North Sea Gas

Lord Teverson Excerpts

Wednesday 7th September 2022 Lords Chamber

[Lord Callanan (Con)]

As I intimated in my previous answer, we are co-operating closely with the European Union, and as I said, throughout the summer, in the quiet months, the UK’s LNG terminals—we have 20% of the entire European capacity—have been working overtime precisely to help our European friends to refill their storage capacity in time for the winter months. Therefore, security is a top priority for us, and of course we work very closely with other suppliers such as Norway, with LNG suppliers, and with our European friends.

[Lord Teverson (LD)]

My Lords, it is incredible to me that Centrica, a private company, was just able to close our national gas storage facility without, it would seem, any consultation or intervention by the Government. What will stop that happening again in two or three years’ time?

[Lord Callanan (Con)]

We have received proposals from Centrica, which we are closely examining at the moment. I point out that the market in 2017 was in a very different position. A number of independent reports were produced by experts at the time, supporting that decision from Centrica. However, the situation is very different now, which is why it is now looking at reopening it.

Energy Bill [HL]

Lord Teverson Excerpts

Committee stage
Monday 5th September 2022 Lords Chamber

[Baroness Worthington (CB)]

My Lords, I will speak to Amendment 7, to which I have added my name. I declare my interest as a co-chair of Peers for the Planet. I apologise for not being present at Second Reading; I wrote to the Minister, and I am grateful for his detailed response to some of my points. I will endeavour to be brief, as this is Committee, and will simply explain why we consider that Amendments 7 and 242, together, bridge the divide that is evident between the two sides of the House, as witnessed in this debate.

The noble Lord, Lord Moylan, was absolutely right that you cannot simply declare that you want to win a war; you need to have tactics and a strategy for winning it. Our Amendment 7, complemented by Amendment 242, provides that strategy, which is, as the noble Lord, Lord Ravensdale, eloquently articulated, fundamentally underpinned by physics. Energy is a question of physics and, if we understand that, we will know that we are not struggling towards net zero but in fact doing very well on that path.

The clarity with which I now see industry communicating on this issue is far greater than it has been over the last decade. It is saying: “Electrify everything that can be electrified and use our abundant resources of clean electricity to decarbonise.” That is how you square the three principal objectives of energy policy: affordability, cleanliness, and resilience and security. That pathway is so clear now that the Bill could be hugely enhanced by having this set out at the front.

I support the Government’s intentions. They seek to address the trilemma of those three objectives, which are fundamental to winning this war against climate change and against the energy crisis that we currently face. That very energy crisis is an interesting reason why we are powering towards net zero faster than ever before: it is absolutely clear that the volatility of gas and oil underpins it, and we cannot forget that. What is the Government’s current policy? It is to reduce our reliance on those volatile commodities, which would serve everyone’s needs: it would help us reduce bills and would give the consumer a reliable source of energy.

The Bill has many measures which we will come on to debate that will help us along that path. But it lacks an overarching statement of objective. We now need to revisit the debates we had on the Energy Act 2013 about the need for a decarbonisation target to provide clarity over this direction of travel. We all sat there—many noble Lords here today were there—and had debates on why knowing our way towards that target was needed for investor and stakeholder confidence. It is now very clear that it is needed because, as the noble Lord, Lord Ravensdale, pointed out, simple mathematics shows that we still have a lot of technology that needs to be put into place to become operational, and we need a plan that monitors progress towards that.

Subsequently, we have added an extra dimension to this: electrification. As I said, physics tells us that electrification is fundamentally more efficient; you will get six to seven times more usable energy from an electricity-based system than if you rely on fossil fuels or hydrogen. Six to seven times fewer wind turbines will be needed to provide the same benefit in terms of heat or transport. That should be of interest to everybody; it saves costs and helps make the system more secure.

So I hope that the Minister will look at our amendment carefully. It adds an extra dimension to this Bill, which will give it so much clarity so that everybody will have a clear sense of the path that we are on. As I have said, the UK should be very proud of the efforts it has taken to date. We are not as exposed to the energy crisis as other countries, because of investments we have made over the last two decades and because we have taken seriously this objective of making our system more resilient and fit for the future. There is an international dimension—I am sure we will come on to talk about this in other parts of the Bill—but it is absolutely clear that the thing that we can do best at the moment is continue on the path of decarbonising our electricity system using technologies that locate cheap power on our shores, to rid ourselves of the insecurity and volatility of gas prices and to move forward to an efficient system that converts primary energy into heat, transport and work. If we can do that, we will show the world how it should be done: do not pick winners but instead create a system that is sensible and will provide the right guardrails for capital investment so that money will flow and we will all benefit. I look forward to the Minister’s response to our amendment.

[Lord Teverson (LD)]

My Lords, it is always a great pleasure to follow the noble Baroness, Lady Worthington, and although we do not always agree on absolutely everything, I reckon that I agree with about 99.5% of her speech.

First, I declare my interest as chair and director of Aldustria Ltd, an energy storage company; I will try to avoid too much discussion of that area. On these amendments, I very much thank the noble Lord, Lord Lennie, for having opened our debate today. I very much agree with the principle of what the Opposition Front Bench is trying to achieve here. What this Bill does not have—the noble Lord, Lord Moylan, put it very well indeed—is great focus or coherence. It would be good to start trying to improve that through a type of preamble that puts context, including strategic context, at the beginning of the Bill. I hope that we can refine that more on Report; it may not be perfect, but perhaps we can find a way of doing that between us.

I also agree with the noble Lord, Lord Moylan, about the pricing of electricity and how that works. As he says, our European colleagues are looking at that very strongly now. There must be a better way of doing this; it cannot make sense to the public that we charge and price our main energy sources on the marginal cost of the last producer. Clearly, that does not make sense, and it does not do the reputation of the fossil fuel industry any good either. Yes, they might use their money to give back to shareholders—hopefully they will use it for different types of investment and diversification—but it besmirches the whole sector, and we need to find a way around that.

Where I would disagree very strongly with the noble Lord, Lord Moylan, is around trying to game or look at alternative dates for net zero. It seems to me that in September 1939 the Cabinet probably did not look at whether to declare war on Germany this month or two years later or four years later. We may criticise Neville Chamberlain for all sorts of things in retrospect, but I guess that is not one of them. It was an absolute threat to our future security, and we made a decision. If we think of the costs to this country, and to us and consumers, of our right stand on Ukraine, I guess that we have not done those calculations either—because we know that Putin’s war has to fail and that, for European security and our long-term security, we in the western world need to pursue the tactics that we have.

