Draft Warm Home Discount (Scotland) Regulations 2026
Martin McCluskey Excerpts(4 days, 23 hours ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I beg to move,
That the Committee has considered the draft Warm Home Discount (Scotland) Regulations 2026.
It is a pleasure to serve under your chairmanship, Sir Desmond. The draft regulations were laid before the House on 17 March. Since 2011, the warm home discount has supported low-income and vulnerable households by reducing energy bills during the coldest months of the year, when support is most needed. The Warm Home Discount (Scotland) Regulations 2022 ended on 31 March 2026; the draft regulations will extend the scheme in Scotland for a further five years until 2031, providing certainty for households, suppliers and delivery partners.
As the Committee will know, fuel poverty is a devolved matter in Scotland. Under the Energy Act 2010, as amended by the Scotland Act 2016, Scottish Ministers have powers to design their own fuel poverty scheme, subject to consultation with and agreement from the Secretary of State. To date, the Scottish Government have not made use of those devolved powers. They have instead requested that the UK Government prepare regulations to lay in this Parliament, on their behalf, to continue the warm home discount for the next scheme period. Scottish Government Ministers must consent to the making of such regulations before they are made; I have sought and received their formal consent.
Let me set out some of the background. In September, the Government consulted, with the agreement of the Scottish Government, on proposals for the next scheme period. Consultation responses relating to Scotland were shared with Scottish Ministers, who have determined the eligibility criteria for the next scheme period within the agreed spending limit, as set out in the draft regulations. That spending limit will be £92 million for this year, as well as for subsequent years. The draft regulations will continue to require energy suppliers with more than 1,000 domestic customer accounts across Great Britain to participate in the scheme. Suppliers with fewer than 1,000 domestic accounts will be able, as they are now, to participate on a voluntary basis.
The draft regulations will continue to provide for £150 rebates to be provided by scheme suppliers under the data-matched core group and the application-based broader group. Participating suppliers will continue to be obliged to provide a £150 rebate to eligible households in the core group, applied directly to their electricity bill. The draft regulations also set out new eligibility criteria for the core group in Scotland, aligning qualified benefits with those of the Scottish winter heating payment, as of December 2025, for the next scheme period. It is estimated that 345,000 households will receive a core group rebate each year, an increase of roughly 250,000 on 2025-26. The draft regulations will continue to oblige scheme suppliers to allocate the remaining balance of their Scottish spending obligation through non-core group support, delivered via the broader group, and optionally though industry initiatives.
The draft regulations will update the mandatory eligibility criteria for the application-based broader group, which suppliers must consider when providing support via the broader group. The number of rebates available within the broader group is finite and is dependent on the size of each supplier’s obligation in Scotland. Suppliers will continue to determine their own application processes and decide which eligible households receive the rebate within their obligation.
Suppliers will continue to have discretion, subject to Ofgem approval, to extend their eligibility criteria further to other households that are wholly or mainly in, or at risk of, fuel poverty. Under the core group and broader group, around 560,000 rebates are expected to be provided each winter to Scottish households for the rest of this decade, which is almost double the number supported in winter 2023-24, before the scheme was expanded by this Government for winter 2025-26. In addition, the draft regulations will introduce provisions for a late rebate to be issued where a household eligible for the core group did not receive support in the previous scheme year because of an administrative error by a supplier, Ofgem or the Secretary of State.
The draft regulations also include a new power to allow the Secretary of State to direct suppliers to communicate additional information about the scheme directly to successfully data-matched core group customers. Households that are not automatically matched by the Department for Work and Pensions will continue to be notified by the Government, and they will be directed to the warm home discount helpline to determine their eligibility for the core group rebate.
By continuing the warm home discount scheme, through the draft regulations, we are securing vital support for eligible Scottish households each winter—the coldest time of the year, when support is most needed. I commend the draft regulations to the Committee.
Harriet Cross
The warm home discount, as I say, moves bill payers’ and taxpayers’ money around; it does not reduce the cost, and it does not take money off bills. People are still paying it, but in a different place. People who can just manage are paying it for those who just cannot. It is an unfair mechanism that penalises those who are just above the margin. Although we recognise the importance of making sure that bills are affordable for everybody, that does not mean that those who can just pay should be penalised. That is why we brought in, and we support, the concept of a warm home discount to help make bills affordable, but there must be an alternative via the cheap power plan to ensure that we can help everyone.
I would be grateful if the Minister answered a few questions. Why have the regulations only been put before us today, when the 31 March 2026 deadline has already passed? The Minister mentioned that the measure will cost £92 million. I believe that that is for the next five years.
Harriet Cross
It is per year. Does that fall completely on the Scottish Government’s budget, or is it shared between the Governments of Westminster and Holyrood? Given that there is an alternative, via the cheap power plan, that would eliminate the costs rather than moving them, and given that the Government have already addressed some of the costs by removing some of the carbon taxes, why would they not go further and implement more of the Conservatives’ cheap power plan?
Martin McCluskey
I thank hon. Members for their speeches. The hon. Member for Gordon and Buchan asked why there had been a delay in laying the draft regulations. The delay was because of continued negotiations between the UK Government and the Scottish Government. At the outset of the discussions with the Scottish Government, there was ambiguity as to what was devolved and what was reserved; that took us some time to agree with the Scottish Government. Scottish Government Ministers then took some time to determine eligibility for the scheme. The reason that we are putting the draft regulations before the Committee today, rather than having done it before the 2022 regulations came to an end, is that we had to wait for the Scottish Government to decide what the criteria for each of the groups would be.
The hon. Member asked about the cost of £92 million per year. That £92 million is set by the Secretary of State within the part of the regulations that is reserved. That is proportionate to the overall UK figure; £92 million is the amount that goes to the Scottish Government. That is where the reserve power is. There is a UK-wide figure, so UK—in this case, GB—taxpayers will bear the responsibility for the cost of those bills across the country.
The hon. Member also spoke about the Tory cheap power plan, which I have read with interest. I have to say that it is quite thin on detail, and I would argue that some of the suggestions in it would probably bring about further instability within our electricity market.
Let me talk about some things that the Government have done in just the past few months. Our £150 warm home discount is offering targeted support to the most vulnerable people. There is also universal support, in the form of the 7% price cap reduction in the current price cap period. Last week, we announced the British industrial competitiveness scheme, which provides support for industry. The Secretary of State for Energy Security and Net Zero also announced last week how we will go further and faster in our mission for clean power by 2030.
It is important to emphasise to hon. Members that the way to get our energy bills down permanently is through home-grown clean power that we control and can control the price of. It is not through continued exposure to volatile fossil fuels like oil and gas that at this very moment are leaving us exposed to volatile wholesale costs, which are still the largest part of each of our energy bills.
I can guarantee the hon. Member for Inverness, Skye and West Ross-shire that I have noticed no one in Speedos in Inverclyde. Even on the sunny banks of Gourock this weekend, there were certainly no Speedos on display, despite the warm weather. The hon. Member made an important point about the impact of rising energy bills on rural homes and businesses; he will know that provision has already been put in place for additional support for those who use heating oil, with over £50 million delivered by the UK Government and now a £10 million scheme in Scotland. We have always said that we will keep that under review. To my knowledge, the Scottish scheme is nowhere near exhausted, but we will keep under review the amount that might be required for additional support.
I also point the hon. Member towards the decisions in the Budget to remove costs from energy bills, which disproportionately reduce electricity users’ bills over those who have dual fuel, because most of the discount came from the electricity part of the bill. That will have made a difference. However, we also need to close the spark gap between electricity and gas. The action that the Secretary of State took last week, alongside the Chancellor, to move electricity generation to longer-term contracts for difference will help to close that gap. However, I agree with the hon. Member that there is still room for further measures in future.
As I mentioned, fuel poverty is a devolved matter in Scotland. The draft regulations, which we are making on behalf of the Scottish Government, will help more households in Scotland who are facing financial challenges or fuel poverty to receive support each winter, the time of year when support is most needed. This Government are ensuring that lower-income households benefit the most from energy bill reductions.
I should also address the point that the hon. Member for Gordon and Buchan made about redistribution. This is where we will probably find an ideological difference in our approach to support for the most vulnerable. The Labour party supports redistribution. We support the fact that those with the broadest shoulders are being asked to pay a little more on their energy bills for support—
Harriet Cross
Does the Minister think it fair that someone who is £1 or £10 over the limit will have to pay for someone who is £1 or £10 under the limit? This redistribution is penalising people near the limit to such an extent that those who are just outside it will end up worse off than those who are just inside.
Martin McCluskey
That is why we need a balance of universal and targeted support. Currently, through the price cap, those on dual fuel bills will be receiving an average reduction of 7%. Alongside that, we have targeted support for the most vulnerable people in society. I think that that provides us with the right balance to ensure that widespread support is targeted at those who most need it.
We acted in last year’s Budget by taking money off energy bills to tackle the cost of living. These significant changes to how energy is priced have ensured that energy bills have fallen by 7% for an average dual fuel customer paying by direct debit. Once again, I commend the draft regulations to the Committee.
