COP28

Kerry McCarthy Excerpts

Thursday 16th November 2023 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

Simon Stiell, the UN climate executive secretary, said at COP27 that we need

“everybody, everywhere in the world, every single day, doing everything they possibly can to address the climate crisis.”

That is the scale of the challenge ahead of us, and the global stocktake synthesis report has underlined what is at stake. We are falling short on mitigation, adaptation and finance. Current NCDs are 20 to 24 gigatonnes of carbon dioxide equivalent short of what is needed to limit warming to 1.5°. The conclusion is stark: there is a rapidly closing window of opportunity to secure a liveable and sustainable future for all. Indeed, in meetings I have had recently with climate scientists, they have warned that although they want to cling to the hope of keeping 1.5° alive, they fear we are now in the territory of 2°. At 2°, we lose our coral reefs, for example; that is not a solution that we should be happy to live with. Echoing Simon Stiell, the global stocktake report states that

“much more action, on all fronts and by all actors, is needed now”.

One would not know it from the speech that the Minister has just made, but we do not have a Government who are taking the action on all fronts that is needed now: we have a Government who are not just stalling, but taking us backwards. I thought it was quite a cheek for the Minister to cite electric vehicles, given that the Government have just rowed back from the 2030 ban on the sale of new internal combustion engine vehicles. The motor manufacturing sector, including the Society of Motor Manufacturers and Traders and the Ford motor company, was quite happy with that 2030 date. The only reason that date was moved was that in the wake of the Uxbridge by-election, the Prime Minister wanted to play party politics with net zero. The Minister is quite audacious at times: he said that some countries were seeking to stoke division at COP, but that is exactly what his Government have been doing in recent weeks on net zero.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

The rest of the European Union has set the deadline of 2035. It was right that the United Kingdom Government set the ambition for 2030, but we recognise that things are changing: we have had covid, and there is still a need to roll out infrastructure. I think the hon. Lady is being ungenerous, since we will now be in line with the rest of the European Union, and we have a higher take-up of EVs than many other countries.

[Kerry McCarthy]

In all the conversations I have with businesses, they say that they want certainty and a strategic sense of direction; they want to know where they are going, so we should not move the goalposts. There was no reason to row back from that target, and as I have said, the motor industry itself has expressed concern. That industry needs to develop a market in new vehicles now, so that in a few years’ time, we will have the affordable second-hand market that we need so that people can afford to make the transition. The right hon. Lady is absolutely right that the infrastructure is not there, but that is a challenge that we should rise to, getting a comprehensive network of public sector charging points, grid connections and so on. She will have heard that from Labour at its recent party conference.

Let me turn to domestic progress. Again, to listen to the Minister, one would think that everything was going swimmingly. The Climate Change Committee has assessed that the UK is unlikely to meet its NDC to reduce emissions by 68% between 1990 and 2030. The Government’s own carbon budget delivery plan conceded that Ministers only have plans for 92% of our NDC, but they have said that they are confident about delivering those emissions savings—that is something we often hear from the Minister, without any actual detail about how we will get there. In fact, it has been assessed that the Government have credible plans for only 28% of the required emissions reduction. There is a lot of work to be done.

The Climate Change Committee assessed the Government’s policies in October with and without the Prime Minister’s climate climbdown, and found a 20% increase in the proportion of the NDC pathway covered by “insufficient plans” having taken into account the Prime Minister’s intervention. It said that the

“widespread uncertainty for consumers and supply chains”,

is more difficult to quantify, but, as I have said, at all the meetings I have had, people are saying that this has absolutely knocked them off course. There is a huge amount of enthusiasm for going down the path to net zero and I am told that there is a lot of private sector finance ready to invest, but they need a stable economic climate, not a Prime Minister who is U-turning just when action is needed.

Following the disastrous contracts for difference auction, the proportion of the electricity supply pathway with significant risks increased by over 5,000%. The refusal to help renters contributed to a fivefold increase in insufficient plans for buildings. When the Government’s policies are, as the Climate Change Committee found,

“making Net Zero considerably harder to achieve”

and driving up energy bills, how can Ministers go to COP trying to boast about how well things are going in the UK? I do hope for action before COP. We have the autumn statement next week, and we were expecting some plans—I think the Chancellor promised in the spring that he would bring them forward—in response to the Inflation Reduction Act and the measures we then saw in the EU. I hope that we do get something on that front to at least reassure businesses that the Government still have net zero in their sights and see it as an important part of a future industrial strategy for us.

The UK used to be at the forefront of global climate action, and again the Minister was being a bit cheeky when talking about the progress that has been made since 2010. I think he entered Parliament when I did in 2005. Is that right?

[Graham Stuart]

indicated assent.

[Kerry McCarthy]

The Minister may recall being on the Green Benches in 2008 when the Labour Government introduced the world’s first Climate Change Act, which was then adopted by more than 100 countries around the world. It was groundbreaking.

[Graham Stuart]

If the hon. Lady wants to have a history lesson—and we did, indeed, come in together—she will remember that it was David Cameron, as the leader of the Conservatives, who was the first leader of a major party in this country to call for a climate Act. I think the Liberal Democrats leader followed suit a few hours later, and the Labour Government then eventually did so. I served on the Joint Committee, chaired by the brilliant David Puttnam, that put this into place, so I will not take any lectures from her. It was the Conservatives who led the charge to get that going—the first major party to support it—and I was pleased to see it put on the statute book. We were of course the first major economy in the world, and the first Government, to legislate for net zero overall.

[Kerry McCarthy]

It was a Labour Climate Change Act brought in by the now shadow Secretary of State for Energy Security and Net Zero, my right hon. Friend the Member for Doncaster North (Edward Miliband). I can see why the Minister may be desperate to try to claim credit for it, because the Government have so little else that they can claim credit for, but it was a Labour Act introduced by a Labour Government. It is because that was enacted that we have seen so much progress, and as I have said, it was taken as a model for many other countries to follow. However, we are now setting entirely the wrong example to other countries by scaling back on our net zero ambition and last year the Prime Minister had to be forced to attend COP.

[Graham Stuart]

Will the hon. Lady give way?

[Kerry McCarthy]

The Minister will have an opportunity to respond in his wind-up at the end, but I suppose I will give way once more.

[Graham Stuart]

This is a really important topic, and it is important that we get our language right. The Government have not scaled back our net zero ambitions for either our NDC in 2030 or net zero by 2050. The hon. Lady can make lots of points, partisan or otherwise, but it would be great if she acknowledged that this country has, under this Conservative Government, cut emissions by more than any other major economy on earth and has the most ambitious plans for 2030.

[Kerry McCarthy]

The Minister will also know that the Government had to be taken to court, because it is one thing declaring targets and ambitions, but unless they have the strategy—[Interruption.] The Government were taken to court, and that is why they had to produce the delivery plan earlier this year. The Climate Change Committee, which by his account was all his idea because it was all his idea to introduce the Climate Change Act, has said that the Government are not on track to meet their ambitions. So the Minister cannot just rely on grandiose boasts about where he wants to get us to if he does has not have a plan to get us there, and it is very clear that he does not have a plan to get us there.

The Minister said that we represent only 1% of global emissions, which is true, but the NDC emissions gap is approximately the total combined annual emissions from the top three emitting countries. Yes, they have responsibilities, but this does need everybody everywhere to play their part. I do not think we would want to try to suggest that we were insignificant in the big global picture because we represent only 1% of the total population.

I will move on specifically to the COP agenda and what we hope to see. Will the UK be calling for the phase-out of unabated fossil fuels, and does the Minister agree with the global stocktake report—[Interruption.] I am just about to come to that. I know the Minister mentioned it, but does he agree with the global stocktake report that fossil fuel subsidies are stifling cost-effective low-carbon alternatives? The global stocktake report states that

“lifetime emissions from existing and planned fossil fuel infrastructure will exceed estimates for keeping…1.5 °C within reach”.

My point is that, if the UK will be calling for the phase-out of unabated fossil fuels, how does he think going to COP when the Government have just announced the Offshore Petroleum Licensing Bill in the King’s Speech will sit when he tries to lecture other countries on moving away from fossil fuels?

The global stocktake report is clear that CO₂ removals have a role, but are

“not a substitute for deep emissions reduction.”

It states:

“A rapid reduction of the world economy’s reliance on fossil fuels towards clean energy is central for reaching global net zero”.

That sounds to me like an endorsement of Labour’s clean energy mission for 2030. Unlike the Government’s short-term approach, this will increase our energy security, create good jobs and reduce energy bills—unlike, as the Secretary of State for Energy Security and Net Zero admitted the other day, the Offshore Petroleum Licensing Bill—and it will mean that the UK is leading the world in tackling the climate crisis.

The Minister mentioned nature-based solutions, and I was very pleased to hear that, but can he say a bit more about what global action the Government will be supporting with sustainable land management—I understand that that will be on the agenda at COP in a way that it has not been in the past—as well as terrestrial and ocean carbon sequestration? What discussions are there likely to be on the role of setting up credible international carbon markets? To give one example, we know that wetlands have huge potential, but we are still waiting to hear about the saltmarsh code—the former Secretary of State for Department for Environment, Food and Rural Affairs, the right hon. Member for Suffolk Coastal (Dr Coffey), may have something to say about that—and whether we can add saltmarshes to the greenhouse gas inventory. With the UK’s leading position as a world financial centre, we are ideally placed to be playing a role in creating these markets both on the nature side and on the carbon side.

It is estimated that tree loss last year was 2.1% higher than the maximum level. Will the Minister update us on that? He mentioned halting and reversing deforestation by 2030, and on the international side that is very much about stamping out links to deforestation in our supply chains. Could he give an update on how that is going, because as I understand it, it is not going well? Those issues were all highlighted in the global stocktake.