I thank the noble Baroness, Lady McIntosh of Pickering, for her amendments, particularly in mentioning rural aspects of oil—my own household is on oil, and we are not covered by a price cap—and in particular business. In all the media coverage that we have had on this very real energy crisis over the past months, it is funny how business has very much taken second place to households and consumers. Clearly, households and consumers are ultimately the most important, but business is completely fundamental to our economic performance and being able to solve this crisis in the long term.

I am not absolutely sure about energy from waste plants. Clearly, it does not make sense to export it, but the real challenge there is in starting to raise recycling again, or even AD in terms of other parts of household waste. I was so impressed by the forensic look by the noble Lord, Lord Ravensdale, at investment need and the scale of the challenge, and also at how we need to measure that and put proper planning into how we meet it.

The one other area that I would like to mention comes back to 2013 and the then Energy Bill, mentioned by the noble Baroness, Lady Worthington. At that time, one big thing that we discussed was the energy trilemma of security, cost and decarbonisation. The noble Viscount, Lord Trenchard, brought that back up again. But what this crisis, and the almost a decade between these two Bills, has shown, is that it is no longer a trilemma—they all work in exactly the same direction. Renewables are now cheaper than fossil fuels, as we know—it is why we have the huge price increases that we do. Our security is reinforced by having much more renewable generation on our own seas and our own land—and, as a result, we have lower costs and a decarbonised energy system as well. We have moved on since that time.

We need to have a focus in this Bill, and I support the amendments. We need to move on in this debate, but I am absolutely sure that we will need that coherence when we get to Report.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, the whip, the noble Baroness, Lady Bloomfield, has spoiled a lot of my fun today, because I was going to tell the Government exactly what they needed to do if they were going to produce an Energy Bill that deals with the crises that we are facing. We are facing three immense crises at the moment, and one of them is, of course, the climate crisis. There are strong whiffs of climate denialism in your Lordships’ House, which I find absolutely staggering, considering that the science is so very clear on it. However, it is a bit last century, that sort of attitude, so I understand why it might exist here in your Lordships’ House. But we have those crises—the climate emergency, the ecological crisis and the cost of living crisis—and this Energy Bill is so topical. It is exactly the sort of thing that we need to bring forward so that we can deal with all these crises, and I guess make life better for millions of people in Britain and the rest of the world.

I agree with a lot of what the noble Lord, Lord Howell, said. He made the point that this does not do the job. Also, I am very sympathetic to Labour’s initial amendments. I understand why they are in there, but it reads a lot more like the sort of issues that a Labour Government would bring forward—hopefully not too long in the future.

I am concerned that our time is going to be wasted on this Bill, because we have a new Prime Minister—a climate-wrecking ideologue who will make it incredibly difficult for us to get the sort of issues into this Bill that we need. The noble Lord, Lord Howell, and other noble Lords also mentioned nuclear. We have to get real on the fact that nuclear is not the answer. Nuclear power stations take a long time to come online. There will be all sorts of problems even getting them started, so they are not the answer. We have to think faster than that; they just will not work.

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The noble Baroness, Lady Worthington, referred to the construction industry. Are we specific about that when looking at mineral carbonation? There is already at least one company that makes the reasonable claim—perhaps still to be fully attested—to be a carbon capture and storage producer of cement blocks, using a process of mineral carbonation that combines waste slag from the steel industry with carbon from industrial plants. We need to leave these possibilities open and ensure that they are encouraged, to make sure that a company that develops such a plan does not then run into a block of legislation that stops it being able to deliver because it would then be left in a difficult commercial situation.

[Lord Teverson (LD)]

My Lords, I wish to speak to my Amendment 10. First, let me say that I very much agree with the drift of the debate so far, in that carbon capture, usage and storage has got a lot more real in the past few years—I give the Government credit as well—in terms of clusters and using carbon capture, primarily for industrial processes. What we should not be using it for is gas power stations that are CS-ready and which through carbon capture become much less efficient in their energy production. Clearly, we should be substituting gas and not using it in that way. The same absolutely goes for usage, where possible. I am sure that a lot of fizzy drinks and other such things use it as well.

In my Amendment 10, I am concerned that there should be in the Bill a duty for the Secretary of State. We should have transparency in the sector. What we are trying to do here is stop cross-subsidy between networks and network users. In many ways, this is a probing amendment. I would be interested to hear the Minister’s reaction on how we can keep these networks and markets transparent so that we can assess users, sectors and networks in their own right and avoid transfer charging or subsidy from one to the other without understanding whether there is a case for it.

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[Lord Callanan (Con)]

If the licence is transferred to another body, it will also have to be approved under the same process. You cannot just wake up in the morning and decide to transfer your legal obligations to somebody else who is not an appropriate, fit and proper person. So, of course, that will be taken into consideration.

I must say that the noble Baroness is wrong to provide the parallel with the existing water companies. I do not think that anybody is arguing that people who hold those licences are not fit and proper to do the job. There is a legitimate argument about levels of investment and how that money is being spent, et cetera. However, no one is arguing about their competence; the noble Baroness is trying to draw a very bad parallel there.

[Lord Teverson (LD)]

My Lords, I hope the Minister will forgive me for not understanding some of this, because it has raised a number of questions in my mind. If the CO₂ is put, say, under the sea—as we have been talking about—who actually owns the CO₂ once it has gone there? Who is liable for it and who has the legal right to the storage area itself? Given that most of these are created from the oil and gas that has been extracted, does that belong to the lease of the fossil fuel company that extracted them and does that last for ever? I do not understand how this works and where the liabilities land.

As the noble Baroness, Lady Bennett, said, if an organisation says, “I don’t want to do this any more”, there is no obligation for anybody else to take it on—so there will be a legal limbo. Perhaps the Minister could explain how this licensing works within that context. It seems to me that the Crown Estate will come into this somewhere, but maybe the Minister could enlighten me. I apologise again, because I should know the answer to all of these questions.

[Lord Callanan (Con)]

I am happy to confirm the legal detail of the system to the noble Lord in writing, but my understanding is that the operator of the site would bear the responsibility. That is precisely why we have built in the relative decommissioning costs. The fund will have to be established and the operator will have to show that the ability is there to decommission the relevant pipe work, et cetera. I assume that that assurance and other long-term effects will also be built into that condition, but I will be very happy to confirm that in writing to the noble Lord.

[Lord Teverson (LD)]

That would be very useful.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, I say first of all that I agree with every word that my noble friend Lady Blake said in her excellent speech, particularly that she is looking forward to the return of my noble friend Lady Liddell—so am I. After all, on this issue she is the master and I am the apprentice, as has been fairly obvious today.

