Category: Energy

Caroline Lucas – 2022 Speech on Energy (Oil and Gas) Profits

The speech made by Caroline Lucas, the Green MP for Brighton Pavilion, in the House of Commons on 5 July 2022.

The Government are introducing this Bill in response to the extraordinary profits being made by the oil and gas sector—profits that are not earned but are a consequence of high global gas prices, fuelled by Russia’s illegal invasion of Ukraine. As families across the country are struggling to make ends meet, faced with rising energy bills and a cost of living scandal, energy companies operating in the UK are predicted to make an eye-watering £11.6 billion of unexpected windfall profits this year from oil and gas extracted from the North sea. Not only is it right that those windfall profits are taxed and redistributed to provide vital support to households, some 6.5 million of which are now living in fuel poverty, but, frankly, it would be morally reprehensible to do anything else.

I therefore welcome the fact that the Government are finally introducing a windfall tax—or an “energy profits levy”, as Ministers prefer to call it. That is something that I, too, called for a very long time ago. However, I am extremely concerned that it is being rushed through, with the consultation open for just five working days and the Bill receiving only one day of full scrutiny in this House. That is patently insufficient time to consider legislation of this complexity and importance.

We must consider first whether the tax is set at a level that constitutes an adequate response to the ongoing energy crisis. In the sixth richest country in the world, April saw more than 2 million adults not eat for a whole day because they could not afford or access food. The energy levy is one of the tools we have to tackle this social scandal. We have a deep responsibility to use it to full effect and to ensure that this is the beginning of the end for such grotesque levels of poverty and inequality.

Secondly, we must consider the impact of the proposed investment allowance on not just domestic but global emissions. I know that the Treasury does not even recognise the idea of subsidies in the fossil fuel sector, but that does not change the reality. Make no mistake: this is a subsidy. It is reckless, and its climate impacts make a mockery of the Government’s claim to global climate leadership.

I understand the Government’s desire to give certainty to companies and bring forward this tax with urgency, but the draft explanatory note makes it clear that the levy

“will have effect for profits arising on or after 26 May 2022.”

In other words, it is already backdated. That means that allowing more time for proper consultation and scrutiny would not materially affect the outcomes of imposing the levy.

I support going further than the Government intend to by imposing a permanent tax on companies, to be levied at a rate of at least 30%, bringing the total level of tax on oil and gas company profit to 70%. That 30% increase is a small one on the Government’s proposed 25% levy, yet it would bring the UK in line with the global average, joining countries such as Angola and Trinidad. It has been estimated that a tax of that level would generate an additional £13.4 billion for the Exchequer. I made this point in my submission to the Government’s consultation, and I very much hope that Ministers will judge that it warrants serious consideration and will revise their Bill accordingly before it is presented to the House next week.

On the permanency of the tax, I know that Ministers will point to the fact that this Bill is intended to address the windfall profits of oil and gas companies, and that there will come a time again when gas prices are lower and profits are not so high. But as the Treasury team know, the UK currently has the lowest tax take in the world from an offshore oil and gas regime. That is not a badge of honour; it is a badge of shame. In Norway, the Government get $22 per barrel of oil in tax, whereas here in the UK we are talking about just $2. So we should use this opportunity to bring the UK in line with the permanent tax rate of other countries, regardless of the scale of profits

One other change is crucial: preventing this Bill from including the 80% so-called “investment allowance”. That outrageous proposal would, according to the Government’s own factsheet, mean that for every £1 that businesses invest in North sea oil and gas they will

“overall get a 91p tax saving”.

First, let us consider the fact that this relief will come at a huge cost to the taxpayer. Analysis by the New Economics Foundation showed that the investment allowance would cost £1.9 billion a year, because any subsidised oil and gas projects will not start to return a profit until after 2025, the date of the sunset clause laid out in the draft Bill. The E3G think tank estimates that lost revenue from the investment allowance over the next three years could have insulated 2 million homes over the same period, saving households £342 a year, on average. I struggle to believe that anyone thinks that handing money back to oil and gas companies is better than kick-starting the street-by-street nationwide home insulation programme that so many of us have been speaking about at such length this evening.

