Warm Home Discount (Scotland) Regulations 2026

Lord Whitehead Excerpts

Tuesday 28th April 2026 Lords Chamber

Moved by

[Lord Whitehead]

That the draft Regulations laid before the House on 17 March be approved.

Considered in Grand Committee on 27 April.

Motion agreed.

National Emergency Plan for Fuel

Lord Whitehead Excerpts

Tuesday 28th April 2026 Lords Chamber

[Lord Moynihan]

To ask His Majesty’s Government what plans, if any, they have to activate the National Emergency Plan for Fuel.

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

The UK benefits from a strong and diverse range of energy supplies, and the physical supply of fuel to the UK is stable. The national emergency plan for fuel, which has been in place for over a decade, sets out a number of levers that can be deployed in a fuel emergency depending on the type of issue being faced, and this is summarised on GOV.UK. We would consider intervention, with a preference always for the least invasive measures first, if it appears that there could be a shortfall of fuel nationally; but, to reiterate, we are not in this situation.

[Lord Moynihan (Con)]

My Lords, this morning the CEO of Wizz Air, which carried over 30 million passengers last year, warned that European airlines risk collapse by September if jet fuel prices remain at current record levels. We are starting to learn of flight cancellations taking place to save aviation fuel and passengers being compensated so airlines can make savings now. Businesses are saying that the Government are not prepared. We have seen the closure of two refineries here in the UK in two years and the threatened closure of the remaining four due to carbon taxes and electricity prices four times higher than in the US, which makes the UK particularly vulnerable. Given that President Trump has stated that there is no timeframe for ending the Iran war, when will the Government listen to industry, level openly with the public, be transparent and heed the words of the Chief Secretary to the Prime Minister, who has admitted that shortages are coming? Now, the Government should publish a national emergency plan for fuel to show how we can shore up our domestic supply of all forms of fuel and allow the public to make considered decisions.

--- Later in debate ---

[Lord Whitehead (Lab)]

The noble Lord conflates a number of different sources of fuel into one in his question. It is certainly the case, as far as petrol, diesel and other similar fuels are concerned, that supplies in the UK are stable. The UK as a refiner of petrol actually exports petrol from the UK, so there is no question of supply problems there. Only 1% of the crude oil that goes into petrol refining comes from the Middle East and only 7% of diesel comes from the Middle East so UK fuel supply is generally stable and secure. Jet fuel is slightly different as a higher percentage of it comes from the Middle East, but the airlines in the UK are clear that they are not currently seeing a shortage of jet fuel. Indeed, aviation fuel is typically bought in advance, and airports and their suppliers keep stocks of bunkered fuel to support their resilience.

[Earl Russell (LD)]

My Lords, the double blockade of the strait is still in place and shows no signs of easing. The national fuel emergency plan was last updated in April 2024, yet current pressures across aviation fuel, diesel and fertilisers are unique and complex. What consideration is being given to updating and stress-testing the plan? How will the Government balance timely information with avoiding panic? What steps are being taken to support early economy-wide fuel efficiency measures?

[Lord Whitehead (Lab)]

The noble Earl is absolutely right to point to the complexity of the situation at the moment, not just in terms of particular kinds of fuel supply but the knock-on effects of, for example, a lack of supply in the Middle East as a result of some refineries being bombed and long-term supply questions across the world about certain other fuels. The national emergency plan for fuel, however, is a plan for shortages of fuels, of which there are none at the moment in the UK.

The wider question is: what will happen as far as prices are concerned as this crisis develops, since we have no means of determining exactly when it will finish? That is not an issue for the national emergency plan for fuel, but it is one for the question of stabilising prices for consumers and ensuring that businesses are not at risk from those prices getting out of control. Indeed, as the noble Earl knows, the Government have already started taking initiatives in this respect. For example, £53 million has been distributed to cushion the effects of price rises in home heating fuel, which are particularly suffered by people who are off grid.

[Lord Stirrup (CB)]

My Lords, can the Minister confirm that sufficient consideration is being given to the maintenance of adequate stocks of petrol and jet fuel for the military, for their ongoing military operations and their essential training, and that consideration is also being given to alleviating any pressures from the price rises on the already hard-pressed defence budget?

[Lord Whitehead (Lab)]

I cannot speak in any detail for the Ministry of Defence, but the noble and gallant Lord can be assured that the question of bunkering and keeping supplies, particularly of jet fuel, is very much directed in conjunction with both civil aviation and military requirements. The question, as he implies, is a further one of prices. It is a matter of looking at how best a particularly targeted intervention can be undertaken in future to ensure that prices do not undermine various activities in this country. The Government are keeping a close watch on that at the moment.

[Lord Sikka (Lab)]

My Lords, the national emergency plan for fuel remains a contingency for crisis. Its objectives include protection of human life and alleviation of suffering. Since 2020, energy companies have made £125 billion in profits and around 120,000 people a year die in fuel poverty. Does the Minister agree that there is a crisis and that lives can be saved by curbing profiteering by energy companies?

[Lord Whitehead (Lab)]

Yes, the noble Lord asks me whether there is a crisis and there is one in place at the moment. However, we have considerable difficulty in determining exactly its direction and depth, precisely because we do not know what the position is and will be, particularly concerning the Strait of Hormuz, for the future. The response to that crisis, as far as the Government are concerned, clearly has to be to take every measure possible to ensure that the Strait of Hormuz is open—and open without tolls—for the passage of fuel across the world, but we do not know how long that will last.

The plans that we are therefore undertaking, particularly given the prices that may be an issue in global fuel scarcity, with various people trying to cannibalise everybody else’s fuel supply, are under our control nationally. We can therefore indeed intervene, if necessary, to make sure that those prices remain as stable as possible and, particularly as far as those who are in fuel poverty are concerned, that more people do not fall into fuel poverty as a result of those problems.

[Lord Redwood (Con)]

Two of our refineries have shut under this Government and the remaining four are at risk from high costs and very high taxes. What has emerged from government discussions with our refiners to expand our refinery output? That is the way to national security—not relying on product imports from dangerous parts of the world.

[Lord Whitehead (Lab)]

I do not quite recognise the noble Lord’s description that the four refineries in this country are at risk. Those are very large and stable refineries. As he knows, they continue to refine the forms of crude coming into the UK into petrol and other fuel products. Those refineries are set up to provide a particular kind of output based on the crude oil coming into them, and that is not necessarily a full spectrum of fuel products. Therefore, part of a strategy, as far as fuel is concerned for the future, is to look at where those refineries can expand and increase their production if possible, and to make sure that, where they are not able to easily refine the things we need, we have secure sources of those for the future.

[Lord Lancaster of Kimbolton (Con)]

My Lords, military aid to the civil authorities, or MACA, tasks are a standard provision within national resilience and there is a MACA task for fuel shortages. However, policy is clear that the military should only ever be used in extremis. The challenge is that, in recent years, they have become the default setting for many government departments when, frankly, right now, they should be doing other things. Can the Minister reassure your Lordships’ House that civil contingency is in place and that the military will only ever be used at times of extremis? I declare my interest as director of the Army Reserve.

[Lord Whitehead (Lab)]

Yes, indeed I can assure the noble Lord that that is the situation. It is what is set out in the national emergency plan for fuel, particularly in terms of the kinds of interventions that can be deployed in a fuel emergency, ensuring that the least invasive measures are carried out first. As the noble Lord will know, there are circumstances in which the military could be involved in making sure that fuel gets to the right destinations and that it is carried and delivered securely and reliably. That is all in the national emergency plan for fuel—a plan that we are not intending to implement at the moment because the circumstances envisaged by that emergency plan are not in place.

[Lord Spellar (Lab)]

My Lords, can the Minister assure us that steps are being taken to ensure that we have adequate storage for fuel and gas? The situation that the Government inherited was certainly unsatisfactory for gas and, given the unstable international environment, we clearly need much more reserve capacity to provide resilience.

[Lord Whitehead (Lab)]

The noble Lord is right to raise storage and resilience. As far is gas is concerned, we have reliable supplies from a range of sources. Most notably, 43% of our supplies come from UK fields. A further 20% comes from Norwegian fields, some of which can be landed in the UK only when it has come from the fields. Only a small percentage comes in from LPG and other tankered arrangements. The question of supply, therefore, is about supplementing those secure supplies with a reasonable amount of reserve facility. That is indeed in place, in terms of eight reserve supply arrangements, as well as the development of the former Rough field in the UK for gas supply purposes.

[Lord Bellingham (Con)]

My Lords, on the Minister’s last point about resilience and the Norwegian fields, does he personally support the early development of Rosebank and Jackdaw?