The Minister has again given us a very detailed and helpful reply. However, what worries me slightly is that I still think it strange that those involved in the commercial operation of this—the CCSA members and the CCSA itself—have different interpretations of the draft of the Bill from the officials advising the Minister. I hope that, between now and Report, there can be some discussions to see whether all those in the industry accept the Minister’s explanations today. Otherwise, we can look forward to further amendments on Report. In the meantime, I withdraw my amendment.

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[Lord Teverson (LD)]

My Lords, I welcome very much that we have moved on to the area of enforcement because, if there is one thing that is true in anything to do with the environment, we make legislation—very effectively, often—but our enforcement does not work, because of either lack of will or lack of resources.

I would like assurance from the Minister, if possible, that the regulator will be resourced enough—I would be interested to know what conversations have taken place over this—to make sure that enforcement does take place. Of course, for enforcement to happen, particularly in physical facilities, there needs to be inspection. I would be interested in understanding who will be inspecting and what the resource level is likely to be.

I come back to a very good point made by the noble Baroness, Lady Blake of Leeds, on safety, which was not answered by the Minister earlier. CO₂, although not toxic like carbon monoxide, is a gas that, if exposed, can be suffocating. I would like to understand how enforcement on subsea storage facilities can take place.

Enforcement is good, but my questions are these: how will it be resourced, what is the programme for it and can it happen sufficiently to ensure safety?

[Lord Lennie (Lab)]

My Lords, the government amendments appear to correct an oversight in the Bill. If noble Lords are confused then so am I. I am not entirely sure what the Minister was saying, but it appears to me that there was a stage missing in the original drafting of this Bill and the attempt now is to put in that stage—which is, in effect, a final warning to licence holders to act in specific ways in order to become compliant. If that is right, then I understand it and I do not oppose it, but I want to make sure that I understand correctly what the Government are trying to do. If I am right then, other than to point out the original omission, we do not oppose these measures; we just want clarification of what is being put into the Bill.

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Moved by

[Lord Teverson]

38: Clause 57, page 51, line 34, at end insert—
“(1A) When making regulations under this section the Secretary of State must also publish an explanation of how revenue support mechanisms deliver in line with the CCUS Strategy and Policy Statement and the overall Strategy and Policy Statement, and how milestones relate to net zero pathways set out by the Climate Change Committee.”Member's explanatory statement
This amendment seeks to ensure that policy processes are aligned with the Government’s Strategy and Policy Statement.

[Lord Teverson (LD)]

I asked specifically that all these amendments be grouped together because they have one aim: to make sure that there is a coherence between policy measures and the net zero pathway that is the Government’s own aim. Of course, the Government have undertaken to produce a government strategy and policy statement and the Bill requires a statement focusing on CCUS to be produced as well. However, our contention is that there is no current requirement for policy and infrastructure planning processes to be based on a consistent set of assumptions about the future. That means, in practice, that two projects could get a green light despite being justified by incompatible visions of system need, ensuring that one would ultimately be left stranded. Of course, that does not lead to confidence in this area. So there could be incompatible visions.

For instance, hydrogen electrification visions of the future involve very different supporting infrastructure, and a lack of coherence could create expensive infrastructure which, at the end of the day, is unusable or redundant. The strategy provides an opportunity to set out the latest set of assumptions, projections and decision methodology and I am sure that is what the Government want to do to underpin their policy, to which other processes should align. What we are really trying to do in these amendments is to make sure, practically, that the actions that arise from the Bill are coherent and tie in with the policy statements of the Government. It seems absolutely straightforward to me: it is that missing link, if you like, that pushes together intent in these various areas and makes sure that the strategy is coherent in its delivery. It is as simple as that and I hope the Government and the Minister will look favourably on that approach. I beg to move.

[Baroness Blake of Leeds (Lab)]

I do not have an enormous amount to add to the comments of the noble Lord, Lord Teverson. I highlight again the significance of linking strategy and policy: that is crucial. We will discuss in future debates the issues around the role of the ISOP and its independence, and, particularly in the context of this afternoon’s debate, look at long-term thinking, making sure that we get all the checks and balances in place. We are in a very fast-moving environment and need to make sure that we are absolutely on top of all the changes that are taking place. The noble Lord, Lord Teverson, highlighted the risk of lack of coherence: we need to make sure that everything is nailed down, line by line, and I am sure we will have further discussion on these areas as we go through different aspects of the Bill. I look forward to the Minister’s conclusions on this group of amendments.

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Therefore, given the reassurances I have been able to provide, I hope the noble Lord will feel able not to press his amendments.

[Lord Teverson (LD)]

I thank the Minister for his response and reassurances. Obviously, I am fairly disappointed with the overall reply. On the principles of coherence and delivery, I will read what he has said and think about coming back to this issue on Report. I thank him for going through the Government’s feelings on this issue in detail and may respond fully later during the passage of the Bill. In the meantime, I beg leave to withdraw my amendment.

Amendment 38 withdrawn.

Energy Bill [HL]

Lord Teverson Excerpts

2nd reading
Tuesday 19th July 2022 Lords Chamber

[Lord Teverson (LD)]

My Lords, it is always a real pleasure to follow the noble Baroness, Lady Jones of Moulsecoomb, because of her rather special style in this House, which I think we genuinely welcome, and her plain speaking.

I must declare a couple of interests. I chair a company called Aldustria Ltd, which is into energy storage—I say to the noble Lord, Lord Moylan, that that is actually one of the answers to variability on renewables—and I am a trustee of the Green Purposes Company, which holds the green share in the Green Investment Bank.

I want to go back into history, not as far as the noble Viscount, Lord Hanworth, did, to Baldwin and Chamberlain, nor to the OPEC crisis that my noble friend Lord Bruce mentioned, but to 2013 and the last major energy Act, which was presented and introduced by Ed Davey as the Liberal Democrat coalition Secretary of State. It did a number of things but there were two key measures. First, it introduced contracts for difference, which were a major step forward at the time. Again referring to the noble Lord, Lord Moylan, to some degree, CfDs now produce money for both the contract company and, effectively, the Treasury; the present reference price is much higher than the strike price, so the taxpayer does really well at the moment in that area. We do not have to worry about levies on producers because it is a self-balancing mechanism that comes back to the taxpayer when energy prices are high. The second thing introduced by that Act was the capacity market; it had its issues, particularly with diesel generators, but a lot of that has been solved now.

The 2013 Act changed the way that the energy market worked in this country and it has been very successful. The Bill before us does not change that but is an evolution of it. The noble Lord, Lord Haworth, talked about the weight of the Bill. It might be a thick book but it is not a blockbuster in what it is trying to achieve. It does a number of things and it is a bit of a Christmas tree Bill; I hope we will not have thousands of amendments as we go through eight days of Committee, but there are a lot of areas where we can add things in.