Question put and agreed to.
Ofgem Review: Final Report
Martin McCluskey Excerpts(1 week, 2 days ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
Today I am publishing the Government’s final report of the review of Ofgem, the energy regulator for Great Britain. This review delivers on our commitment to ensure that consumers remain well protected from bad practice and that Ofgem is equipped to regulate a rapidly changing energy system. The current situation in the middle east has once again highlighted the need to protect consumers, particularly during times of volatility, and Ofgem’s ability to respond in times of crisis. The review has examined whether Ofgem’s remit, duties and capabilities remain fit for purpose in an energy landscape shaped by rising demand for clean power, new technologies, and the need for greater resilience and fairness for households and businesses.
In particular, I am pleased to highlight that we will equip Ofgem with stronger powers to take action where needed and to deter bad practice across the sector. The review will also bring enhanced protection for energy consumers, not only by reinforcing its commitment to the protection of consumer interests, but by granting it a stronger mandate to support delivery of clean home-grown power and support investment and growth in the UK.
The review gathered extensive evidence, including over 20,000 responses to the public call for evidence, alongside detailed engagement with consumer groups, suppliers, networks, generators and investors. In addition, the review drew upon the knowledge of an advisory panel comprised of specialists appointed in their individual capacity to ensure independence and diversity of thought, bringing a wide range of experience and perspectives to challenge and guide the review.
The conclusions are clear: Ofgem plays an essential role in our energy system and its statutory duties, regulatory boundaries, and organisational capabilities must be modernised to meet the challenges now, and in the years ahead.
The review also considered Ofgem’s role across the energy system as a whole, recognising the significant interdependencies between generation, networks, system operation, retail markets and emerging flexibility services. Stakeholders highlighted that the energy system is evolving rapidly with decentralised generation, electrification, digitalisation and new business models reshaping how power is produced, transported and consumed, but regulatory frameworks have not consistently kept pace. Evidence indicated that Ofgem must be equipped to oversee the system in a more coherent, end-to-end way, ensuring that decisions taken in one part of the system do not create unintended consequences elsewhere. This includes ensuring efficient network investment, enabling integration of low-carbon technologies, and supporting the development of retail and flexibility markets that deliver genuine consumer value.
To address these challenges, the Government will strengthen Ofgem’s system-wide mandate and capabilities so that it can take whole-system, forward-looking decisions that reflect the interactions between different segments of the value chain. This will help Ofgem to anticipate pressures, drive innovation and competition, and support a more dynamic, efficient and consumer-centric energy system. By ensuring that Ofgem can regulate the energy system as an integrated whole, these reforms will promote efficient investment, enable the scaling of new technologies, and ensure that consumers benefit from a system that is resilient, fair and aligned with the UK’s long-term energy security and net zero commitments. The Government are therefore bringing forward a package of reforms to strengthen Ofgem’s mandate, improve regulatory clarity and reduce duplication, and ensure that the regulator can act more proactively in the interests of consumers. Key measures include:
Strengthening enforcement and redress mechanisms so that Ofgem can act quickly and decisively when consumers face harm, including stronger powers to address poor service and hold senior energy company leaders to account.
Modernising Ofgem’s statutory duties, streamlining them into three clear pillars of consumer protection, economic growth and delivery of net zero. This will ensure that Ofgem can take clearer, more strategic decisions that directly benefit households and support long-term national priorities. Establishing an Ofgem-specific strategy and policy statement, providing clarity on the Government’s strategic expectations while preserving Ofgem’s operational independence.
Boosting Ofgem’s organisational capability, including digital, technical, financial and analytical expertise, to enable a more agile, confident and evidence-driven regulator.
Introducing new transparency and accountability requirements, including regular public progress updates and a five-yearly independent review of Ofgem’s performance.
These reforms will create a regulator that not only protects consumers but supports an energy sector that can innovate, invest and improve the customer experience. They will help build a more resilient, fair and modem energy system as we accelerate towards clean power and strengthen the UK’s energy security.
A copy of the Ofgem review final report will be placed in the Libraries of both Houses. The Government will now work closely with Ofgem, industry and consumer groups to take forward the implementation of these reforms.
[HCWS1533]
Cost of Heating Oil
Martin McCluskey Excerpts(2 weeks, 2 days ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I thought we were about to end up in an “I am Spartacus” moment. [Laughter.] It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I thank the hon. Member for North Norfolk (Steff Aquarone) for raising this vital issue and giving us the opportunity to discuss it at length, since it is an important area that is dominating much thinking among Members and in my Department.
It is important at the outset to put this in the wider context of what is happening in the middle east. It is clear from what we have heard over the past few weeks that the conflict in the middle east is not Britain’s war. The Prime Minister made the right judgment in not taking the country into offensive action, but how we emerge from this crisis will define us for a generation in how we respond. It is clear that we need to de-escalate the situation in the middle east. We need a negotiated settlement that allows the free passage of traffic through the strait of Hormuz. That will ultimately determine the fate of energy prices and our constituents’ cost of living.
Let me do three things. First, I want to respond to issues raised around the immediate support the Government have offered. Secondly, I will talk a little more about market reform and regulation, and the process going on with the CMA. Finally, I will talk about some of the wider structural issues discussed this morning.
As hon. Members have mentioned, 1.5 million households in the UK use heating oil to keep their homes warm. We know from what has been said this morning, and also from looking at what has been happening in the market, that the price of a litre of heating oil has increased significantly—doubled, in fact—since the war in the middle east began. Even before the situation in the middle east developed, the cost of living crisis was a priority for the Government. Hon. Members know that we have till the end of June. This does not apply to those on heating oil, as we will discuss, but energy prices have been reduced under the price cap by 7% until the end of June, and the Government were taking other measures to alleviate the cost of living even before the middle east situation started.
I want to be candid with people about the choices that we had to make. Under the last Government, it took around 200 days for support to come to heating oil customers. We have rolled out support within two and a half weeks, but there is a trade-off when we make such decisions, and the decision that we made was to prioritise speed at this point, which meant deploying funding through local authorities in England and through devolved Governments elsewhere in the UK. That does, however, limit our ability to stipulate what the criteria are, but that is the trade-off we had to make. Listening to hon. Members this morning, I think we have made the right choice in prioritising speed because the need is clearly great right now. Had we been sitting here saying that the Government were coming up with a far more extensive scheme that might take months to deliver, I think we would have had a very different sort of debate this morning.
Martin McCluskey
No one has said that this is the extent of all the support that will be on offer: I have been very clear about that, both in the Chamber and whenever I have been asked the question. The point of immediate support now was to provide people with relief from an immediate crisis. We have been very clear—the Chancellor was and the Secretary of State was—that it was never intended to provide discretionary support for every single heating oil user to fill up their tank. It was to provide immediate relief quickly from a pressing crisis that we were facing across the country. We are keeping everything under review. Were we in a situation later in the year where we need to look at providing further support, we will make decisions then, but right now that support is on offer to people.
Different local authorities are taking different approaches. That is in the nature of the trade-off that we had to make. North Norfolk is taking an approach that looks at means-tested benefits, but North Northamptonshire is not taking an approach that relies on means-tested benefits. It is asking for evidence that people are not able to afford a payment, which involves, for example, giving over bank statements to enable people to make an assessment based on income rather than on means-testing. So different authorities are taking different approaches. That is what we have to accept if we are deploying this through the crisis and resilience fund and not having a centralised scheme as we did before. But as I said, this is about doing things at speed to make sure that people have the support they need.
On the situation in Northern Ireland, the hon. Member for Strangford (Jim Shannon) highlighted that almost two thirds of homes rely on heating oil. We have allocated £17 million to support them. Again, we will keep that under review. We have heard complaints from the Northern Ireland Executive, as we have heard from others this morning, that it is not enough. But as I understand it—the hon. Member might want to correct me—there is not currently a scheme through the Northern Ireland Executive to deploy that money, so we do not yet know what the demand actually is in Northern Ireland for the take-up of that funding.
Jim Shannon
I do not want to be churlish—when we get something that is helpful, we accept it—but our indications are that those moneys will be disbursed across Northern Ireland shortly and that it will be £35 per household. As I asked in my contribution about pensioners, who are really feeling the pinch, what can be done for them specifically?
Martin McCluskey
As I said, once the funds are disbursed in Northern Ireland, just as across the whole of the United Kingdom, we will make an assessment as to what further work might need to take place. I will have further discussions with the Northern Ireland Executive. We are obviously keeping every option under review, especially as we start to think about later in the year and into the winter. In Northern Ireland, we are still to see what happens when the funds are disbursed.
In Scotland, we have heard from my hon. Friend the Member for Na h-Eileanan an Iar (Torcuil Crichton) about how Advice Direct Scotland is disbursing those funds. However, we cannot know at the moment how much is being given out, because the Scottish Government will not let Advice Direct Scotland provide us with that data, so there is no way for us to know what the situation in Scotland looks like.