Secondly, this allowance dangerously undermines our climate targets by actively encouraging new fossil fuel projects. Indeed, up to 39 fossil fuel projects are eligible for this “super-deduction” and could be developed in the next three years. Together, those could emit as much as 899 million tonnes of greenhouse gases, which is more than double the UK’s estimated net emissions in 2020. The International Energy Agency and the Intergovernmental Panel on Climate Change are clear that new fossil fuel developments are simply not compatible with limiting global temperatures to 1.5°. The most recent IPCC report in April was unequivocal that

“further installation of unabated fossil fuel infrastructure will ‘lock in’ GHG emissions and put 1.5°C out of reach”.

It could not be clearer. Alignment with 1.5° is not just some kind of “nice to have” benefit; it is literally critical to avoiding climate catastrophe.

Thirdly, this investment allowance will not help to address domestic energy security, because, as the Treasury team know, 70% of the remaining reserves in the North Sea are oil and are not the kind suitable for use in UK refineries, meaning that we currently export about 80% of it. I therefore urge the Government to reconsider this aspect of the proposal, which is not just bad for the public purse, but potentially disastrous for our planet and will not deliver the benefits that the Government may claim.

To conclude, at the World Economic Forum in Davos, Fatih Birol, the IEA’s executive director, was clear that decision makers should not use

“the current situation as an excuse”

to invest in projects that are incompatible with net zero. I very much hope that the new Chancellor, whoever they may be, will heed that warning and reform this Bill before it comes to Parliament next week.

July 6, 2022
Alison Thewliss – 2022 Speech on Energy (Oil and Gas) Profits

The speech made by Alison Thewliss, the SNP MP for Glasgow Central, in the House of Commons on 5 July 2022.

It is a pleasure to see you in the Chair, Mr Deputy Speaker. What a strange evening for us to be making speeches in the House. While the Minister did a good job of putting forward the policy, we have to ask who the Chancellor will be by the time the Bill comes to the House next week and, indeed, whether it will still stand when it does come.

The Tories have come here today with a “temporary refund adjustment”, an “energy profits levy”, a windfall tax by any other name. It is a tax that Tory Members were vehemently against all the way up to the point when the now former Chancellor announced it, yet he still came to the Treasury Committee to tell us that he did not believe in windfall taxes. So I can only speculate that this may be one of the reasons why he chose to resign this evening—one of the areas in which he and the Prime Minister apparently disagreed in private—and one of the reasons why he was no longer prepared to give a speech on the economy with the Prime Minister next week, as planned.

Today we see the UK Government finally getting round to doing something about these excess profits; as always, at the coo’s tail. They have the full suite of economic powers to act, but they continue, again and again, to lack the will or the imagination to do so—to support people through a cost of living crisis that they helped to create.

The SNP has been consistent in calling for a windfall tax on excess profits since June 2020, in response to the soaring profits then being made by Amazon and other online retailers during the pandemic. My colleague in the Scottish Parliament and evangelist for Paisley, George Adam MSP, raised that issue and the Scottish Government Finance Secretary Kate Forbes certainly agreed with the principle. It is disappointing that this UK Government, and indeed the official Opposition, have looked only narrowly and in a limited fashion at oil and gas and ignored all the other areas where super-extraordinary profits have been soaring during this pandemic.

Today we see Scotland’s oil and gas resources being used yet again to bail out the UK Treasury. The Tories have made a very specific choice to focus their raids on super-profits not just on Scotland but on one particular part of Scotland: the north-east. Aberdeen and the towns around it have contributed significantly—over £300 billion—to the UK balance sheet, yet when it comes to carbon capture and storage or the Scottish cluster, that area is left on the subs bench, waiting on a list instead of leading a just transition. The UK Government will not even match the Scottish Government’s commitment to the just transition fund.

I have listened carefully to those in the oil and gas industry, and the lack of predictability and consistency in the taxation regime comes up again and again. When the industry expert Nathan Piper gave evidence to the Treasury Committee back in March, he spoke powerfully about the impact this has on confidence and investment. Yes, we know that oil and gas can be volatile, but when we look just across the water to Norway, we see a reliable stewardship of resources and the world’s largest sovereign wealth fund. Scotland, look at what you could have won, had it not been for the squandering and mismanagement of our natural resources by each and every UK Government since the first drop of oil was extracted. Schrödinger’s Scotland: a country too poor to be independent but simultaneously so rich that the UK Government can use Scotland’s North sea as a £5 billion cash machine.

