just happens to be the year when the Government’s target is to have finished decarbonising the electricity grid. Clearly we are not going to make that unless we move it forward very quickly, and I have concerns that we will already not be able to meet it.

The Minister and others in his position have said, all the time, “This is not necessary—it is already covered.” However, those examples already given by the noble Baronesses in the debate show that the directions and the objectives that the Government now have are not sufficient, and that this needs to change. We need to change it now, otherwise our decarbonisation of the grid by 2035, let alone net zero by 2050, will be missed. That cannot be allowed; these amendments must be part of the Bill.

[Lord Lennie (Lab)]

My Lords, my thanks to noble Lords who have spoken in the debate: the noble Lords, Lord Ravensdale and Lord Teverson, and the noble Baronesses, Lady Hayman, Lady Altmann and Lady Bennett. I will quickly review what I think they said and set out our amendment.

The noble Lord, Lord Ravensdale, set out the principal purpose for the Bill. Split in four ways, it will: increase energy systems’

“resilience and reliability … support the delivery of the UK’s climate change commitments … reform the UK’s energy system while minimising costs to consumers and protecting them from unfair pricing”,

and improve the overall efficiency of the UK energy system and economy. It also requires an annual report to Parliament on the above. The first three of those points are lifted directly from the opening paragraph of the Explanatory Notes, while the fourth is also an objective of the ISOP simply made wider.

Labour tabled an amendment in Committee, and I will remind noble Lords of its contents. The context of that was, at that time, the cost of living crisis; the energy price cap was going up to £3,549 per year. National Energy Action predicted that the number of UK households in fuel poverty would rise to 8.9 million. Tory leadership candidates at that time were vying for leadership to be Prime Minister but were running away from the issue of net zero; the High Court found that the net-zero climate strategy was inadequate, and the Climate Change Committee found that credible plans existed for only 39% of emissions, citing “major policy failures” and “scant evidence of delivery”. As regards energy security at that time, gas prices were expected to surge to record highs the week after the Nord Stream 1 pipeline was shut down, and European prices had risen by nearly 400% over the past year. The UK relies on gas for about 40% of its power generation, and even more on the coldest days when demand is high and wind generation tends to be low. In 2017, a BEIS report included a scenario for a complete cut-off of Russian gas and found that the UK could see “significant unmet demand” if the cut was prolonged and continental European countries paid whatever was necessary.

However, the Bill is a hotchpotch of things thrown together, lacking an overarching theme to tackle these issues. Our amendments would have set out a purpose for the Act, increasing resilience and reliability; supporting the delivery of UK’s climate change commitments; reforming energy systems; binding the Secretary of State and public authorities to these purposes; requiring the Secretary of State to designate a statement as a strategy and policy statement with regard to the purpose of the Act; and requiring the Secretary of State to review the strategy and policy statement on a five-year basis. That would have forced successive Governments into long-term thinking about the specific purpose, not limiting the impact and ambition of the Bill to what has been tacked together, which simply does not go far enough or tackle the immediate problems.

The amendment from the noble Lord, Lord Teverson, would place gas and electricity markets under a duty to assist in the delivery of net zero, and our amendment would require the Secretary of State to designate a statement giving GEMA a mandate for considering the role of energy in supporting government policy in achieving net zero. The amendment from the noble Baroness, Lady Hayman, would include in Ofgem’s general duties a specific requirement to have regard to meeting the UK’s net-zero emissions.

Briefing from RenewableUK sets out the argument for Ofgem remit reform. It states:

“Ofgem’s remit has not changed since its establishment in 2000, and does not prioritise electricity decarbonisation”—


in line with recent government legislation or stated ambitions. It has only a consideration of greenhouse reduction. It continues:

“As a result, Ofgem has been unable to substantially reform its working practices and regulatory frameworks in response to the 2008 Climate Change Act and the UK’s subsequent net zero ambition, to detriment of renewable energy investment and decarbonisation pace.”


It goes on to say that the Government have an opportunity to reform Ofgem’s remit in the Bill we are addressing today.

There is some key evidence for that. Mike Thompson, the Climate Change Committee’s chief economist, noted the integration of energy with transport and heat, including the potential for

“cars sitting on driveways acting as batteries and putting electricity back into the grid”.