I have referred a couple of times to the noble Lord, Lord Moylan, but I liked seeing decarbonisation and net zero as a constraint. That is an interesting way of looking at this issue and I do not disagree; it is an objective that we are dynamically moving towards but it is a constraint in how we move on energy.

We are looking at energy security, which is particularly important at the moment; decarbonisation of the economy; and, particularly at this time, the cost of energy and the effects that that has. Those of us who were involved in the 2013 Act remember that the big issue we were trying to solve was the energy trilemma of security versus price versus decarbonisation. Amazingly, over the nine years since then, there has been a convergence of those needs. It seems, practically and evidentially, that we can solve all three of them. By decarbonisation and the additional use of renewables and other technologies, we can solve security and decarbonisation, and help to bring down prices, literally, against the fossil fuel crisis at the same time. We have that ability.

We on these Benches welcome the Bill. It has a number of good parts, including on hydrogen—although I entirely agree that its use will be highly constrained. I was interested that the experiment involves gas heating, which is maybe not one of the best areas in which to do it. I shall come to the future system operator later, but it is much more of a strategic look, and I welcome that. On heat networks, heat pumps and carbon capture, storage and usage, I am somewhat sceptical about their overuse but it is good that we move them forward. I also welcome the fact that we are going to continue our interest in fusion.

Let me talk about energy security. One thing that surprises me goes back to a point made by the noble Lord, Lord Howell. Part 10 talks about resilience and the core fuels. I went through that part of the Bill and—the Minister may correct me—it relates only to petrol and oil; it does not refer anywhere to gas. So we still have a resilience problem in an area of energy policy that is very important at the minute. Exactly as the noble Lord, Lord Howell, pointed out, in 2017 we effectively stopped gas storage in this country when the Rough storage facility was closed. To give the Government Benches their due, the cry went up from that side of the House asking why this was happening. I understand that there are now negotiations to try to reopen that facility. I would be interested to hear from the Minister how they are progressing and whether that will happen.

On the speed of transition, let us remind ourselves that we have a target to decarbonise electricity by 2035, which is only 13 years away, and the Prime Minister has said that we should have 40 gigawatts of offshore wind in eight years’ time. That is really quite something. How do we go about meeting that? One of my criticisms is that there is nothing in the Bill to reduce gestation timescales—an offshore wind farm can take 10 years to go from start to finish. I am interested that the Minister said that one of the areas of amendment to the Bill is around trying to reduce approvals from four years, which was optimistic, to one year because of the change of environmental rules. I would be the first to say that the way that environmental regulation works around offshore wind is probably not the best way it could go. We will want to look at what those regulations will become to achieve that sort of level in timescale.

As other Members have mentioned, the objectives of the regulators get in the way on transition—partly the North Sea Transition Authority, but particularly Ofgem not having a zero-carbon objective. I know the Government feel that that is already covered in the remit but it is not, and it gets in the way. That is one area which it is important to change in the Bill.

The other area is the system operator, or ISOP. I read that long section through. The ISOP is called an independent operator, but there is nothing in the Bill guaranteeing its independence or how that regulator—or planner or operator—is appointed. I see no reason why it should have any real authority. It is unfortunate that this detail is not there. I think back to when the Labour Government put in the Strategic Rail Authority, which in the end did not manage to achieve anything because it did not have any real authority, and so it was abolished. I would like to understand how the ISOP will work and have authority, and not be just an animal of BEIS or the Treasury. I was going ask, “Is ISOP a fable?”, but I decided that it would not work in the House.

A number of noble Lords have mentioned onshore wind. From my house in Cornwall I can see 35 wind turbines. That is fantastic. When I go out on my bike I can tell, as they move, whether I will be cycling against the wind or with it. Most people think that they add character to the countryside. The Government are just not brave enough in that area.

One of the areas completely missing in terms of transition, which I see as vital, is electric vehicle charging. We do not have the infrastructure to support the revolution which is happening through market forces as much as anything else. I know that is for the Department for Transport but, if we really want to transition, the Bill needs to achieve it, so let us not get too much into silos.

In terms of grid investment, we have had the announcement that National Grid is going to spend some £54 billion bringing offshore electricity to the mainland, but what about the money required to upgrade the grid in Great Britain? When it comes to getting access to the grid, whether for storage or renewable energy, we are running out of capacity.

I was speaking to one of the DNOs today, and of its 8 million households, only 2 million have smart meters—an appalling ratio. I am sorry, but that is what a DNO told me this morning on the figures for its area. If you include SMETS 1, the figure rises to 3 million. That is a fact.

I will talk about bringing costs down. Clearly this Bill does not deal with immediate issues, but it could be about the near-medium term. Demand reduction—particularly through energy efficiency, as many have mentioned—is really important.

The price cap is still an imperfect mechanism. It may have served its purpose to a degree, but should we not now be moving to something such as perhaps a social tariff? I would be interested to hear from the Minister about what the Government are looking at post the energy cap.

Many have mentioned local authorities and communities. I word-searched the Bill as well, and local authorities are mentioned in regard to heat networks, as obviously you can hardly do these at all without local authorities. They, and local communities, must be involved. Only through these means can we bring costs down in this industry in the medium term. Yet what have we got? We have already passed this year the Nuclear Energy (Financing) Act, which actually puts up energy prices for households. The new Prime Minister might consider scrapping that for a start.

As I said, the Bill is important, and there are many parts that I and these Benches support. It is not a blockbuster, but it is a big Bill. Let us make sure that the really important areas, such as energy efficiency and the systems operator being able to ensure we have a full and proper strategic view into the future, are actually achieved. There is a lot to do.

Energy: Prices and Supply

Lord Teverson Excerpts

Thursday 14th July 2022 Lords Chamber

[Lord Callanan (Con)]

My noble friend is tempting me to say what is understood and is not understood by the Treasury, which is perhaps a road I should not go down. Of course, the point is right. The contribution of energy to the consumer prices index is particularly important, and my noble friend is also correct about the proportion of indirect taxes on energy bills.

[Lord Teverson (LD)]

My Lords, the Conservative manifesto of 2019 stated:

“We will help lower energy bills by investing £9.2 billion in the energy efficiency of homes, schools and hospitals.”


Now that we are over half way through this parliamentary term, exactly how much money has been spent—not planned to be spent—on the energy efficiency of homes and other buildings?

[Lord Callanan (Con)]

Certainly, we are well on the way to that commitment, and this spending review period allocated about £6.6 billion towards those targets. For example, we have spent £471 million to date on the social housing decarbonisation fund and £350 million on the sustainable warmth programme, and we are going out to bids later this year for another £800 million of spending under the social housing decarbonisation fund, so we are making considerable progress.