In England, we are having weekly stocktakes with the DWP, which is the Department responsible for the crisis and resilience fund. It is providing us with assurance on the disbursal of those funds, and we hope to have a dataset available in May that looks at how many applications and payments have been made, and what those payments look like across the country.
Torcuil Crichton
If officials from Advice Direct Scotland can tell me, as a constituency MP, the number of applicants they have, and the estimated number they will have—16,000, with 5,000 applications already last week—surely they can provide that information to the UK Government as well.
Martin McCluskey
Unfortunately, the Scottish Government are not allowing the data to be shared because of the pre-election period. I would argue that that is not what the pre-election period is meant for, and I will continue to have those discussions with the Scottish Government. I know that other hon. Members in Scottish constituencies have faced a similar problem in getting any data about their constituencies from Advice Direct Scotland because of this prohibition from the Scottish Government.
I am conscious of time, so I turn to the issue of wider market reform. There is obviously evidence that the market as it exists at the moment is not working. I find it difficult to listen to the hon. Member for Mid Buckinghamshire (Greg Smith), who was a Minister in the Department for Business and Trade under the last Government—
Martin McCluskey
Well, the hon. Member was a Member of the party that was last in government, let me say that, and I find it difficult to listen to him tell us about the lessons that we should have learned. We should never have been in this position, and we should not be in a position again where we are facing higher energy prices because of an international situation, and where we are having to deal with an unregulated market in heating oil. I argue that the then Government should have looked at this in 2022 and determined what action needed to be taken.
I will explain what we have done so far. The CMA is conducting an investigation at speed. These investigations normally take around a year, but it is going to conduct this one within 12 weeks. It has already completed the evidence-gathering stage, and it is now in the process of examining that evidence. I hope that it will come forward with the report in June. The Prime Minister has been clear that we will look at what comes forward from the CMA and examine the case for regulation.
Hon. Members across the Chamber have spoken about a price cap, but I do not want to prejudge the work of the CMA. There have also been suggestions about minimum orders and price guarantees—there a number of different proposals on the table—but we have to ensure that we make the right decision, and do not end up with unintended consequences that could make the situation worse. In a market with a large number of players, many of which are quite small rural businesses, it is especially important that we do not make the situation any worse. We are looking at a range of options.
The Chancellor has written to the CMA to ask that it remains vigilant across heating oil prices and tackles any unjustified increases that it might find. The Government are also in daily contact with industry to understand the drivers of recent price movements. We have reminded heating oil distributors of their commitments under the trade association code of practice.
Pippa Heylings
Does the Minister have a timescale for when he expects the review of the market and any recommendations to come back from the CMA? When will the Government enact them? Will they be part of the energy independence Bill, or is there another way in which they could come into effect quite quickly?
Martin McCluskey
I hope the report will come back to us some time in June, and then we will examine it to determine what may be required in terms of further action. I want us to move as quickly as possible. I have another meeting with the chief executive of the CMA tomorrow to discuss progress on the market investigation and ensure that work is carrying on at the pace that we want. We are not moving slowly. We have already accelerated this process—it was a year, and it is now 12 weeks. That is significant, but we obviously want it to move as quickly as possible.
Let me turn to the wider structural issues that we face in the energy sector. We recognise that the heating oil sector is under-regulated. Unlike gas and electricity, heating oil is not regulated by Ofgem, and we will put that right by exploring what regulations are needed to protect consumers and get them a better deal.
Taking a step back, ongoing events provide us with yet another clear reminder that we must get off the rollercoaster of global fossil fuel markets and on to the path of clean, home-grown energy that we control. We will learn the correct lessons from the crisis, unlike the previous Government, who went through the situation in 2022 and did not. In our mission to make the UK a clean energy superpower, we have already brought in £90 billion of investment in clean British energy. In the light of spiking oil and gas prices, we intend to go further and faster in the pursuit of national energy security.
We are bringing forward the next renewables auction, just months after the most successful auction that we have ever had, which secured enough power for the equivalent of 16 million homes. We are making plug-in solar available for the first time in Britain so that families can buy a low-cost panel straight from a supermarket and set it up on their balcony or in their garden.
We are speeding up delivery of the £15 billion warm homes plan. I heard what many Members said about the fabric of housing. There is obviously support within the £5 billion that we have set aside for low-income schemes, but there is also work going on about low interest and no interest consumer loans. I am trying to accelerate that work so that we can get that to people as soon as possible.
Pippa Heylings
We welcome the publication of the warm homes plan, but we have not received details of what will replace the energy company obligation 4 programme, which was run through local authorities. Can the Minister tell us when he expects that detail to be available? Will it be published ahead of the winter so that it can be applied and homes can be upgraded?
Martin McCluskey
As the hon. Lady knows, the Department runs a range of programmes. We took the decision to abolish ECO4 because it was not working effectively. In some cases, it was costing more to find people who needed the measures than it was to deploy the measures. The Department has been provided with an additional £1.5 billion, which took the total up to £15 billion for this financial year. That money is being deployed through the local government schemes—the warm homes social housing fund and the warm homes local grant. That is enhancing what has already been provided to low-income households through the Department.
As I say, £2.7 billion of capital is being deployed to provide low interest or no interest consumer loans. We need to accelerate that. At the moment, we are probably looking at early next year, but I would like to see that come forward so that we can use those consumer loans as a response to the current situation. We know that there is significant demand for home upgrades, including solar, battery and heat pumps, but we have to give people the support they need to take up those options.
We will speed up the delivery of the £15 billion warm homes plan—the largest home upgrade programme in British history—and we are reforming nuclear regulations following the Fingleton review so that we can fast-track new nuclear power stations.
Greg Smith
The Minister seems to have pivoted towards electricity and away from heating oil, which this debate is about. On the wind auctions, I am not sure consumers will thank him for the price that has just been paid. However, we are talking predominantly about the many rural homes that are off the gas grid. Many are built out of stone—I declare an interest, as mine is built out of witchert, which is a form of cob—and heat pumps do not touch the sides. Will he at least acknowledge that for those rural homes, we need to look at things such as alternative fuels? Boilers can be converted to run on hydrotreated vegetable oil and, in the future, synthetic fuels. We must not just keep talking about electricity.
Martin McCluskey
Fifty per cent of grants provided through the boiler upgrade scheme, which is our primary vehicle for providing people with grants for heat pumps to replace—
Martin McCluskey
If the hon. Gentleman will let me finish the point, I was going to say that 50% of those are to rural homes. I am not trying to dismiss the fact that there are some properties where it would not be appropriate to fit a heat pump because of the fabric, although adaptations can be made. However, we are seeing from consumer behaviour that most boiler upgrade scheme grants are going to rural homes, so there is clearly demand within rural areas for heat pumps, whether the traditional air-to-air or air-to-water heat pumps or ground source heat pumps, which are increasingly popular in rural homes.
I go back to the point about learning the lessons. We are in a situation where this country is significantly exposed to fossil fuels, whether through gas or oil. The long-term solution—to remove that risk and exposure—is to move to electrification, because we would not be having this debate if homes were electrified. We need to find solutions for rural homes, and we need to move to technology that means people have more control over their energy and the system.
Behind every decision this Government take is a simple principle: whatever the challenges, we will support working people. We will always fight their corner through this crisis. That is why we are directly helping those affected by the spike in heating oil costs, cracking down on energy suppliers who are cancelling orders or jacking up prices, and working at pace to ensure the sector is properly regulated. That is why we are doing everything we can to end our reliance on unstable fossil fuel markets and take back control of our energy.
That will mean an era of economic growth, good new jobs and unprecedented investment—an era of real energy security. That is how we will ensure that ordinary working British people, including those in rural areas, never again pay the price for foreign conflicts and our overdependence on fossil fuels.
Draft Energy Prices Act 2022 (Extension of Time Limit) Regulations 2026
Martin McCluskey Excerpts(2 weeks, 3 days ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I beg to move,
That the Committee has considered the draft Energy Prices Act 2022 (Extension of Time Limit) Regulations 2026.
It is a pleasure to serve under your chairmanship, Ms Vaz.
This Government are fully committed to fighting people’s corner to tackle the cost of living crisis. Across the energy system and more widely, we are acting on this as a matter of priority. A number of steps were taken in last year’s Budget, and we have since gone further. At the Budget, alongside several positive changes to help working people with the cost of living, the Chancellor announced that we would remove costs from energy bills from this month. I want to be clear what those costs are. First, we are closing the Energy Company Obligation scheme, removing its costs from bills and instead funding home upgrades for energy efficiency via the warm homes plan. Members may recall that recent regulations extended ECO4 by nine months, but only to enable an orderly closure, with no costs on bills, from this month.
Secondly, we transferred 75% of the renewables obligation scheme costs attributable to domestic energy supply to instead be funded by the Exchequer. The core renewables obligation incentive for relevant generators. These were principled decisions to fund more of the investment we need from public spending rather than bills, which is the right and progressive thing to do. It is thanks to those decisions that typical household energy bills fell by 7% or more than £100 from 1 April.