The built environment and transport are also on the COP agenda, and it would be helpful if the Minister could tell us a little more about the Government’s priorities for the talks. He mentioned the loss and damage fund, and the work of the transitional committee. It would be interesting to know more about what conversations he has had with climate-vulnerable countries, and the small island developing states in particular, because it is one thing to set up these financial arrangements, but in the past the smaller a country, the fewer resources it has, and it finds it very difficult to access the finance that is out there.

The Minister also mentioned the need to reform international financial institutions, which was welcome. I do not know whether he intends to reveal much about his actual agenda at COP before he goes—and it would be useful to know who else is going with him—but one question that has been asked of me is whether he will be attending the ministerial event on methane on 4 December. I think it is really important that we start addressing methane in connection both with the fossil fuel sector and with agriculture and waste. I hope that will be a priority for him.

To conclude, the UN has previously warned that the world is on course for a catastrophic 2.8°C of warming, in part because promises made at COP26 and COP27 have not been fulfilled. We are running out of last chances, but we can still avert the very worst of it, because we have the knowledge and tools to do so; it is just the willpower that is lacking at the moment.

The UK under Labour will, as called for in the global stocktake, transform our energy system with a plan to double onshore wind, treble solar, and quadruple offshore wind. Our warm homes plans will see 90 million cold and draughty homes brought up to standard, and Labour’s answer to the Inflation Reduction Act will restore Britain’s international leadership and create jobs across the country. Our proposals for a clean power alliance will lead ambitious countries and support the most vulnerable. A net zero target should not lead to complacency. There is so much more that the UK can and must do, not only to reduce emissions but to deliver energy security, reduce energy bills, and enable British industry to thrive over the long term. That is the vision we need to see at COP.

--- Later in debate ---

[Graham Stuart]

I congratulate all the Members who have spoken in the debate, which is an important one ahead of COP28. Further to the other interactions that I mentioned in my opening speech, we will be making a written ministerial statement on our priorities for COP before we go, and I will be responsible for the negotiations there.

It has been a very interesting debate, but it is a shame that the hon. Member for Bristol East (Kerry McCarthy) struggled so much to acknowledge the position that we are in. I have never heard it come out of her mouth that this country has cut its emissions more than any other major economy on this earth, which it has, or that it has the most ambitious plans of any economy on this earth, which it has. It would be good to have that as a baseline; there is plenty of room to pick up on issues and concerns about our performance while also acknowledging that the UK truly is a global leader. I am pleased to say we are not only leading domestically, but leading in the international space as well.

A couple of Members mentioned the Climate Change Committee in the context of the Prime Minister’s speech in September. It is worth noting that the Climate Change Committee’s analysis shows that there is “no material difference” in our progress in cutting emissions since its last report in June. We are tacking, as I would put it. However, our destination remains exactly the same. We are reassuring people in rural areas who were fearful that they could neither afford heat pumps nor be sure of their functionality, while increasing the subsidy for them by 50%, and working to build the system and drive the cost curve down, so that more and more homes can have them. That is right the way to ensure that we maintain public support for delivering net zero.

The same applies to zero-emission vehicles. Manufacturers have a ZEV mandate—an obligation to “green” their fleet up to 2030. That builds on our successful record to date; we are ahead of the Climate Change Committee’s and our own projections. We are maintaining that ZEV mandate. The Climate Change Committee spoke of “no material difference” in progress on particular changes, but the focus on grid and other aspects of the Prime Minister’s speech are all about turbocharging our efforts to deliver not only the nationally determined contribution in 2030, but net zero by 2050.

Methane was mentioned, and it is an important issue. The global methane pledge is a collective commitment intended to mobilise international action on methane. I am pleased to say that UK methane emissions between 1990 and 2021 dropped by 62%, one of the largest reductions in any OECD country, but I should also to highlight the fact that methane represents one of our biggest opportunities—the opportunity to ensure that that pledge is delivered not only domestically but internationally. It should also be noted that we are the only major economy to set a legally binding emissions reduction target, of 77%, for 2035 as part of carbon budget 6. We will see what happens at the 2025 COP in Brazil—10 years on from Paris—but the expectation is that new NDCs will come forward for 2035.

Finance was touched on in the debate. We remain one of the largest and most active donors in international climate finance, and we are making record commitments. With the aim of helping the world to adapt to the inevitable climate change impacts that we can already see, at COP27 the Prime Minister made a commitment to triple UK adaptation finance from £500 million in 2019 to £1.5 billion in 2025. The UK is also committed to maintaining a balance between mitigation and adaptation spending, and to providing at least £3 billion of UK climate finance for the purpose of protecting and restoring nature. We provide the majority of our climate finance in the form of much-needed grants rather than loans—which I think compares well with what is provided by some other donor countries—and we prioritise our contributions for the biggest challenges faced by the poorest and most vulnerable.

Alongside Malawi and Vanuatu, I co-chaired the climate and development ministerial ahead of the Abu Dhabi pre-COP meetings. It focused on the issue of access, which was absolutely right. We hear again and again from countries such as Samoa, whose Minister has said that the access process takes too long. At the CDM, we set out a “vision statement” expressing greater recognition of the need for national programme development to ease access to money as well as increasing the quantum. The hon. Lady is right: it is not enough to have this notional money if it does not actually flow to those who by definition, as she said, are the least able administratively to meet the requirements of some vast organisation. We need to make sure that the system fits the needs of those it serves, rather than the other way round.

[Kerry McCarthy]

I welcome what the Minister has said. I think that another problem for those countries is coming up with the evidence base to demonstrate the impact that climate change is having on them. There are currently some very good initiatives: for example, science students from the UK are going out to study marine areas. There is a great deal of interchange. Does the Minister think we could do more to facilitate that evidence-gathering, which could then be used as a basis for making an application to show the need for climate adaptation funding?

[Graham Stuart]

The hon. Lady is absolutely right. We need to make sure that technical assistance is there because, even as we try to get the green climate fund, the global environment facility, the World Bank and various others to improve their systems and ambitions to better meet the needs of the most vulnerable—shouting at both parties is like shoving a nine-pin plug and a three-pin plug together and wrapping them in gaffer tape—we also need to get a smoother system that helps them both to step up so that it genuinely flows, otherwise we will have endless frustration. Hearing Ministers from Vanuatu, Tuvalu, Samoa and elsewhere brings it alive, which is why these international meetings are useful. They remind us of the realities on the ground.

Since 2011, The UK’s climate finance has supported more than 100 million people to cope with the effects of climate change, improved the climate resilience of more than 32 million people and reduced or avoided more than 86 million tonnes of greenhouse gas emissions.

Nature has rightly been mentioned, and we want to see action and ambition from the presidency and all parties on transforming food systems and building policy, practice and investment for sustainable agriculture at scale. That includes endorsement of the leaders’ declaration on food, agriculture and climate action, supported by a further commitment to policy action, innovation and investment through the policy dialogue for sustainable agriculture and the agriculture breakthrough.

It is always difficult to keep our head around all these issues, as there is an alphabet soup of initiatives. I always want to check that they are not duplicative, but they are often complementary and working together.

--- Later in debate ---

[Graham Stuart]

The hon. Lady is absolutely right. The Congo has extraordinarily large and important peatlands, which have the same basic dynamics. Everything is different, and every country is different, which is why we have to pull different things together, but the fundamental principle is that we have to create a system in which the local people—from the governor of the province down to the indigenous villagers—are better off by maintaining and keeping these peatlands. We are keen to make sure that the role of peatlands is understood because, again, they are a critical enabler. Lost peatlands cannot easily be replaced, and they are part of the negative tipping point we could reach if we do not take urgent action.

[Kerry McCarthy]

I welcome the Minister’s enthusiasm and recognition that peatlands have an important role to play but, at the moment, they are emitting carbon because of how they are treated in this country, particularly when it comes to grouse moor management. Does he agree that we need to address those practices? Many peatlands are also sites of special scientific interest or are meant to be protected for nature in other ways.

[Graham Stuart]

I will not stumble into another Department’s area of responsibility. We work collectively across Government to share the burden of making sure we meet our net zero targets.

In wrapping up the debate, I assure hon. and right hon. Members of the Government’s commitment to delivering on net zero at home and internationally. Although there is evidence that a peak in global emissions is within sight this decade, we need emissions to peak by 2025 and to reduce by 43% by 2030. The sobering reality is that, this year, global emissions are likely to reach a new peak, as Members across the House have said. Keeping 1.5° within reach requires nothing less than a paradigm shift.

As I said in my opening remarks, the UK accounts for less than 1% of global emissions. Beyond what is directly within our grasp, the question before us is how we can help to create the will and the capability to move the remaining 99%, for which the major emitters, in particular, will be crucial.

I would like to close by offering some reflections on the UK’s role in helping to drive forward international progress in this critical decade. For hon. Members who are interested, we have set out in greater detail the UK’s vision and role in driving forward international action on climate and nature to 2030 in our 2030 strategic framework, which is available online. It sets out six key global challenges, and how we will use our international partnerships, strengths in finance, expertise and domestic leadership, trade and investment, and world-leading strengths in science and innovation to drive forward progress.

The first point to make is that though the gap looks unassailably large, we must not lose hope and fall into a council of doom. The reality is that efforts to date have succeeded in bending the emissions curve away from apocalyptic levels of warming of 3° or more. In some sectors, notably energy and electric cars, the transition is taking off. The IEA’s latest world energy outlook predicts a peak in fossil fuel use by 2025, due to what it describes as the “unstoppable” growth of low-carbon technologies. Solar and electric vehicles particularly stand out. Since only last year, the IEA has revised up its global solar 2050 capacity forecast by 69% and increased by 20% the number of electric vehicles it expects to be on the roads by 2030, such that it is expecting electric vehicles to comprise two thirds of new car sales by 2030.