[Lord Whitehead (Lab)]

The noble Lord will know that those two fields have exploration licences but do not yet have production licences. The general point about those fields, and indeed new fields, particularly in the UK, was made just recently by the director of the International Energy Agency, who said that those and other fields

“would not change much for the UK’s energy security, nor would they change the price of oil and gas. They would not make any significant difference to this crisis”.

Regarding the current crisis, it is right in general to continue to move away from reliance on volatile and possibly unstable sources of fossil fuel and develop the greater security that comes with renewable and low-carbon energy, which is what the Government are doing.

[Lord Naseby (Con)]

Is the Minister aware that those fields produce oil and gas that is cheaper and of a better quality than the comparable materials that we import? Surely that is a sensible way forward.

[Lord Whitehead (Lab)]

The noble Lord perhaps refers to the relative cost of supplies into the UK, which is a fairly complicated matter, and the carbon content of those supplies, which is also a further complicated matter. Those supplies are lower in carbon content than LPG coming in but are nevertheless much higher in carbon content than renewable supplies, which the Government are working on at the moment. The question of price and value is a very complicated issue, but one which is not necessarily germane to the current crisis.

Warm Home Discount (Scotland) Regulations 2026

Lord Whitehead Excerpts

Monday 27th April 2026 Grand Committee

Moved by

[Lord Whitehead]

That the Grand Committee do consider the Warm Home Discount (Scotland) Regulations 2026.

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, these regulations were laid before the House on 17 March 2026.

Since 2011, the warm home discount has supported low-income and vulnerable households by reducing energy bills during the coldest months of the year, when support is most needed. The Warm Home Discount (Scotland) Regulations 2022 ended on 31 March 2026. These regulations will extend the scheme in Scotland for a further five years, until 2030-31, providing certainty for households, suppliers and delivery partners.

Fuel poverty is a devolved matter in Scotland. Under the Energy Act 2010, as amended by the Scotland Act 2016, Scottish Ministers have powers to design their own fuel poverty scheme, subject to consultation with and agreement from the Secretary of State. To date, Scottish Ministers have chosen not to exercise those powers and have instead consented to the UK Government laying regulations on their behalf. That remains the position for the next scheme period. Under devolution arrangements, the Scottish Government have provided their formal consent for these regulations to be made.

In September, the Government consulted, with the agreement of the Scottish Government, on proposals for the next scheme period. Consultation responses relating to Scotland were shared with Scottish Ministers, who have determined the eligibility criteria for the next scheme period within the agreed spending limit, as set out in these regulations.

The regulations will continue to require energy suppliers with more than 1,000 domestic customer accounts across Great Britain to participate in the scheme. Suppliers with fewer than 1,000 domestic accounts will, as now, be able to participate in the scheme on a purely voluntary basis.

These regulations will continue to provide for £150 rebates to be provided by scheme suppliers under the data-matched core group and the application-based broader group, a different division of groups than is the case with the English scheme. Participating suppliers will continue to be obliged to provide a £150 rebate to eligible households in the core group, applied directly to their electricity bill. These regulations set out new eligibility criteria for the core group in Scotland, aligning qualifying benefits with those of the Scottish winter heating payment as of December 2025 for the next scheme period. It is estimated that the number of households that receive a core group rebate will increase by roughly 250,000 to 345,000 households per year compared with 2025-26.

--- Later in debate ---

[Lord Moynihan (Con)]

My Lords, I too thank the Minister for bringing forward this SI and explaining it in such detail, especially given the fact that we have already debated this at some length, when my colleague from the Liberal Democrat Benches also participated in certain aspects of it.

The focus on Scotland allows us to look at some specific aspects relevant there and to consider why the Warm Home Discount (Scotland) Regulations 2026 are so important for Scottish households—needed as they are, I might add, because of the high cost of energy and electricity in not only Scotland but the rest of the United Kingdom, because of the doubling down on the policy of building intermittent wind farms far from the grid and energy costs that are sky high relative to international comparisons. With those wind farms operating at some 31% to 40% of their maximum potential capacity, we are required to continue to import gas and to pay for gas-fired CCGTs all year long for the sole purpose of being available when the wind does not blow and the sun does not shine. For that reason, it is all the more important that this draft warm home discount provision is available—because of the high prices of electricity and the need to protect those most in need in Scotland.

We understand how important this is, since the warm home discount is being immediately offset for so many by rising energy prices, driven by the Government’s own policy choices. It is important to note that suppliers are not funding this support; it is paid for by households through an additional levy. The Government are increasing taxes on working people to fund handouts to others, rather than fixing the problem at source by addressing the issue of making electricity cheap.

In addition, the administration costs will continue to rise. I would be grateful if the Minister could confirm whether the administration costs alone are estimated to be about £20 million per annum. It is time the Government addressed the need to cut electricity bills. We hope that during the brief coming recess, DESNZ will have the opportunity to see whether it can axe the carbon tax, scrap renewable subsidies and overturn the North Sea licensing ban. That will provide the greatest benefit to people on low incomes, not least vulnerable Scottish customers.

As the Minister has said, the WHD scheme supports those on low incomes, vulnerable to cold-related illness, or living wholly or mainly in fuel poverty. That is of course right—it is a policy that has been supported by both sides of the Committee. We need to target fuel-poor households, with the highest estimated energy costs identified through data matching, which we covered when we last discussed this important measure in the context of the rest of the United Kingdom.

I welcome the recognition of the Secretary of State being able

“to direct energy suppliers to communicate with ‘matched’ customers identified through automated data matching, and … requiring suppliers to provide information on eligibility, the use of automated decision-making, and where to find the Scheme’s privacy notice”.

We already agreed to that in a previous debate on the application of the WHD extension elsewhere in the United Kingdom. However, the Minister will not be surprised to hear me say that we should also consider Professor Dieter Helm’s concern that, in not considering the WHD orders in the context of the wider energy policy being pursued by the Government, we are, to use his words, simply “moving the deck chairs”. The most important issue is that the warm homes discount scheme must be judged in the context of the fundamental issue of energy costs, and, most importantly, the high energy costs that make us so lacking in competition, particularly in the UK industrial sector but also in terms of very high domestic costs.

For many of the people concerned, fuel is perhaps the most important and noticeable change in energy prices for low-income households. Only recently, industry chiefs have warned that British electricity costs mean that domestic refineries are struggling to compete, and therefore that Britain will be increasingly reliant, as will Scotland, on imported fuel. Average petrol prices, at 157.62p a litre, are currently 25p higher than at the start of the war, and diesel has risen twice that to 188.9p a litre. Does the Minister recognise that, as the war has proven, it is important for a major economy to be focused on increasing its reliance on domestically generated fuel and not on imported fuel? This issue of security of supply is one I hope that we will return to and that the Minister can also address today.

We still import 60% of our gas, which is around 20% of our national energy demand. I hope that, during the brief Recess, the Secretary of State will reconsider his refusal to allow production at remaining North Sea gas fields, particularly Rosebank and Jackdaw, and that, at least recognising that there may be political motivation behind his decision, he will return to this subject shortly after the 7 May elections. As we know, when we look at Rosebank and Jackdaw, the emissions intensity is substantially lower than imported LNG from the United States. Therefore, on any environmental grounds, it makes great sense to develop our own gas reserves, not to mention the benefit to the Treasury of the revenues that are generated.

In the context of Scotland, we are losing nearly 1,000 jobs a month in Aberdeen—1,000 valuable jobs that are highly regarded around the world. It is so important to recognise that, from Aberdeen to Ardersier, we need to make sure that we protect jobs in Scotland and that this policy of being completely opposed to new licences, and not adjusting the commercial and fiscal terms that would encourage the extension of current production in reservoirs and tie-backs, is very damaging to the economy, puts up prices and, in turn, means that, in future, more people may have to avail themselves of the regulations we are discussing today.

We are approaching a brief break, which is an opportunity to test how popular the Government’s energy policies are in Scotland. I hope that this will allow DESNZ to undertake a comprehensive review of its doubling down on an energy policy that is high-cost—one of the highest in the world—and regrettably more polluting than it needs to be. I gave the example of LNG imports from the US against our own production from, for example, Rosebank and Jackdaw.

We are increasingly highly reliant—I know that the Minister will always expect me to say this—on Chinese solar imports from Uyghur slave labour and coal-fired factories. We are also highly dependent on ever-enlarging warm home discount schemes, which, we both agree, are a fundamental responsibility of parties in government. However, those schemes, which should be welcome because they ease some of the consequences of these policies, do not deter us from the most important issues: addressing the policies and reducing the cost of energy. Ultimately, if we can do those things, such policies will be less necessary because we will have addressed the facts that we need to be more competitive, that energy needs to be more affordable and that we need to protect jobs—not least in Scotland—which are absolutely vital to our economy and our energy mix.