Let me briefly set out how we delivered the removal of the RO costs from bills, before I come on to how the regulations will enable that to continue. Under the RO, energy suppliers purchase certificates from relevant renewables generators, and previously recovered the full cost of those purchases from consumers. From 1 April, suppliers have been required to recover only 25% of those costs from domestic consumers. For domestic consumers on standard variable tariffs, Ofgem’s energy price cap, published on 25 February, factored in reduced policy costs reflecting the RO changes that we are considering this morning. As a result, the price cap has fallen by 7% or £117, to £1,641 per year for a typical dual-fuel customer paying by direct debit. It will remain held down at that level until the end of June.
In addition, the Government issued a legally binding direction to suppliers on 18 March requiring them to also pass on the full savings to domestic consumers on fixed tariffs. With suppliers no longer recovering 75% of the cost of the RO from household energy bills, we are instead providing equivalent monthly grant funding. We acted quickly to deliver this funding and the associated consumer savings, using an existing power in the Energy Prices Act. That power needs to be extended via regulations to avoid its expiry. It is those regulations that we are discussing today.
The regulations do not give the Secretary of State any new powers, but they ensure the spending power we are using to enable the consumer savings remains available. Legally we can extend the time limit on this power only by six months at a time, so the regulations extend them from 25 April to 25 October. While I expect to need to seek a further extension, I can assure members that the Department is working on primary legislation to provide a more permanent solution when parliamentary time allows.
I would like to note that the position is slightly different in relation to Northern Ireland, where the Executive are delivering a comparable policy. I have been working with the Minister for the Economy in Northern Ireland, and at her request we have laid separate regulations to support delivery there.
Before I close, I will say that we are in a different international environment to when the energy bill reduction was planned in the Budget in November. That was noted by the Secondary Legislation Scrutiny Committee in the other place. It is now even more important that we have acted to reduce energy bills by more than £100, and that bills will stay capped down at a lower level until the end of June.
Whatever the challenges that lie ahead, 75% of RO costs will remain off domestic energy bills for the next three years. We have already gone further in supporting vulnerable heating oil consumers in response to events in the middle east, and we continue to monitor those events closely to ensure we are ready to be both responsive and responsible. The regulations are a simple time limit extension, but are essential to the ongoing removal of 75% of RO costs from domestic energy bills and I commend the draft regulations to the Committee.
Martin McCluskey
I will turn first to the comments made by the official Opposition, and the call to scrap the renewables obligation scheme. I want to put it on the record that it is simply not realistic to scrap that scheme. We took a deliberate decision to remove 75% of the RO from bills and to move that on to general taxation. The shadow Minister may oppose that move, but it is a principled decision that we have taken in order to spread the burden of those renewables obligations more widely, to make sure that those with the broadest shoulders are paying more, rather than it falling just on bill payers, and to maintain the incentive for renewable generators in the scheme at the same time.
The shadow Minister will know that the RO supports 25,000 generation stations, which accounts for approximately 30% of UK electricity generation. Abandoning the RO would not just send a signal to industry that we are not a reliable partner for investment but potentially put at risk our electricity generation, which would be deeply irresponsible. We will take responsible action to move this on to general taxation, while at the same time reducing the burden on bill payers, as people would expect the Government to do, not just because of the situation in the middle east but because of the situation that we faced before that with the rising cost of living.
I deeply admire the work that my hon. Friend the Member for Stoke-on-Trent Central does to advocate for his constituents. I am not aware of him having requested a meeting with me. He may have requested a meeting with either the Minister for Industry or the Minister for Energy. My brief covers only domestic consumers, not industry, but I will happily ask my hon. Friends the Minister for Energy and the Minister for Industry to meet with him to discuss the issues that he has raised in Committee this morning. He made a number of points about the increasing costs on industry, which as Members would expect are being actively discussed in the Department as we establish what support we may be able to offer, not just to domestic consumers, which is what we are dealing with this morning, but to non-domestic consumers.
The Government were taking significant action to reduce bills prior to the situation that has arisen in the middle east, but as hon. Members have mentioned, the rising cost of energy due to what is happening in Iran continues to dominate thinking in the Department. As hon. Members have mentioned, we have already come forward with proposals and help for those using heating oil, and all other contingencies are being kept under review to ensure that we support people through this situation as they face rising energy prices.
Question put and agreed to.
Energy Infrastructure: Development Consent Application Deadlines
Martin McCluskey Excerpts(1 month ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
This statement concerns three separate applications for development consent made under the Planning Act 2008 by:
North Falls Offshore Wind Ltd for offshore wind turbines approximately 24.5 km from the port of Lowestoft, including onshore connection to the electricity transmission network. The current statutory deadline for the decision is 28 April 2026.
Morgan Offshore Wind Ltd and Morecambe Offshore Windfarm Ltd for the Morgan and Morecambe offshore wind farms transmission assets in the east Irish sea off the coast of north-west England, including onshore connection to the electricity transmission network. The current statutory deadline for the decision is 29 April 2026.
RWE Renewables UK Dogger Bank South (West) Ltd and RWE Renewables UK Dogger Bank South (East) Ltd for the Dogger Bank south offshore wind farms in the north sea approximately 100km for the east coast, including onshore connection to the electricity transmission network. The current statutory deadline for the decision is 30 April 2026.
Under section 107(1) of the Planning Act 2008, the Secretary of State must make a decision on an application within three months of the receipt of the examining authority’s report unless a new deadline is set using the power under section 107(3) of the Planning Act 2008. Where a new deadline is set, the Secretary of State must make a statement to Parliament to announce it.
Having consulted the relevant guidance and under advice from officials, I have agreed to set a new deadline of no later than 14 May 2026 for deciding these applications. This is because the current statutory dates for these three cases are within the pre-election period for local elections in England. This period commences on Thursday 16 April and the guidance advises that particular care should be taken where there is a specific local or geographical dimension to an announcement; where an announcement could have a particular impact on an area or areas where elections are being held; and where an announcement relates to matters which are likely to be raised in election campaigns. For that reason, I am moving the decision dates to 14 May.
The decision to set the new deadline for these applications is without prejudice to the decision on whether to grant or refuse development consent.
[HCWS1472]
Energy Infrastructure Planning: Botley West Solar Farm
Martin McCluskey Excerpts(1 month ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
This statement concerns an application for development consent made under the Planning Act 2008 by Photovolt Development Partners on behalf of SolarFive Ltd for the construction and operation of a solar farm on land in West Oxfordshire, Cherwell and Vale of White Horse districts, across approximately 1,400 hectares.
Under section 107(1) of the Planning Act 2008, the Secretary of State must make a decision on an application within three months of the receipt of the examining authority’s report unless a new deadline is set using the power under section 107(3) of the Planning Act 2008. Where a new deadline is set, the Secretary of State must make a statement to Parliament to announce it. The current statutory deadline for the decision on the Botley West solar farm application is 10 May 2026.
I have decided to set a new deadline of no later than 10 September 2026 for deciding this application. This is to enable my Department to seek further information from the applicant with sufficient time to allow for consideration of this information by other interested parties.
The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent.
[HCWS1471]
Oral Answers to Questions
Martin McCluskey Excerpts(1 month, 1 week ago)
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Stephen Gethins (Arbroath and Broughty Ferry) (SNP)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
The Government know that energy bills in Scotland remain too high. That is why we are fighting the consumer’s corner. The action we took at the Budget will ensure that from April the price cap will fall by 7%, or £117, which is fixed until the end of June. That is in addition to support offered to vulnerable heating oil customers in Scotland and the expansion of the warm home discount, which means £92 million in annual funding for Scottish consumers.
Stephen Gethins
Scotland is one of the most energy-rich countries in Europe, and the Treasury and the UK Government have benefited to the tune of hundreds of billions as revenues have flowed in over the years, yet bill payers in Scotland pay among the highest prices in Europe. Labour promised that bills would be hundreds of pounds lower than they are now, yet two years in they follow the failure of successive Westminster Governments in terms of resilience and bills. Would Scotland not be better off looking after its own energy resource?
Martin McCluskey
Bills are going down by 7% from next week. We do not need to imagine a future with independence and what would happen with the SNP in power. Let us look at the record. The hon. Member’s party promised a publicly owned energy company six years ago; we delivered Great British Energy within 18 months. His party scrapped fuel poverty targets; we are lifting 1 million households out of fuel poverty by the end of this Parliament. While his party in government in Scotland abandoned the heat in buildings Bill, this Government are making the biggest ever upgrade to home efficiency through the warm homes plan, with £15 billion of spending.
Graeme Downie (Dunfermline and Dollar) (Lab)
Does the Minister agree one reason we need to see lower energy bills in Scotland—and that has been blocked—is the SNP’s ideological objection to nuclear power? I recently received a written answer from the Minister for Energy regarding a study by GB Energy to assess Scotland’s full potential for nuclear power. Will the Minister work with his colleagues to ensure that that analysis is published as quickly as possible so that the people of Scotland can see exactly how much we are missing out on thanks to the SNP’s ideological objection to nuclear power, and how much people are suffering as a result?
