Heat Networks Regulation

Dan Poulter Excerpts

Wednesday 28th November 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)]

I believe this is the first time I have had the honour of speaking in a Westminster Hall debate under your chairmanship, Mr Pritchard, and I am very pleased to do so. I congratulate and thank the hon. Member for Lewisham East (Janet Daby) for securing a debate on this important issue.

When I started thinking about heat networks, I realised that when I first moved to London, which I respectfully say was probably before hon. Lady was born, I lived in an old block of flats with a big boiler in the basement. We were all either freezing cold or boiling hot, and we paid far too much for heating via our service charge. My understanding is that that is really what a heat network is—obviously not just in one block of flats but in an area—so I immediately sympathised with her cause.

Of course there is a lot more to it than that. I agree entirely with the hon. Lady’s assertion that we need to ensure that all heat network consumers are well protected and benefit from fair bills, which is not the case at the moment. On the plus side, heat networks are a valuable part of our commitment to decarbonising heat, and we expect the sector to expand significantly with continued support from the Government. That does not mean it should continue as it is now, but the principle of heat networks is good if they work properly, and they can be of mutual benefit to the Government’s decarbonisation projects, to energy and local authority suppliers and to consumers in all our constituencies.

More than 400,000 consumers across the country are already on a heat network, and most report a largely positive experience. They are currently covered by general consumer protection and competition law and by the Heat Network (Metering and Billing) Regulations 2014. In addition, consumers on a Heat Trust-registered scheme, which the hon. Lady mentioned and I will come to in a moment, have free access to the energy ombudsman’s services.

In 2017, my Department commissioned a large-scale survey to quantify consumer experiences of heat networks in England and Wales for the first time. The results show that heat network consumers are as satisfied as non-heat network consumers with their heating system, and that on average they are likely to pay less for their heating. That is supported by analysis from the Competition and Markets Authority, which I strongly welcome. However, both our consumer survey and the CMA found evidence that some consumers get a poor deal on price and do not receive the quality of service we expect. That is exactly what the hon. Lady said, and she was backed up well by the hon. Member for Greenwich and Woolwich (Matthew Pennycook), whose constituents have clearly had a similar experience.

In its final report in its heat networks market study, the CMA makes important recommendations about how to strengthen consumer protections for heat network consumers. My Department has been reviewing the CMA’s findings alongside the recommendations of the industry-led taskforce that reported at the beginning of the year. Very soon, we will set out our priorities for establishing the long-term market framework that the hon. Lady mentioned, with—I stress this—a key focus on protecting consumers.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I thank my hon. Friend for giving way and I congratulate the hon. Member for Lewisham East (Janet Daby) on introducing the debate. She made some very good points. On the point that the Minister has made, the Government have highlighted and responded to the unfair hiking of leasehold charges, and have dealt with that issue. The examples are from the few rather than the many, if you like. We are discussing district heat schemes. A few unscrupulous providers of those schemes are trying to exploit the people they are provided for. I think it requires legislation, rather than a good-will scheme or framework to deal with that. Would the Minister put that into his thinking when the Government respond?

[Richard Harrington]

I thank my hon. Friend for his intervention. I agree with him. It seems to me that legislation is exactly what is needed. In my three years as a Minister, I have learned that it is easy to talk about legislation, but it is all in the detail. We have to make sure that it does exactly what my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) mentioned, which is to protect consumers, but at the same time provide a basis for the industry to expand. As I said, for decarbonisation and for many things, the structure can be a really good one for consumers.