The lesson we should draw here is clear: rapid, large-scale transformation is possible. The challenge is that we need to replicate this success across all sectors of the economy. There will be no single silver bullet to driving the transformational systemic change that we need on a global scale. We will deploy every important lever we have to accelerate action in this critical decade, building on the framework we put forward in the Glasgow pact and our 2030 strategic framework. That includes working through the United Nations framework convention on climate change, bilaterally and through other channels. Working with others who are like-minded, and others, we need to see countries upgrading their climate targets. There is no point in having a global stocktake eight years after the Paris agreement if it does not lead to a ratcheting up of the nationally determined contributions to match the requirements that we find from the science. In particular, we need the major emitters to do that. Countries representing more than 90% of global GDP are covered, as I have said, by some form of net zero target. Those countries now need to align their near-term targets with the commitments that they have made. We will harness our global diplomatic network, international development offer and partnerships to drive forward action.

We will also be taking action to realign financial flows in line with the Paris agreement and a nature-positive future. We will use our strengths as a global green finance centre and role as a shareholder of key financial institutions to reorientate finance flows and tap the power of markets to make progress towards unlocking the trillions required. We will accelerate transitions globally through targeted collaboration with others, focusing on the most important, highest-emitting sectors, through initiatives such as the breakthrough agenda, so that we can reach positive tipping points and avoid negative ones, and so that clean tech is affordable and accessible across all sectors of the global economy. We will also continue to push to accelerate the global energy transition, for example, through our long-standing leadership on phasing out coal in the Powering Past Coal Alliance. We will also champion the need to phase out unabated fossil fuels and at the same time transition the North sea into a clean energy powerhouse here at home.

Let me touch on that issue, as it was raised by others. We have new licences in the North sea for oil and gas because we continue to need oil and gas. We will need oil and gas in 2050 and beyond. Our production is falling, without new licences, at a rate of about 9%. With no new licences and no new investment, we will not see a greening of the basin. Worse, we will see the loss of the subsea and offshore engineering capability we need, as it will either leave this country or be made redundant, rather than being retained here.

The hon. Member for Edinburgh North and Leith (Deidre Brock) raised the issue of a just transition. There is a true transition to be made, and opposing new oil and gas licences in this country when we are a net importer of both, and when the emissions that will come from imports such as liquified natural gas would be higher, makes the Opposition parties friends of oil and gas workers, but just not those in this country. The approach of those parties will not make any difference to how much we consume, but it will make a difference to our emissions, and not in a good way, and it will lose the very engineering capability we need to deliver the transition, as well as a very material contribution to our ability to make that change, which is of course the £50 billion of taxes that we expect to get from the sector over the next five years. The Opposition parties are in entirely the wrong place. They have put optics ahead of doing the right thing, and it does not take a lot of reflection or analysis to come to the conclusion that we are doing the right thing.

We must globally focus on the positive tipping points we need to accelerate the global low-carbon transition. I thank hon. Members from across the House for their contributions to this debate, and I hope that my team and I will be able to count on the support of everyone in the House, despite all of the global challenges we face, to make the upcoming COP the success that the world needs it to be.

Question put and agreed to.

Resolved,

That this House has considered COP28.

Oral Answers to Questions

Kerry McCarthy Excerpts

Tuesday 19th September 2023 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

According to the Climate Change Committee,

“the private sector…is being held back…by weak policy signals, uncertainty, and barriers to investment,”

and perhaps we would not need to be so reliant on China if those issues were addressed. Just last month, UK investors representing £1.5 trillion in assets wrote to the Prime Minister, warning that that could mean the UK missing out on 1.7 million jobs. Will this zombie Government listen to investors and their own advisers, look at the game-changing interventions in the States and bring forward a UK version of the Inflation Reduction Act before it is too late to save British businesses and British jobs?

[Graham Stuart]

Yet another unfunded spending commitment from the Labour party—the party that left us with less than 7% of our electricity coming from renewables and that left us reliant on coal; a party that wants to nationalise the industry and drive out all those companies that have transformed the North Sea basin, led the world in cutting the cost of offshore wind, and made us the European leader in offshore wind and the global leader in cutting emissions. The Labour party is the biggest enemy of net zero and the biggest enemy of the private investment in this country that will help us get there.

Energy Supply Market: Small Businesses

Kerry McCarthy Excerpts

Wednesday 13th September 2023 Westminster Hall

[Kerry McCarthy (Bristol East) (Lab)]

It is a pleasure, as always, to see you in the Chair, Ms Fovargue. I thank the hon. Member for Aberconwy (Robin Millar) for bringing this important debate to Parliament. He came up with quite a comprehensive list of asks for the Minister, so I hope she has time to respond to them in full. I endorse many of the things he said.

As the hon. Member for Aberconwy suggested, the energy supply market seems stacked against hospitality businesses in particular, and we need both short and long-term action. Today’s debate has reflected the fact that although the actual peak of the energy bills crisis has dampened a little, the problems are still out there. Just because it is not on the front page and we are not having urgent questions every other day in Parliament, that does not mean to say that the problem has gone away.

As has been said, small businesses in the hospitality sector have faced an onslaught of difficulties over recent years. We had the pandemic, which obviously hit them very hard, we have had a rise in rents and interest rates, and we have had soaring inflation, yet sky-high energy bills remain one of small businesses’ main concerns. I have certainly seen that in my own constituency and across Bristol.

The Christmas period should be a boom time for hospitality companies, but in Bristol we saw several go under, including a brewery that was forced to stop production after a 500% increase in energy bills. That was the last straw after everything else they had had to contend with. Thankfully, there are other businesses that are just about surviving, although they are very much struggling with their bills. An independent bakery contacted me to say that it had received a final demand for an energy bill that was in the thousands—way more than they had been paying in the past. It managed to get the money together to just about pay when the final demand came in, but the bailiffs were still sent in and disconnected it. It is now having to rely on a noisy generator, which is understandably upsetting the neighbours. That is not how it wants to conduct its business, but it has no choice.

An independent café told me about the problems it was having. The neighbouring café is part of a big nationwide chain, which can negotiate an energy bill contract that goes across all of its outlets. The little independent café found that the energy companies do not want to talk to it at all because it is not a big enough customer. As we have heard, too many small businesses are locked into expensive multi-year energy supply contracts that were perhaps taken out at the peak of the market. The fact that many of them have been denied service altogether because they are deemed to be too high risk is an issue on which we need to hear from the Minister.

The Government and Ofgem must work in tandem with suppliers to ensure that the disproportionate hit that hospitality is taking does not continue. The hon. Member for Aberconwy quoted the CEO of UKHospitality, Kate Nichols, talking about a canary in the coalmine; last month she said:

“The Ofgem review last week was crystal clear that many of the issues facing businesses lie at the door of the energy suppliers. Whether it is refusing to renegotiate contracts, demanding enormous deposits, or simply refusing to supply the sector, it’s clear that some energy suppliers are mistreating the sector.”

We have heard about how extortionate security deposits and unfair contracts are holding businesses back. Labour’s view is that we need to start reforms to the market to ensure that the cheap price of low-carbon energy is passed on to consumers. We also support calls for decoupling gas and electricity, which is something that we have mentioned many times before.

It is good to hear that Ofgem has been encouraging suppliers to work with hospitality businesses to resolve the issues they are facing with fixed prices that are far above the current market level. However, that sort of voluntary approach is not good enough. The British Beer and Pub Association has been calling on Ofgem to ensure that, beyond voluntary measures for suppliers, there is also

“recourse to more binding mechanisms to ensure expected standards of conduct and behaviour are met and maintained.”

The context here is important. It is not a crisis that has come out of the blue. The situation in Ukraine has had an impact on global energy supplies, but that is not the only factor. From getting rid of our gas storage—unlike any of our European counterparts—and slashing energy efficiency installation rates, to banning onshore wind and crashing the market for solar, the Government have failed to prepare and protect Britain. It is families and businesses that have paid the price.

The extent of that failure was laid bare last week during the auction round for contracts for difference for offshore, which saw zero bids because the price was set at an unrealistic rate. There was the potential there for 5 GW of wind, which could have powered nearly 8 million homes and saved consumers £1.5 billion a year compared with the cost of electricity from gas. That is a real lost opportunity to bring cheap and clean power to many more houses. We had an urgent question on that in Parliament yesterday.

Hospitality businesses need immediate short-term support, and we heard good examples from the hon. Member for Aberconwy about delivering that within the supply market. Until we transition to clean, cheap and secure renewables, however, we will remain exposed to the same energy market that forced the Government to cap energy bills. Analysis from Labour revealed that over the summer 300,000 businesses have been forced to cut hours directly as a result of inflation, with 17% of hospitality firms reporting reducing staff work because of price rises. I think we have all seen that: anyone who went down to places like Cornwall or Devon over the summer will have seen cafés that we would expect to be open at the peak of the tourist season having to close early because they cannot get the staff to maintain seven-day-a-week opening.

Despite record energy profits, the Prime Minister continues to refuse to implement a proper windfall tax, which we have been calling for. Our green prosperity plan would cut £53 billion off businesses’ energy bills by 2031. In the short term, we would help businesses to cut their plans for good, with vouchers for energy efficiency measures. The hon. Member for Aberconwy is right to raise the deficiencies in the energy supply market. Soaring energy bills are a threat to livelihoods up and down the country. I reinforce his calls for the Government to not just sound sympathetic but actually take action to help SMEs to survive.