Martin McCluskey
My hon. Friend makes a crucial point. I know that he is an advocate for nuclear in Scotland, as am I. We are missing out on the opportunities of nuclear, and it is a disgrace that 1,300 Scottish nuclear workers have to move south every week just to get employment in the nuclear industry. I hope that the Scottish National party reverses its ideological ban on nuclear power as soon as possible.
Sarah Hall (Warrington South) (Lab/Co-op)
Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
We understand that many households, particularly in rural and off-gas grid areas, rely on heating oil as their primary source of heat. That is why my right hon. Friend the Chancellor has announced £53 million of support for those who heat their homes with heating oil, and £4.6 million will be delivered by the Scottish Government. Obviously, we continue to monitor the situation closely and will keep measures under review.
Mr MacDonald
In the remote highlands and islands, where mains gas is not available, where we have the highest level of fuel poverty in Britain, where local households and businesses rely on heating oil and electricity, and where much of Britain’s renewable energy is generated, but to minimal local benefit, does the Minister accept the unfairness of a highlander having to pay a multiple of what those in cities pay for energy?
Martin McCluskey
The hon. Gentleman makes an important point. I visited the Western Isles last week to speak directly to people who have been affected by the energy crisis, and I heard about the pressures people there are under. It is why we have welcomed the Competition and Markets Authority’s investigation into heating oil. On his point about people benefiting from local infrastructure, this morning we announced a trial for free wind power for people living near that infrastructure—he will be able to find the details in the Vote Office.
Torcuil Crichton (Na h-Eileanan an Iar) (Lab)
I welcome the UK Government’s support for heating oil customers in my constituency and the follow-up support from the Scottish Government, but I am slightly baffled that the Scottish Government have chosen to centralise support through Advice Direct Scotland, instead of entrusting local authorities. Will the Minister urge the Scottish Government to use local expertise, such as Tighean Innse Gall, which he met last week, and Point and Sandwick Trust, which have that local knowledge to find hard-to-reach customers, because we know that in rural areas people are reluctant to come forward for support?
Martin McCluskey
I was pleased to join my hon. Friend in Stornoway last week to meet those organisations. It is absolutely crucial—whether it is through the local government schemes that we are running in England or through the centralised scheme that the Scottish Government are running—that we take advantage of local knowledge to ensure that the support reaches the people who need it.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
In Aviemore it will be snowing tomorrow—in fact, in quite a lot of north Scotland it will be snowing to a pretty low level. People in those areas are suffering hugely from massive energy prices for electricity, heating oil and liquefied petroleum gas for tanks. In Aviemore, a 2,500-litre tank, which was filled in November for £1,400, now costs £3,400 to fill. That is the differential that people are having to pay. Does the Minister agree that £35 per household is frankly a drop in the ocean?
Martin McCluskey
I think the hon. Member should be careful not to sow fear about these issues among his constituents, which is precisely what his remarks do. My right hon. Friend the Chancellor provided £4.6 million to the Scottish Government, who have increased the fund to £10 million. It is absolutely imperative that the Scottish Government tell hon. Members and constituents how to access the funding. They are delivering that £10 million scheme, which they have told us will be available from 1 April, so it is up to them to set out how it will get to people.
Euan Stainbank (Falkirk) (Lab)
About 30% of households in the Braes villages use alternative heating sources such as heating oil—that is far above the district, constituency or Scottish nationwide average. The Scottish Government’s decision to deliver the scheme nationally rather than locally is creating anxiety in those communities that they may be forgotten by Holyrood. What assurances have Ministers received from their Holyrood counterparts that Scottish heating oil support will be available and proportionate for communities such as the Braes villages?
Martin McCluskey
I welcome my hon. Friend’s advocacy for his constituents. It is essential that the Scottish Government scheme, which is running to support people with heating oil costs, finds its way to the people who need it. I am disappointed that the Scottish Government have chosen to centralise the funding rather than work alongside local government, but it is for them to set out how they will ensure that everyone is reached.
Greg Smith (Mid Buckinghamshire) (Con)
I declare an interest: my home is off the gas grid and my boiler is fuelled by domestic heating oil. I have listened carefully to the Minister’s answers, and there have been significant gaps—there has been no mention of liquefied petroleum gas, for example. Although it is always right to support the most vulnerable in our society, I am not sure that he has fully understood that there are many households on modest incomes across rural communities that do not receive benefits and simply do not have £500, £600 or £700 lying around to meet a bill that they have not budgeted for.
Perhaps the Minister could answer a specific question on certainty. While the CMA investigation goes on, customers continue to place orders without knowing how much they will be charged when the oil is delivered. He could implement an interim measure before a wider set of changes to stop that practice. Will he do so?
Martin McCluskey
I think I need to start by correcting some of what the hon. Gentleman said. In my statement last week, I confirmed that LPG was part of the support—perhaps he did not hear that. Our priority, all the way through this crisis, has been to ensure that funding reaches people at speed. That is why we have delivered support in two weeks, not 200 days. On his point about means-testing, the funding is discretionary, so local authorities can decide how to provide it to people. I think he also called for a CMA investigation. We will look and study the results of the investigation to see what needs to happen to regulate the industry, but, as I said from the Dispatch Box a number of times last week, it is clear that the market is not functioning properly.
Dr Roz Savage (South Cotswolds) (LD)
Michael Wheeler (Worsley and Eccles) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I thank my hon. Friend for his important question. We are taking three additional measures. We are expanding and extending the warm home discount to 2031. We have supported heating oil customers with the £53 million-worth of support that was announced last week, and our £15 billion warm homes plan is the biggest home upgrade plan in British history. All of that is wrapped up in our clean energy mission—clean power 2030—which will ultimately give us control of our energy.
Stuart Anderson (South Shropshire) (Con)
Martin McCluskey
We moved swiftly to introduce funding to support people. The £53 million-worth of support, which is being disbursed through the crisis and resilience fund in England and Wales, will provide support for people through this immediate period. We will keep other measures under review, but if hon. Members have examples of unfair pricing practices, it is important that they report them to the CMA so that it can consider them as part of its review.
Callum Anderson (Buckingham and Bletchley) (Lab)
Mark Sewards (Leeds South West and Morley) (Lab)
Martin McCluskey
We heard in the responses to our 2024 consultation the concerns about the continued risk to consumers arising from some of these TPIs. The Government plan to bring in new regulation of TPIs and will appoint Ofgem as the regulator, which will be empowered to put in place rules to protect small and medium-sized enterprises and other TPI customers.
Helen Morgan (North Shropshire) (LD)
Martin McCluskey
The support on offer is not means-tested; it is at the discretion of local authorities to decide the criteria for those applications. That is the first point. The second point is that the CMA is investigating this in detail. As my right hon. Friend the Secretary of State said earlier, if there are any examples, please bring them to my attention and to the CMA’s attention, so that they can be considered as part of that review.
Martin Rhodes (Glasgow North) (Lab)
Terminally ill people often have additional energy needs and energy costs. What steps is the Department taking to support those people who are terminally ill with increased energy costs?
Martin McCluskey
I welcome my hon. Friend’s advocacy for those people. No one with a terminal illness should have to face concerns about their energy bills. I will soon be meeting the Minister for Health Innovation and Safety, my hon. Friend the Member for Glasgow South West (Dr Ahmed), to discuss how Government can better share data in order to target support at vulnerable people and those with health conditions.
Mr Gregory Campbell (East Londonderry) (DUP)
The Secretary of State will be aware of the very high dependence in Northern Ireland on home heating oil. Although the Government have offered some help in the past 10 days, has consideration been given to what happens beyond the summer period if the crisis in the middle east continues over the next few months?
Martin McCluskey
We have supplied £17 million to the Northern Ireland Executive, and I had a constructive conversation last week with Minister Archibald about how that is deployed. We will keep other measures under review as the situation develops.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
I thank the Minister for his focus on securing UK private investment in critical minerals—it is fantastic to see. I know the Secretary of State agrees that Cornwall is vital for future UK energy security. One test and demo model in the Celtic sea has come forward in auction round 7, but I want to ask the Secretary of State about the timing of AR8, and whether he will look again at test and demo models in the Celtic sea, so that we can really use that energy base.
Oil and Gas
Martin McCluskey Excerpts(1 month, 1 week ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“welcomes the Government’s approach to the future of the North Sea, which maintains existing oil and gas fields for their lifetime, as well as introducing Transitional Energy Certificates while accelerating the transition to clean energy; notes that new licences to explore new fields would take many years to come online and would make no difference to energy bills; recognises that oil and gas prices are set on international markets; and further welcomes the measures announced by the Government to go further and faster on national energy security by reducing reliance on volatile fossil fuel markets and expanding secure, home grown clean energy.”
As I have said many times in this House, the North sea oil and gas sector is one of our great industrial success stories. We are proud of the role that the North sea’s workers and communities have played in helping to power our country and the world for decades, and we recognise the role that oil and gas will play in our energy mix for decades to come, as well as the vast skills and experience of our offshore workforce. However, as a Government we also have a duty to be honest about the challenges we face, and the reality is that more domestic oil and gas production will not make us more energy secure and will not take a penny off bills. There is a lot of debate when it comes to this issue, so it is important to focus on the facts.