[Lord Whitehead (Lab)]

I thank noble Lords for their valuable contributions to this debate; I will attempt to address them in the best way I can.

I have got to know the noble Lord, Lord Moynihan, well during my time as a Minister in this House. I say to him, with respect, that, although he is unfailingly constructive and courteous and makes important points, I fear that he has today given us a tour d’horizon of all the things we have been discussing over the past few months, wrapped within the carapace of the SI before us, which relates only to the specific Scottish circumstances of the warm home discount scheme. I hope he will forgive me if I do not give a detailed reply to some of his points because they have been discussed on other occasions; perhaps we could, over a drink at the end of the Session, tease out some of these issues between ourselves as we prepare for the proroguing of Parliament.

On the contributions concerning this specific SI, I thank the noble Lord, Lord McNicol, for his contribution. His concerns relate to the enormous increase in coverage that has been achieved by these new arrangements. Because the Scottish Government asked the UK Government to set up an SI for a scheme similar, but not identical, to that in the rest of the UK, the benefits of the substantial increase in coverage now relate to Scotland and England just the same. However, there are of course questions relating to the fact that there are, and have been since 2011, considerable differences between some of the detail of the Scottish scheme and the English one. That is partly because of the identification of virtually everybody who is taking part in the expanded scheme in England, but it is not quite so as far as the Scottish scheme is concerned.

In the Scottish scheme, there is a core group and there is a broader group. The broader group is subject to identification by application and is then put into the assistance system by the energy suppliers, but there is a question about whether those energy suppliers are going to do that properly. How will it be ensured that they do, and, if they fall short, how can that be rectified by things such as making sure that industry initiatives are brought up so that the broader group does not suffer in the way that it might otherwise do? It is down to the Scottish Government and Ofgem to make sure it happens, but it is clearly something that we need to keep a close eye on as the scheme develops.

I say to the noble Lord, Lord Moynihan, that the Government are taking action on energy prices and bearing down on them. As he will know, we have the energy price cap, which has made sure that prices go down by about 7% over the next few months. We have had the transfer of renewables obligation levies and the ending of eco-levy costs to reduce bills. We have an ambition to take considerably more off energy bills in the future using those sorts of devices.

The noble Lord talked about domestically produced fuel. We completely agree on the need to have domestically sourced power in the UK. That is exactly what the Government are doing with increased offshore wind and solar. I have already talked to the noble Lord about how we can increase the amount of domestically produced onshore gas by increasing the biomethane that is injected into the grid—a completely domestic source of gas. The Government are acting on these things.

The noble Lord quoted Dieter Helm, saying that we are only moving the deckchairs. Sometimes moving deckchairs is a good thing, particularly if the deckchairs were previously in the shade and you can bring them out into the sun by the things you are doing. For example, one of the things that we are doing here is to move the effect of the funding from standing charges to individual markers related to the amount of power that is being consumed by particular customers. Instead of that money being taken for these warm home discount schemes from standing charges, they will be a combination of matters now, which will save people something like £39 on standing charges. So yes, we can move the deckchairs. I am conscious that we need to move further and faster—to move more deckchairs more rapidly—and transcending that. If this measure is about moving deckchairs, the deckchairs have been moved very efficiently and we have a good scheme as a result.

[Lord Fuller (Con)]

I listened careful to all the deckchairs moving around, but the Minister’s analogy is incomplete, because the deckchairs that are referred to in the famous aphorism relate to the deckchairs on a sinking ship. That is the pointlessness of some of the things we are looking at. It is important that, rather than rearranging the deckchairs on a sinking ship, where everybody goes down with the vessel, we look at keeping energy prices as low as we can. The high energy prices that this nation is labouring under are de-industrialising our nation, killing our chemical industry and giving everybody the highest energy costs in the industrialised world. That is something we need to bear down upon.

[Lord Whitehead (Lab)]

As I was just saying to the noble Lord, Lord Moynihan, moving the deckchairs depends on the fact that the ship is not sinking. Of course, this ship is not sinking. That is why we have been able to double the eligibility for people to take part in the scheme and are further doubling down on energy price reductions through the devices that I set out and the further development of clean, domestically produced power to make sure those prices stay low for the future. We are doing other measures, such as de-linking the arrangements between gas-based electricity and renewables-based electricity. The purpose of a number of things might seem to be moving the deckchairs, but certainly not on a sinking ship. The ship has all its deckchairs in the sun now and is steaming forward to a bright energy future.

Motion agreed.

Committee adjourned at 5.10 pm.

Low-carbon Heat Networks

Lord Whitehead Excerpts

Wednesday 22nd April 2026 Lords Chamber

[Baroness Griffin of Princethorpe (Lab)]

My Lords, on behalf of my noble friend Lady Curran, and with her permission, I beg leave to ask the Question standing in her name on the Order Paper.

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

The warm homes plan sets a new, ambitious target for heat network growth to meet 7% of heat demand by 2035 and an even greater amount by 2050. This ensures that households and businesses in dense areas can benefit from the cheapest clean heat for them, and that we are maximising the efficiency of our energy system. Alongside our other capital schemes, this Government will invest £1 billion in low-carbon heat networks over this Parliament, including through the green heat network fund and the heat network efficiency scheme. Heat network zoning will fundamentally transform the development of new heat networks in England; it will provide the tools to ensure that they are built in the right places, and give investors and developers the certainty they need to bring forward more ambitious schemes.

[Baroness Griffin of Princethorpe (Lab)]

I thank my noble friend the Minister and welcome the warm homes plan, but we need ambition. Only infrastructure heats homes. Clean, low-carbon heat networks can match gas boiler costs. Instead of every house having its own gas boiler, you have one central source of heat—a big heat pump, a river, a disused coal mine or even a data centre—and you pipe that heat through insulated underground pipes to thousands of homes. I ask my noble friend: when do the Government intend to treat heat networks as essential national infrastructure?

[Lord Whitehead (Lab)]

My noble friend is absolutely right about the importance, cheapness and flexibility of heat networks for the future. Indeed, the Government are taking that flexibility—that essential nature—of heat networks very seriously in their ambitions for them to provide something like 20% of total heat by 2050. Among other things, the Government are doing that through the green heat network fund, to bring forward investment, and to make sure, through the heat network efficiency scheme, that existing heat networks are brought up to scratch with the newer ones that are coming on stream.

[Earl Russell (LD)]

My Lords, we welcome the Statement made yesterday by the Energy Secretary that the Government will be working to accelerate the £15 billion warm homes plan. We support the work that the Government are doing on heat networks but, in light of the current energy crisis, what further work will be done to accelerate the rollout of heat networks, particularly for social housing, to ensure that those in fuel poverty get the help that they need as urgently as possible?

[Lord Whitehead (Lab)]

The noble Earl is quite right to emphasise how important it is to accelerate the rollout of heat networks, particularly in view of the present gas volatility crisis. As has already been mentioned, heat networks can source their heat from anywhere. For many years Southampton heat network, if I dare mention it, has sourced its heat from geothermal energy. There are many other heat networks that can source heat from waste heat, mine heat and, as has also been mentioned, the future heat from data centres. So the customer greatly benefits from having access to heat that otherwise would not be accessible so far as a home is concerned. That is why we are determined to push forward with heat networks as fast as we can, and to make sure that the target—that is, 20% of heat from networks as a portion of heat overall—is achieved in very good time.

[Lord Porter of Spalding (Con)]

My Lords, what risk assessment did the Government undertake before they moved the regulation of social housing landlords’ heating networks from the Housing Ombudsman to Ofgem? The result is that Ofgem can launch unlimited fines based on annual turnover: this will create a push for the big social landlords to take out heat networks, not put them in. At the moment they are controlled by fines levied by the ombudsman, and these are considerably lower than those Ofgem will be able to raise against them.

[Lord Whitehead (Lab)]

The regulations came in on 27 January, and this move to properly regulate the heat network field was due to the fact that the system had very little overall regulation before and was dependent on some voluntary heat regulation schemes. In many instances it was not satisfactory so far as consumers were concerned. The emphasis on the regulation was a fair deal for consumers, but it also means a fair deal for those good heat network operators which want to play by the rules and make sure that their heat networks are as good as they can be.

[Baroness Hayman (CB)]

My Lords, I declare an interest as a director of Peers for the Planet. Like others, I welcome the publication of the Warm Homes Plan and the increased target for the initiation of low-carbon heat networks. But I ask the Minister: what plans do the Government have to ensure that we have a trained and efficient workforce able to carry through these plans? We have had many energy-efficiency and insulation plans in the past that have foundered because we have not had the workforce able to implement them.