Electricity and Gas (Energy Company Obligation) Order 2022

Lord Teverson Excerpts

Tuesday 12th July 2022 Grand Committee

In conclusion, I welcome ECO4 as an improvement in so far as it will bring more money for retrofitting homes but, unfortunately, not in the significant numbers required, nor in a broader strategic retrofit context.

[Lord Teverson (LD)]

My Lords, there have been a few changes in the Government over the past week and it is excellent to see the Minister still here. I took the opportunity to look up his responsibilities, because there has been a bit of a shuffle in BEIS and I was even more delighted to see that he has responsibility specifically for energy efficiency—I think he had it before; the climate change side has moved slightly. I am delighted that energy efficiency remains with the ministerial purview of this House.

I also welcome the fact that the Government tabled an amendment on Report to the UK Infrastructure Bank Bill to include energy efficiency specifically as part of the bank’s remit in terms of its investment. I think the whole House very much welcomed that change. They could have done one or two other things, but at least we had that.

On ECO and the prior schemes, I read a report by the Energy & Climate Intelligence Unit—ECIU. I am on its advisory board and it is one of the better of these think tanks. It was interesting that the report reckoned that between 2009 and 2019 some 6 million homes had been improved to band C in energy performance. It estimated that that amounted to a 20% cut in their gas demand, which meant that on an annual basis now those households were saving £1.2 billion. Clearly, that is significant.

Those figures are from 2009 to 2019 and the ECO scheme came in in 2013, but the number of applications dived hugely over the past eight years and only now has started to tick upwards again. It was interesting to read in the Explanatory Memorandum that some 2.4 million homes had made applications to the ECO scheme, but in 2020 we still had 3.5 million homes in energy poverty. Think about that. There were applications for 2.4 million homes but at the end of that process there were still 3.5 million homes in fuel poverty—and that was before the huge price rises in energy that we are now seeing.

The Minister mentioned 450,000 applications and taking them out of fuel poverty. There is no chance of taking homes out of fuel poverty at the moment. We are going to add to that because of the energy prices that there are.

I know this from my own experience. At the beginning of this year I paid a monthly standing order to Octopus Energy of £212. This month I paid £355. That is not my only energy cost, but I admit that, for me, it is not a crisis. But, my goodness, for people outside that is an horrific increase in their energy bills.

I suppose I just want to make the same old argument again that there is so much to be gained from these programmes, as that statistic from the ECIU suggested, but at the moment they are only a pinprick—a drop in the ocean—in terms of what we actually need. Of course, it is easy to say that if we were not starting from where we are now but from before George Osborne as Chancellor of the Exchequer massacred the various energy efficiency schemes’ futures in terms of new homes and those sorts of applications, my goodness we would be in a better position than we are now. We are in a position where the Government are spending £37 billion, I think it is, on putting right the cost of living crisis, much of which is driven by energy costs, yet all of that is just to stand still, and I am not the first person to say that. If only we were managing to put that money into these sorts of schemes, my goodness those fuel poverty numbers would start to come down rather than inevitably skyrocketing, as they will. That is my comment on this. As the noble Lord, Lord Whitty, said, how can one argue that this is an improvement? As I said, it is a drop in the ocean, given what we need to do.

My question follows on from what the noble Lord, Lord Grantchester, said. One of the lessons from the disaster of the green homes grant was that the bit that involved local authorities actually worked. I am interested to understand how our local authorities, which are so much better at understanding their local communities and the issue of fuel poverty, will be tied in to the way the ECO4 scheme is delivered.

[Lord McNicol of West Kilbride (Lab)]

My Lords, like many others, I thank the Minister for his explanation of what this order achieves: introducing the latest energy company obligation, ECO4, replacing ECO3, which came to an end in March. I start by echoing what the noble Baroness, Lady McIntosh of Pickering, said, about the effects of the delay. Has any assessment or estimate been made of the effects of the delay between 1 April and the new regulations coming in?

As we heard, the order will place a cost-reduction obligation on gas and electricity suppliers that exceed domestic supply thresholds, requiring them to promote the installation of energy efficiency and heating measures to reduce the cost to low-income and vulnerable households. Unlike ECO1 and ECO2, which were centrally funded, I understand that this obligation to fund and finance again falls on the energy companies using their own resources, as was the case with ECO3.

If this understanding is correct, can the Minister confirm what assessment was made of the difference in impact between these two approaches, given that we now have examples of both? Given that energy suppliers will incur these costs, which will need to be recouped, we can expect them to be passed on directly to customers through energy bills. As others have asked, is this really the best approach at this time, given the energy crisis? Will any steps be taken to encourage or even obligate energy companies not to pass costs on to customers who can ill afford them at this time? In reality, if they are passed on, it will be the consumers and customers who will be paying for the upgrades of their own homes.

As the Minister outlined, the objectives of this order are to help alleviate fuel poverty, accelerate progress to meet fuel poverty targets, contribute to carbon reduction, reduce the costs of meeting the renewable energy target and encourage innovation. All of these are welcome, as is the targeting of vulnerable and low-income households. If the target we have heard about of annual bill savings of £224 million is reached, this will make a real difference.

Warm Home Discount (England and Wales) Regulations 2022

Lord Teverson Excerpts

Monday 20th June 2022 Grand Committee

[Lord Best (CB)]

My Lords, I am delighted to follow the powerful commentary of the noble Baroness, Lady McIntosh of Pickering. I declare my interest as president of the Sustainable Energy Association, and I take this opportunity to thank the Minister for a very engaging and encouraging speech at our annual reception last month.

While welcoming the new measures, I am asked to raise the position of the more than 500,000 private renters whose landlords manage their bills. When it comes to accessing the £150 the warm home discount affords, these 585,000 people may be barred from applying as they do not pay their energy supplier directly as the WHD stipulates. There is no legal requirement for landlords to pass on the energy grant to their tenants, and there seems to be a lack of guidance on how the process should be managed by landlords. By extension, this would be the case for the £400 energy grant which the Government will be offering this October. This can be a particular problem for those living in park homes, where the site owner pays for the energy supply and passes on costs to the residents. I believe Sir Peter Bottomley MP has been in touch with the Minister on this subject. Can the Minister share plans for ensuring that the warm home discount directly supports those who are in need of its help but who do not pay their suppliers directly? Will the Government be providing any guidance to enable fair management of the moneys by the landlords involved?