Draft Electricity Capacity (Amendment) Regulations 2023

Kerry McCarthy Excerpts

Tuesday 18th July 2023 General Committees

[Kerry McCarthy (Bristol East) (Lab)]

It is a pleasure to see you in the Chair, Mr Robertson. I say at the outset that we will not oppose the Government in bringing forward the amendments, but I am going to speak for about half an hour about why we will not—[Laughter.] No, I will not.

We accept that the changes should be made and they are of very minor significance to the scheme overall. To recap, the capacity market is currently the main system in place for securing a stable and reliable electricity system. Generally, the system works well in providing secure provision. It provides commitments by generators to supply guaranteed power into the system, allowing those balancing the system to know in advance what capacity they can rely on for each period. A system of fines is in place for generators that have committed themselves to supply but then do not deliver when required.

It is worth noting that suppliers have to agree to deliver power only if required. They still get paid for the capacity agreement if they are not required to deliver power. I can see why that might be the case—we do not want to disincentivise them—but there is an element of free money in the system, and that needs revisiting at some stage.

I will not repeat the Minister’s explanation of the three amendments that are being introduced, other than to comment that the second amendment, to regulation 34, simply gives effect to something that was for practical purposes always the case, as the low carbon contracts company was never in a position to know whether the capacity market holding generator would be successful in a CfD bid.

As I said, we do not have a problem with any of the amendments, so we will not seek to divide the Committee.

Oral Answers to Questions

Kerry McCarthy Excerpts

Tuesday 4th July 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Kerry McCarthy (Bristol East) (Lab)]

The director general of UK Steel said this week:

“There are huge question marks over if government really wants to sustain steel, the backbone of British manufacturing, or just leave it to shrink and rely on other nations’ supply.”

He is right to say that. It is four years since the Government promised the green steel fund, but not a penny has been paid. Why are the Government failing our steel communities so comprehensively?

[Amanda Solloway]

That is absolutely not true; we are legislating for that at the moment. It is incredibly important to the Government that we combat that and support the energy and trade-intensive industries.

[Kerry McCarthy]

The Committee on Climate Change said last week that

“the Government has high ambitions for decarbonisation but no policy to deliver it”.

We have been slow to react to the US Inflation Reduction Act and to the EU’s proposed green deal industrial plan. The right hon. Member for Maidenhead (Mrs May), who, for the benefit of the Minister, is not from the Labour Benches, said:

“Where the UK once led, we are now falling behind.”

When will Ministers snap out of their appalling complacency and come up with the strategy and timeline that we need to support the UK in the global race for green jobs and investment?

[Amanda Solloway]

We have met all our carbon targets and will continue to do so. The Government have made the commitment to continue hitting and progressing on those targets.

Road Fuel Prices

Kerry McCarthy Excerpts

Monday 3rd July 2023 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

People across Britain are facing the highest mortgage costs in Europe, the highest inflation among advanced economies, and the highest tax burden in 70 years. They are paying the price for 13 years of Conservative failure.

In that context, it is more important than ever for the Competition and Markets Authority to do all it can to help to bring down prices. Effective competition in the interests of consumers must be at the heart of our economy. That is why we firmly support the CMA’s proposals to help to bring down the cost of fuel.

‘Filling up the tank at supermarkets is an essential part of everyday life for families and small businesses across the country, so the fact that the average annual supermarket margins on fuel increased by 6p per litre between 2019 and 2022 is deeply worrying.

I am pleased to see that the Secretary of State has accepted the recommendations from the CMA to stop retailers artificially inflating petrol prices during a cost of living crisis; as he says, transparency is very important. However, given that the then Business Secretary wrote to fuel retailers and the CMA more than a year ago to highlight apparent unfairness in fuel prices, why has it taken so long for the Government to take action on this issue? Motorists did not need a report to tell them that they were being fleeced by fuel retailers; they see it every time they fill up at the pump. Why did the Government need to wait for the CMA to tell them what everyone else knew before they took action?

In Northern Ireland, the Consumer Council published a fuel price checker in September 2020, which has helped to keep fuel costs below those in England. Why have the Government taken almost three years to agree to do the same in England? Once again it is too little, too late from a Government, who have again sat on their hands. I note what the Minister said about an interim voluntary scheme and about consulting as soon as possible, but can he give a clear indication of when the Government will introduce the change in the law that is needed to make this permanent?

[Graham Stuart]

The hon. Lady is right to highlight the cost of living crisis and the level of taxes. That, of course, is why her party getting into power would be such a disaster for ordinary consumers and motorists throughout the country. We have come through the pandemic and made sure we have kept the country afloat; for instance, the Government supported paying nearly half of everyone’s energy bills through the last winter. A Labour Government would be a threat to markets such as this, which we need to function properly, not in the way they would under Labour.

As for why this has taken so long, the hon. Lady ought to know, having seen the disaster of her £28 billion energy borrowing package, which dematerialised: it was a great announcement, but it did not survive contact with reality.

Energy Bill [ Lords ] (Sixteenth sitting)

Kerry McCarthy Excerpts

Committee stage
Tuesday 27th June 2023 Public Bill Committees

[Alan Brown]

Okay, so we go back to my monologue justifying why the Government should accept some of our new clauses, including new clauses 1 and 2.

Clearly, we should be grateful that energy prices are starting to fall, but the reality is that the cap on energy bills for an average household was set at £1,138 in April 2021. This month, Ofgem has set the cap at more than £2,000, so energy bills are still nearly double what they were two years ago. The reality is that many people are struggling badly with their energy bills, even though prices are falling, and those struggling the most are those with prepayment meters. People with prepayment meters can access credit of only £5 or £10. If they reach that credit limit, the lights go out—it is as simple as that. They cannot turn on the gas or electricity, and it is a real difficulty for people. It also means that if people cannot get out of the house for whatever reason—if they are ill or have just had a newborn kid—and have reached the threshold, they lose access to their energy by virtue of not being able to top up their meters.

It is unfair that people with prepayment meters pay higher standing charges. Frankly, it is an outrage that people who pay in advance for their energy are paying a premium to access it, whereas people like us in this room, who pay by direct debit, have access to credit and cheaper tariffs. As I say, the reality is that if someone is on a prepayment meter, they are going to struggle to pay their bills, they will pay more and they will face the difficulties associated with a lack of credit.

As End Fuel Poverty states:

“Imposition of a pre-payment meter is disconnection by the back door. When you can’t top up the meter everything clicks off”.

Forcing people to have prepayment meters means that those who are already struggling are put on to a system whereby they will be forced to ration, automatically disconnected when the credit limit is reached and more likely—this is the rub—to have a cold, damp home, with the long-term health implications that that brings, as well as the short-term heating and eating dilemmas.

It is estimated that 19% of housing stock across the UK is damp. The proportion rises to nearly a third, or 31%, for those on prepayment meters. In other words, if someone is on a prepayment meter, they are 65% more likely than the average person to live in a damp house. Some 51% of prepayment customers have health conditions or disabilities, so in many ways the existing system is punishing those who are more likely to require more energy in the first place. That, in a nutshell, is why a social tariff is needed for those with prepayment meters.

Research by Utilita indicated previously that as many as 14% of the 4.5 million households with prepayment meters did not choose to be on such tariffs, and what has been happening during the cost of living crisis is outrageous. For example, an investigation for the i paper revealed that since the end of lockdown energy firms have secured almost 500,000 court warrants to forcibly install meters in the homes of customers who are in debt. Freedom of information requests showed that in the first six months of last year there were 180,000 applications for such warrants.

We then had the bombshell coverage of an undercover reporter working for bailiffs, which exposed the cruelty of some bailiffs for what it was: revelling in the forced installation of prepayment meters, no matter the vulnerabilities of the customers. The officers of that debt company were working on behalf of British Gas, which of course said that it was shocked and that it did not advocate such a policy.

The rub is that some utility companies are using debt collection agencies routinely as part of their process to collect money that they believe they are owed. That set-up relieves utility companies of the burden of debt collection. More importantly, it stops them providing debt advocacy and interacting with customers, which is what is required. Meanwhile, the debt collection companies add their own fees just for reissuing bills to customers.

All that is why we tabled new clauses 1 and 2. Voluntary codes for prepayment meters will never be enough. It is quite clear that we will never know how many people were forced on to prepayment meters against their will, especially when smart meters can be switched remotely to prepayment mode without people even realising initially.

New clause 1 sets out the need for legacy prepayment meters to be switched to smart meters as long as consent is given. This is an enabling aspect, as smart meters will make it easier to implement the provisions of new clause 1(3), which will end the practice of so-called self-disconnection. The provisions include the consideration of a social tariff, and, most importantly, mechanisms to allow customers to access credit and not be cut off immediately as they would be with a £5 or £10 credit limit.

New clause 2 restricts the forcible use of prepayment meters. It does not prevent informed consent and agreement for people to move to prepayment mode, because some customers like it as a way of managing their debt, but what is important is consent and an understanding of what prepayment means. The provisions also give access to impartial debt counselling services before the switch to prepayment mode is needed. Subsection (2)(c) places a duty on the Secretary of State to assess and define customer vulnerabilities, because the current definition is too narrow and does not cover some people who should be classed as vulnerable. Lastly, subsection (3) confirms that switching smart meters to prepayment mode is considered the same as a legacy prepayment meter.

Too many people have been forced on to prepayment meters. We cannot allow that to continue and we cannot allow the door to reopen for energy companies. No matter what they say here and now when there is an immediate storm and a backlash, we need to protect people for good going forward, which is what new clauses 1 and 2 will do.