[Lord Whitehead (Lab)]

The noble Baroness makes an excellent point on the need to run the expansion of facilities such as heat networks, and indeed many other green and low-carbon technologies, alongside an assurance that the skills are available to put those into place and the workforce is available to do those things. That is part of the wider government plan to make sure that training and skills are properly matched to the low-carbon future that we have in front of us, rather than training people for, dare I say, obsolete technologies that will have a relatively short life in the future and will be superseded by this widespread series of low-carbon technologies.

[Lord Moynihan (Con)]

My Lords, low-carbon heat networks, while commendable, face major disadvantages and risks, including financial risks, technical challenges in retrofitting, and operational challenges such as overheating and service outages. Do the Government really believe that, given local authority financing constraints, councils such as Lewisham—where my former constituency lies—can meet the targets set by government for 2035, and indeed the targets for 2030 set by Lewisham Council?

[Lord Whitehead (Lab)]

Yes, the Government believe that those targets can be met, and local authorities up and down the country have shown, by activities in their own areas, that they are very keen to make sure that those targets are met. Following earlier requests for expressions of interest, the applications for heat networks have shown that there is enormous interest in developing heat networks in various parts of the country—interest led not only by local authorities but by various local communities, including possible interest in the Great British Energy plan to develop 1,000 local schemes by the end of this Parliament. The will to do it is there; we need to make sure that there is the support for these new developments as they go forward, so that the schemes can come forward in the best way possible.

[Lord Grantchester (Lab)]

My Lords, the decarbonisation of heat remains one of the biggest challenges to achieving net zero, and heat networks are a new growth opportunity. Is it not anomalous that there are no decarbonisation requirements on non-domestic buildings? I agree with my noble friend the Minister and his confidence. Could the public sector take a lead on this, with local authorities being resourced to implement heat network zoning to encourage heat connection and supply to suitable buildings at competitive prices?

[Lord Whitehead (Lab)]

The heat network zoning arrangements now in place are not just for purely domestic heat networks. To refer again to a particular heat network I am familiar with, that is a heat network that includes both residential domestic housing and a number of commercial and industrial properties. Ensuring that that heat zoning takes account, as far as it can, of the opportunities for heat networks to operate for commercial and industrial buildings, as well as residential properties, is clearly a substantial part of that move and will shape how heat networks develop in future years.

Clean Power 2030 Action Plan: Rural Communities

Lord Whitehead Excerpts

Wednesday 22nd April 2026 Lords Chamber

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, I am very grateful to all those who have contributed to this important debate and particularly to the noble Baroness, Lady McIntosh, for securing it in the first instance. She made a number of important points that go along, I think, with her particular view about the role of renewables but are nevertheless important points that need considering as far as this debate is concerned.

Before proceeding, I want to add my congratulations to the noble Lord, Lord Nagaraju, who made his maiden speech this afternoon. I think he will have gathered already from the acclaim around the House for his maiden speech that he will undoubtedly be a tremendous asset to our House in the future.

In her initial contribution, the noble Baroness, Lady McIntosh, listed a number of alternatives to Clean Power 2030. What was striking about the list of alternatives she put forward is that they are mostly things that the Government are doing already. They are not necessarily exactly in the context of the Clean Power 2030 Action Plan, although there are many more things in that plan than many noble Lords and others seem to think—for example, there is a substantial role to play for hydrogen in the action plan and on a longer-term basis after 2030.

The noble Baroness mentioned clean power: floating solar, energy from waste and small nuclear. The Government are actively involved in undertaking all these things at the moment. But I emphasise that they are not alternatives to the race or the journey to clean power; they are part of that journey, along with other things, such as offshore and onshore wind, solar, and various other arrangements that we can see blossoming before us.

The action plan is a requirement to get to mostly, or almost wholly, renewable power by 2030, both for reasons of carbon emissions reduction—and the move towards net zero by 2050—and to make sure that the nation has energy independence as far as is possible and that we are not dependent on fossil fuels from around the world dictating how our energy economy works for the future.

Noble Lords have drawn attention to just how hard this work will be to achieve those particular goals, and they are absolutely right: it is very ambitious to ask the energy system to translate itself into a low-carbon system with the speed that we hope will be achieved. But we ought to be clear that the means being put in place to do this are not the bogey mentioned by a number of noble Lords. This is genuinely clean power. It will, certainly for rural communities, enhance their way of life, with cleaner air and much greater community involvement in the power that will be introduced, which the noble Earl, Lord Russell, mentioned. Altogether, this will make our society a much cleaner, greener and more liveable place overall.

That does indeed involve certain changes to how we deploy our power in the future. Noble Lords have mentioned that we may use 10% of productive farmland, for example, for solar and similar activities. Reports were mentioned, and the land use framework published by Defra in March 2026, for example, states that renewables are projected to take up approximately 155,000 hectares of England’s utilised agricultural area, which is about 2%, not 10%. As the noble Earl, Lord Russell, mentioned, that is far less than the amount of land taken up by golf courses in this country for the future. So it is not the huge take that some people suggest.

[Lord Fuller (Con)]

The noble Lord is selectively quoting from the table, and he may indeed be right on solar, but the land use framework enumerates a whole load of other different types of use. In total, 1.7 million hectares—about a fifth of all the farmland in England—is to be taken from agriculture and applied to other uses. He cannot get away from that: those are the Government’s numbers.

[Lord Whitehead (Lab)]

The noble Lord says I am selectively quoting. I am sorry to disagree with him, but I am not selectively quoting; I am quoting. That is what the land use framework says on the best estimates for the land that is being taken. In addition to that, he and other noble Lords will be aware that, in the guidance and arrangements for the development of solar, there is a clear understanding that the best and most versatile land will be excluded from those solar developments and that they should go primarily on brownfield land or less-important agricultural land, so that precisely that best and most versatile land for farming and food use is preserved for that activity. That is what is happening with the solar developments coming forward at the moment.

The other thing I want to mention on rural communities is that, when we are putting forward proposals for grid coverage of the country, as other noble Lords have mentioned—the noble Lord, Lord Howell, for example—that is not just about clean power 2030. Among other things, it is about getting the grid fit for energy for the future in general. Even if clean power 2030 were not in place, it would be necessary to undertake that huge programme of grid renewal and updating, partly because of the extreme neglect of grid uprating that took place during the Conservative Government who immediately preceded this Government. We are not just undertaking a grid for the future but catching up from the past.

[Baroness McIntosh of Pickering (Con)]

I am not accusing the Minister in any way of misleading the House, because this is from a different department, but the actual figure that was consulted on by the Department for Environment, Food and Rural Affairs in January 2025 was that more than 10% of farmland in England was to be diverted towards helping to achieve net zero and protecting wildlife by 2050. That was in the consultation that was the prelude to the land use framework and I understand was in parallel to this net zero policy.

[Lord Whitehead (Lab)]

I am happy to write to the noble Baroness to clear up that exact point, but what I quoted from, as I am sure she will know, is the actual land use framework and not the precursors to it. At the final point when it was published by Defra, it came to the conclusion that I have mentioned. It is in table 1 on page 19 of that land use framework, so it can be looked at. I am very happy to write further to the noble Baroness on that particular point.

What is absolutely right, though, as indicated in the contribution from the noble Baroness, Lady Gill, is that we are basically all in this together. It cannot be the case that we can exempt parts of the country from the energy revolution taking place in front of us. But what we can do is make sure that, where it has effects on those areas, they are mitigated as far as possible: for example, as we are planning at the moment, they will have community benefits coming their way from those changes. Community investment through the discount schemes is also coming forward. A new electricity bill discount scheme will provide £2,500 over the next decade to households living within 500 metres of new and significantly upgraded transmission infrastructure, with the first payments expected in 2027.

We are also looking seriously at community benefit from upcoming changes to grid systems and various things. The SSEN’s upcoming Tealing to Aberdeenshire transmission line, for example, could mean funding of more than £23 million for local communities. There is assistance for communities that are associated with those changes, but also an understanding that, while those changes have to be made very carefully—with full consultation and appreciation of the difficulties that may stand in the way of some of those schemes—where those schemes go ahead, they have done so on the basis of our Planning and Infrastructure Act. That means full scrutiny and consultation, full arrangements for remediation and a full consideration of what, among other things, the cumulative effect on the landscape may turn out to be.

With that, I hope I have addressed the points made by most noble Lords. If I have failed to do that because of time constraints, I am happy to write, particularly to the noble Lord, Lord Howell, to go a little further on the question of hydrogen for the future. I can assure him that it plays a very substantial role in the process, along with other non-variable things such as biomethane and biogas, for the future of the energy economy.

