Taxation (Energy and Vehicles) Bill

Earl Russell Excerpts

2nd reading & Committee negatived & 3rd reading
Tuesday 14th July 2026 Lords Chamber

[Earl Russell (LD)]

My Lords, we on these Benches broadly support this Bill. It contains three sensible if modest measures responding to the real pressures households and business face because of the ongoing conflict in the Middle East, and we will not oppose them. Our wish is for the Government to do more to protect the public and the economy from the impacts of this continuing conflict, and to see that these measures are monitored, reviewed and reported on.

I note that the fragile ceasefire, which many had hoped would bring stability to the region, has now completely broken down again. We have now had three days of American attacks on Iran; Iran has struck numerous tankers in the strait; and Trump is now talking of imposing a toll on all ships exiting the strait. The cost of oil has shot up again overnight, so this conflict is far from over, and its consequences for the UK, in terms of energy prices, fuel costs and the cost of living, will continue to be felt for some considerable time. I seek reassurance from the Minister that today’s measures must not and will not be the limit of the Government’s ambitions. They are welcome but they are minor in scale.

This Bill does little to bring down the underlying cost of energy, particularly electricity, which remains stubbornly and unreasonably high. In brief, the Bill’s three measures are an increase in the electricity generator levy from 45% to 55%, targeted at exceptional returns when wholesale prices spike; an increase in the approved mileage allowance rate from 45p to 55p per mile for the first 10,000 miles, backdated to the start of this year; and a 12-month vehicle excise duty, or VED, holiday for most heavy goods vehicles renewing their licence between 1 July 2026 and 30 June 2027, reducing their liability to a nominal £1.

On the mileage rate, I echo the point made by my honourable friend the Member for St Albans in the other place that this increase is long overdue, and it will particularly benefit those who work in the care sector. What steps will the Government take to ensure that care workers are made aware of it?

On the vehicle excise duty, hauliers have understandably welcomed the relief, and we support it. Given that the conflict’s impacts represent ongoing costs beyond the 12 months, why did the Government not consider giving themselves the power in this legislation to extend the holiday for a further year without the need to bring back further primary legislation? What confidence do the Government have that this relief will be passed through to consumers rather than absorbed elsewhere in the supply chain? The public would rightly be concerned if haulage costs continued to rise. What monitoring is planned? And will this be reported at least by the Autumn Budget, or is there an option to do that sooner?

On the electricity generator levy, we have long argued for exactly this kind of decoupling of electricity prices from volatile gas prices that this increase is said to encourage, and we support that objective—although we do not feel that this measure alone is capable of doing that. Can the Minister assure the House that this levy increase will not undermine those ambitions?

The levy increase is in effect the stick to the carrot of longer-term contracts, and the interaction between these two policies is quite a complex matter. How will the Government keep the overall objective under further scrutiny? A higher rate is only a proxy for the real goal of moving legacy generators off spot price exposure and on to newer fixed-term contracts for difference.

I would be grateful if the Minister could set out how progress on the actual migration to CfDs will be monitored and reported. Without that information, it is quite difficult for Parliament to make a determination on how this wider policy objective has been achieved. More broadly, will the Minister confirm that, should the conflict continue, the Government will bring forward further measures as needed and keep both Houses updated?

We support this Bill, but it needs to sit alongside a much wider set of proposals that we believe are required—indeed, many across the House have strayed beyond the measures in the Bill into broader areas. My party has called for a three-month, extendable emergency transport package to keep Britain moving, an immediate 10p cut in fuel duty, a cap on bus fares at £1, a 10% cut in rail fares and a reduction in VAT on public electricity charging. We have also set out a permanent essential energy guarantee, giving every household a discount on its energy use, with vulnerable and larger households receiving more. And we continue to press for the wider structural reforms that would genuinely bring down bills for good, such as an energy security bank offering low-interest loans for home energy improvements and reversing cuts to insulation programmes so that we can halve energy bills within a decade.

Can we expect serious and detailed plans to come in the energy independence Bill to make sure that the cost of our energy is reduced—particularly the cost of electricity, which, as I know the noble Lord is aware, we need to bring down so that we can get people on to EVs and heat pumps? The cost of electricity remains too high, the crisis in the Middle East is not resolved, and much remains to be done. Should the crisis continue and deepen, we stand ready to co-operate with Ministers and government to protect our citizens and our economy from the worst of its impacts.