Richard Tice
Earlier today, the Secretary of State refused to answer my question about why the price of gas in the United States is between a third and a quarter of the price of gas here in the UK. Perhaps the Minister could help us all and help the British people with that question, which goes to the heart of the price of gas and the size and cost of our bills.
Martin McCluskey
As the hon. Member will know, the price of gas and oil is set on an international market and, as I have said, extracting more from the North sea would not make a penny’s difference to the price in this country.
The North sea is a super-mature basin that accounts for around 0.7% of global oil and gas production. Production has been naturally falling for more than 20 years, which means that our North sea no longer has the reserves available to support domestic energy demand. Crucially, any new licences now would not make any difference to people’s energy bills because, regardless of where it comes from, oil and gas is sold on international markets, where we are price takers, not price makers.
Graham Stuart
If we were to accept the argument that it would make no difference to the international price—notwithstanding the fact that there are global markets and that supply and demand leads to much lower prices in some places than in others—we are still talking about billions of pounds in forgone taxes, which could be used to reduce prices, to reduce VAT and to reduce all sorts of impositions on the British people, saving not pennies but many pounds on ordinary people’s bills. That is true, isn’t it, Minister?
Martin McCluskey
The Conservatives want us to remove a tax that is contributing £12 billion to the Exchequer, funding our public services and allowing us to invest in our schools, hospitals and other public services. If they oppose that funding, they need to come forward with their own proposals. The only route to energy security and lower bills is to get off our dependence on fossil fuel markets over which we have no control, and on to clean home-grown power over which we do.
Tom Tugendhat (Tonbridge) (Con)
There seems to be a complete failure to understand how the gas market works. It works on piped gas, on local markets and on an integrated supply and consumption system, yet the Minister is addressing it as though it involves shipped oil. It is not the same market, yet he is dealing with it as though it is. Could he please begin to address the fact that this is a very different market?
Martin McCluskey
We have been importers of gas since 2004, and the Conservatives will know—because they presided over the period of decline—that it has been declining for some time.
Recent events in the middle east are yet another reminder of the need to speed up the transition and protect British people from price shocks. Thanks to our mission to make the UK a clean energy superpower, we have already seen £90 billion of investment announced for clean British energy, but we are now determined to go even further and faster in pursuit of national energy security.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I accept the Minister’s point about having more home-grown energy, and renewables can be good for insulating ourselves from economic shocks, but he will know that great swathes of our industrial base are gas dependent, not least the ceramics industry. What message does he send to them? The current price per therm is twice what it was three weeks ago. Those business are renewing their contracts. This is going to kill industry in certain parts of our foundational sector that we need to meet our mission, so what is the Government’s message to those industries?
Martin McCluskey
My hon. Friend is a real advocate for the industries in his constituency. The Minister for Industry is looking in detail at this and coming forward with proposals for industry to take us through this moment, as we deal with the situation in the middle east.
We are bringing forward the next renewables auction months after our most successful auction ever secured enough power for the equivalent of 16 million homes. Just today, we set out plans to make plug-in solar available in supermarkets so that more people can put a panel on their balcony or outdoor space and begin saving energy. We are also ensuring that heat pumps and solar panels will be standard in new-build homes.
The energy profits levy has been mentioned by a number of hon. Members across the House. Since its introduction in 2022, the levy has raised around £12 billion. As I said earlier, this revenue supports vital public services. As the Chancellor noted at the recent spring forecast, the energy profits levy will be replaced by the new oil and gas price mechanism in 2030, or sooner if average oil and gas prices over six months fall below the thresholds of the energy security investment mechanism. The Chancellor recognises industry’s calls for the EPL to be replaced by the mechanism, and wants to work with industry to provide certainty on the future fiscal regime while taxing the windfall profits of energy companies.
Harriet Cross (Gordon and Buchan) (Con)
On the energy profits levy, the Office for Budget Responsibility’s forecast last year downgraded the expected income from oil and gas by 40% between March and November, and by another 20% between November and March this year. By 2030, we are now expecting only £100 million from a sector that used to bring home billions. That is because of the EPL and the ban on licences. That is the impact that Labour is having on the oil and gas sector.
Martin McCluskey
The hon. Lady will know that this is a windfall tax on windfall profits. If there are no windfall profits, there will not be a windfall tax.
The motion calls for an end to the ban on oil and gas licensing. The Government have been clear that we will support the management of existing fields for their lifespan. That is why we have committed to introducing transitional energy certificates, which will enable some offshore oil and gas production in areas adjacent to already licensed fields linked via a tieback or in areas that are already part of an existing field. New licences to explore new fields would make no material difference to overall production and would run contrary to the science on tackling the climate crisis.
Dr Andrew Murrison (South West Wiltshire) (Con)
Why does the Minister think the strategy of this Government is so different from that of Norway? Nobody doubts the commitment that Norway has to the environment and net zero, and yet it is pumping more oil and gas than it has done for a very long time, notwithstanding its longer-term commitment to net zero.
Martin McCluskey
Norway has managed its fields in a very different way from the way this country has over the course of 40 or 50 years. Every country will take its own decisions on how best to secure its own energy supply, and many other countries are taking a similar approach to the United Kingdom.
Let me turn to Jackdaw and Rosebank, which are addressed in the Opposition motion. At the outset, I should say that it would be inappropriate for me to comment on the merits of individual cases because doing so could prejudice the decision-making process. As with planning decisions, which are comparable in nature, offshore oil and gas projects are subject to a robust and legally-grounded regulatory framework under which information submitted by developers must be carefully assessed. In both the Jackdaw and Rosebank cases, the Secretary of State will make a decision on whether to agree to these being consented in due course. It is imperative that all relevant material is properly considered so that decisions are sound, defensible and robust. When reaching a view, the Secretary of State will assess the overall balance between any potential significant environmental effects and the wider benefits to the interests of the country. As Members would expect, that assessment will involve considering a range of factors, which may include energy security, alongside environmental considerations.
Some have asked why the decisions are taking time. The answer is straightforward: these are planning-type decisions that must be taken in full knowledge of the facts. The guidance on the assessment of scope 3 emissions, published last year in response to the Supreme Court’s judgment, is the first of its kind, and it is therefore crucial that we take the time to apply it properly. [Interruption.] It serves no one’s interest for decisions to be rushed—it certainly does not serve the industry or the constituents of the right hon. Member for Beverley and Holderness (Graham Stuart), who is chuntering from a sedentary position—only for it to be overturned later by the courts, which was the mess that the previous Government got into.
Peter Swallow (Bracknell) (Lab)
The Minister mentioned energy security. Of course, that is fundamentally the most important issue facing us as a country at the moment, not only because of the conflict in the middle east, but wider conflicts, including that in Ukraine. Is it not the case that we must stop taking short-term decisions and instead look to the long-term future of our energy so that we can get nationally controlled energy security, which is good for our national security, too?
Martin McCluskey
My hon. Friend makes an important point that gets to the heart of this debate. We are not going to learn the wrong lessons from the current situation in the middle east. We will not make ourselves more reliant on fossil fuels, at a time when we can see playing out day after day in all our constituencies the effect—rising prices—of being overly reliant and exposed to gas and fossil fuels.
We are incredibly fortunate to have the North sea on our doorstep. For almost half a century, the oil and gas buried there has fuelled development and charged our economy. But for too long, Governments have ignored the transition happening before their eyes. We owe it to the North sea’s workers and communities, which have done so much for our country, to set out a proper plan for their future and to seize the immense potential in clean energy.
Stephen Flynn
The workers who the Minister is referring to have a very different take from his own on his Government’s approach to the North sea. Indeed, I think they would be incredulous at the arguments he is making today and that his Government have made over many months, because it is costing them their jobs. He knows that moving from the energy profits levy to the oil and gas price mechanism as quickly as possible will give those workers some hope and will help assist with energy security. Is he or his Department currently in discussions with the Treasury about making that happen?
Martin McCluskey
The Chancellor has had discussions with industry and will continue to do so, and that is the right and appropriate way to conduct these decisions. I was pleased to be in Aberdeen a couple of weeks ago talking to the same workers that the right hon. Member mentions. Of course, we need to do as much as possible to ensure that oil and gas workers are properly protected through this transition, but we must not lose sight of the great potential, for example, in floating offshore wind, which will also provide a significant future for his constituents and people across Scotland.
As I was saying, the transition that is under way is the only way to get off the rollercoaster of fossil fuels and build a more secure energy system. Following a consultation with businesses and communities last autumn, we set out the steps we are taking to unleash the North sea’s clean energy future. That plan recognises our world-class energy workers and supply chains and the importance of supporting them through that transition.
Graham Stuart
The Minister has been most generous in giving way. He will know that Harbour Energy was the single largest producer in the North sea—it is leaving. He will know that it has been devastating for so many workers in the industry. He will also know that, by all projections, in 2050 this country will still be dependent on oil and gas in all scenarios. Yet, by not doing new licences, we will by definition be more dependent on foreign supply, much of it having to come through the strait of Hormuz. How can that make any sense? I do not think the Minister thinks it does, but I suppose he is forced to stand on his feet and repeat the nonsense that comes out of the mouth of his Secretary of State.