Overall, the Government are doing a responsible job in trying to match the requirements of the clean power action plan with quality of life and the future, particularly of rural communities. We will certainly continue to take that very carefully into consideration as the plan develops and, indeed, as clean power goes beyond 2030 and into the next decades.

Electricity: Domestic Pricing

Lord Whitehead Excerpts

Tuesday 21st April 2026 Lords Chamber

[Lord McCabe]

To ask His Majesty’s Government what plans they have to review the effect of the marginal pricing structure on the cost of electricity for domestic consumers.

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

Delivering lower bills and a secure energy supply for working families and businesses is at the heart of the Government’s sprint toward homegrown clean energy. Marginal cost pricing has historically incentivised the cheapest forms of energy to provide as much power as possible. That worked well when the competition was between fossil fuel producers, but less well when there are many cheaper bids from renewable sources for power supply but still the price can be set by more expensive and volatile gas. Accelerating the development of renewable generation, as we are now through clean power 2030, will progressively reduce to a residuum the amount of time that gas sets the price.

[Lord McCabe (Lab)]

I am grateful for that Answer and I welcome the direction of travel on energy security and price stability, but do we not need to work harder and faster to decouple gas from electricity prices? Is it not true that gas accounts for about 30% of electricity generating but that the effect of gas on the price mechanism is responsible for the huge bills landing on households and businesses up and down the country?

[Lord Whitehead (Lab)]

My noble friend is absolutely right. Although gas accounts for only 30% or so of the market, at the moment it sets the price over 60% of the time with marginal cost pricing arrangements. It is right that we need to go faster and further. Indeed, today the Government have announced plans, among many other things, to ensure that the element of the renewable input into the system—on renewables obligations rather than fixed-price contracts for difference—can be moved over to that latter category as soon as possible, thereby bearing down on the amount of time that gas sets the price in the market.

[Earl Russell (LD)]

My Lords, we cannot afford continued fossil fuel dependency. We welcome the move from legacy contracts to cheaper ones. Indeed, my party proposed similar over a year ago. I support the Greenpeace Power Shift RAB model to remove gas, the most expensive component, from the market. Are Ministers still looking at these proposals, and will they take them forward? If not, why not? Together these proposals fall short, and that is my worry here. Despite the way they have been trailed, they will not deliver the savings we require.

--- Later in debate ---

[Lord Whitehead (Lab)]

The Government are looking actively at many different ways of going further and faster as far as the green energy revolution is concerned. Indeed, they are actively looking at the Greenpeace and Stonehaven report on not only delinking but strategic reserves for gas in future. My personal view is that what they are proposing is a little early in the cycle but, nevertheless, could be an important element later on, in how the system stabilises itself once it is mainly renewables and low carbon.

[Lord Redwood (Con)]

Is the quickest way to get energy prices down not to cut some of the rip-off taxes that the Government impose? How does imposing an extra windfall tax help?

[Lord Whitehead (Lab)]

Imposing an extra windfall tax, on those elements of the system that are within the renewables orbit but outside the CfD arrangements, takes away the excess profits that those elements make as a result of being aligned with gas in charging those volatile prices. So it is a very sensible thing to do, to make sure that excess profits are not taken from consumers but instead reside with them as lower prices.

[Lord Vaux of Harrowden (CB)]

To follow up on that, can the Minister explain how a windfall tax paid to the Treasury ends up reducing people’s bills?

[Lord Whitehead (Lab)]

The effect of the windfall tax is, essentially, to start returning some of those excessive bill contributions back to bill payers so that their overall bills are less than they otherwise would be.

[Baroness McIntosh of Pickering (Con)]

My Lords, does the Minister not agree that Denmark—where renewables, on which Denmark excels, are highly developed—is the largest producer of oil and gas in the European Union? We will continue to need fossil fuels, in addition to renewables, going forward.

[Lord Whitehead (Lab)]

The reference that the noble Baroness makes to Denmark is an interesting one, inasmuch as the Danish system is wholly integrated between renewables, heat and power of different kinds—particularly district heating and various such things, which can be used in conjunction with other forms of energy to provide a balanced overall system. It is true that Denmark continues to produce oil and gas but also that Denmark is, along with the UK, looking at methods of making sure that relates to production for the future rather than exploration.

[Lord Grantchester (Lab)]

My Lords, this is one aspect of the high cost of electricity in the UK. The wider question it raises is: what plans do the Government have to reduce the cost of electricity? On the electrification of the energy mix of the future, which is among the many answers that my noble friend the Minister may wish to give, do the Government need to consider bringing forward a strategic national plan with a focus on the lessons to be learned from this present crisis?

--- Later in debate ---

[Lord Whitehead (Lab)]

I thank my noble friend for that question, because he has, remarkably, just anticipated the development of the strategic spatial energy plan and a reformed national pricing delivery plan, both of which came out this morning. Both plans address exactly the longer-term balance arrangements as far as electricity is concerned, particularly how prices can be the lowest possible for the deployment of electricity and gas resources across the country.

[Lord Teverson (LD)]

My Lords, the most effective way of bringing down household energy bills is through the energy efficiency of homes. I welcome the Government’s move to apply the future homes standard, which will bring up energy efficiency, but they are not going to implement it until 2028—before which, some 100,000 or more homes will be built inefficiently. Can the Government please bring this forward, at least to 2027?

[Lord Whitehead (Lab)]

I thank the noble Lord for that question. I cannot stand here and guarantee that that move will be brought forward by one year, as he suggests. It is a very sound idea. The future homes standard, which is now in place, is instead of the net-zero low-carbon standards that should have been implemented about 15 years ago, if the previous Government had not thrown them out. We are catching back up, as far as possible, and making sure we can get that done in good order.

[Lord Moynihan (Con)]

My Lords, by our doubling down on intermittent renewable wind and imported Chinese solar, as the Secretary of State announced this morning, does the Minister agree that while the wholesale price link to gas and electricity constitutes, as he said, only some 30% of the consumer price, the main culprits of ever-escalating industrial and domestic prices are the Government’s green levies, the taxes and the system costs, which constitute the remaining 70% and are increasing month by month? When will the Government address these costs?

[Lord Whitehead (Lab)]

Of course, the Government have addressed those costs, particularly in the recent move to take elements of the levies away from levy arrangements and into the general Exchequer. That is part of the £150 off energy bills that the Government have recently reported. The noble Lord is absolutely right about the effect of levies on prices, but I hope he will also accept that that is exactly what the Government are doing at the moment: bringing prices down for the consumer by transferring how those levies work for the future.

[The Earl of Clancarty (CB)]

My Lords, it is good news that the Government have enabled standing charges to be reduced, but should standing charges not be got rid of completely? They are basically daylight robbery.

[Lord Whitehead (Lab)]

The noble Earl treads a fine distinction between the possible daylight robbery of standing charges and the fact that some charges need to be levied collectively because of the various fixed costs that the system has, which have to be contributed to in order to deliver the service to individual consumers. How you charge those standing charges is a matter of considerable debate and something that the Government are looking at. Whether, for example, you charge them as an overall fixed sum or as a sum per household, depending on its energy bills, is a matter of considerable debate at the moment. The idea that standing charges should relate more exactly to what standing charges should be for in the first place is a point well made.

Energy Prices Act 2022 (Extension of Time Limit) Regulations 2026

Lord Whitehead Excerpts

Thursday 16th April 2026 Lords Chamber

Moved by

[Lord Whitehead]

That the draft Regulations laid before the House on 23 February be approved.

Relevant document: 54th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 13 April.

Motion agreed.

Data Centres: Energy Demand

Lord Whitehead Excerpts

Thursday 16th April 2026 Lords Chamber

[Earl Russell]

To ask His Majesty’s Government what steps they are taking to ensure that projected increases in energy demand from data centres do not compromise the achievement of their targets for clean power by 2030 and for net zero by 2050.

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, the Government recognise that Great British electricity demand is expected to grow significantly, driven in part by advances in AI. We are clear that this growth must not prevent delivery of clean power by 2030 and net zero by 2050. The Government are working to ensure data centre energy demand supports a flexible, resilient and increasingly low-carbon electricity system, including through smarter siting, improved use of existing clean generation and more efficient use of power. Importantly, evidence has shown that AI will support emissions reduction across the economy through improved efficiency and system optimisation, potentially outweighing additional electricity demand.

[Earl Russell (LD)]

My Lords, with Ofgem warning that proposed data centres are seeking 50 gigawatts, exceeding our current peak demand, my view is that, as yet, inadequate assessments have been made by government and regulators of AI’s climate impacts. Does the Minister agree that it is unacceptable merely to believe that this demand is compatible with clean power and our net-zero targets? I ask the Minister to commit to a NESO standing forecast for AI’s electricity use and to ongoing direct contact between government and the Climate Change Committee on data centres.