He argued that there is a

“need for real integration and a regulator that can think from a systems perspective”,

suggesting that hydrogen and heat networks should be within Ofgem’s remit.

Jonathan Brearley, chief executive of Ofgem, said:

“Planning the system and setting how it evolves should not really be done by the regulator. The regulator’s job is to make sure that that is done efficiently and effectively by the companies concerned.”


We appreciate that argument.

A number of witnesses told the committee that the net-zero target should be included explicitly within Ofgem’s statutory duties. Dr Hardy said that he would

“put net zero up top”,

balancing out its other duties against the context of

“hitting that legislated carbon target”.

Professor Mitchell said that

“net zero has to be the raison d’être of Ofgem”

and argued that

“delivering on legally enshrined commitments to decarbonise”

should form part of Ofgem’s principal duty.

The committee concluded:

“To ensure that, on an enduring basis, the appropriate focus is given to net zero within its competing priorities, we recommend that Ofgem’s duties should be amended to include explicit reference to having due regard to the net zero target. While Ofgem maintains that net zero considerations already factor into its decision-making, adding net zero explicitly to its statutory duties will serve to make this clear.”


We feel that the UK needs not to be left behind but to show similar ambition in its plans for the future of the electricity industry, including Ofgem’s remit.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

First, I thank the noble Baroness, Lady Worthington, and the noble Lord, Lord Ravensdale, for bringing forward Amendments 1 and 136 and the noble Lord, Lord Teverson, for his contribution to the debate. As I set out in Committee, although the Government believe these amendments are well intentioned, ultimately, they are unnecessary. First, the Bill has a clear purpose, so I do not think any introductory clauses are necessary. Where appropriate, the Bill already sets out fairly clear objectives and general duties for the Secretary of State and other specified bodies in carrying out their functions under the relevant parts.

Secondly, in regard to an annual report, I assume noble Lords are aware that the Energy Act 2013 introduced the power for the designation of a strategy and policy statement that sets out the Government’s strategic priorities for energy policy, the roles and responsibilities of those implementing such policy, and the policy outcomes that we want to see achieved. We have committed to a second statutory consultation this spring. I therefore believe that an annual report to Parliament would cause unnecessary duplication of the existing strategy and policy statement.

--- Later in debate ---

[Lord Teverson (LD)]

My Lords, I also have great concern about this amendment. It seems to me that, on renewable transport fuels, we have a government amendment, in a group of some 20 amendments or more, that changes the taxonomy in the UK, exactly as was said by the noble Baroness, Lady Bennett, and the definition of a renewable fuel. I do not think that is particularly good practice; it is the wrong way to do this. I hope that the Commons, when this goes down the other end, will debate it rather more, because it requires a lot more thought.

I can get my head around the nuclear bit with hydrogen, which has now been well explained to me. I was trying to understand this amendment, I must admit, before the noble Lord, Lord Ravensdale, spoke, but whether it is renewable or not is a debate to be had. I do not have quite such an issue over that, maybe, but it needs to be debated fully. What I have a problem with is more the carbon side, because what we are talking about is no different from energy from waste. Energy from waste is one of the dirtiest forms of energy that is produced. It has other benefits—it does not produce landfill and all that sort of side—but it is not, in any description, a renewable fuel. So I too have great reservations about this amendment. Clearly I am not going to oppose it here today, but I very much hope that the other end of the building will give this much greater scrutiny and see it as a major decision around the taxonomy of renewable fuels and renewable energy when the Bill reaches there.

[Lord Lennie (Lab)]

My Lords, this amendment would allow two other low-carbon fuels to be supported under the existing and forthcoming renewable transport fuel schemes. As we have heard, these are recycled carbon fuels and nuclear-derived fuels. While the noble Lord has created a degree of happiness with the noble Lord, Lord Ravensdale, some unhappiness still exists around the Chamber. These fuels can provide similar carbon emissions savings to the renewable fuels already considered under these schemes. Furthermore, these fuels are crucial for the production of sustainable aviation fuel, which is imperative to achieving the jet zero strategy and fulfilling the forthcoming sustainable aviation fuel mandate.