Martin McCluskey
I am more than capable of forming my own conclusions, and what is in this speech are my own conclusions. I encourage the right hon. Gentleman to listen to what I have had to say throughout this speech. Harbour Energy is continuing to operate. He talks about dependence. The dependence that we see at the moment is dependence on fossil fuels and on oil and gas, which has left every single one of our constituents across this House exposed to volatile oil and gas prices and to higher prices. As I said in response to my hon. Friend the Member for Bracknell (Peter Swallow), the only way out of that is to get off this rollercoaster of fossil fuels and on to home-grown energy where we can control the price. That is a responsible action from a Government who are focused on the long term and not the short term.
Dr Murrison
Offshore Energies UK does not agree. It said that at the current rate of the Government crashing the North sea industry, we will be three times more reliant on gas by 2035 than we are at the moment. Is the Minister right or is Offshore Energies UK right?
Martin McCluskey
I will say to the right hon. Gentleman what I said to his Front Benchers last week: the Conservatives need to stop talking down the North sea. With 1.1 million barrels a day being extracted, that is not an industry being shut down; that is an industry continuing to produce.
Just last week, the Minister for Energy met our North Sea future board in Aberdeen with representatives from industry, unions and local groups to discuss how we can drive a fair, orderly and prosperous transition. Net zero is the economic opportunity of the century—
Martin McCluskey
That is despite what the hon. Member for Boston and Skegness (Richard Tice) might say. This Government will ensure that our oil and gas workers can take advantage of that opportunity while driving for energy sovereignty and abundance with clean home-grown power.
Several hon. Members rose—
Draft Electricity and Gas (Energy Company Obligation) (Amendment) (Specified Period) Order 2026
Martin McCluskey Excerpts(1 month, 1 week ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I beg to move,
That the Committee has considered the draft Electricity and Gas (Energy Company Obligation) (Amendment) (Specified Period) Order 2026.
It is a pleasure to serve under your chairmanship, Mrs Barker. The draft order was laid before the House on 26 January this year.
This Government remain fully committed to ensuring that households, particularly those on low incomes or at risk of fuel poverty, can live in warmer, more energy efficient homes that are affordable to heat. At the heart of that endeavour lies the warm homes plan, which is a comprehensive and long-term strategy to reduce energy bills, alleviate fuel poverty and enhance energy security. We have committed to investing £15 billion, the biggest ever public investment to upgrade British homes and cut energy bills. Of that amount, £5 billion is allocated to support low-income households.
The energy company obligation has played a key part in helping households to reduce their energy bills. ECO was launched in 2013, and the current phase, ECO4, which has run since 2022, has delivered more than 1 million energy-saving measures to around 300,000 households. The scheme places an obligation on the larger energy suppliers to deliver energy efficiency improvements to vulnerable and fuel-poor households that result in measurable bill savings.
Although ECO4 has delivered a significant volume of home energy efficiency improvements, it has not been without challenges. As the National Audit Office recently set out, there have been widespread, systemic issues in the delivery of solid wall insulation, which we have taken urgent steps to tackle. We are also bringing forward comprehensive reforms to the retrofit consumer protection system to make it stronger, more transparent and more accountable, so that this cannot happen again. We expect all installers to ensure that households receive timely and high-quality remediation of any non-compliance identified.
Given these systemic issues and inflation that is still too high, we have taken the considered decision not to replace ECO4, therefore easing pressure on household energy bills. This, in combination with the Government’s funding 75% of the domestic cost of the legacy renewables obligation, will remove around £117 of costs on average from household energy bills across Great Britain.
This instrument will introduce a small and necessary change to the existing scheme by extending the end date of ECO4 from 31 March 2026 to 31 December 2026. The extension provides obligated suppliers with additional time to meet their existing targets, and most importantly allows them time to focus on the remediation of non-compliant installations. The instrument does not change targets, impose new obligations, increase supplier costs or increase consumers’ bills.
Finally, the changes made by the draft order are limited but important. By extending ECO4, we are ensuring a stable period of delivery and an orderly closure to the scheme, and we are safeguarding consumers. I commend the draft order to the Committee.
Martin McCluskey
I thank hon. Members for their contributions to the debate. I will turn briefly to each of the points that were raised.
The hon. Member for Mid Buckinghamshire asked about cost. The measure comes at no cost, and there is no additional funding behind the amendment. It is an extension of the obligation largely to ensure that remediation is conducted on those properties that require it. That comes at no additional cost. The bill savings that the Chancellor outlined in the Budget stand, and consumers will see them when they receive their energy bills on 1 April, after which the new price cap will see energy bills reduce by 7% over the price cap period, funded by the move of 75% of the RO to general taxation and the abolition of ECO from bills.
On the second point, the remediation programme is moving at pace. We have already contacted all affected households. We are encouraging everyone to come forward for an audit. If any Committee members have affected households, I encourage them to ensure that their constituents take up the offer of an audit. There is no route to remediation without constituents contacting us to ensure that they get an audit. As I said in the House, I think in October, this will happen at no cost to the consumer. It is backed by guarantees that will ensure that it is paid for through the system and the supply chain, not drawing on any additional funds, at this stage, from the Government.
On the supply chain more generally, we recognise the fact that there has been disruption—the hon. Member for South Cambridgeshire raised this as well. We have done a number of things to try to combat that. First, we have set up a taskforce alongside industry and the Local Government Association to bring together the bodies that procure from small and medium-sized enterprises in the ECO supply chain. That has already borne some fruit; hon. Members may have seen last week that an additional £295 million, announced to run through the warm homes local grant and the warm homes social housing fund, will provide a bridge through to the additional schemes that will come in future.
I would like to push back gently on some of the points about the lack of a fuel poverty plan. Significant amounts of money are already being deployed through the warm homes local grant and the warm homes social housing fund. The deployment of the new scheme from 2028 will involve integrating those two schemes, which are working right now and are already delivering measures to people’s homes.
I have also heard, not just from hon. Members today but more generally, the idea that we are no longer standing behind insulation. I would not want people to leave this Committee with that impression. The warm homes plan has a significant focus on new technology, but also on insulation, and I anticipate that the amount being deployed for insultation will remain.
I agree with the hon. Member for South Cambridgeshire: there is no point deploying measures onto homes that are leaky and will not keep people warm and dry. Many of the warm homes local grant and warm homes social housing fund projects I have visited in the short time I have been doing this job are benefiting from a combination of insulation alongside modern technology such as heat pumps, batteries and solar.
For every building and project, it is about getting the mix of measures correct to deliver warm homes and lower bills. It would be remiss of us to publish a plan in this day and age that did not reflect the technological changes of the 10 years and the efficiency of batteries, heat pumps and solar, which are helping people to drive down their bills today.
We intend to consult on the integration of the two schemes shortly. Again, I impress on hon. Members that we will not be left without a scheme for low-income people. Some £5 billion of the £15 billion for the warm homes plan is focused on low-income households. As I said earlier, an additional £295 million is already being funded through those schemes, in addition to what was already budgeted for in these scheme years.
Finally, on remediation, which I know has interested and concerned hon. Members across the Chamber when we have discussed this subject before, I want to repeat that it is really important that people come forward for those audits. The supply chain and the system stand ready to remediate homes, but we cannot do that without people coming forward for those audits.
I thank all hon. Members for their contributions to this debate. As I said, the instrument before us will ensure that the ECO scheme concludes in an orderly, responsible and consumer-focused manner. I commend the draft instrument to the Committee.
Question put and agreed to.
Draft Warm Home Discount (England and Wales) Regulations 2026
Martin McCluskey Excerpts(1 month, 1 week ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I beg to move,
That the draft Warm Home Discount (England and Wales) Regulations 2026 be approved.
It is a pleasure to serve under your chairmanship, Mr Dowd. I should say to hon. Members that I have a terrible cold and I can barely hear at the moment, so if I do not answer any questions, it is not because I am avoiding them. The warm home discount scheme has been a key policy in the Government’s approach to tackling fuel poverty and reducing the energy costs of low-income and vulnerable households ever since its inception in 2011.
Linsey Farnsworth (Amber Valley) (Lab)
At a recent coffee morning that I held in the village of Holbrook, constituents raised their worries about energy bills. In 2024-25, 6,219 people, or 14.5% of all households in Amber Valley, received the warm home discount. Particularly in the light of ongoing uncertainty on household energy costs due to international events, I am really pleased that the Government are continuing to support the scheme and that I am a member of this Committee. Does the Minister agree that the Government should be focused on this issue absolutely?
Martin McCluskey
I know that my hon. Friend is a champion for her constituents in Holbrook and across her constituency. Like many hon. Members, she will have seen the increase in the numbers of people this year who are eligible for the warm home discount because of the decision made by the Government to expand the scheme to 6 million households. Her constituents and the constituents of all hon. Members will benefit from that this year.