[Lord Whitehead (Lab)]

I completely agree with the noble Earl that merely believing that it is all going to be okay and that we can easily absorb all these additional demands on the energy sector without doing anything else is, at least, a folly. That is why the Government are taking substantial steps, for example through the AI growth zones, to make sure that we plan where data centres will be and make sure that those data centres are as closely aligned as possible with sources of either optimised electricity or constrained electricity or with new sources of energy production, so that the AI data centre development is not a burden on the system but an addition to it.

[Lord Geddes (Con)]

My Lords, remounting my favourite hobby horse, can I ask: when will the Government give increased support for tidal power, which, unlike wind and solar, never runs out?

[Lord Whitehead (Lab)]

I welcome that question from the noble Lord. This is an issue that is quite close to my heart, and I recently visited the Liverpool tidal barrage scheme to see how it is doing. I personally am committed to developing tidal power, both tidal stream and tidal range, but there is still some way to go in working out how that can be value for money and can be supported through various longer-term methods of support because of the long life that tidal range in particular has in front of it.

[Lord Wigley (PC)]

My Lords, does the Minister accept that the most economic way of meeting such peak demand from clean sources is rapidly to accelerate the programme for building hydro pump storage schemes? There are a number that are ready to go in Wales and Scotland. They are clearly economic, using electricity generated cheaply at night to augment peak availability, so please, please, please will the Government get on with it?

[Lord Whitehead (Lab)]

I agree with the noble Lord that pumped hydro schemes are one method of ensuring that electricity is used as efficiently as it can be in terms of taking it in at some stages of the cycle and releasing it at others. A number of other arrangements can do that, such as batteries and other forms of long-term storage—compressed air, for example—all of which will be a substantial part of the battery of systems to optimise the electricity production of the country as AI develops.

[Lord Alton of Liverpool (CB)]

My Lords, when the Minister last answered on this question, he was good enough to talk about the problem of using Uyghur slave labour in the manufacture of solar panels. He promised to write to me, and I am grateful to him for following up that promise. In that letter, he said that he would inform the Joint Committee on Human Rights by July of the measures that Great British Energy is taking to eliminate the use of slave labour. Will he comment on what he said about the need for a review of the 2015 modern slavery legislation that the noble Baroness, Lady May, who introduced that legislation, has called for, not least Section 56 of the 2015 Act, and how he intends the review of that legislation, which he mentions in the letter, to take place?

[Lord Whitehead (Lab)]

I have a feeling that the noble Lord will shortly be in receipt of a further letter from me on this subject. It is the case that the Modern Slavery Act, particularly in terms of a number of the concerns that have been raised about the more offset arrangements as far as modern slavery is concerned, needs some uprating. That is being considered, but as to some of his further points, I think I will need to write to him further.

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

My Lords, will my noble friend confirm that new nuclear is important, in terms of both data centres and our clean energy programme? Will he confirm that the only way we can get new nuclear at places such as Hunterston in East Lothian, where we currently have a nuclear power station, which is much needed in Scotland, is if on 7 May we get rid of the incompetent SNP Administration?

[Lord Whitehead (Lab)]

I have lots of reasons to agree with my noble friend about particular Administrations and how they might be replaced. As far as the future of AI nuclear is concerned, it is certainly the case that new nuclear can sit very well alongside, for example, AI growth zones. One example of that is the Wylfa area, where the contract for a new SMR has just been signed, which will also be an AI growth zone where a number of data centres can establish themselves and directly use the power coming from that new SMR on that site.

[Lord Moynihan (Con)]

My Lords, given that the environmental footprint is rightly central to the Government’s net zero policy, what is their reason for not opening the North Sea to a new licence round tied to long-term take-or-pay contracts to power new data centres, for example, when the average carbon intensity of the North Sea is 24 kilograms per barrel of oil, Jackdaw is 8 and imported LNG from the United States is 85 kilograms of carbon intensity? What is the Government’s rationale for not developing our own reserves rather than importing LNG, at the expense of energy security, with an environmental impact four times more polluting than developing our reserves in the North Sea?

[Lord Whitehead (Lab)]

I am afraid the noble Lord is back on his fairly standard topic. As far as AI is concerned, we ought to bear in mind that clean power already represents 73.7% of GB electricity generation and we are targeting clean power providing at least 95% of that power by 2030 or so. Importing a lot more gas to deal with the introduction of AI does not necessarily follow, because it is really a question of using that clean power in the most optimised way possible to make sure that AI is supported, so his thesis does not quite stack up.

[Baroness Sheehan (LD)]

My Lords, what requirements will be put in place to ensure that energy efficiency and waste heat recovery measures are implemented?

--- Later in debate ---

[Lord Whitehead (Lab)]

The noble Baroness mentions waste heat and electricity waste, and that is precisely the sort of area that needs to be optimised in terms of making sure that we can deal with this growth in AI without building huge new resources. It is by optimising the system that we can get quite a lot of this new requirement over the line. For example, the introduction—interestingly, using AI—of dynamic line rating allows cables to work at a much higher rate much closer to their thermal capacity because of the ability of AI to predict what that line is going to do as opposed to the lower rating that they are on at the moment. That could produce up to a 50% gain in capacity for those lines. The same goes with a lot of things concerning waste heat.

Energy Prices Act 2022 (Extension of Time Limit) Regulations 2026

Lord Whitehead Excerpts

Monday 13th April 2026 Grand Committee

Moved by

[Lord Whitehead]

That the Grand Committee do consider the Energy Prices Act 2022 (Extension of Time Limit) Regulations 2026.

Relevant document: 54th Report from the Secondary Legislation Scrutiny Committee

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, these draft regulations were laid before the House on 23 February and consist of an extremely short SI—six lines altogether—and a very slight amendment of a date from 25 April 2026 to 25 October 2026. I am sure noble Lords will be eager to know why that change of date is being undertaken. On 1 April, typical household energy bills reduced by more than £100, thanks to action this Government took following the Budget. Energy bills are lower than they were in March because of the choices made by the Chancellor last year. They will remain capped at this level until July.

I want to be clear what lies behind the reduction in energy bills from 1 April. First, we have taken the considered decision to bring the energy company obligation scheme to a close, removing its costs from bills and instead funding future energy efficiency home upgrades via public investment in the warm homes plan. Secondly, we are moving 75% of the cost of the renewables obligation scheme attributable to domestic energy supply to the Exchequer. These principled reforms shift the balance from levies on bills to public spending. These regulations support that reduction in energy bills by ensuring that the Government retain the necessary power for the renewables obligation cost transfer.

The renewables obligation scheme exists to incentivise UK renewable energy generation through a system of tradeable certificates. The scheme closed to new applications in 2017, but existing sites can continue to receive support until the scheme ends in 2037. The scheme has been instrumental in taking a nascent renewable energy sector to where it is today, with the scheme supporting around 30% of total UK electricity generation. The core of the renewables obligation scheme is a process in which electricity suppliers purchase certificates from renewable generators. This process continues unchanged.

However, previously, suppliers ultimately recovered the cost of complying with their renewable obligations from customers via energy bills. Ofgem considered these costs when setting the quarterly price cap for domestic consumers in Great Britain. From 1 April, the Government are instead providing grant funding to electricity suppliers to cover 75% of the cost of these obligations attributable to domestic energy supply in GB. We have given a legal direction to electricity suppliers, requiring them to pass these savings on to domestic consumers. Ofgem has also reflected the reduced cost in the lower price cap from 1 April. At the Budget, we committed to keep these costs off bills until 31 March 2029.

I hope noble Lords will agree that these are good things to do concerning energy price costs and the reduction of customers’ bills. But, of course, there must be a legislative basis for those changes. The legislative basis for the grant funding that enables the energy bill reductions I have mentioned is currently set to expire on 25 April this year. These regulations, as I have mentioned, extend this time limit to ensure that the removal of costs from electricity bills can continue. We can extend the time limit on the legislation—the Energy Prices Act 2022—by only six months at a time. The extension in these regulations is until 25 October, when the Bill is in effect re-sunsetted.

I therefore expect to return to the House in October to seek a further extension on that sunset clause, but I assure noble Lords that the department is working on primary legislation to provide a more permanent solution, which will be taken forward when parliamentary time allows.

The position is slightly different in Northern Ireland, where energy costs are a transferred matter for the Executive, and the Northern Ireland renewables obligation forms a smaller cost on electricity bills. The department has been supporting colleagues in Northern Ireland as they develop an offer comparable to the policy in Great Britain. Following a request from the Minister for the Economy in Northern Ireland, we laid separate regulations in March to support their delivery, which I hope to bring before your Lordships shortly.