I will not speak for long on this, because we want to move on, but this amendment would insert a new clause in Chapter 3 of Part 3 of the Bill, providing for recycled carbon fuel and fuel derived from nuclear energy to be treated as renewable transport fuel. Amendment 74, in the name of my noble friend Lord Whitty, would make it clear that the regulator needs to ensure that consumers of heat networks have equivalent consumer protection to those of other suppliers. The Explanatory Notes say of Clause 166:

“This clause provides that GEMA will be the regulator for heat networks in England, Wales and Scotland. The Secretary of State may introduce regulations to appoint a different regulator by affirmative procedure. The regulator in Northern Ireland will be the Northern Ireland Authority for Utility Regulation (NIAUR) subject to a similar power to make changes by secondary legislation.”


I think that is something we can all agree with.

[Lord Callanan (Con)]

I thank all noble Lords who have taken part in this debate. Before I engage in the detail of the amendments, let me respond to the noble Baroness, Lady Bennett. I am sure I have never said that we should not listen to scientists; of course we should, but we should accept that there are sometimes different scientific opinions. I notice that the noble Baroness is very keen to listen to scientists on some occasions, but the Greens are totally opposed to listening to the vast majority of scientists who say that nuclear should provide an essential way of decarbonising the country’s economy.

By way of example, perhaps she would like to look at the mess her Green friends have got themselves into in Germany by their irrational objections to nuclear policy: they have ended up, now that they are in government, supporting the eradication of villages to open more lignite mines, the dirtiest form of coal production, because they got rid of all their nuclear capacity. Obviously they could not have predicted the gas shortages that would come along, but this is the problem you get yourself into with idealistic policies without any practical effect in the real world. Thankfully, I do not think there is any chance of the noble Baroness or her party being in government in the UK to make similar errors and mistakes.

--- Later in debate ---

[Lord McLoughlin (Con)]

My Lords, on behalf of the committee, I thank the Government for responding favourably to the report. I hope this is something that other departments will follow through in their subsequent considerations.

[Lord Lennie (Lab)]

My Lords, as we have heard, these amendments relate to ensuring that regulations which make provision for a civil penalty must include the provision of a right of appeal to a court or tribunal against the imposition of such a penalty in a number of instances in the Bill, as recommended by the DPRRC. It is good news that the Government have accepted these recommendations. These amendments have been tabled to make changes to the procedure of regulations under several powers, as recommended by the committee, and to clarify that non-statutory documents do not have legislative effect in relation to heat network zoning methodology. We support these amendments.

Amendment 22 agreed.

Electricity Supplier Obligations (Green Excluded Electricity) (Amendment) Regulations 2023

Lord Lennie Excerpts

Monday 20th March 2023 Grand Committee

I agree that that is indeed the legal case. However, there is also a moral imperative and a common sense one. Is it not the case that this abolition of the GEE from energy supplier obligation calculations will make it harder for us to realise our statutory net-zero targets—which are more important than ever in light of the IPCC report today?

[Lord Lennie (Lab)]

My Lords, I thank the Minister for his thorough explanation of the regulations and the noble Baronesses, Lady McIntosh and Lady Hamwee, for their contributions and questions, which the Minister will no doubt deal with when he comes back.

I will take the reverse order from the Minister: I will deal first with the green amendment and then with the energy intensive amendment. Contracts for difference are the main way in which the Government support low-carbon electricity generation projects. While we were in the EU, a supplier could seek a reduction in their liability proportion in the levy by offsetting low-carbon electricity generated in the EU area. The UK is no longer under an obligation to offset any low-carbon electricity generated in the EU area. Following industry consultation—I do not know how thorough it was, or how much there was—removing the green excluded electricity was determined to be the fairest way of proceeding following our exit from the EU. As I understand it, the supplier obligation applies to all licensed suppliers of electricity to pay for the contracts for difference.

The statutory instrument is relatively straightforward: it removes something that was implemented when contracts for difference first became the major instrument of the development of renewals in the UK. It looks to close a potential loophole in state aid regulations. Suppliers importing electricity from Europe should not have that supplier obligation applied to them and the electricity they are bringing in from European sources. As we no longer have responsibilities over state aid, it is no longer appropriate to continue with the arrangement that was dependent on the state aid loophole. In the past, suppliers had to provide proof of power coming in to claim that there was no money to pay, as it were, for that energy coming in. Now the opposite is the case: suppliers will have to provide evidence of what is coming in as a renewable source, via the interconnector, from Europe to ensure that they pay. Can the Minister say why any company would now produce evidence of green energy imports through the interconnector in order to pay? Nothing in the regulations requires that evidence is given so that payment is made, and there is nothing about enforcement action or penalties against bodies which do not provide information to enable future payments to be made.