According to recent Government figures, £120 million-worth of the vouchers issued for customers in prepayment mode were still unclaimed at the start of June. There are only four days left until the deadline on 30 June, so I hope the Minister will update us on the outstanding balance of unclaimed prepayment meter credit vouchers. Having nearly 20% of vouchers unclaimed at the start of the month is indicative of a failed policy that does not support the most vulnerable in our society. Again, that is why we need new clauses 1 and 2 to protect those who sometimes cannot protect themselves.

[Kerry McCarthy (Bristol East) (Lab)]

As always, it is a pleasure to see you in the Chair, Ms Nokes.

I rise primarily to speak in support of new clause 38, but it has quite a lot of overlap with new clause 2. Our new clause 38, on the restriction of the use of prepayment meters, says:

“The Secretary of State may by regulations restrict the installation of new prepayment meters for domestic energy use.”

It makes provision to ensure that consumers have full and informed consent on the installation of a prepayment meter, and that vulnerable customers are not put on to prepayment meters. We heard from the hon. Member for Kilmarnock and Loudoun some of the reasons why we have shared concerns about that. Some of my points will be very familiar to the Minister if he followed the debate earlier this year, when it reached crisis point.

Citizens Advice estimates that the number of people moved on to prepayment meters reached 600,000 in 2022, up from 380,000 in 2021. We know that that comes at a cost to them. There is a poverty premium on some of the most vulnerable, and on people on the lowest incomes, because of the shift to prepayment meters, and their use should be restricted as a result. Those with prepayment meters are more likely to be in fuel poverty and facing significant debts already. We find ourselves in a situation in which those requiring the most support are being forced to pay the most and are given the least help.

Citizens Advice revealed at the start of the year, at the height of the energy crisis, that someone was being cut off from their energy supply every 10 seconds, with millions unable to afford to top up their prepayment meters. We also know that so-called voluntary self-disconnection was a thing. People simply could not afford it, so they would not necessarily feature in the numbers. Labour’s call for a moratorium on the forced installation of prepayment meters was dismissed until the March Budget. The Secretary of State told the House on a number of occasions that he was talking to Ofgem and that plans were in motion, but during that period we were still hearing horrific stories about forced entry to people’s houses, warrants being issued and energy companies continuing to go down that path.

Our view was very much that it was the Government and the energy regulator’s responsibility to ensure that people were not left at home in the cold and the dark, yet we had to press incredibly hard before anything was achieved. Over the winter, more than 130,000 households that included a disabled person or someone with a long-term health condition were being disconnected from their energy supply at least once a week because they could not afford to top up. The same report also said that

“63% of PPM users who had disconnected in the last year said it had a negative impact on their mental health. This rises to 79% of disabled and people with long-term health conditions.”

Really good work was done by organisations such as Citizens Advice, but it also took tireless investigations from UK newspapers to expose the scale of the crisis. An investigation by the i in December showed that magistrates were batch processing hundreds of warrants in the space of a few minutes to allow the forced installation of prepayment meters, with one court in the north of England approving 496 warrants in just three minutes. At some point, we were given reassurances that people’s circumstances and vulnerabilities were being taken into account before the warrants were issued, but if nearly 500 are issued in three minutes, clearly they are not taking any information into account; it is very much a rubber-stamping exercise.

An undercover report by The Times in February highlighted how British Gas was employing debt collectors to break into people’s homes. Among them were customers described in the staff notes as a woman in her 50s with “severe mental health bipolar”, a woman who

“suffers with mobility problems and is partially sighted”,

and a mother whose

“daughter is disabled and has a hoist and electric wheelchair”.

We heard in debates at the time that many MPs had their own stories of constituents who were affected by the forced installation of prepayment meters; hopefully we will hear from some today to back up what we are calling for.

It was therefore a relief when action was taken in April, and a code of practice was introduced by Ofgem, but we have to wonder why the scheme is voluntary rather than compulsory. Just yesterday, the Committee on Fuel Poverty, in its annual report, expressed disappointment with Ofgem’s code of practice, stating that it is

“disappointingly limited in ambition”.

We have to wonder what the Government’s role is in that. I argue that Ofgem has proven incapable of dealing with the situation and it is up to the Government to step up and take control. That is what we seek to achieve with the new clauses.

The code’s voluntary nature still leaves too much power and judgment in the hands of energy suppliers, and the vulnerable and the voiceless should not be exposed to the dangers that prepayment meters pose, so I call on the Minister to give us some assurance that he accepts that it is the Government’s responsibility to act in this case—we cannot continue to leave it to voluntary codes of practice—and to support new clause 38.

[Andrew Bowie]

It is an absolute pleasure to serve under your chairmanship again, Ms Noakes, for sitting 16 in the final week before we conclude our proceedings in Committee. I thank Members for tabling their new clauses.

New clause 1 places a duty on the Secretary of State to ensure that all legacy prepayment meters are replaced with smart meters before the end of 2025. The Government have been clear that our aim is for as many households as possible to benefit from smart metering, including those that prepay for energy, which is why we have set minimum installation targets for suppliers until the end of 2025. To ensure effective scrutiny and transparency, large suppliers are also required to publish their performance against their targets, broken down by credit and prepayment mode. That ensures that they have strong incentives to deliver.

Although we agree with the hon. Member for Kilmarnock and Loudoun that smart prepayment is highly superior to legacy prepayment meters, it is also true that those customers who would benefit the most from prepayment meters can be among the hardest audiences to reach and the most vulnerable in our society. It is therefore critical that we tread carefully and do not place unrealistic targets in statute that may cause unintended consequences.

As drafted, the new clause could result in the prioritisation of the replacement of traditional prepayment meters. That may inadvertently deprioritise smart meter installation for credit consumers, many of whom are in vulnerable circumstances. Data from Ofgem indicates that around 70% of those with disabilities pay by direct debit and may therefore benefit from the automated readings that smart meters deliver.

Let me turn to the requirement to end self-disconnections within six months of the Bill becoming law. It is critical that the market delivers a fair deal for consumers, with an energy market that is resilient and investable over the long term. Ofgem’s recently published code of practice on prepayment is clear that when self-disconnection occurs, suppliers must make multiple attempts to contact the customer to understand the reasons for self-disconnection and offer appropriate support, including additional support credit. If frequent or prolonged periods of self-disconnection are identified, energy suppliers should assess whether a prepayment meter remains a safe and practicable option for that consumer.

As announced in the 2022 autumn statement, His Majesty’s Government have committed to work with consumer groups and industry to consider the best approach to consumer protection from April 2024, as part of a wider retail market reform. In addition, as announced at the spring Budget, we are keeping the energy price guarantee at £2,500 for an additional three months from April to June. That means we have covered nearly half a typical household’s energy bill through the energy price guarantee and energy bill support schemes since October, with a typical family saving £1,500. That is in addition to the expanded warm home discount scheme, which has been extended until 2026 and provides £475 million in support per year in 2020 prices.

New clauses 2 and 38 would allow the Secretary of State to restrict the use of prepayment meters, especially in relation to vulnerable consumers or where consumers are not aware that they are being moved to a prepayment mode. It is of course critical that our most vulnerable energy users are protected. The findings in The Times regarding British Gas customers were shocking and completely unacceptable. The Government acted quickly to tackle that issue of inappropriate prepayment meter use, and the Secretary of State wrote to energy suppliers insisting that they revise their practices and improve their action to support vulnerable households.

Following that intervention, all domestic energy suppliers agreed to pause the forced installation of prepayment meters and the remote switching of smart meters to prepayment mode. Ofgem rules are clear that suppliers can install a prepayment meter to recover a debt only as a last resort. They also require energy suppliers to offer a prepayment service only when it is safe to do so, with clear obligations on energy suppliers regarding support for customers in payment difficulty. The Secretary of State has called for more robust Ofgem enforcement on those issues, and Ofgem has responded by announcing a further review of supplier practices relating to prepayment meter customers.

[Kerry McCarthy]

The Minister may be about to come to this point, but I am wondering how it is going—does he know how many warrants are now being issued by the courts? Is he aware of statistics on how many prepayment meters are now being installed or on the type of customers who are being put on them?

[Andrew Bowie]

I do not have the exact numbers at my fingertips, but I am happy to write to the hon. Lady with that information. I can tell her that the senior presiding judge has ordered magistrates courts to immediately stop authorising warrants for energy firms to forcibly install prepayment meters while the process by which suppliers bring forward such applications is being reviewed.

--- Later in debate ---

[Alan Brown]

I beg to move, That the clause be read a Second time.

I shall potentially continue my losing streak here. This new clause is about setting up a just transition commission. The Committee may be aware that the Scottish Government set up a just transition commission a couple of years ago, which is effectively world leading. It brings together independent academics, and representatives from trade unions and right across industry. It advises the Scottish Government on policy implications and what is needed as we move forward to a just transition to ensure that workers are not left behind and do not lose their jobs, to be effectively left on the scrapheap.

This important body came together and has brought transparency to the Scottish Government, and I want to see that replicated at Westminster. It would be good for the Government as a way to work across the sector and the industry, with trade unions and academics to provide expertise. I look forward to hearing the Minister’s thoughts on that, explaining why they are probably not going to do this in the short term. I will be happy to be proved wrong on that.

[Kerry McCarthy]

We certainly need more focus, and to hear more from the Government about ensuring that this is a just transition. We know that we cannot reach net zero without the skilled workforce to deliver it, and without decisive action to ensure that no community is left behind. It is illustrative to look at what Joe Biden is doing with the Inflation Reduction Act in the United States, where a lot of focus is on energy-intensive states such as Texas to ensure that, as they move away from fossil fuel exploration, the jobs are still there. We all know what happened, as we debated earlier in this Committee, when the coalmines were closed with the lack of a strategy to ensure good, decent jobs for people left behind. We saw whole communities abandoned and, in some parts of the country, turned into basic commuter villages, rather than having a home-grown industry.

