Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Amendment) Regulations 2022

Debate between Graham Stuart and Kevin Brennan

Monday 9th January 2023 General Committees

[The Minister for Energy and Climate (Graham Stuart)]

I beg to move,

That the Committee has considered the Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Amendment) Regulations 2022 (S.I. 2022, No. 1280).

It is a pleasure to serve under your chairmanship, Dame Caroline. The regulations were laid before the House on 6 December 2022.

We have already passed legislation concerning the energy bill relief scheme pass-through requirement for heat suppliers, which ensures that benefits from the scheme, known as the EBRS, are passed through to end consumers on heat networks. That legislation also provides for a route to resolve disputes between consumers and heat networks on the pass-through requirement. I say that by way of introduction while wishing all Committee members a happy new year.

I hope that Members will applaud the statutory instrument, which amends the existing pass-through regulations, introducing a requirement on heat suppliers to send a simple notification to provide information to the Secretary of State by 6 January 2023—a date that has now passed. That information, which includes the heat supplier’s name, business address and contact details, will be shared with the energy ombudsman and the Consumer Council for Northern Ireland to support their handling of domestic and microbusiness consumer complaints.

The information will also be shared with the Office for Product Safety and Standards for enforcement purposes. The SI strengthens the OPSS’s enforcement powers, enabling it to request information from suspected heat suppliers to determine whether they fall within the scope of the regulations. The OPSS may impose existing civil sanctions, including a monetary penalty, on heat suppliers that fail to comply with requirements to notify, to join the redress scheme or to provide information. The monetary penalty has been modified, providing for a maximum penalty of £5,000 to provide an effective deterrent to non-compliance.

[Kevin Brennan (Cardiff West) (Lab)]

Suppliers were required to notify by 6 January 2023 but, as the Minister pointed out, it is now 9 January 2023 and we are being asked to approve the SI today. What will be the status of a supplier that failed to notify by 6 January but does so before the instrument is approved by the House?

[Graham Stuart]

As I said, the instrument was laid before the House back in December. I cannot provide the Committee with an update at this precise moment, but I know that the information has been flowing in. If, through some wondrous form of refreshment, I am able to give the hon. Member further information about the precise legal status and the fines and so on, I will of course do so.

The SI also amends the existing regulations to reduce the administrative burden on heat network companies. It removes the requirement for heat suppliers to provide information about the calculation of the benefit when they first notify end users about the scheme, while retaining the requirement to provide those calculations in the next bill.

The EBRS, and the corresponding pass-through regulations, have been introduced as a critical component of support for consumers on heat networks, and the scheme complements other support that the Government are providing with energy and the cost of living. We expect that the notification requirements will facilitate the consumer complaints handling process and that strengthened enforcement powers will result in more heat suppliers passing on the EBRS discount to their customers, which is of course our aim. I commend the regulations to the Committee.

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[Graham Stuart]

I think the hon. Gentleman knows that he utterly mischaracterises the regulations. We legislate all the time for every kind of group in business and society without a database of who they are. We have simply come forward with supplementary regulation, which we are agreeing to today, the better to ensure that the consumer groups that I would have thought he supports enthusiastically are empowered and given the information they need to protect consumers. It is not some egregious error; this is a positive addition. The law applies to those that run heat networks, regardless of whether we know who they are and have their address. As it happens, in order to make it more practicable and quicker to intervene, we are discussing the regulations we have laid. They are supplementary to what was sound legislation in order to deliver a sound policy. Because I know he is an honest man, I think that the hon. Gentleman, on reflection—were he to do that this evening—might think that he somewhat mischaracterised the regulations.

As to what will happen after 31 March, we will make arrangements after His Majesty’s Treasury announces its review of the EBRS for what goes on after that date. Also, for the betterment of the information available to the Committee, on the question whether microbusinesses will be fined £5,000 if they do not notify, that maximum monetary penalty will apply only if a heat supplier fails to comply with a compliance notice or enforcement undertaking relating to failure to comply with the notification requirement. I hope that provides the hon. Member for Cardiff West with reassurance that there is not some automatic imposition of a £5,000 fine on a particular micro-supplier.

[Kevin Brennan]

That is useful clarification. Clearly, to be fined such a sum for a simple oversight under very new and rapidly introduced legislation would be a big burden on a very small business. If I missed this, I apologise, but did the Minister say whether the updated guidance referred to in the regulations has now been published and made available to businesses?

Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 3) Order 2022

Debate between Graham Stuart and Kevin Brennan

Monday 7th November 2022 General Committees

[Graham Stuart]

I am indeed; I will be delighted to do so.

Since our departure from the European Union, flights between the UK and Switzerland are not covered in either the UK or the Swiss emissions trading systems, creating a gap in ETS coverage. The Government consulted on the policy in this draft instrument between May and July 2019 as part of a consultation called “The future of UK carbon pricing”. In the 2020 Government response to the consultation, we committed to include UK-to-Switzerland flights in the scope of the UK ETS if an agreement could be reached with Switzerland. The agreement has been reached, and Switzerland has amended the relevant domestic legislation to ensure that flights from Switzerland to the UK are included in the Swiss ETS from 2023. This instrument amends the 2020 order to include flights from Great Britain to Switzerland in the scope of the UK ETS for the start of the 2023 scheme year.

In 2019, UK-to-Switzerland flights amounted to approximately a quarter of a megatonne of CO₂—less than 0.2% of the UK ETS cap for the 2023 scheme year. The policy intent is to include flights from across the UK to Switzerland in the scope of the UK ETS. As the Northern Ireland Assembly was not able to consider affirmative legislation at the time this instrument began the legislative process, this legislation only brings GB to Switzerland flights within scope of the UK ETS.

