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

Kevin Brennan Excerpts

Monday 9th January 2023 General Committees

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

I beg to move,

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

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

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

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

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

[Kevin Brennan (Cardiff West) (Lab)]

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

[Graham Stuart]

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

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

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

--- Later in debate ---

[Kevin Brennan]

I have three quick points to put to the Minister. I know he is extremely assiduous in preparing for these statutory instruments and knows his brief well.

First, the impact assessment refers to the fact that the Department does not intend to consolidate the relevant legislation at this time. Will the Minister clarify why that is the case? It might make sense—particularly given what my hon. Friend has just elucidated—to try to tidy all this up into one piece of consolidated legislation. What is the reason for not doing it that way?

Secondly, the explanatory memorandum refers to the fact that

“The Department for Business, Energy and Industrial Strategy is updating guidance to explain these Regulations in further detail, which will be published shortly after the instrument is laid.”

As the Minister said, the instrument was laid before Parliament on 6 December. Will he tell the Committee if that guidance has been prepared, published and made available to the businesses and consumers who are affected by the statutory instrument?

My third point refers to my earlier intervention on the Minister, which I wonder if he can clarify. On these occasions, I am always interested in whether what we are doing not only has an impact, but could have an impact. As the Minister and I have said, the statutory instrument was made on 5 December; the Government laid it before Parliament on 6 December, and it came into force on 7 December without the consideration of this Committee.

Small businesses, referred to in the Minister’s speech and in the explanatory memorandum to the statutory instrument, are affected. They could be subject to £5,000 fines if they are not in compliance with the instrument. Am I right in saying that even if Committee were to reject this instrument, it would make absolutely no difference to the fact that it has already come into force? Our proceedings this afternoon are one of these parliamentary pantomimes we go through, where hon. Members have no influence because, even if we vote to reject a statutory instrument, the Government have already used their Executive powers to bring it into force—in this case, on 7 December.

That is not a technical point. My question is: could small businesses end up being fined £5,000 for not complying with the deadline of 6 January for making the necessary notifications under this statutory instrument, even though it was not scrutinised in Committee until today, 9 January? What is the answer to that question? Does it make no difference, however we vote? And even though the Government say the instrument is light-touch regulation for the very reason that small businesses are affected, could some small businesses in our constituencies end up being fined £5,000 under an SI that MPs did not even properly scrutinise until after the deadline with which they have to comply has come into force?

--- Later in debate ---

[Graham Stuart]

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

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

[Kevin Brennan]

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