In concluding, I thank the Secondary Legislation Scrutiny Committee for noting these regulations as of interest in the context of events in the Middle East, which the department continues to closely monitor.

Energy company obligation costs and 75% of renewables obligation costs have been removed from average domestic energy bills and will stay off bills for at least the next three years. Whatever challenges lie ahead, the Government will prioritise supporting working people with the cost of living. These regulations are ultimately a simple time-limit extension to underpin the removal of these renewables obligation costs from bills. I beg to move.

[Lord Ashcombe (Con)]

My Lords, the Energy Prices Act 2022 was brought forward in circumstances that were, by any measure, extraordinary. It was a moment of acute global volatility, when Governments across Europe were forced to act at speed to shield households and businesses from unprecedented shocks. Those conditions justified exceptional paths but, as we move further away from that crisis moment, it is right to ask whether repeated extensions of emergency measures remain the most appropriate long-term course.

Energy security today is defined not only by the balance of supply and demand over the year but by the system’s resilience at moments of stress. The Government’s own modelling makes clear that peak day gas demand remains high, even as overall annual consumption gradually declines. It is those peaks, on the coldest days, typically when the wind does not blow and the sun does not shine, and the tightest margins that test the system most severely.

In 2024, gas provided 36% of the UK’s energy needs. It is used not only in generating electricity but, importantly, in domestic and industrial heating. Domestic gas production remains a critical component of the UK energy system. In 2024, the UK continental shelf provided 43% of the UK supply, imports of liquid natural gas provided 14% and the balance was imported from Norway. It is more reliable than imported alternatives, which can always be diverted elsewhere—even the Norwegian imports—as Europe becomes ever hungrier for the same molecules. Domestic gas goes into the extensive UK network at significantly lower carbon-emissions intensity—some three times lower—than liquid natural gas, which predominantly comes from the United States, and it is far less exposed to geopolitical risk or global bidding cycles. LNG will remain an important source of flexibility, but it cannot substitute for domestic supply, particularly given the UK’s very limited gas storage capacity.

Maintaining a stable level of domestic production also sustains the essential infrastructure on which the whole system depends: the pipelines, terminals and onshore hubs that provide flexibility, resilience, affordability and, critically at this current time, jobs. Once the infrastructure and experience are lost, they will not easily be rebuilt.

More broadly, there is a strong case for moving from crisis area interventions towards stable, rule-based arrangements. Such an approach would continue to protect consumers when prices spike, while giving investors the confidence needed to support the system in more normal times. That balance between consumer protection and long-term stability is essential if we are to secure an orderly transition and a resilient energy system for the years ahead.

With these points in mind, I would like to pose four questions to the Minister. First, can he outline a clear pathway from the continued use of emergency powers under the Energy Prices Act towards a permanent, price-responsive framework that supports investment and resilience? Secondly, how do the Government intend to ensure that critical gas infrastructure remains viable if domestic production continues to decline? Thirdly, what assessment has been made of the risks associated with greater reliance on LNG imports, particularly in light of the UK’s limited gas storage and exposure to global market volatility? Finally, have the Government considered the carbon implications of increased LNG reliance, given its significantly higher life-cycle emissions compared with UK gas produced here?

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank the Minister for bringing forward this statutory instrument, which introduces a minor amendment to the Energy Prices Act 2022 by extending the Secretary of State’s power to grant renewables obligation certificate funding by six months.

His Majesty’s Opposition do not oppose this instrument in principle. It is right that the Government’s efforts should be focused on the controllable—namely, policy costs. Indeed, it is welcome that the renewables obligation to Exchequer policy demonstrates the Government’s understanding that their choices have a direct impact on people’s bills; that is why the scheme is being advertised as proof of the £150 that the Government promised to take off energy bills.

However, reducing energy bills by shifting the costs from household bills on to general taxation is a rather disingenuous way of achieving government policy. Whether it is the Government or energy suppliers who pay the upfront fee to Ofgem, the cost of ROCs will still be borne by the public and the cost of renewables will continue to apply. Every time the sun shines, solar farms will receive one or two ROCs per megawatt hour, earning them up to double the wholesale price. Every time the wind blows, offshore wind farms will get almost three times the wholesale price, or £240 per megawatt hour. When these farms are forced to turn off due to insufficient grid capacity, they are in receipt of high-constraint payments of more than £200 per megawatt hour.

The renewables obligation deal will last for another 11 years. These costs are going nowhere, and nobody but the British public is going to fund them. The only result of the RO is to Exchequer policy, and this instrument will mean that the public are made less conscious of what they are funding. Absorbing costs into general government spending may make the cost of the renewables programme more discrete, but it will not save the public purse any money.

The upshot of this is that the renewable transition must be underpinned by a cheaper and more reliable source of energy. The immediate way of achieving this is through oil and gas, which we already manage by importing LNG from Norway and the Middle East. I completely agree with the substance and sentiment of my noble friend Lord Ashcombe’s contribution to this short debate. I am aware that this is not the topic of today’s debate, so I will brief, but the intermittent nature of renewables and our current capacity issues mean that we still need to rely on oil and gas. Even during the current war and the subsequent international spike in oil and gas prices, those prices are still cheaper than subsidised renewables. We have the opportunity to divorce ourselves from the vicissitudes of international affairs by exploiting our North Sea reserves, yet the Secretary of State remains as dogmatic as ever. He seemed to toy with the idea of domestic production over the Easter break but, as we sit here today, production at Jackdaw is still yet to commence.

This is in the Government’s control. If they really are committed to reducing energy bills, then, along with subsidising renewables in the long term, they should allow us to produce our own oil and gas in the short term. I hope that the Minister will at least agree with that sentiment; I look forward to his response, in particular to the four intelligent questions posed by my noble friend Lord Ashcombe.

[Lord Whitehead (Lab)]

My Lords, I thank noble Lords for their valuable contributions to this debate. I will try to respond to their concerns—including those of the noble Lord, Lord Ashcombe, who went a bit beyond this particular SI but nevertheless made important points and asked questions that deserve a response.

The noble Lord’s first concern was about whether I can outline a pathway towards permanent legislation here. I agree with him that permanent legislation is always better than re-sunsetting an original sunset clause from previous legislation, as he mentioned. Of course, the Energy Prices Act 2022 was put in place at a time of high crisis as far as energy bills were concerned—not completely dissimilar issues to the ones we face today, but rather more concerned with gas than with oil and fuel generally. Nevertheless, it is a piece of legislation that was designed at least in part to be sunsetted. In essence, what we are doing in this present crisis is re-sunsetting an Act that was originally intended to be sunsetted in the first place. It is quite right that we should bring that sunset request back to the House when we are making it.

Nevertheless, it is a much better idea to have legislation that properly fits the bill in the long term, which is the Government’s intention right now. I mentioned that we will probably want to come back one more time with a sunset extension, in order to make sure that these changes work properly in the long term, but, after that, there should be legislation in place to make a permanent arrangement that is properly workable for the future. Of course, the phrase “when legislative time permits” has a variety of interpretations attached to it, but it is basically a question of finding out to which bit of legislation you can attach this permanent version of a sunset clause. It might be the EIB, but there may be other legislation—we will have to see as we go forward. However, I can give an absolute commitment that we are dedicated to making sure that this happens in the not-too-distant future in order to regularise the circumstances over the longer term.

The noble Lord asked what we are doing to make sure that critical gas infrastructure remains viable. This is a subset of the understanding that, although the use of gas is declining substantially in Great Britain and will continue to do so, the overhead costs and infrastructure issues will remain. It is essential, therefore, that we make sure that the infrastructure is as viable as it can be in the long term and that the whole system does not fall down because we have a lower amount of gas going into and out of it. The Government are actively involved in undertaking that.

By the way, I might add that the increasing amount of biomethane and biogas going into the system—at present, it is about 7% of the total system—will go some way towards assisting the viability of long-term infrastructure. It is certainly this Government’s intention to increase, where possible, the amount of biomethane and biogas going into the system. That gives some indication of where we are on LNG imports, which, as the noble Lord mentioned, have a higher carbon footprint than natural gas, which in turn has a much higher footprint than biogas. At the moment, about 14% of our gas supplies are coming in via LNG. One of the advantages of an increased amount of biogas in the system is that it directly removes the need for LNG to come into the system. All other things considered, something like a 2% increase in biomethane going into the system would be the equivalent of turning around six LNG tankers and them not coming to UK shores at all.