[Kevin Brennan (Cardiff West) (Lab)]

I am grateful to the Minister for giving way on that point. It is ironic that we have been able to reach agreement with Switzerland, but not with Northern Ireland. Leaving that aside, can he enlighten the Committee on how many flights will be covered by the scheme? I do not know whether there are flights from Northern Ireland to Switzerland, but what impact might the order have? I apologise if the shadow Minister was going to ask the same question.

[Graham Stuart]

It is a most excellent question. When the hon. Member for Southampton, Test asks it later, I am sure I will be able to give a definitive answer, but it is a pretty small percentage. I look forward to sharing the exact percentage with the Committee.

Once the Northern Ireland Assembly is functioning, equivalent legislation will be proposed to the Assembly as soon as possible to ensure that all flights between the UK and Switzerland are covered.

In conclusion, the SI will close a gap in the coverage of the UK ETS, fulfilling the commitment set out in the Government response to the consultation on “The future of UK carbon pricing” and upholding the agreement with Switzerland. On that basis, I commend the order to the Committee.

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[Graham Stuart]

I thank hon. Members for their valuable contributions to the debate, and I am grateful for the broad support—so enthusiastic, so driven, so loud—for the proposals.

In answer to the various questions that have come up, I should mention that flights between the UK and Switzerland fell out of scope of ETS coverage following the UK’s withdrawal, although those flights were previously covered by the EU ETS following the EU-Swiss linking agreement, which came into force in 2020. We are looking to restore coverage of that gap. The majority of international flights departing the UK are covered by the carbon offsetting and reduction scheme for international aviation—CORSIA—and the UK continues to play a leading role in the work of the International Civil Aviation Organisation, negotiating for ambitious global action to tackle international aviation emissions, including protecting and strengthening CORSIA.

In 2019, flights from Northern Ireland to Switzerland made up just 76—my maths is functional, if that, but six flights a week would appear to amount to rather more than that—or 0.28% of the total 26,813 flights from the UK to Switzerland. That represented 1,081 tonnes of carbon dioxide, 0.39% of the total 277,814 tonnes. The impact of not including those flights is therefore small, but not negligible. As such, we aim to include those flights in the ETS as soon as possible.

As to why we cannot currently do so, legislation for the UK ETS is made under the Climate Change Act 2008. The powers are devolved, and therefore exercisable only by the Secretary of State for England and by the respective devolved Administrations for the other nations of the UK. Where all agree, joint legislation can be made for the whole of the UK by the Privy Council. The heart of the matter is that under the terms of that Act, scheme expansion requires an affirmative instrument. The Northern Ireland Assembly has not been able to debate and approve instruments, so it is not currently possible to make legislation that extends to Northern Ireland. The draft order has already been approved by the Scottish Parliament and by the Senedd. If approved by both Houses of Parliament, the order will be submitted to the Privy Council to be made covering Great Britain. Therefore, it is a function of the legislation.

[Kevin Brennan]

I understand that point; presumably, if an affirmative instrument is required, Ministers cannot make that legislation in the absence of the Assembly’s meeting. However, if I heard the Minister correctly, he said that there were 76 flights in 2019, whereas the shadow Minister, my hon. Friend the Member for Southampton, Test, said that the actual figure is a return flight six times a week. My maths is not bad—I got a grade A O-level back in the day—and that is a lot more than 76. Will the Minister clarify that point and write to the Committee with the actual figure and, if there is a disparity, the true level of emissions?

[Graham Stuart]

I am sure every member of the Committee will be waiting to hear that, and I am happy to write to confirm it. As it is, it is a relatively small number of flights, given the overall number that go from the UK.

[Graham Stuart]

I have agreed to write with further information, notwithstanding the ability that any of us has to check Skyscanner, and I am happy to do so. However, it was 76 flights in total in 2019, so we are talking about a pretty small issue.

On CORSIA, which I know Members will be keen to hear more about, the UK Government, led by the Department for Transport, consulted on implementing CORSIA in 2021, including six high-level options for how CORSIA could interact with the UK ETS on flights in the scope of both schemes. We are carefully considering the approach to CORSIA implementation and will consult further in due course, seeking to have all legislation for CORSIA in force by 2024.

The UK ETS is regarded in legislation as a fiscal measure, not a regulation. We published an analytical annex with the initial Government response in August 2022. That examined the impact of applying the UK ETS to UK-to-Switzerland flights, so I think that only direct flights are affected. I congratulate the hon. Member for Cardiff West: it is hard to be more arcane than his hon. Friend the shadow Minister, or to have a more detailed grasp or inspection of the factors behind legislation, but on this occasion I think he has achieved it, and I know that he will be pleased to continue the discussion even further.

[Kevin Brennan]

To save me making another speech—of course, I could—I will just intervene on the Minister. Unusually for him, because he is always very thorough, he has left one loose end, which is my question about who the verifiers will be. I am perfectly happy for him to tie up that loose end later by writing to the Committee, in order that we can have that question answered and we can have properly and thoroughly scrutinised this particular fiscal measure.

[Graham Stuart]

I thank the hon. Gentleman for his question. I am sure that, like me, when he was a small boy he was terribly excited when he received a letter addressed to him. I know that other members of the Committee will have a similar childish excitement when they get my letter, in which I will answer that point too, because the verifiers need to be identified properly and effectively.

With no further ado, and with what I can see is the great expectation of the Chair, I commend the draft order to the Committee.