Also, there is no inversion in place for the relationship between the strike price and the reference price. As I understand it, that means that, instead of normal procedure as far as the contracts for difference in this country are concerned, the supplier does not get a payment from the Government in respect of the strike price. As the reference price is currently above the strike price, the supplier has to pay back into the Low Carbon Contracts Company. The company then has a reasonable obligation to pay back that money to suppliers. So I ask the Minister: are companies now obligated under the SI to pay money into the LCCC for contracts for difference which were pre-exempted, and also to get money from the LCCC when the general strike price is inverted against the reference price?

The energy intensive industry exemption, as the Minister said, provides relief to around 320 electricity-intensive companies in the UK. It launched in 2017, and it needs to be reassessed this year under the scheme’s rules. Following consultation, the Government decided to implement two minor changes to the operation of the scheme. The amendments to the scheme are designed to improve accessibility to the EII scheme and to account for the Covid-19 pandemic period. First, it will allow companies applying under the exemption from the indirect costs of funding contracts for difference, the renewables obligation and the small-scale feed-in tariffs to be able to feed in three of the previous five years for assessment, as the Minister said, in order to account for possible lower trading and electricity usage during the 2020 and 2021 pandemic years. Secondly, it will allow new companies to apply with only one quarter of trading rather than two, as was the case previously.

Labour does not oppose those sensible changes which take account of what happened during the Covid period. Companies will be judged against their present performance rather than that of previous years. It is likely that companies previously exempted from the scheme can now be brought into it. Does the Minister agree with that? Could he comment on the observation made in the other place that the mining of hard coal is on the eligibility list? Given the environmental effects of that industry, it seems at least curious as to why it may be included under the EII scheme.

[Lord Callanan (Con)]

I thank all noble Lords for their valuable contributions to the debate. The electricity-intensive industries exemption provides relief for key foundation industries, including companies operating in the steel, paper, chemicals, cement and glass sectors. The scheme also supports emerging sectors ,such as battery manufacturers and companies making semiconductors. The companies this scheme supports are located all over the UK and provide high-paid, good-quality jobs both directly and in the supply chain.

These EII regulations are necessary to improve the operation of the current excluded electricity scheme. They will make it easier for start-ups and new businesses to apply. They will also allow businesses to account for the impact of Covid-19 when reapplying for relief. We will update and publish our guidance on the GOV.UK website to ensure that businesses are aware of these proposed changes, and proactively engage with stakeholders to ensure that they are too.

Following the consultation in spring 2023, we will come forward with our proposals on the recently announced British industry supercharger, which aims to roll out further support to important manufacturing businesses. This will be through exempting firms from certain costs arising from renewable energy obligations, as well as the GB capacity market costs, while also exploring reductions on network charges, which are the costs that industrial users pay for their supply of electricity.

The proposed removal of the green excluded electricity exemptions from the CfD scheme means that a supplier in Great Britain will pay a proportion of the contract for difference scheme cost that is closer to their market share. It will remove a condition placed on the British scheme by the European Commission and ensure that the supplier obligation is applied to GB suppliers in accordance with their market share.

We are proposing these legislative amendments following a public consultation. It generated 28 responses from a cross-section of the energy industry, representative bodies, brokers and other concerned parties, with the policy proposals receiving wide support.

I will move on to the specific questions raised. My noble friend Lady McIntosh asked about redistribution costs, the impact of standing charges, impact assessment and the consultation period. I say to her that, for the EII exemption scheme, any increase in the bills of non-eligible consumers arising from these changes is likely to be extremely minimal. For this reason, it was felt that a new impact assessment was not required. The redistributed cost applies only to the policy cost element of an electricity bill and does not impact or increase the current standing charge.

The noble Baroness, Lady Sheehan, asked a number of questions about consultation responses, the number of consultees and the distribution of comment, and about the carbon border adjustment mechanism. The Government’s response to the consultation will be published shortly and it will set out further detail on the distribution of comments received. I can tell the noble Baroness that, in total, there were 64 responses to the EII exemption consultation, including from electricity suppliers, currently eligible businesses and other organisations.

