Draft Energy Bill Relief Scheme and Energy Bills Discount Scheme (Amendment) Regulations 2024

The Committee consisted of the following Members:

Chair: Graham Stringer

† Billington, Ms Polly (East Thanet) (Lab)

† Fahnbulleh, Miatta (Parliamentary Under-Secretary of State for Energy Security and Net Zero)

Farron, Tim (Westmorland and Lonsdale) (LD)

† Heylings, Pippa (South Cambridgeshire) (LD)

† Juss, Warinder (Wolverhampton West) (Lab)

† Lam, Katie (Weald of Kent) (Con)

† McDonald, Chris (Stockton North) (Lab)

† McEvoy, Lola (Darlington) (Lab)

Mundell, David (Dumfriesshire, Clydesdale and Tweeddale) (Con)

† Riddell-Carpenter, Jenny (Suffolk Coastal) (Lab)

† Rimmer, Ms Marie (St Helens South and Whiston) (Lab)

† Rushworth, Sam (Bishop Auckland) (Lab)

† Slinger, John (Rugby) (Lab)

Sobel, Alex (Leeds Central and Headingley) (Lab/Co-op)

† Thomas, Bradley (Bromsgrove) (Con)

† Timothy, Nick (West Suffolk) (Con)

† Turley, Anna (Lord Commissioner of His Majesty’s Treasury)

Yohanna Sallberg, Committee Clerk

† attended the Committee

Third Delegated Legislation Committee

[Graham Stringer in the Chair]

Draft Energy Bill Relief Scheme

09:25:00

I beg to move, That the Committee has considered the draft Energy Bill Relief Scheme and Energy Bills Discount Scheme (Amendment) Regulations 2024. The regulations were laid before the House on 16 December 2024. They amend two schemes that were created by the previous Government in response to the energy crisis. The amendments address an issue that was not considered in the rush to create the schemes, but has now come to the fore as we bring the schemes to an end. The issue is somewhat technical, so I ask hon. Members bear with me. Both the energy bill relief scheme and the energy bills discount scheme, which I shall refer to as the EBRS and the EBDS, supported non-domestic energy users, including businesses and heat networks. The EBRS supported energy bills from October 2022 to March 2023 and the EBDS supported bills from April 2023 to March 2024. The schemes have processes in place to ensure that, as bills are revised with accurate meter readings, the difference between the discount applied to the estimated bill and that applied to the final bill is reconciled. Suppliers then come back to Government to recover additional discounts they have paid out, or to pay back any excess discounts stemming from an over-estimation of the energy used in the first instance. That is right—the intention behind the schemes has always been for the Government, not the energy suppliers, to meet the cost to the consumer. The regulations allow for the Secretary of State to determine when a supplier should leave the scheme on the basis of an assessment that there will be no further material amount owed by the Department to that supplier. Once a supplier has left the scheme, they are unable to claim back any further moneys from the Department for discounts they paid out on behalf of the schemes. However, as the regulations currently stand, suppliers are still required to pay out discounts on any newly billed energy supplied during the periods of either scheme, even when that situation arises through no fault of their own. This could result in suppliers funding Government support without the ability to recoup those costs from the Department. That is contrary to the intention of the schemes. Consequently, suppliers have been reluctant to leave the schemes, which must come to an end in a timely manner. The amendments in the statutory instrument remove the obligation on suppliers to provide the discounts to customers, except in instances when the consumer has lost out due to poor practices by their energy supplier. In those instances, we have provided carve-outs to balance the interests of suppliers with support and protection for consumers. Carve-outs are in place when a supplier has failed to provide their customers with a bill for energy supplied during the scheme period, when unreasonable delays or another failure has led to the energy not being billed accurately, or when the supplier has unreasonably failed in the duty to provide the discount. The customer should not and will not lose their entitlement to the discount in those circumstances. If any dispute arises between the supplier and the customer in relation to the carve-outs, the resolution mechanisms will be those normally used in the industry, via a complaint to the Energy Ombudsman, investigation and potential sanction by the regulator, Ofgem, or court action. The amendments apply to energy suppliers in Great Britain. Separately, the regulations amend the Energy Prices Act 2022 to allow the devolved Administration in Northern Ireland to make amendments to address issues in the Northern Ireland scheme. That is because their power to amend their equivalent legislation has expired. Let me end by saying a few words about the challenges that non-domestic consumers face because of high prices. I know that Members across the Committee are concerned about that. Energy prices for non-domestic customers have dropped below the record peaks during the crisis, but the Government recognise that they remain high and pose issues for some businesses. The Government believe that our mission to deliver clean power by 2030 is the best way to break our dependence on global fossil fuel markets and to protect bill payers, including non-domestic consumers, permanently. In the short term, the Government are taking action to better protect businesses from being locked into unfair and expensive energy contracts. Last year, the Government launched a consultation on introducing regulation of third party intermediaries, such as energy brokers. That is aimed at enhancing consumer protections, particularly for non-domestic consumers. The consultation has now closed and the Government will respond in due course. The Government are also empowering businesses to challenge unfair and poor practices by suppliers. Since December 2024, small and medium-sized enterprises with fewer than 50 employees can have access to free support to resolve issues with their energy supplier through the Energy Ombudsman. That expands the service to 99% of British businesses, allowing them to access up to £20,000 in financial awards. Those are important steps, on which we will continue to build. I hope that hon. Members will support the important regulations, which I commend to the Committee.

