Energy Bills Discount Scheme Regulations 2023 Energy Bills Discount Scheme (Northern Ireland) Regulations 2023 Energy Bills Discount Scheme (Non-Standard Cases) Regulations 2023 Energy Bills Discount Scheme Pass-Through Requirement Regulations 2023 Energy Bills Discount Scheme Pass-Through Requirement (Heat Suppliers] Regulations 2023

Alan Whitehead Excerpts

Monday 22nd May 2023 General Committees

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

We have been around these houses quite a few times, between us. I cannot remember exactly how many SIs we have had on the energy bill support scheme pass-through requirements—the non-domestic element of the original scheme—but I think it is well into double figures. During that period we have debated a whole range of things relating to those SIs, both positive and negative. The overwhelmingly positive aspect of the SIs has been that they provide the support people need for their bills in these times of great uncertainty and difficulty.

Today we are debating five SIs, which, secure the energy bill discount scheme for non-domestic businesses in Great Britain and Northern Ireland for a further year. The Minister will not be surprised when I repeat my concerns about the likelihood of some people getting the money they are entitled to, in view of the requirements of the SIs. She will recall our discussions about whether there should be a strict legal liability on the intermediaries responsible for the pass-through arrangements. There has been a further development in the arrangements for the energy ombudsman to become involved in matters of dispute, but he or she has no legal recourse to enforce payments. We still lack a strict legal liability for those whom the legislation makes responsible for passing through payments to the right people. I do not think we will profit greatly by having a long debate about that— I do not think we will resolve it further—but I note that I am still not entirely satisfied.

I am puzzled about how the new scheme fits in with paragraph 5 of schedule 6 to the Energy Prices Act 2022, which provides for reduced energy charges for non-domestic customers in Great Britain. It is right that the secondary legislation should concern itself with a one-year scheme, particularly for non-domestic customers, bearing in mind that the contracts they enter into do not fall strictly within any particular six-month period. One problem we had in our previous discussions about non-domestic customers was that someone might take out a contract for a non-domestic service that started before the support period and finished halfway through it, or that they might take out a contract halfway through the support period that finished outside it. There could be problems at either end. Those issues seem to have generally been resolved, but a period of a year is a more approachable proposition.

The Energy Prices Act sets out a two-year window within which support is to be provided, and states that that support

“may only provide for the reduction of charges for electricity supply that takes place during a period of six months or less;”.

As the explanatory notes to the Energy Bill Discount Scheme regulations state,

“The EBDS takes us up to the end of the third of the four successive periods.”

That means that the Act envisages a maximum of two years in four different tranches of six months. It then states:

“Support under EBDS will be provided for a year (divided into two six month periods), reflecting the limits in the Act.”

Dividing the support into six-month periods reflects the limits in the Act, but it does not make it clear—it is certainly not clear in the secondary legislation that we are debating—whether the superior legislation so limits the provision of support for a period of six months or less that putting forward a proposal that support should be provided for one year does not necessarily count, for legislative purposes.

It may be perfectly in order for the Government to set an aspiration that support should be for one year, but that may not necessarily accord with what the Act says. In order to make that right for a year, we may have to be here, yet again, in six months’ time re-legislating for the second of those two six-month periods.

I would like to know whether today’s proceedings really will be the last word on that support, or whether the proposal for a year’s support is an aspiration that will require us to go around the houses with legislation in six months’ time. If the Minister can clarify that, I will be very happy to support these regulations. In fact, I am happy to support them for the reasons I have outlined; I will not make my support conditional on the Minister’s doing that, because I am sure it will take some clarification. It is important, however, that we make it clear that we have finished legislating to give that certainty, and that as a result of today’s proceedings, we have put to bed for another year the question of price support for non-domestic customers.

--- Later in debate ---

[Amanda Solloway]

I thank hon. Members for their contributions to this debate. First, I address the question of whether these instruments are the end of the legislation in this area. I sincerely hope so. However, if there is anything to add when we meet tomorrow, I will of course let the hon. Member for Southampton, Test know, but it is very much my clear understanding that they are the end.

I turn to the point made by the hon. Member for Cardiff West about the music industry. I understand his great passion. He indicated very clearly why the industry is so important to the whole United Kingdom. He mentioned that he is very proud of our music industry—I am as well. I will attempt to explain the reason why we have these schemes. If I am unable to give a full enough explanation, as always I will be happy to offer a further meeting. Within the discount scheme, there is the universal level, which I believe is the level originally mentioned by the Department for Digital, Culture, Media and Sport Minister, my hon. Friend the Member for Hornchurch and Upminster. On that level, support will be given across all of the non-domestic industry. That is my understanding of the support that the music industry will be receiving.

