Electricity and Gas (Energy Company Obligation) (Amendment) Order 2025

Earl Russell Excerpts

Wednesday 16th July 2025 Grand Committee

[Baroness Coffey (Con)]

My Lords, these regulations come about as a consequence of a consultation. Unusually, it was only a four-week consultation, which is not unprecedented but surprising, especially recognising that it happened in November. It closed in December, and here we are in July debating these regulations. I appreciate that it may have felt targeted, but I wanted to get a sense from the Minister of how Ofgem has worked with the energy suppliers or indeed the public on why, in effect, there has been such a failure in the delivery of those targets.

I do not know the council tax of band of the Minister’s house but mine is a B. I tried to get this GBIS. I am in a pretty old house that is leaky when it comes to heat and similar. I thought I would test this scheme out because, like anybody else, I was impacted by the energy shock. It took a long time to register and get a potential appointment. But before they would even come out to the house, I had to sign an agreement that they could make any changes to parts of my house that they deemed necessary in order to put in some loft insulation, including me agreeing automatically to installing Xpelair fans in various rooms and many other things. So, I have to say, I just stopped. There was no way I was going to sign up to a predetermined agreement when somebody had not even seen my house.

My concern is the following. I have been working on fuel poverty for a long time as a parliamentarian. I set up the APPG in the House of Commons many years ago, and I managed, when I was a Minister, to make sure we got a law through to open up the data exchange across government. That meant that we could provide a considerable amount of data, particularly affecting rural homes, in order to access all this ECO, because, as the Minister may be aware, quite often with these schemes half the budget ends up going on trying to identify who could be eligible for them. That law was supposed to change that. I feel, at times, that the energy companies continue to talk the talk on fuel poverty but, when it comes to delivering and achieving a significant reduction in fuel poverty right across our country—that would be a noble achievement—they complain that it is all a bit too complicated. For what it is worth, that is not good enough. Ofgem is not challenging enough. I do not expect the Minister—especially the fabulous Minister in front of us now—to deal with every bit of this, but he should expect more from Ofgem, which is admittedly a non-ministerial department.

There were 122 responses to the consultation, as it well set out. I would like to try to understand the impact of these changes. Having floor, loft and cavity insulation coming together in a whole package is probably sensible, but how are the Government going to hold the energy suppliers to account to deliver financially, not just what is convenient for them? The summary of the responses sets out, “It is very difficult for the companies to meet their obligations”, rather than focusing on the whole purpose of this, which is to reduce energy consumption and bills. So at the moment, I cannot see any analysis of why this will make a difference and how we will not just be in the same place next year with energy companies.

I also want to get an assessment of the rural data definition changes and a sense of how many households, and homes, will as a consequence no longer be covered in rural areas. I appreciate that they will be updated every 10 years, but I do not know what rules the ONS has applied in reclassifying a home as being in a rural area or not.

As I said, I do not have much confidence in the energy companies delivering even these changes. It looks to me as though they will continue to wring their hands. It feels like this is moving the goalposts. I appreciate that these changes in legislation may be seen as being pragmatic, but what reporting will the Government provide to Parliament as a consequence to see that this will make the difference that it is supposed to make?

[Earl Russell (LD)]

My Lords, from these Benches we generally support the draft regulations. We commend the stated commitment of this Government to deliver warm homes that are cheaper to heat and to tackle fuel poverty. We have some of the highest energy bills and some of the coldest, dampest and worst-insulated homes in Europe. Cold homes not only waste energy and contribute to global warming needlessly but cause problems for people on budgets and low incomes and with ill health.

We generally welcome the warm homes plan in the spending review, with its ambitious £13.2 billion of investment, and the crucial steps towards reducing our energy bills and strengthening our energy security. We particularly welcome the rollout of solar panels, heat pumps, batteries and insulation.

We particularly welcome several targeted practical changes introduced by this draft instrument, targeting those in need of most support. The most significant change allows 75% of the energy suppliers’ £1 billion Great British Insulation Scheme target to be met through the reassigned ECO4 delivery pathway. This appears to be a pragmatic approach. The Explanatory Memorandum clarifies that this is necessary because the GBIS would otherwise have severely underdelivered, and this is seen as the way to maximise savings and get this done. Further, it reassures us that this will not increase consumer bills, as it is using existing funds and will be a good means of reassigning support and continuity in the ECO4 supply chain. This is considered better value for billpayers, as ECO4 is cheaper to contract.