09:30:00

It is a pleasure to serve under you bright and early this morning, Mr Stringer. I am pleased to respond to the draft regulations on behalf of the Opposition. Committee Members will be relieved to hear that I shall not detain them long. It was right for the previous Conservative Government to step in during the cost of living crisis to protect families and businesses from rocketing energy bills. The supply shock from the pandemic and a major land war in Europe created a unique set of circumstances. Thanks to the previous Government, we came through the storm. Now that the crisis has passed, it is reasonable to finish the work of winding down the energy bill relief scheme and the energy bills discount scheme. They were always intended to be temporary measures during a time of national emergency. Now we are presented with the challenge of finding our way back to recovery and a long-term path to lower energy prices. As the current Government continue down the ideological decarbonisation route, led by the Secretary of State, we will watch carefully in order to protect the families and businesses who bear the cost of unrealistic clean energy targets. Indeed, experts expect the energy price cap to rise next month. The Manchester-based— not Aberdeen-based—head of GB Energy, Juergen Maier, says it will be “a very long-term project” to reduce bills by £300, which was a promise that Ministers stopped making as soon as their election campaign ended. I note that the Minister is wiser than her boss in not repeating that promise. We support the regulations. We recognise their role in winding down the old schemes, but we remain vigilant about new policies that will surely make lives harder and more expensive because of the unattainable and self-harming decarbonisation goals that the Government are pursuing.

09:32:00

I thank the hon. Member for his response. I am glad that we have consensus across the Committee about the regulations. The hon. Member is right to point out that energy bills are high. All hon. Members know that, and it is a central focus of the Government’s. I come back to the fact that we inherited a position whereby bills were at record heights. That is a result of our dependence on global fossil fuel markets over which we have no control. I have said this before and I will say it again: the Opposition were happy with that status quo, but we are not willing to put up with it. We believe that it must be changed. Our drive for green power will deliver home-grown clean energy, which will give energy security to the country and financial security to families. While we do that, our manifesto commitment to reduce bills remains central to what we are trying to achieve. It is the core of everything that the Department is trying to do. We will bear down on bills through clean power and we will ensure that we take short-term action to protect bill payers who are struggling. Critically, we will upgrade millions of homes so that we can deliver lower bills and warmer homes. We are committed to that because we understand that, throughout the country, people face a cost of living crisis, which we inherited from the Conservative Government, who did not do enough to insulate and protect people. We will not make that mistake. We are determined to do this. Again, I commend the regulations to the Committee. Question put and agreed to.

09:34:00