Last year, the Government expanded the warm home discount scheme, removing the high cost-to-heat threshold to ensure that an additional 2.7 million of the poorest households across Great Britain received the £150 rebate off their energy bills this winter, with nearly 6 million households now eligible overall. The current scheme period ends on 31 March 2026, and new regulations are therefore required to continue the scheme beyond that date. In September, we consulted on continuing the warm home discount scheme up to and including the winter of 2030-31. The consultation respondents, including consumer advocacy groups, charities and industry, strongly supported proposals to continue the scheme and to continue providing rebates to vulnerable households via automatic data matching.
Today, we are discussing these regulations, as well as some additional changes to the scheme that will allow eligible households across England and Wales in or at risk of fuel poverty to continue to receive the rebate for the rest of this decade. Members will note that the regulations relate only to the scheme in England and Wales. The warm home discount scheme will also continue in Scotland to winter 2030-31 with £92 million a year of funding allocated. Fuel poverty is devolved in Scotland and, under these arrangements, the Scottish Government have determined eligibility for the next scheme period in Scotland within the funding envelope. Separate regulations have been laid in this Parliament to continue the scheme in Scotland, and I look forward to discussing these regulations with the House in due course.
George Freeman (Mid Norfolk) (Con)
What provision do these measures make for the disproportionate impact of fuel poverty in rural areas? Treasury figures show that cost of energy increases have disproportionately hit rural households, rural public services, rural charities and rural businesses, including in my Norfolk constituency. The risk of fuel poverty is 15% higher in rural areas. Do these regulations include any provision that tackles this traditionally overlooked injustice?
Martin McCluskey
I accept what the hon. Gentleman says about fuel poverty having a disproportionate impact in rural areas. The warm home discount applies equally, regardless of whether someone is in a rural area or an urban area, but the Government are taking other actions including through our warm homes plan, which has a particular focus on rural households, and rural retrofit to ensure that everyone is able to take advantage of it. Other areas of the Department’s work are focused on rural homes.
Turning to the detail of today’s statutory instrument, it will introduce the Warm Home Discount (England and Wales) Regulations 2026. These regulations will extend the scheme in England and Wales for five more years from 2026 until they expire in 2031. The regulations will continue to oblige energy suppliers with more than 1,000 domestic accounts to participate in the scheme. The regulations will ensure that, as is the case currently, energy suppliers with fewer than 1,000 domestic accounts can choose to participate voluntarily in the scheme.
Under the scheme, participating energy suppliers are obliged to provide support to eligible households through a rebate provided directly to their energy bill, valued at £150. Eligibility for the rebate will continue to be set out by the Secretary of State in an eligibility statement, which is published for each scheme year. Following the removal of the “high cost to heat” threshold and the expansion of the scheme in 2025-26, the Government are committed to maintaining the current eligibility for the rebate in England and Wales, based on receipt of means-tested benefits, for a further five years. Eligibility for the scheme remains unchanged, but the regulations introduce a more streamlined approach to administration, without impacting eligibility.
The existing core group 1 and core group 2 will be merged into one core group in England and Wales, with a view to enabling clearer communication and messaging to potentially eligible households. That change was broadly supported by consultation respondents. We put out a range of communications ahead of and during each scheme year to eligible households, and will continue to do so for the next scheme period. The automatic data matching process for the core group in England and Wales will continue, using data held and processed by the Department for Work and Pensions, with the majority of eligible households—typically around 96%—expected to be automatically data matched, meaning that they will receive the rebate without taking any action.
In addition, the regulations will continue to oblige scheme-supported energy suppliers to participate in the industry initiatives element of the scheme. Industry and consumer advocacy groups strongly supported its continuation in the consultation ahead of these regulations. The regulations set out a range of permitted activities overseen by Ofgem, through which energy suppliers can deliver towards their non-core obligations, supporting eligible households in fuel poverty or that are in a group at risk of fuel poverty. Permitted activities include benefit entitlement checks, energy efficiency measures, energy advice, debt relief and financial assistance payments of £150.
Scheme energy suppliers can also choose to dedicate non-core spend towards the park homes scheme, which I know is of interest to a number of Members, who have corresponded with me on the topic. It provides eligible households with £150 of support towards their energy bill. Industry initiatives provide vital support and are often delivered by the third-party partners of energy suppliers, including charities. The value of support available for industry initiatives will continue to be updated as under the current scheme period. The regulations will also introduce changes to the administration of the scheme and enhance consumer protections for eligible households.
The regulations also include a new provision that can enable the Secretary of State to direct suppliers to communicate directly with our own successfully data-matched customers to provide further information about the scheme, including information related to automated decision making. Where that provision is used, the Government would continue to notify households that are known as unmatched households, following the automatic data matching process, where additional information or evidence is required to determine their eligibility. Where a household is deemed unmatched, the Government will continue to notify them to contact the warm home discount helpline to determine their eligibility for that scheme year.
The regulations make provisions for a late rebate of £150 to be paid by a scheme supplier if the Secretary of State is satisfied that an eligible household did not receive a rebate in the preceding scheme year due to an administrative error by a scheme electricity supplier, the Secretary of State or Ofgem. In addition, the regulations will replace fixed spending targets with annual estimates based on the number of eligible households expected to benefit from a rebate each winter to predict more accurately scheme costs.
Tackling fuel poverty is a priority for the Government. We recognise that too many households cannot afford to heat their homes at a reasonable cost. That is why, in January, we published our new fuel poverty strategy alongside our warm homes plan, to ensure that many more fuel-poor households are protected by 2030. The continuation of the warm home discount scheme through these regulations will provide vital support for eligible households each winter, at the coldest time of year when support is most needed. I commend the draft regulations to the Committee.
Martin McCluskey
I thank hon. Members for their contributions. On the points raised by the Opposition Front Bench spokesperson, in Q2 of this year energy bills will be lower than they were in 2024. He does not need to take that from me; he can see that in the research of the Resolution Foundation. He talks about expensive costs of energy. I agree that, in this country, we have some of the most expensive energy. That did not happen in the 18 months of a Labour Government, that has been building for a number of years, including during the period that he was in this role in the Department for Energy Security and Net Zero.
The only thing that seems to have changed with the hon. Gentleman over the last 18 months is that he has abandoned his commitment to clean power and net zero, which was well documented, not just in Hansard, but on his own website. We discussed that in the Chamber just a few months ago. His policy, which would see us turn away from clean power, is, bluntly, a road to ruin. We would expose people to further volatility in fuel prices and to the fact that we are already over-exposed to the price of gas. We would also continue to make ourselves reliant on energy supplies that are coming from petrostates. Over the last few weeks, we have seen the impact of being overly reliant on oil and gas supplies coming from overseas.
Lewis Cocking (Broxbourne) (Con)
If the Minister issued new oil and gas licences for the North sea we could produce more of our oil and gas here at home. That would mitigate some of the problems that he has just raised about being over-reliant on oil states.
Martin McCluskey
I am happy to be barracked under your chairmanship, Mr Dowd. Turning to the point that the hon. Member for Broxbourne raised, he knows that it would not matter if additional oil were extracted from the North Sea—it would not reduce the price of domestic energy in this country. It would not have any impact. If he has evidence to the contrary, I will be more than happy to take another intervention for him to demonstrate that energy prices would reduce if we extracted more oil from the North sea. No? Okay.
Moving on to the Liberal Democrat spokesperson, I thank her for the constructive tone of her speech. On the point around debt, Ofgem have consulted on a debt relief scheme, and more will be coming on that in the near future. On data sharing, I share her desire to ensure that there is far more data sharing. That is something that I have had discussions about, not just with the Department for Science, Innovation and Technology—and she may be aware of the kickstarter programme that is looking at how we can better share household income data—but with the Department for Health and Social Care too, specifically, around how we share data on vulnerability and health.
There are some really great examples at a local level. For example, Beat the Cold is an organisation in Stoke that is already sharing data between local NHS organisations and third sector organisations in order to reach the right people with vulnerability. The point for me is, if that can be achieved on a local level, we should be able to achieve something similar on a national level. The hon. Lady talks about cold, leaky homes, and that is obviously a focus of the Government’s £15 billion warm homes plan, which is investing in that area. I will gently say to her that, while we did cancel the ECO programme, that was because it failed and did not provide good value for money.
We have put an additional £1.5 billion into capital schemes through DESNZ, which will reach low-income people across the country. I point towards the announcement that was made by the Secretary of State on Sunday about the additional funding that will go into mayoral combined authorities, and elsewhere, for low-income schemes. That is from that £1.5 billion that resulted from the cancellation of ECO. On ECO, there were instances where, for example, about half of the cost was going into finding people to apply measures to, rather than actually applying measures, so from a value for money point of view, we needed to make sure that that worked far more effectively.
To sum up, we are committed to delivering the £150 warm home discount for at least another five years to support the households in England and Wales who need our help most. The regulations will deliver a warm home discount scheme that is more transparent and provides stronger consumer protection and greater clarity around eligibility. I commend the draft regulations to the Committee.
Question put and agreed to.