It has rightly been said that net zero is the economic opportunity of the century, but it represents a potential threat to those who, at the moment, rely on traditional industries. That is not because oil and gas extraction will immediately cease, or because coal-fired blast furnaces will suddenly be switched off. It is because our reliance on the old way of doing things will gradually decline and, as a result, the skills required will evolve.

Workers in those industries need to know that there is a plan. As I said, we cannot allow the mistakes of the 1980s to be repeated. We need a forward-looking industrial strategy, to make it clear that the transition to net zero is an opportunity to reinvigorate our industrial heartlands and coastal communities and to make it clear that that means a higher quality of work, better regulation of employment practices and greater diversity in the sector. This is quite a complex task. Some of it will be industry-led, but we know, particularly when we get further down the supply chain to those clusters of jobs that will be based around the traditional industries, that those smaller companies will need support to diversify as well.

--- Later in debate ---

[Alan Brown]

The hon. Lady will be aware that procurement rules and contracts for difference auctions, for example, are reserved to Westminster, so the Scottish Government do not have control of that. There is a whole supply chain aspect that is not developed, and that is partly because of these procurement rules—the fact that the cheapest price takes all. We want that amended at some time.

[Kerry McCarthy]

I was about to move on to that, because it is important. On the Government’s lack of action on developing a strategy, I have been trying to ask questions about the Green Jobs Delivery Group, such as when we will actually see some delivery and outcomes and how that will feed through into a skills strategy and an industrial strategy, but I have been getting very little by way of response.

Friends of the Earth Scotland has called on both the UK Government and the Scottish Government to ensure greater worker representation in their transition planning through existing bodies such as the UK’s Green Jobs Delivery Group and the Just Transition Commission in Scotland. It says that at the moment there is little support provided for high-carbon workers to find alternative jobs, to facilitate retraining where necessary, or to lighten the financial burden of training currently borne by the workers.

Last month, the Climate Change Committee briefed that the

“Government has policy levers at its disposal to support workers during the transition”

but warned that

“clearer plans are needed to harness the potential of the transition and to manage its risks.”

Work has been done. As I said, my concern is about focusing on setting up a commission rather than just calling on the Government to actually come forward with a clear strategy, a clear road map, particularly on the skills front, and to link that up. I do not know whether the Minister will accept my analysis of the situation, but it seems very fragmented. It is left, in large part, to big companies in the supply chain to try to ensure that the workers of the future are there as they transition. There is not a strategy for the smaller companies in the supply chain unless the big companies are leading that.

[Alan Brown]

I understand what the hon. Lady is saying about wanting the Government to get on with it sooner, but does she not agree that commissioning a body of experts will provide better advice, enabling the Government to develop their strategy better?

--- Later in debate ---

[Kerry McCarthy]

As I said, the Government have had their green jobs taskforce, and now they have the delivery group. They are also doing things on the nature side. I would argue that they should have had all the information and expert advice; it is all available out there.

What we need are more incremental steps. Rather than setting up a body, we need something concrete from the Minister on what the Government are doing, for example, to ensure that further education colleges are tying up with the potential needs of businesses in their areas. Some incredibly good further education colleges are working on that—going into schools, working with businesses and encouraging young people to look at those careers—but as I said it is piecemeal and depends on the quality of the college, and the relationship with other agencies in the local area. I sympathise with focusing on a just transition, but I have concerns about whether setting up another body is the way to do it.

[Andrew Bowie]

I thank the hon. Members for Kilmarnock and Loudoun and for Bristol East for their contributions. The Government agree with the intention behind the new clause; however, we already view transition as a consideration embedded across all Government policy actions. We are committed to managing the transition to net zero in such a manner that the positive opportunities are maximised for the economy and the population, while protecting individuals, communities and the economy.

Given that the majority of the low carbon economy lies outside London and the south-east of England, Government action to deliver our net zero commitment and build a low carbon economy will help to level up the UK and spur on the transition. That is demonstrated through the North sea transition deal agreement in March 2021, through which the UK became the first G7 country to agree a landmark deal to support the oil and gas industry’s transition to clean, green energy, while supporting 40,000 jobs in industrial heartlands across the UK.

Since delivering a net zero workforce transition needs joint action by Government, industry, and the education sector, the Government have established the green jobs delivery group. The group is headed up by Ministers and business leaders to act as the central forum for driving forward action on green jobs and skills, and has committed to publishing a net zero and nature workforce action plan in 2024, which will consider the workforce transition. We will continue to join up across the devolved Governments, who have already made excellent progress, with the Welsh Government having launched their net zero skills plan in March 2023, and the Scottish Government and Skills Development Scotland having launched their climate emergency skills action plan 2020-2025 in 2020.

Energy Company Obligation Schemes

Kerry McCarthy Excerpts

Tuesday 27th June 2023 Westminster Hall

[Kerry McCarthy (Bristol East) (Lab)]

It is a pleasure, as always, to see you in the Chair, Mr Paisley. I congratulate the hon. Member for Ceredigion (Ben Lake) on securing the debate.

We have heard from all Members who have spoken how important it is for the Government to look at the complexities of this issue. I represent a predominately urban constituency and, by and large, the other Members we have heard from represent rural constituencies. Each area will have different problems depending on its housing stock, the availability of skills and so on, but it is the Government’s job to try to iron those problems out. That is why it is important that we are having this debate so that people can put on the record some of the issues they have found.

Let me start with the broadbrush issues with retrofitting. Members have set out well that the crisis of rising energy bills has brought home to people how much energy they lose through having poorly insulated homes—energy is literally going through the roof—and how we could reduce not only bills, but our emissions if we had homes that met the EPC C standard.

I would say that this is about retrofitting existing homes, but the Government had a pledge to introduce zero-carbon new homes and then dropped it. Estimates suggest that well over a million homes have been built since then that do not meet the EPC C standard. Given that we face such a massive task in retrofitting existing housing stock, it seems ludicrous that we do not insist that new builds meet a certain standard, because we will need to retrofit them not too far down the line.

I have just come from the Energy Bill Committee, where we were talking about how we ensure that we have the skills for a just transition. This work tends to be carried out by small and medium-sized enterprises and sole traders—it is not as though there is one big company that will deliver it—and they need certainty that this is a line of work in which there will be jobs for the foreseeable future. With schemes stopping and starting as they have in the past—there was lack of consumer confidence because of the way some earlier schemes floundered—people will not move into those jobs, particularly given the shortages of construction workers, plumbers and electricians. It can be difficult to get people to do even the traditional jobs, let alone move into this area. We must address that to create stability.

The need for consumer advice was mentioned, and I just mentioned consumer confidence. Previous experience shows us that that is really important. This is about going into people’s homes, uprooting their domestic lives and putting them at risk of having to pay a lot of money. Under earlier schemes, cowboy operators did not do work to the expected standard and people were suddenly told that they needed extra—

[Liz Saville Roberts]

It seems evident to me that, since many of the people who will qualify for support through these schemes will be vulnerable, unless protections are built in for them, they may not be able to deal with it when work is not done to the expected standard, which is what we will hear about as MPs. I would have expected the Government to build that into the schemes in the first instance because of the nature of the people they are trying to support.

[Kerry McCarthy]

That is very much the case. I have been in this place for 18 years. Earlier in my career, I saw in my casework people who had been ripped off really struggling to deal with the bureaucracy of whether they would be able to get public funding and whether they had to pay the people who were literally on their doorstep asking for money.

Turning to where we are now, the ECO scheme was well intentioned and welcome, but it is not working. At the moment, the UK has the least energy-efficient housing in Europe and home insulation rates have plummeted. Many statistics have been bandied around. My numbers are slightly different and relate to a different time period. In 2013, the coalition cut energy efficiency programmes; in the same year, insulation rates fell by 92%. That is what I go back to—the period when the market crashed, setting us back about a decade to where we are now. Last year, only 159,699 ECO measures were installed in low-income and fuel-poor homes, a reduction of 59% from the 393,706 in 2021.

There is a substantial gap between Government insulation targets and delivery where ECO4 is concerned. Analysis from E.ON Energy suggests that, as of December 2022, the industry had completed around 11% of the obligation, compared with an expected 19%. We estimate that at the same point during the ECO3 scheme, the industry had completed 29%. That delay will have consequences. A report from the World Wide Fund for Nature and ScottishPower warns that the Government are on track to insulate just one sixth of the homes needed to meet their target of reducing energy consumption by 15% by 2030.

I have spoken to people from various businesses in the retrofit industry, and they fear that the same mistakes are being made. Nigel Donohue, chief executive of the Installation Assurance Authority, said the transition to ECO4 was

“really poorly managed…despite conversations with the Government about not allowing this to happen to the industry again”.

There is no getting away from the fact that the scheme is really struggling.

There are two major issues delaying delivery. The first is limitations on scoring. Aeon estimates that up to 90% of the properties eligible for ECO4 will not receive the support they desperately need because those homes do not meet the minimum improvement requirements. The goalposts that must be cleared for properties to meet the SAP score are being moved, so vulnerable, fuel-poor households have been ruled ineligible and are missing out.

The second issue is costs. Funding assumptions under ECO4 are significantly lower than actual installation costs, and rising inflation has led to costs in the supply chain escalating even further. With current inflation rates and the skill shortages, those costs are likely to be increasing incrementally, almost by the week. I am not convinced that the Government have taken that into account. Delivering loft insulation, for example, is currently 430% more expensive than the Government estimate, while cavity wall insulation is 372% more expensive. These are clearly not small discrepancies, and they have to be recognised in the ECO4 scheme.