[Lord Teverson (LD)]

My Lords, it is a great pleasure to follow both the noble Baroness and the noble Lord, who asked excellent questions, particular the question about park homes. There are some 85,000 residents in park homes in this country, and they do not always have the sort of landlords we would like them to have. They are a big issue generally.

Although I welcome this secondary legislation in principle, it is worth noting that this is a reflection of a policy failure over decades, in that we have such a requirement to help people with energy bills because our housing stock is nowhere near the standard it should be. All this, including the £15 billion being spent by the Treasury on the cost of living, specifically around energy issues, is about standing still rather than investing in the future. I know the Minister will say that the Government are investing, but it is a trickle in comparison to what we need. Past Governments have been equally bad at resolving that. This is a symptom of a policy failure over decades in this country.

I shall ask a couple of technical questions on this and will then come on to one or two other things. The figure that rather shocked me—it may be because I misunderstand it—is in paragraph 7.2 on page 3 of the Explanatory Memorandum:

“The Impact Assessment models an improvement to the fuel poverty targeting rate of the scheme from 39% to 47%.”


Does that mean we have moved getting it wrong to 61% from to 53%? I would like to understand that. I remember going through these statutory instruments for Governments, and I understand the problem of trying to target these things correctly and that somehow the statistics or working with data from other departments does not work. But it is worth understanding whether that figure is what I understand it to be and how we improve that for the future because, my goodness, if that is it, we certainly need to improve it.

The next page refers to an algorithm that there were the largest concerns about. We all know the problem with algorithms. They can be great things but, as the Department for Education found out on A-level results, they can be disastrous. I am interested to understand what that issue was and whether it was resolved or was altered in the final prospectus.

Like the noble Lord, Lord Best, what I do not understand—the Minister will forgive me if I have missed it—is how private renters get their money back from prepaid meters. It seems straightforward when the core group are just paid the electricity on their bills. What happens in terms of prepayment meters?

I want to ask about one more thing before a more general point. This is for England and Wales; it talks about Scotland coming on later on but Northern Ireland is not mentioned. Northern Ireland has a much higher rate of fuel poverty than England and Wales—18% historically, though I am sure it will be a lot larger by the end of this year. We do not have a functioning Executive or Assembly in Belfast. Can the Minister say whether the Government will have to legislate directly regarding schemes over there or are schemes that have already been agreed carrying on? Clearly, fuel poverty is a big issue in Northern Ireland.

Lastly, I have a more general question for the Minister. We had an announcement today—it came through on the news—that, rightly, the Government wanted to protect the additional money paid by consumers to retail energy companies that tended to get washed out when they went bankrupt. The answer seemed to be—I know that news reporting is not necessarily accurate—to ensure that the balance sheets of these companies were better in order to solve it. If a company goes into administration, it goes into administration; the balance sheet is washed out automatically in that case. Why cannot we put that money into an escrow account or find some way in which that can be isolated from the company and remains the consumers’ money in trust? I do not understand why that is not a way forward. If the Minister could give me some clue on that, I would be very grateful.

[Lord Lennie (Lab)]

My Lords, I thank the Minister for bringing these proposals, which are an improvement on the previous scheme. I also thank noble Lords for their contributions, in particular the noble Baroness, Lady McIntosh, who represented the NEA’s concerns about the core group 2 and how some of them will miss out, on the way that the scheme is set up, on the funding sufficiency—or insufficiency—and on the prepayment customer concerns, which the noble Lord, Lord Teverson, also raised. The noble Lord, Lord Best, is an expert on the private rented sector. We share his concerns about that; I will come on to that in what I have to say. The overall theme of the noble Lord, Lord Teverson, is that it represents a failure in public policy that we have to have this scheme in any place, but here we are: we have to have it and this is, as I have said, an improvement.

The Government have said that they intend to bring forward a new set of reconciliation regulations “later this year”, which is better than “when Parliament has time” or “in due course”, but can the Minister be a little more precise about when “later this year” means?

On the criteria and the algorithm used to estimate energy costs, how satisfied is the Minister that the algorithms used will not lead to an education-type embarrassment for the Government and, therefore, a failure in terms of there being lots of customers who potentially would benefit from this scheme but may then miss out? Have the Government included all eligible households, including persons with a disability, in their revised six criteria for the new scheme?

The scheme has an impact on energy suppliers, the authority and the Government. The energy suppliers are likely to recover their costs from their customers, which is estimated to be £19—a £5 increase on the former scheme. The authority and the Government are likely to incur costs of approximately £22 million for their work in issuing notices and identifying customers eligible for core group rebates. The Secretary of State will conduct a review or partial review of the scheme, and the authority will review participation of suppliers in the scheme and publish an annual report. This is welcome.

However, Labour would introduce legislation to uplift the warm home discount for 9 million working families and pensioners during the present inflationary crisis. As the noble Lord, Lord Teverson, and the noble Baroness, Lady McIntosh, pointed out, this is an extraordinary time for energy costs. I am not saying that it could have been predicted but Ukraine is upon us and, therefore, more may well need to be done in the lifecycle of this scheme.

Core group 2, which has replaced the broader group, will not now have to apply for inclusion in the scheme, which is welcome. However, there will be households beyond that group who remain in fuel poverty, such as those in rented accommodation. They may be on low incomes and with disputed levels of energy use, particularly when they have no access to what proportion of the payment they make to their landlords is for energy supply. They may not be receiving benefits, which would usually give them automatic inclusion. It may be impossible for them to contest their exclusion. The Minister’s observations on this would be very welcome.

If an energy company goes into administration or disappears entirely, will the supplier of last resort take on the full obligation of the failed supplier or are there now no small-enough energy suppliers left—that is, those with 50,000 customers—that can go bust? Have they all gone bust already? The recovery of the scheme from customers will mean that, in some cases, energy companies will be recovering money from those who have received the warm home discount, thus giving with the one hand and taking away with the other. Would Minister like to comment on that?

The overall scheme is likely to add to the rise in the socialisation of the expenses of suppliers of last resort, resulting in a probable £100 contribution to the increased price cap. Have the Government considered whether the scheme should be covered by Exchequer funding or by a wider group of people contributing, not just individual customer payers?

In welcoming the progress the Government have made with these changes to the scheme, there are a number of observations on which I would welcome the Minister’s response.

--- Later in debate ---

In reply to a related point from the noble Lord, Lord Teverson, we should accept that the scheme’s targeting will never be perfect, but it will be much improved. As additional data become available, we will attempt to improve it further in the future.

[Lord Teverson (LD)]

That is a very useful explanation, but will the department look at how accurate it was in retrospect? Will it take a sample of properties and see whether the scheme reflected how things were on the ground to check the effectiveness of the algorithm?