On energy imports in general, the UK has a diverse supply. The noble Lord mentioned the substantial element of supply played by the Norwegian gas fields, some of which are landable only in the UK and not in Norway itself. There is also the continuing supply from the North Sea. I have mentioned LNG, which comes from diverse sources; at the moment, only 1% comes from sources in the Middle East, so that issue will not overturn the security of the gas system in the near future. I hope that I have given fair thought to the noble Lord’s valuable contribution.

I turn to the supportive and helpful contribution of the noble Earl, Lord Russell. He is right to add that this is the right thing to do right now, bearing in mind that we very much want to make sure that, in a time of such volatility, domestic and commercial bills are pressed downwards as far as is possible. The two measures I have mentioned rearrange the ways in which bills are charged to some extent, but they nevertheless have the real effect of bringing those bills down considerably. He is quite right to seek an assurance that that is not just a temporary fix for the time being but will be put on a more permanent basis; we are looking to secure legislation to make sure that that happens.

The noble Earl rightly mentioned information sharing on these measures and other measures that are likely coming forward to push down bills. He should be aware of the Utilities Act 2000 (Amendment of Section 105) Order, which has enabled the sharing of more detailed data than DESNZ currently holds between the department and Ofgem. The aim of that order is to ensure that more detailed data is properly safeguarded and is used for the intended purposes, not others. I hope that the noble Earl can be reassured on that basis.

I turn to the valuable contribution of the noble Baroness, Lady Bloomfield. It is true that these measures shift the burden of the legislation from particular consumers to more general taxation purposes. That is a fair thing to do, in terms of generally sharing the burden of increased electricity prices, but I accept that the Government are very much involved in making sure that, by changing the way the electricity market works, prices are much lower over a longer period of time.

Fuel Supplies: War in Iran

Lord Whitehead Excerpts

Wednesday 25th March 2026 Lords Chamber

[Lord John of Southwark]

To ask His Majesty’s Government what plans they have to ensure the continuity of fuel supplies in the light of the war in Iran.

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

The UK benefits from a strong and diverse fuel supply. The fuel supply industry has been clear that fuel production and imports continue as usual. The Government continue to monitor the situation closely and will act if necessary. The essential lesson of this conflict, however, is that while we are dependent on fossil fuel markets, we are exposed to volatile prices. The answer must be to go further and faster towards homegrown clean power that we control.

[Lord John of Southwark (Lab)]

I thank my noble friend for his Answer. Two matters prompted my Question: first, reports that 20% of the world’s oil supply passes through the Strait of Hormuz, and, secondly, reports at the weekend and since that the UK has only four weeks of fuel supplies in reserve. Given that, can he tell me how much of the UK’s supply is dependent on the oil that passes through the Strait of Hormuz? If current disruptions to worldwide oil supplies continue, how long will it be before the Government are forced to introduce restrictions on or rationing of fuel supplies?

[Lord Whitehead (Lab)]

I thank my noble friend for his question. His first statistic is correct. His second statistic, not that it is necessarily one that has his support, is categorically untrue—it is categorically untrue that there are only four weeks of fuel supply in the UK. However, the Government are closely monitoring the situation to ensure that supplies remain resilient. The UK remains a net exporter of petrol, with domestic capacity sufficiently filling this demand, while diesel volumes are met mostly by domestic production and imports from trusted partners. Only a small percentage is obtained from the Middle East. The majority of crude oil used for UK production comes from the United States and Norway, with just 1% from the Middle East. The UK obtains a proportion of jet fuel from the Middle East, but the fuel supply industry has been clear that fuel production imports are continuing across the UK as usual.

[Lord Carlile of Berriew (CB)]

My Lords, I declare my interest as part of a consultancy that provides geopolitics analysis to the Government of Qatar. Does the Minister agree that the continuity of fuel supplies may involve negotiations with those who have de facto control of the Strait of Hormuz rather than with those whom we wish had control of the Strait of Hormuz?

[Lord Whitehead (Lab)]

The issue of fuel supply through the Strait of Hormuz is relative to world supply and world prices; that is, because the UK obtains only a very small proportion of its supplies from the Middle East, the effect is more likely to be on prices across the world as other people seek to make up their supplies from different sources. The noble Lord is right that how we clear the Strait of Hormuz for those supplies has to be a question of disengagement, détente in the present conflict, and negotiation not in an ideal world but with those with whom we find ourselves in a negotiating position.

[Lord Redwood (Con)]

My Lords, do the Government understand that they have already presided over the closure of two of our oil refineries with their high-carbon taxes and unfriendly energy policy? Will they take urgent action to avoid the closure of the remaining ones, which would leave us without domestic supply and with shortages?

[Lord Whitehead (Lab)]

The noble Lord will not be surprised to hear that I do not agree with his analysis of why the two refineries that have closed in the UK have done so, but the four refineries that we have in the UK are all producing well and in a robust condition. The Government will continue to monitor that process, but there is no reason to believe that further refineries are likely to close in the near future.

[Earl Russell (LD)]

My Lords, does the Minister agree that while the conflict with Iran has driven up oil and gas prices, this is not currently a fuel supply crisis, and motorists and households should therefore continue to purchase fuel and gas as usual? If the conflict persists and international supplies are further disrupted, what steps are being considered to safeguard aviation fuel supply and to prevent significant increases in aviation fuel prices in the longer term as we head towards the summer?

[Lord Whitehead (Lab)]

The noble Earl is right; this is currently, in essence, a price crisis and not a supply crisis. That will remain the case for quite a long time, depending on how long the war continues. If the war continues for a very long time, there obviously will be issues not necessarily of supply to the UK but offset issues relating to other people trying to eat the UK’s lunch, as it were, in their quest for supplies elsewhere in the world. The Government have already taken action in terms of taking part in the IEA’s release of substantial amounts of oil to make sure that that does not happen in the medium term and co-ordinating with efforts internationally to make sure that jet fuel, for example, is available on a world basis. Aircraft and other companies in that field hedge their supplies very long in advance, and therefore this is not an issue for the immediate future.

[Lord Harris of Haringey (Lab)]

My Lords, I refer to my interest as declared in the register as chair of the National Preparedness Commission. It is not just oil that passes through the Strait of Hormuz. A third of global trade in fertiliser passes through the strait. I appreciate that this is not immediately within my noble friend the Minister’s portfolio, so if he does not have the information in his folder, perhaps he can write to me and place a copy in the Library, but what consideration is being given across government to the implications for farmers in this country but more particularly for global farming and long-term food supplies if this disruption continues?

[Lord Whitehead (Lab)]

My noble friend is right that this does not fall within my brief particularly, but I do know a bit about the subject he is raising, which is synthetic ammonia supplies from the Middle East. We do not have ammonia production in this country at the moment, so there is potentially a long-term issue of ammonia supplies coming into the UK and into a lot of other countries across the world, as my noble friend mentioned. Part of the solution is to go for different sources of ammonia which are not synthetic, particularly green ammonia and other forms of fertiliser such as digestate, which can fulfil substantially the role played by ammonia in the farming cycle.

[Lord Howell of Guildford (Con)]

My Lords, I am not sure that any of the figures we have heard in the last few minutes are correct or substantial. In fact, there is a huge amount around the world of spare oil capacity and oil production potential which can be and is being brought into play. There is the vast boost in American shale, obviously, from which we get a lot already. There are the reserves which have been released under the scheme which I chaired in 1979 at the IEA, and those reserves are only a small part of more reserves that can be developed at any time we wish. There are pipelines which bypass the Strait of Hormuz. All I am saying is that the situation can be overexcited by an ill-informed media. Does the Minister agree that we should be careful not to excite these dangers and realise that this is a manageable situation if we take a strong line on what can be done to reopen the Strait of Hormuz when we can and in the meantime do not get so worked up that everyone starts talking about rationing and other idiotic ideas?

[Lord Whitehead (Lab)]

I hope the noble Lord does not consider that the figures and other facts that I have presented this afternoon are all erroneous, because I assure him that they are not, but he is right to say that this is not a question just of whether stuff goes through the Strait of Hormuz or nothing. There are a great many other ways in which oil, petroleum products, gas and so on can be taken from their source to where they want to go without going through the Strait of Hormuz. For example, pipelines across Arabia are already beginning to take some of the oil that otherwise would go through the Strait of Hormuz out to port, and the same is true with gas supplies. It is not all about LNG coming in vessels going through the Strait of Hormuz. I totally agree with the noble Lord that we should not be too taken up by overexcitable, ill-informed press speculation but should concentrate on the real facts and the real opportunities that there are to gather ourselves a sustainable oil and gas supply, which also includes making sure that as much as possible of our energy supply comes from home sources in the medium and long term.