The Department for Energy Security and Net Zero acknowledged the increased costs when consulting on the ECO+ scheme back in December, but ECO4 has not been aligned. There is also the problem I mentioned of the gaps between schemes causing confusion and a drop in uptake. There was a four-month gap before ECO4, and I think at one point prior to that there was an 18-month gap between schemes, which I am told had a major impact on the skills front. We cannot allow the same to happen with ECO+. Continuity is needed.

I have also spoken to a housing association boss who says that he thinks the schemes are working okay generally, but that timescales and bureaucracy are a big problem. Low levels of contribution to band D homes means that installers and energy companies are less likely to take them on. He would like a focus on ensuring that installers are compliant with publicly available specifications, PAS, in the long term, so that people trust retrofitting more, but at the moment the process is very bureaucratic. He cites a case where a 115-page form was needed to fit loft insulation that took only an hour to install. I do not know how long it takes to fill out a 115-page form, but I would imagine that it was considerably longer than one hour. He also said that with schemes such as the home upgrade grant, the focus on specific measures, rather than letting retrofitting co-ordinators decide what is best, sometimes means that they cannot offer support for some houses.

It would be remiss of me not to mention how well Bristol is doing at retrofitting homes through its City Leap programme. The 3Ci website has a really good account of what we are doing. One of our ambitions, for example, is to get all social housing up to EPC C by 2030, which involves an innovative arrangement with private sector finance. Under our green prosperity plan, Labour is committed to spending £6 billion a year to retrofit 19 million homes to EPC C within a decade, saving families an average of £1,000 a year on their energy bills, creating over 206,000 new full-time equivalent jobs, and cutting national gas imports by up to 15%. I hope that we will be ready to start work on that in just over a year’s time, or whenever the election is called, but it would be good if the current Government addressed some of the underlying issues, particularly the skills gap, ensured continuity of supply, and listened to what Members have said today, so that we are ready to hit the ground running. Even if we do not win the next election, I am sure the Minister would hope to get things in a better place so that we can steam ahead with this programme.

Energy Bill [ Lords ] (Fourteenth sitting)

Kerry McCarthy Excerpts

Committee stage
Thursday 22nd June 2023 Public Bill Committees

[Andrew Bowie]

Well, I hope it will remain a pleasure—I am sure it will. Here we are on day eight, sitting 15 of the Committee. There has been a comprehensive debate on the clauses, and I thank all Members on both sides and from all three parties represented for their full contributions. I will respond to some of the points that were made.

The hon. Member for Stretford and Urmston just referred to the Ofgem net zero duty. I am delighted that the Committee has welcomed the Government’s commitment on the duty and our new clause, and I pay tribute again to Members across the House and in the other place for their constructive dialogue on the issue. I confirm to the hon. Member for Kilmarnock and Loudoun that the measure will allow for anticipatory investment. I have engaged with industry and others, and they are confident that that is the case and welcome this step.

Community energy projects can have real benefits for the communities in which they are based, which is why so many Members supported the private Member’s Bill on the issue. However, the Government and I do not believe that every consumer should have to bear the cost of such projects. That does not seem a fair way to fund them.

[Kerry McCarthy (Bristol East) (Lab)]

Will the Minister explain why he does not think that consumers should bear the cost of community energy projects but does think that they should bear the cost of new hydrogen, through the hydrogen levy? That seems rather inconsistent.

[Andrew Bowie]

As the hon. Lady knows, we are listening and acting on the concerns raised by many in this place and the other place, including on Second Reading in the Commons, when issues regarding the hydrogen levy were raised. I am sure that we will have much more to say on that when the Bill comes back to the Floor of the House.

I am also not convinced that the Lords amendments tackle the real issues faced by community energy groups: high start-up costs and lack of expertise. I have had positive engagement with Members on that. The Government are therefore considering other options that could tackle such issues in a fairer and more proportionate way ahead of Report stage. I hope that members of the Committee and those who are following our proceedings with interest are reassured by those comments.

The hon. Member for Kilmarnock and Loudoun spoke at length, as did other Members—I hope to cover most contributions in my response—about coal. The hon. Gentleman specifically mentioned exporting coal to Germany. It is rather ironic that the only reason that Germany is importing coal is its nonsensical position on nuclear and new nuclear power—a position that is shared by the Scottish Government in Edinburgh. The hon. Gentleman might want to take that away and consider it.

The hon. Gentleman also mentioned that he disagreed with the comment by my hon. Friend the Member for South Ribble that the debate in Committee the other day was one of the “most jaw-dropping” moments of her political career, given the events of the week. I concur with the hon. Gentleman that that was a bit surprising, given that this was the week that a former leader of Aberdeen Labour claimed that Labour’s energy policies were the “final straw”—this is a Labour councillor saying this—and that

“Margaret Thatcher never delivered a more brutal put down of an industry than that delivered by Keir Starmer in Edinburgh.”

In the same week, a Green Minister in the Scottish Parliament faced a vote of no confidence, the Whip was withdrawn from a former SNP Minister, and a person of interest in an ongoing police investigation professed their innocence but could not do the same for another person of interest, to whom she is married. The last week was quite an exciting week for politics—I agree.

Our reliance on coal is rapidly diminishing, but there is still a need for it in industries such as steel and cement, so now is not the right time to make these licensing changes. I thank colleagues, including my hon. Friend the Member for South Ribble, for highlighting the role that these industries play in our constituencies, where they provide jobs and contribute to the economy.

Energy Bill [ Lords ] (Twelfth sitting)

Kerry McCarthy Excerpts

Committee stage
Tuesday 20th June 2023 Public Bill Committees

[Dr Whitehead]

I thank the Minister for that intervention. Following the assurances he has given on that basis, among others, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 260 to 263 ordered to stand part of the Bill.

Clause 264

Civil nuclear industry: amendment of relevant nuclear pension schemes

[Kerry McCarthy (Bristol East) (Lab)]

I beg to move amendment 103, in clause 264, page 234, line 31, at end insert

“, or on benefits in deferment or pensions in payment;”

This amendment means that the Secretary of State may not put a cap on revaluation of benefits in deferment or pensions in payment.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clauses 265 to 269 stand part.

[Kerry McCarthy]

It is a pleasure to see you in the Chair, Dr Huq. These clauses relate to nuclear pension schemes, and the amendment would provide certainty that Nuclear Decommissioning Authority pensions would not be capped. There is some ambiguity in the drafting of the Bill, and the door has been left open for the introduction of regulations to cap pension increases when that is not part of what has been agreed in the past among Government, unions and nuclear workers.

I say the door has been left open for such regulations because subsection (3) (c ) of the clause specifies that only increases for revaluation—that is, active deferred members—cannot be capped. It does not mention pensions in payment. The wording is

“not involving imposing a cap on any revaluation or revaluation rate”.

The amendment would mean that the Secretary of State could not put a cap on revaluation of benefits in deferment or pensions in payment, as well as the other schemes I have mentioned.

The provision as it stands is contrary to the heads of terms agreement between BEIS and the NDA, which explicitly states that pension increases will be in line with inflation, as measured by the consumer prices index, with no reference to any cap. It is also important to note that, although members of recognised trade unions in the NDA group voted in favour of the reforms that these measures facilitate, I am told that there was by no means an overwhelming endorsement. Many voted in such a way because they feared the Government would impose even worse reforms, which had been threatened, if they did not agree to what is now on the table. They felt that that was the best deal they could get, but they feel that the promises made to them have been broken and they are not happy. Given that, it is even more important that we ensure that the Bill reflects the compromise agreement that was reached.

It is also wrong to say that these reforms would bring pension provision across the NDA group into line with wider public sector pensions, which I think is what the Minister in the Lords said. Those pension schemes underwent much more radical reform long before Lord Hutton’s review of public sector pensions, and they have been closed to new entrants for many years. Lord Hutton recommended that public sector pension accrual remain on a defined-benefit basis, but pension provision across the NDA group is mostly on a defined-contribution basis. I have been approached by representatives of trade unions who are eager to meet the Minister to ensure that reforms are fully consistent with Lord Hutton’s review. I do not know whether the Minister can offer today to meet those representatives, so I can take that back to them.

An amendment is necessary to remove any doubt about the status of nuclear workers’ pensions. I am sure we all agree that the effectiveness of the Civil Nuclear Constabulary is essential to maintain the UK’s nuclear security, and that the work of everyone at the NDA is really important, as we have already heard this morning. Those people are integral to keeping the public safe, and that should be recognised when legislation is being determined.

I hope the Minister accepts that the amendment has been tabled in a constructive spirit. It is designed to remove any uncertainty, and I hope he will accept it.

[Andrew Bowie]

I am searching in vain for a second Minister to take some of this Bill. Unfortunately, they do not seem to be available. I thank the hon. Member for Bristol East for moving her amendment and allowing us to debate an important issue, especially for employees of the Nuclear Decommissioning Authority. I recently had a constructive meeting with trade unions representing workers from the NDA and was happy to discuss the issues they are concerned about in depth and specifically the one we are debating today.

The Nuclear Decommissioning Authority agreed with unions as part of negotiations that the consumer price index should be used for revaluations and that it should not be capped. Both the reference to the CPI and that revaluations should not be capped are referenced in the clause. As the clause sets out, revaluations include pensionable earnings, benefits in deferment and pensions in payment. Pensionable earnings relate to the pension payments contributed by employee and employer while they are working. Benefits in deferment are those benefits that have been built up by an employee who has left the pension scheme but has not yet accessed it. Pensions in payment relate to those receiving their pension.