Regarding the distribution of comments, there was significant support for the amendments proposed under this SI, as they improve access to the schemes and ensure that firms are not disadvantaged by the impact of the Covid pandemic. The scheme continues to have a robust process both for initial applications by EIIs and for the required reassessment that an EII needs to go through to continue to receive the exemption. This includes an assessment of the company’s accounts, its electricity bills and any other supporting evidence. As officials are in regular dialogue with firms in the energy-intensive sectors it was felt that, given the relatively minor and technical nature of the changes, five weeks represented a sufficient consultation period. As stated, we will publish our formal response shortly.

The noble Baroness, Lady Sheehan, also asked about a carbon border adjustment mechanism. I agree that this could represent an easier solution to the problem of carbon leakage, but I am sure she will accept that it is more of a long-term change. The EU is also looking at it on a longer timescale. We will shortly publish a consultation on a potential CBAM, but I am sure the noble Baroness will realise that there are lots of potential implications of such a mechanism.

Cleaner Energy Technologies

Lord Lennie Excerpts

Tuesday 14th March 2023 Lords Chamber

[Lord Callanan (Con)]

No, I think the noble Lord is being too pessimistic, as he often is. We have ambitious projects supporting steel. The noble Lord is right that hydrogen is probably one of the technologies that will be required to decarbonise the steel industry and we are working closely with the industry on that.

[Lord Lennie (Lab)]

My Lords, in 2021 the Government set out in guidance a revised approach to valuing greenhouse gas emissions due to the more ambitious goal in the Paris Agreement to limit global temperature rise and the UK’s legal requirement to achieve net zero by 2050. Can the Minister say what steps the Government have taken since this adjustment to ensure that the revised approach is meeting its intended goals?

[Lord Callanan (Con)]

We give a value to carbon and use that to inform our policies, not least through the ETS. We have supported a number of early-stage technologies. Offshore wind was extremely expensive when we first started supporting it; now it is very cost-competitive and we are confident that we will end up in the same position on hydrogen.

Heat and Buildings Strategy: Gas Boilers

Lord Lennie Excerpts

Tuesday 28th February 2023 Lords Chamber

[Lord Callanan (Con)]

I am aware of the noble Baroness’s scepticism about hydrogen—we have discussed it a number of times. I agree with her about ground source heat pumps. There are some great, innovative UK companies developing them and we support them under the boiler upgrade scheme.

[Lord Lennie (Lab)]

My Lords, the Committee stage of the Energy Bill started in September 2022, and we still have not reached Report. Is this delay down to the Government adopting the Labour Party’s suggestions in Committee, which would make targets of the future homes standard and ban the installation of gas boilers in new homes? I guess from the Minister’s response so far that this is not the case. Can he say what is causing the delay?

[Lord Callanan (Con)]

I am sorry to tell the noble Lord that it is nothing to do with the Labour Party’s policies. My responsibilities do not extend to predicting the business of this House. I am sure that the Chief Whip has taken careful note of the noble Lord’s comments.

Domestic Heat Pumps: Budget Underspend

Lord Lennie Excerpts

Tuesday 28th February 2023 Lords Chamber

[Lord Callanan (Con)]

As the noble Baroness is aware, we have two potential trial villages at the moment. We will make a decision later this year on which one will be selected, assuming that we get the powers to do so in the Energy Bill. We are still looking very closely at the costs of the trial. They are still to be determined, so I cannot give her an answer yet. The two gas networks are looking at the costs as we speak.

[Lord Lennie (Lab)]

My Lords, in addition to the underspend highlighted in the Question by the noble Baroness, Lady Sheehan, about £2.1 billion remains unspent of the £6.6 billion promised in the Conservative manifesto to be used on energy efficiency and decarbonisation of heat. The think tank E3G puts this down to a lack of effective policies on domestic insulation and decarbonisation. Can the Minister say if and how the Government intend to deliver on that manifesto promise?

[Lord Callanan (Con)]

The noble Lord will have to have a little patience and wait for the Chancellor’s spending announcement. As I have said before, there has been no lack of government commitment in this area: we are spending £6.6 billion over this Parliament, and we have already had another £6 billion committed by the Chancellor for energy-efficiency schemes from 2025. It is going well.