Clearly, the energy-intensive industries needed more support based on the energy that they use, and the fact that a lot of the work is international was also taken into account. The list that the hon. Member for Cardiff West referred to was the standard industrial classification list, known as the SIC list. That is the standard that we used to define the energy-intensive industries that were to have the additional discount. If I have not explained that fully, I am happy to have a meeting with the hon. Member at a later date.

[Dr Whitehead]

The Minister mentions the so-called SIC list. That is an interesting list in so much as it provides, as my hon. Friend the Member for Cardiff West said, a number of categories of energy-intensive industries. Some of those categories are very narrowly drawn, and some are very widely drawn. His point, at least in part, was that some of the categories within the energy-intensive classification for the higher level of funding are very tightly drawn, and therefore they come into that level, whereas others are very widely drawn.

I mentioned the discrepancy between ornamental or leisure gardens and horticulture, which is often very intensive, and between horticulture and agriculture. Clearly, agriculture is outside the energy-intensive industry classification, but because horticulture is classified within agriculture it does not get in, even though it has similarities with things in the energy-intensive list. I wonder whether the Minister will find time, at some stage, to look at the SIC list to see whether it does the job that we think it does when it comes to ensuring that people get the assistance. Energy-intensive industries should be well enough drawn to ensure that we do not have the sort of anomalies that my hon. Friend the Member for Cardiff West thinks we have.

[Amanda Solloway]

The hon. Gentleman makes an interesting point about the SIC list. That is obviously the list we are using at the moment. We have taken a consistent approach to identifying the most energy and trade-intensive sectors with all the sectors that meet the agreed threshold to be eligible for this support. The Government are committed to continuing to provide essential energy bill support to eligible UK businesses, charities and public sector organisations until April 2024, to help avoid unnecessary financial pressures and job losses resulting from the ongoing situation in the wholesale market.

In addition to the baseline discount for all non-domestic consumers, the new scheme also provides, as we have discussed at length, much-needed targeted support for energy and trade-intensive industries and consumers on heat networks. That additional support will ensure that those most exposed to volatile energy prices and international trade are supported while limiting the fiscal burden on the taxpayer. The methodology ensures that the scheme captures those industries that have been identified as being less able to pass through their increased energy costs to customers because of international competition, as demonstrated by the level of trade intensity, and require an additional level of support. The pass-through requirement sets out how the benefit is passed on to end users in a reasonable and just way. The delivery of this calculation has been designed to ensure that it is not prescriptive but supports all scenarios.

By replicating existing civil enforcement mechanisms, we hope to avoid any complications for end users and provide clarity on how disputes can be raised. My Department has published clear guidance on gov.uk, both for intermediaries and for end users, that provides detailed information to help those affected. We are keen to ensure that all end users, including those who are vulnerable, receive the benefits of the schemes to which they are entitled. We will continue to review our pass-through requirement communication strategy, including reviewing guidance on gov.uk and offering engagement sessions to ensure that intermediaries understand their obligations and that customers receive the benefits to which they are entitled. I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the Energy Bills Discount Scheme Regulations 2023 (S.I. 2023, No. 453).

ENERGY BILLS DISCOUNT SCHEME (NORTHERN IRELAND) REGULATIONS 2023

Resolved,

That the Committee has considered the Energy Bills Discount Scheme (Northern Ireland) Regulations 2023 (S.I., 2023, No. 454).—(Amanda Solloway.)

ENERGY BILLS DISCOUNT SCHEME (NON-STANDARD CASES) REGULATIONS 2023

Resolved,

That the Committee has considered the Energy Bills Discount Scheme (Non-Standard Cases) Regulations 2023 (S.I., 2023, No. 464).—(Amanda Solloway.)

ENERGY BILLS DISCOUNT SCHEME PASS-THROUGH REQUIREMENT REGULATIONS 2023

Resolved,

That the Committee has considered the Energy Bills Discount Scheme Pass-through Requirement Regulations 2023 (S.I., 2023, No. 463).—(Amanda Solloway.)

ENERGY BILLS DISCOUNT SCHEME PASS-THROUGH REQUIREMENT (HEAT SUPPLIERS) REGULATIONS 2023

Resolved,

That the Committee has considered the Energy Bills Discount Scheme Pass-through Requirement (Heat Suppliers) Regulations 2023 (S.I., 2023, No. 455).—(Amanda Solloway.)