[Lord Callanan (Con)]

Yes, of course we will conduct a process of constant improvement. As more data become available, as universal credit is rolled out, and as EPCs are increasingly rolled out and more properties have one, it will make targeting easier. We will modify the scheme as we go forward, using new and improved targeting data.

I thank noble Lords for the useful points they made. I am pleased that virtually everyone who spoke was in broad agreement that the scheme should continue at this time because it has been very successful at providing householders on the lowest incomes with critical support.

Global Energy Sector

Lord Teverson Excerpts

Wednesday 15th June 2022 Lords Chamber

[Lord Teverson (LD)]

My Lords, I must unplug myself from the excellent forensic analysis by the noble Baroness, Lady Bennett.

One of the great things about the IEA report is that it shows a pathway and is optimistic, if you like, that the pathway is

“narrow but still achievable”—

it is possible. I have now been shown the pessimistic side of that: it is not possible, as we still have the problem and we do not have all the solutions to it. Having said that, our UK Climate Change Committee bases most of its analysis on proven technologies. However, as we all know, the UK is only a small part of this issue and the rest of the globe is something extra. I hope we can get some optimism back in this debate somehow, although I recognise a number of those arguments.

At the moment, it seems to me that we are a cross-roads on this debate, particularly because of decisions made in the Kremlin on Ukraine, as mentioned by my noble friend Lady Sheehan, and a resurgence of the dilemma about whether to get through the cost of living crisis and the cost of energy crisis by investing in fossil fuels again or accelerating the transition to renewables and other forms of decarbonisation in our economy. I am convinced, as my party would be, that it is clear that we need to take the fork in the road and follow the path that pushes for further decarbonisation of our planet, our energy systems and our economy. The other way to go is not necessarily right.

Three things in particular sprang out at me from the report. They have been mentioned by Members already so I will not spend a lot of time on them, but it was clear to me that, in the order in which the report listed remedies, energy efficiency was once again number one. I know the Minister completely agrees with that, but what amazed me was the statistic where the report estimated that some 30% of what we need to do for decarbonisation could be achieved through not just energy efficiency but demand-reduction measures that included energy efficiency.

In this country at the moment, with the cost of energy in particular at the core of the cost of living crisis, the figure quoted is that the Government are committing some £37 billion to sort out the issue of customer bills and so on—but that is dead money; it goes but it does not improve the situation. Where are we when it comes to using money to invest in energy efficiency and ways of producing demand reduction? I would be interested to know whether, given energy efficiency’s absence without leave in the Government’s energy security strategy, there will be measures in the Bill that is coming forward to make sure that we can move on from the green homes farce over the last two years and really take that issue on.

The other area that noble Lords have mentioned is ending investment in future fossil fuels. I might slightly disagree with my noble friend, in that when we have a crisis, as we do at the moment, I would expect existing assets to be sweated out. If President Biden manages to persuade Middle East countries to increase their production when we have a reduction in supply from Russia and its allies then, to me, that is a way forward. However, on the question of investing in fossil fuels in the long term, coming from an economist’s background, I know there will be supply where there is demand. However, it is important that we say no more about energy investment; it gives the wrong signals. There is a risk of stranded assets for the corporations that decide to do that, but there needs to be leadership on that.

I was amazed to hear that the Government recently approved, despite the Conservative local authority being against it, the exploration in Surrey. I would be interested to hear from the Minister why he feels that should have taken place.

The other strong message that has come out, and not just in the IEA report, is that there are economic benefits of decarbonisation, not just in terms of bringing down the costs of energy due to energy efficiency; in the whole area of jobs, growth and levelling up, the report estimates that would be an additional 0.4% of growth per annum. I expect that there is a strong standard deviation around that figure, but it shows that there is a way of moving forward that is economically positive but also brings the environmental benefits of clean air and a much better atmosphere altogether.

I have a question for the Minister. Suddenly COP 26 seemed to discover methane and the challenges around it. I thought that was a positive part of the Glasgow conference, in that there was an allowance to do that. The IEA report points out that if we stopped the leakage from gas that there is at the moment and put it back in the market, we could bring down the cost of gas substantially, so what are we doing in the North Sea, and indeed internationally, to reduce methane emissions?

An interesting part of the report said that we could get rid of 17% of regional air flights globally through surface transport if we invested properly in high-speed rail. Given the decades that it is taking to do that in this country, that is something that I feel is a bit late for us to do.

The report lays a good foundation globally. The Climate Change Committee has shown that we can achieve what we want to in the UK with existing technologies, but for me the key message is that we need to move forward on both energy efficiency and renewables. Indeed, the IEA chief executive, Dr Fatih Birol, said that energy efficiency and renewables are “the Romeo and Juliet” of energy transition. That is absolutely right. I will leave the subject at that, except to say: let us focus on those areas and make sure that we in the UK are able to deliver net zero by 2050.

Contracts for Difference (Allocation) and Electricity Market Reform (General) (Amendment) Regulations 2022

Lord Teverson Excerpts

Monday 13th June 2022 Grand Committee

[Lord Lilley (Con)]

My Lords, I will ask some questions, because I do not fully understand all this and these SI debates are often a good opportunity to expand one’s knowledge.

First, I would be grateful if the Minister can explain how a shorter life validity of the supply chain plan acts as an incentive, and what it incentivises. What happens after the plan lapses? None of that is obvious to me from the not very helpful Explanatory Memorandum. Are these supply plans published? Can we all see them or are they private documents between the Government and the supplier? Overall, do they help us to estimate what percent of the value added in supply chains is generated within the UK? If so, I would be grateful to know what it is.

Can the Minister also confirm that although the newest offshore fields won the bidding process with low prices, they have not yet activated their contracts so they are able to sell their electricity at the very high prices now prevailing, making what most people might call a windfall profit? That is the sort of thing Governments love to tax but they seem to have got off scot free. I would be grateful to know whether that is the case and to what proportion of wind generation that applies.

I would also like to know what proportion of wind generation comes from the early contracts, which, if I have correctly understood it—that may well not be the case—got a variable price plus a bonus and therefore are getting not merely the current high price but the current high price plus something extra: jolly good for them, but not so good for the consumer. Again, that is something that Governments might like to tax but they do not seem to have done so in this case. I would like to know what proportion of the renewables supply that is. By deduction, that should tell us what proportion of the renewables supply is under CfDs and therefore is not going up with the gas price. It would be very helpful if the Minister could answer that.

If those questions identify an intrinsic problem in the present system, why does this measure not deal with it—unless it does and I have not been able to find it in the not very helpful Explanatory Memorandum? I will be grateful for the Minister’s replies.