The Government are content, therefore, that the legislation as drafted does not exclude benefits in deferment and pension in payment from the non-capping of the revaluation of earning by CPI. It is therefore in line with the agreed scheme. However, I am happy to put on record that in the new scheme, both benefits in deferment and pensions in payment will be uprated by CPI and will not be capped. While I appreciate the hon. Member for Bristol East raising the issue and the importance of ensuring that those with benefits in deferment and pensions in payment do not have their revaluations capped, I do not think the amendment is necessary.

[Kerry McCarthy]

Can the Minister confirm that when he discussed this with the trade union representatives, they were happy to accept his assurances that that is what the Bill says? Certainly, they have not communicated that to us. As far as I am concerned, they still believe that getting our amendment into the Bill is still important.

[Andrew Bowie]

That specific element was not discussed or brought up in the meeting, but I am happy to meet trade unions again to continue the discussion on the matter.

[Kerry McCarthy]

If there is some ambiguity, is there a reason why he feels that putting a clarification in the Bill to spell it out and give those reassurances would not be acceptable? The amendment does not seek to change his position as I understand it; it just seeks to make sure that that is clear.

[Andrew Bowie]

I understand why some Members, including the hon. Lady and trade unions, would find that helpful. We do not believe it is necessary because I have stressed today on the record—it will be in Hansard—that it is the Government’s position that those benefits in deferment and pensions in payment do not have revaluations capped and that they will be uprated by CPI. We do not think it is necessary because that is already the Government’s position. It is on the record and I am happy to stand by that.

Turning to clause 264, the 2011 report by Lord Hutton of Furness started the Government on the road to the reform of public sector pensions. While the Public Service Pensions Act 2013 made a large number of reforms, it did not cover all public sector bodies, including those within the NDA group. The NDA is the statutory body responsible for the decommissioning and safe handling of the UK’s nuclear legacy, with 17 sites across the United Kingdom, including Sellafield. Even though the NDA was created in 2005 via the Energy Act 2004, many of its sites have been operating since the middle of the 20th century. That lengthy history has led to a complicated set of pension arrangements, which include two pension schemes that, while closed to new entrants since 2008, provide for final salary pensions and are in scope for reform. They are the combined nuclear pension plan and the site licence company section of the Magnox Electric Group of the electricity supply pension scheme. 

In 2017, the Government and the NDA engaged with trade unions to agree a reformed pension scheme that was tailored to the characteristics of the affected NDA employees. That resulted in a proposed bespoke career average revalued earnings scheme which, following statutory consultation with affected NDA employees and a ballot of union members, was formally accepted by the trade unions. Subsequently, a formal Government consultation was launched in 2018, with the Government publishing a response in December of that year confirming the proposed change.

The reformed scheme still offers excellent benefits to its members. Notably—and unusually compared with other reformed schemes—it still includes provision for members to retire at their current retirement age. For nearly everybody, that will be 60 years old. However, the complicated nature of the pension schemes, in the context of the statutory framework that applies to pension benefits across the NDA estate, means that specific legislation is needed to implement the new scheme.

Clause 264 provides the Secretary of State with the power to make secondary legislation designating a person who will be required to amend the provisions of a nuclear pension scheme. That is necessary, as at the current time the scheme rules limit the NDA’s ability to make changes to pension scheme arrangements. Clause 264 uses the phrase “relevant nuclear pension scheme” to describe the types of schemes that a designated person could be required to amend by virtue of that amendment. Clause 265 explains what is meant by that phrase. Clause 265 also clarifies the UK Atomic Energy Authority pension schemes and pension schemes that benefit persons specified in the Public Service Pensions Act 2013 are not relevant pension schemes.

Clause 266 relates to the provision of information. In order to implement the proposed pension reforms, the NDA—and, in the case of the MEG-ESPS, Magnox Limited—will need information from others. Clause 266 gives a person who has been required to amend a relevant nuclear pension scheme the power to require persons holding any information they might reasonably require to provide that information. That could include the number of members in a pension scheme, and the salaries and ages of those members.

Data protection legislation may still prevent the information from being shared. The clause specifies, however, that in making that assessment, the requirement to disclose imposed by the clause must be taken into account. The clause also provides that disclosure does not constitute a breach of confidence or breach of any other restriction on the disclosure of information.

Clause 267 sets out definitions relevant to the clauses about amendments of relevant nuclear pension schemes. Clause 268 relates to the protection that is in place that would currently block any change of pension. Although the reformed pension to be provided to affected NDA workers is still excellent, it has always been clear that the reforms to public sector pensions would result in lower levels of benefits to members than is currently the case. Although that is the acknowledged effect of Government policy in this area, it does bring it into conflict with existing legislation. Both schedule 8 of the Energy Act 2004 and regulations made under schedules 14 and 15 of the Electricity Act 1989 effectively mean that any change to NDA pensions must be “no less favourable”.

Clause 268 effectively expands a power made under an earlier clause, providing the ability for regulations made by the Secretary of State to amend or disapply schedule 8 of the Energy Act 2004 and regulations made under schedules 14 and 15 of the Electricity Act 1989. Given that this is not a hybrid Bill, we believe it is more appropriate for those powers to be exercised via regulation rather than primary legislation.

Clause 269 relates to the procedure for the regulations under this chapter. The Government believe it is right and proper for regulations under this chapter to be subject to the affirmative procedure. We also believe that these regulations should not be subject to the hybrid instrument procedure. There has been considerable consultation with those affected, and the policy is in line with pension reform across the public sector.

[Kerry McCarthy]

I welcome the Minister’s assurances and his offer to meet the unions to discuss this point. I have spent a lot time looking at the wording. Although I agree that it could be interpreted in the way the Minister says, that is arguable. I still feel it would be best to have clarity in the Bill and, therefore, would like to press the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Andrew Bowie]

That is demonstrated by the clause, and that is why I believe that now is not the right time to make the changes suggested by the Labour party. We will oppose the clause.

Finally, I will address clauses 272 and 273 on community energy, which I also oppose. I recognise that several Members spoke in support of these clauses on Second Reading. However, the Government continue to believe that this is a commercial matter that should be left to suppliers, and further work is needed before considering whether primary legislation is needed.

In evidence submitted to the Committee and published on 13 June, Energy UK set out its in-principle support, much like the Government, for community energy, and recognised the role that it will play in our energy system. However, it asks that

“these measures be removed to give the Government, the regulator, and the industry time to fully consider the best approach to integrating community energy effectively, protecting consumers and preventing additional costs being added to all consumers’ energy bills on behalf of a currently small portion of the population.”

[Kerry McCarthy]

Does the Minister accept that the wording inserted in the Bill by the Lords reflects the exact same wording of a private Member’s Bill—I think it is the Local Electricity Bill—that more than 120 Conservative MPs previously pledged to support? I checked to see whether any members of the Committee supported that Bill, and apparently the hon. Members for Hyndburn and for West Aberdeenshire and Kincardine were among those 120 MPs. I think the rest of the Committee gets off the hook on that. Would the Minister like to explain why he has changed his mind?

[Andrew Bowie]

The hon. Lady is hearing me explain at great length why the position of the Government is what it is.

Clause 272 seeks a minimum export guarantee scheme. Community energy projects can already access power purchase agreements, which are arrangements for the continuous purchase of power over a given period with market-reflective prices. For example, Younity, a joint venture between Octopus and Midcounties Co-operative, already purchases electricity from more than 200 community groups of all sizes. It has PPAs of varying contract lengths, from six months to five years. Renewable Exchange has also enabled more than 100 community projects to sell electricity via PPAs since 2018.

When we introduced the smart export guarantee, we consciously moved from a consumer-funded subsidy model to a competitive market-based system with cost-reflective pricing. That was in line with the vision to meet our net zero commitments at the lowest net cost to UK taxpayers, consumers and businesses. Introducing a fixed price would be a step backwards, as it requires all energy consumers to pay more than the market price for electricity to subside local communities that benefit from community energy projects. An electricity export guarantee indexed to the wholesale price is inconsistent with the Government’s aim to decouple renewable generation from a wholesale price linked to the marginal cost, usually fossil fuel generation or gas. A static export price could also dampen price signals needed in the system, for example, in the use of intraday batteries.

History suggests that such a support scheme would have only a minimal impact on deployment. For example, deployment of community energy projects over the final five years of the much more generous feed-in tariff subsidy scheme was still very low. These projects are also typically more expensive than larger utility-scale renewable projects, with small solar and onshore wind projects between 50% and 70% more expensive. The proposal would be mandatory for suppliers with more than 150,000 consumers, and would therefore introduce a huge new administrative burden. Suppliers would face the additional one-off costs of putting in place process and IT infrastructure, as well as ongoing costs of managing the scheme, which would be passed on to consumers in higher bills. It is likely that it will disproportionately impact smaller suppliers, sitting just above the 150,000 customer threshold.

Similarly, on clause 273 it is the Government’s view that a local tariff is unlikely to result in a better price for consumers. Suppliers would incur potentially significant costs in setting up and delivering the scheme. They would also have to recoup the additional costs, which we anticipate would be via the service fee and would therefore be recoverable only from local consumers. A small-scale low-carbon generator is also unlikely to guarantee a supply of electricity to local consumers at all times. Suppliers would have to buy additional wholesale energy to cover all local consumer demand, while continuing to charge for all other supply costs incurred. The local tariff would also need to reflect the export price paid to the generator. Presumably that is intended to ensure that local consumers benefit from cheaper export prices, but it would create an unintended outcome whereby higher export prices benefit the generator and increase the tariff price.

I hope that I have explained at length why I, as the Member for West Aberdeenshire and Kincardine, am espousing this position. I reassure the Committee that I am working with my officials to explore what other credible options are available to support the community energy sector. Indeed, work continues as we speak. We are taking these issues seriously, but for the reasons that I have provided I will oppose the clauses.