We welcome the flexibility to enable greater allowance of installation measures, especially for low-income households. We welcome the plans to encourage the uptake of smart meters, and we welcome the updating of technical standards.

I have just a couple of questions for the Minister. A lot of previous schemes have not quite delivered as intended. Indeed, even here, a scheme that would have underdelivered is having its resources rolled into a new scheme. So, specifically how will this new programme be monitored to ensure that it actually works and delivers in practice, and does not fall foul of some of the issues that have plagued past schemes?

The Minister spoke about the issue of quality control with past schemes. I very much welcome the fact that 90% of that work has now been done—that is a tremendous achievement. But, again, under this new scheme, how will we make sure that the quality of the work delivered for households is up to the standards that we require and does not cause any further problems?

The Minister said that the Government are planning to bring forward larger-scale reforms for the warm homes plan. Is the Minister able to say anything more about that today or will we just have to wait for that?

We recognise that allowing the 75% of the ECO4 delivery for GBIS targets is pragmatic, but what measures will happen with the remaining 25% of the GBIS target? I do not want that bit to be forgotten about, so how will the Government set about making sure that that is delivered and that those houses are not forgotten about?

How do the Government plan to report on the delivery of this new scheme and make sure that it is delivering? How will the Minister report on the uptake of smart meters under this scheme? We recognise the measures that are being taken to encourage consumers to do that and that the Government are using the contact through the insulation measures to do that. Generally, we welcome what the Government are doing here.

[Lord Offord of Garvel (Con)]

My Lords, this order makes modest changes to the energy company obligation—ECO—scheme, and I was pleased to see the Minister in the other place recognise that ECO4 and the GB Insulation Scheme have been a key part of the effort to upgrade homes across the country. These schemes were introduced under the previous Government to support better insulation of energy customers’ homes, and I am pleased that the Minister has recognised the success of the previous Government in this area. We will not oppose this statutory instrument.

The previous Government announced that more than 300,000 homes would get insulation installed under GBIS, and they said that this could potentially save families up to an average of £400 a year on their energy bills. Claire Coutinho, then the Secretary of State, said that the introduction of GBIS would help hundreds of thousands of people, including some of the most vulnerable in society, get the upgrades their homes need while cutting their energy bills. So this is a Conservative initiative, and we are pleased to see that this Government are building on that track record.

It is concerning that some of the insulation installed under the schemes has not met the appropriate standards, and Ministers are right to tackle this as a matter of urgency. Can the Minister confirm what proportion of the identified issues has now been solved, and can he confirm that no energy customer should be out of pocket as a result of this remediation work?

We know that high energy costs are one of the greatest challenges in our economy at the moment. High energy bills contribute to growing household costs for families, but they are also holding back businesses and stifling growth. One of the key reasons that the UK manufacturing sector is finding it so difficult to grow at the moment is high energy costs, so we would welcome the Government’s continued commitment to energy efficiency and insulation—this is positive work—but we also need to tackle head-on the challenges we face on energy prices, and that means supply-side reform. We must urgently address the energy baseload challenge and get the right mix of cheap energy from all sources so that households and businesses across the UK can thrive.

We support steps to improve household insulation, but can the Minister take this opportunity to set out what steps the Government are taking to tackle energy prices more broadly for households and businesses in the UK? Can he comment on further investment—for example, new nuclear and long-term energy storage—towards that objective? What assessment have Ministers made of the impact of spikes in wind energy production on the cost of energy to consumers? We egregiously pay wind turbine operators to turn off the supply of energy when it spikes, and when we find ourselves in periods of no wind and no sun, we pay exorbitant sums to emergency energy suppliers, which burn gas as a peak supply instead of baseload. What steps will Ministers be taking to review the overall situation so that we can not only deliver better-insulated homes as part of this but, as another key part, drive down the costs of energy for families and businesses?