[Lord Teverson (LD)]

My Lords, I start—partly related to what the noble Lord, Lord Lilley, said—by thanking the Minister profoundly. The last time we had a debate around CfDs, I asked a number of questions about the Low Carbon Contracts Company, which is wholly owned by the Government, and how much money it was making because of the energy price in relation to the strike price on CfDs. The Minister provided a comprehensive reply. Unfortunately, I do not have the numbers from it with me, but I thought it was extremely useful and I thank him for that. There is significant money coming back into the Low Carbon Contracts Company and, therefore, the public sector. Of course, the area that does not is the old ROCs regime, where I presume good profits are being made by those renewable companies that still operate under that system—although those presumably are starting to die out fairly quickly.

--- Later in debate ---

[Lord Callanan (Con)]

I thank all the three noble Lords for their contributions. They were raising wider concerns about how the process works; I do not think anybody objected to the SI itself, so I thank Members for their support. The points that were raised demonstrate the need for these regulations—they are technical changes—and the support for introducing them.

As I said at the start of the debate, these changes are essential to ensure that the next CfD allocation round, which will be the first annual one, can best support something we all want to see: an increase in the pace of renewable development and the deployment needed to help us achieve our net-zero ambitions and get the price of electricity down in the longer term. At the same time, they help to achieve our legal net-zero commitments.

My noble friend Lord Lilley was right to point out the need to consider the likely cost to consumers, the impacts on energy security, et cetera. These regulations must be made now, ahead of the next CfD allocation round, which is planned for March next year, as I said, so that the developers have certainty as to the legislative framework for the next round.

Dealing with some of the questions raised, my noble friend Lord Lilley asked me to explain how a shorter validity acts as an incentive and what happens after the supply chain lapses. He also asked whether supply chain plans are published. The answer is that they are. They set out how they will improve the capacity of the supply chain. The noble Lord, Lord Teverson, touched on the reason and I need to be slightly careful here. We are endeavouring to ensure that—how should I put this?—as much of the supply chain as possible is located in the United Kingdom, without breaching our legal obligations, which nobody would want to see us do. We are subject to legal action from the European Commission in the WTO, at the moment.

My noble friend Lord Lilley also asked what the Government are doing to stop CfD generators delaying their start dates so they can benefit from high energy prices. First, the vast majority of operational CfD projects are, happily, paying back into the system, due to the current high energy prices. I set out those figures in a letter to the noble Lord, Lord Teverson. Subject to his agreement, I would be happy to send a copy to my noble friend.

In essence, in April this year, the Low Carbon Contracts Company, which is responsible for administering this system, returned £108.3 million to GB suppliers in respect of payments made by generators since last autumn. However, my noble friend is correct, and the Government are aware of a small number of projects that have delayed their contract start dates to try to benefit from current high wholesale prices. Legally, CfDs are private law contracts between the Low Carbon Contracts Company, the CfD counterparty and generators. The Government are not legally a counterparty to those contracts. However, we have raised the matter with the industry and made it clear that, in our view, this practice is not within the spirit of the scheme, which is intended to deliver benefits to both consumers and developers. While operating on commercial terms, these developers will not receive CfD payments. We are examining possible changes to the scheme to prevent future CfD projects acting in this way. While this practice is regrettable, it is important to remember that CfDs have played a significant role in massively bringing down the cost of offshore wind in recent years.

My noble friend also asked about capacity. The CfD scheme currently supports 16 gigawatts of new capacity, of which 13 gigawatts is offshore wind. Only two projects, totalling 1.4 gigawatts, have delayed their contract start dates in order to sell their electricity on the open market.

Turning to the slightly problematic area which concerns the noble Lord, Lord Teverson, reflecting the concern of the EU that we are breaching WTO rules, my legalistic response to this is that in the supply chain plans we do not require developers to use UK content. The supply chain plans are there to encourage them to invest in creating competitive, capable and efficient supply chains which are, of course, necessary for us to deliver net zero, taking into account our national obligations.

[Lord Teverson (LD)]

May I say to the noble Lord that that is highly commendable?

[Lord Callanan (Con)]

I thank the noble Lord for his comments. The noble Lord also asked why there is discrimination against floating offshore wind in terms of the 300-megawatt capacity. The answer is that this technology is at a key juncture in terms of its deployment, and we think that certain emerging technologies—such as floating offshore wind—have the potential to play an important role in the future in helping us to meet net zero. Bringing them into the supply chain process now will allow BEIS to support the development of the associated supply chain at an early stage by encouraging the industry to invest in competitive supply chains and—as has happened with offshore wind—to accelerate the cost reduction, by which we are now all benefitting.

There were also a number of technical questions raised by the noble Lord, Lord McNicol. This SI is not affected by the detailed questionnaire that was issued. On his other questions, it may be better if I reply to him in writing, if he will allow me to do so. With that, I commend this draft instrument to the House.

Fuel Poverty

Lord Teverson Excerpts

Monday 13th June 2022 Lords Chamber

[Lord Callanan (Con)]

I totally understand the points that my noble friend is making, and the Chancellor has, of course, already reduced fuel duty. Domestic fuels, such as gas and electricity, are already subject to the reduced rate of 5% VAT. Going further, I would not guarantee that prices would fall, given that most of the price rises are driven by a number of factors that can be seen worldwide. The other problem is that cutting VAT would also be a tax cut for everyone, including wealthier people in society.

[Lord Teverson (LD)]

My Lords, among the most vulnerable groups are park home owners—some 85,000 of them—whose energy supply is often controlled by landlords. These are often, I regret to say, rogue landlords. How will the Minister guarantee that those park home residents will be able to take advantage of the Government’s rebate schemes and the various other things to alleviate energy prices over the next few months?

[Lord Callanan (Con)]

The noble Lord makes a very good point, and that is one of the aspects we are looking at—indirect suppliers through the consultations that we are holding on the various support schemes. I also point out that park home owners are already benefiting from a number of our energy-efficiency improvements, and there have some excellent examples of retrofitting park homes that have been carried out under schemes such as the local authority delivery energy efficiency scheme.

Costs of Living

Lord Teverson Excerpts

Wednesday 25th May 2022 Lords Chamber

[Lord Callanan (Con)]

I do not doubt that it is an incredibly difficult time, and the Government are fully aware of the pressures facing many households. I can tell the noble Lord that we are monitoring the situation very closely, and the Chancellor and the rest of the Government stand ready to take any further steps, if they are needed, to support households.

[Lord Teverson (LD)]

My Lords, the Government are going to make a windfall gain—because of the electricity price contracts for difference, the price of the market will move above the strike price. How many billions extra will the Treasury get over the next year, and will that be fed back to hard-pressed consumers?