Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Amendment) Regulations 2022

Alan Whitehead Excerpts

Monday 9th January 2023 General Committees

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

It is a pleasure to serve under your chairmanship, Dame Caroline. What the Minister says sounds convincing if we take it just in the context of what is in front of us this afternoon. However, it is a little less convincing in the context of what the Minister himself said about the legislation that passed just a little while ago—SI No. 1101—and the whole basis for the pass-through scheme, as far as heat suppliers are concerned.

We should perhaps remind ourselves that the purpose of that legislation was to ensure that, where heat suppliers were in a position to receive support from the energy bill support scheme, and the customers of those energy suppliers, be they district heating networks or whatever, were not directly responsible or able to access the money coming from Government via bill support schemes in general, the pass-through schemes would ensure that the equivalent of what they would have got had they been regarded as wholly domestic customers under the bill reduction scheme would come to them. Indeed the explanatory notes to SI No. 1101 make it clear that the purpose of that regulation was to ensure that there was equivalence between domestic customers receiving the money, whether straightforward bill payers, through their meters, or those people who were immediate receivers of the money coming from Government to support energy costs—in this instance by money though the energy support scheme to energy suppliers.

That was all laid before the House, I think at the end of October, and indeed came into force less than 21 days after it was laid before Parliament, because, as the explanatory memorandum of that SI said, it was

“laid before Parliament less than 21 days before coming into force due to the urgency of ensuring that support for heat network consumers is available this winter through the pass-through of the Energy Bill Relief Scheme.”

That is a very important sentiment, and, indeed, when we discussed it in the House at the time, we accepted that there was a need for that urgency.

Now, we have a further SI, an amendment to the first SI, which we were told, at the time, was urgent to ensuring that network consumers get their money. It is before us, having been laid before Parliament on 5 December and implemented on 7 December, and, as the explanatory memorandum for this SI says, it is

“being laid before Parliament less than 21 days before coming into force due to the urgency of ensuring that support for heat network consumers is available this winter through the pass-through of the Energy Bill Relief Scheme.”

The wording is identical to that of the previous SI.

What appears to have happened, as far as this SI is concerned—and why it is also urgent—is that the Minister’s Department apparently forgot, when putting the original regulations through, that, actually, there is no complete register of heat suppliers in place that would enable the original legislation to be carried out properly. That is actually rather remarkable, because the Energy Bill, which the Minister and I were talking about briefly just before our proceedings started this afternoon, has a whole passage about the regulation of the sector, noting that it is not regulated very well at the moment. Indeed, the explanatory memorandum on this SI—and on SI No. 1101—indicates that it is recognised that the sector

“is not…comprehensively regulated and there exists no complete record”.

Yet the original legislation went through without a word about why the Department did not know who the energy suppliers were and the fact that that made the whole legislation pretty redundant and very difficult to implement. What we have in front of us now is a very rapid and, shall we say, somewhat scrabbled arrangement to try to rectify that original problem, which, as I said, appears to exist because the Department forgot that a rather central part of the method of actually getting money to customers was heat suppliers, who should be known to the Department in order to make them pass the money through.

We heard the Minister mention in his opening comments the Office for Product Safety and Standards—I am not sure whether that office is familiar to other hon. Members; it is not particularly familiar to me. It was apparently going about its business in a reasonably innocent way and has suddenly been told that it now has to keep a database of notifications and it has to administer potential monetary penalties of £5,000 for failure to comply. According to a quite extraordinary note in the explanatory memorandum on this SI, the OPSS, which did not know about this before,

“will also have power to request information from a person they suspect to be a heat supplier before imposing a compliance notice on them or accepting an enforcement undertaking from them.”

We now have to go around requiring the OPSS to sus out suspected heat suppliers and find out whether they really are heat suppliers and, if they are heat suppliers, whether they should comply with the arrangements that are in the legislation already; there are welcome penalties for not complying.

Perhaps I can put it to the Minister that this is all rather rushed, bodged and very last-minute for a scheme that should have been up and running and operating properly as quickly as possible, as the explanatory memorandums on both SIs say, in order to get the money to customers over the winter period and as early as possible. My question to the Minister—not that the Opposition will stand in the way of the legislation this afternoon—is: how has this happened? How has it happened that this sudden and bodged SI has come forward this afternoon to make good something that should have been in the legislation in the first place, so that the scheme operated as well as it could from the beginning? How much time has been lost—in terms of getting money to customers—as a result of this scheme being incomplete in the way it was?

I have another question for the Minister. As time goes by, we are getting closer and closer to the point at which the energy bill support scheme will cease to operate. By the end of March this year, there will not be an energy bill support scheme for industry in the way there will continue to be one for domestic customers. Yet it is the purpose of this SI to get to the equivalent of those, to what are effectively domestic customers, through heat networks for example, the full benefit of support that should come their way as domestic customers. We may have some elucidation this afternoon—in the fairly immediately forthcoming statement in the Chamber, which I will rush down and try to listen to—of whether there will be support after 31 March through the EPS scheme. If there is, will it be the same as the support that there is at the moment? If it is not, will we have to have further legislation in place to try to pass something that will be quite different to what there is at the moment?

Let us not forget that we are essentially talking about the imperative of getting those domestic customers the full amount of the bill support that is due to them because of the circumstance that they are in. They are domestic customers but, because of the arrangements with their heat supply, they do not appear to be so in terms of how the legislation works. Will those domestic customers have to be re-legislated for, as it were, after 31 March if the EBS scheme changes in the meantime? We have already lost a lot of time, for the reasons I have outlined, in getting that support through to customers. Will we end up having a very short window of support that will then be dashed away from customers after 31 March?

I would be grateful if the Minister could elucidate that, but I suspect that we may have to hear the statement this afternoon to find out what will be in place and how it impacts on the legislation in front of us. Those are two quite important questions, but there is certainly no wish on this side of the Committee to impede the progress of the legislation.

--- Later in debate ---

[Dr Whitehead]

rose—

[Graham Stuart]

Really? Does the hon. Gentleman want to intervene after speaking for so long?

[Dr Whitehead]

Briefly, I just want to emphasise something that the Minister does not seem to have taken on board. He said that a mistake was made, but it was such a basic and egregious mistake—to pass a piece of legislation without knowing who is being legislated for—that some questions ought to be asked. Was it simply the speed at which things were done, or was there a fundamental misunderstanding of how the scheme would work?

[Graham Stuart]

I think the hon. Gentleman knows that he utterly mischaracterises the regulations. We legislate all the time for every kind of group in business and society without a database of who they are. We have simply come forward with supplementary regulation, which we are agreeing to today, the better to ensure that the consumer groups that I would have thought he supports enthusiastically are empowered and given the information they need to protect consumers. It is not some egregious error; this is a positive addition. The law applies to those that run heat networks, regardless of whether we know who they are and have their address. As it happens, in order to make it more practicable and quicker to intervene, we are discussing the regulations we have laid. They are supplementary to what was sound legislation in order to deliver a sound policy. Because I know he is an honest man, I think that the hon. Gentleman, on reflection—were he to do that this evening—might think that he somewhat mischaracterised the regulations.

As to what will happen after 31 March, we will make arrangements after His Majesty’s Treasury announces its review of the EBRS for what goes on after that date. Also, for the betterment of the information available to the Committee, on the question whether microbusinesses will be fined £5,000 if they do not notify, that maximum monetary penalty will apply only if a heat supplier fails to comply with a compliance notice or enforcement undertaking relating to failure to comply with the notification requirement. I hope that provides the hon. Member for Cardiff West with reassurance that there is not some automatic imposition of a £5,000 fine on a particular micro-supplier.