In the early years of North sea oil and gas, revenues were used to pay for Thatcher’s mass unemployment. Gordon Brown’s raid in the early 2000s was used to pay for cuts to fuel duty, and the current Tory Government are now zoning in on oil and gas to tackle their own Brexit cost of living crisis when other options are available to them. This comes at a time when the Treasury is raking it in from additional tax receipts from the soaring prices of fuel, energy and goods, giving the former Chancellor an extra £30 billion of fiscal headroom in his budget.

What of the environment and the promises made at COP26? The new investment allowance is, in the Treasury’s own words, an

“incentive for the oil and gas sector to invest in UK extraction”.

It is as though the Treasury has forgotten that COP26 happened at all. This is clearly contrary to the Scottish and UK Governments’ climate objectives and to the commitments they made to the world last November. The UK Committee on Climate Change has stated:

“An end to UK exploration would send a clear signal to investors and consumers that the UK is committed to the 1.5°C global temperature goal.”

Where stands that commitment now? We on the SNP Benches welcome investment, but any incentives must be balanced across sectors and encourage sustainable investment towards a just transition and into renewables, rather than the short-term, carbon heavy investment that the former Chancellor was encouraging. We also know that any investments from this are unlikely to have an impact on our household energy bills anytime soon, but that is where this crisis lies.

A further source of worry to those not in the oil and gas sector is the now former Chancellor’s plans for a further raid on other energy producers, putting at risk Scotland’s key renewables sector. The former Chancellor refused to tell me in the Treasury Committee whether he had even picked up the phone to the Scottish Government to discuss these plans with them. He talked about extraordinary profits, but could not define what they were and who was making them. The Secretary of State for Business, Energy and Industrial Strategy seems to know little of the plans, passing the buck back to the Treasury. All of this is undermining confidence in a sector that could not be more crucial to the future of our planet.

What happens now? When will we hear further details of those plans? The Chancellor claimed a month ago that it would be in “weeks”. Will the plans for other energy producers come forward before the recess? Will the Minister put a date on it? Will there be more tax breaks for renewable development, or is it only oil and gas exploration that get the tax breaks? Will these measures be spliced into the Bill next week? Will we even see a Bill next week? This is more short-termism, more inconsistency and more poor stewardship of Scotland’s resources by a Government we did not elect. Scotland is a renewables powerhouse, and we on these Benches will resist any attempt to stifle that industry and to raid the profits. It used to be said that it is Scotland’s oil. We can now say that it is Scotland’s wind, Scotland’s waves, Scotland’s tides, Scotland’s solar and Scotland’s hydrogen. Westminster lies in chaos. It is Scotland’s opportunity on 19 October 2023. Let us put the power in our own hands.

July 6, 2022
Robert Syms – 2022 Speech on Energy (Oil and Gas) Profits

The speech made by Robert Syms, the Conservative MP for Poole, in the House of Commons on 5 July 2022.

As the motion relates to a Treasury matter, may I pay tribute to the former Chancellor, my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak)? He had to get the country through a difficult period in the pandemic. He produced a number of interesting schemes, such as the furlough and the self-employment income support scheme, where the software worked and where people were helped. I think he was very creative in the way he handled a difficult situation. I know that it is not always easy for senior politicians to take decisions such as the one that he has taken today. I wish him well, along with the former Secretary of State for Health and Social Care, my right hon. Friend the Member for Bromsgrove (Sajid Javid). We will see how events unfold.

Let me start by taking a traditional Conservative position and saying that I do not like windfall taxes. The North sea is a tremendous British success story. We have got oil out of deep seas using technology, investment and British initiative over decades and we have benefited the nation in doing so. We are a nation that has oil and gas all the way around its coast, as Professor Peter Odell used to say in the 1970s. It is just a question of whether it is viable to get it out, and whether the tax and investment regime is good enough.

The North sea is quite mature now. Although the rise in prices is unwelcome for motorists, it certainly gives the opportunity to extend the life of some fields and makes other oil fields with more marginal prospects more viable. If we are looking for a resilient future for our country, getting the best out of our natural resources in the transition to net zero, I think we ought to have a stable tax network, not act like a Venezuelan junta by jumping in and trying to take money away from oil companies. And what are oil companies? They are normally vehicles for pension funds for lots of elderly people living up and down the country who rely on that income to pay their cost of living bills. There is no such thing as a painless tax rise. There is no magic money tree if we go and punch the oil and gas companies in the mouth. I think this is a very short-sighted policy. It may raise money, but the consequences are long term, and it may have an impact on investment.

Apart from the creation of an oil industry, there are thousands of jobs in oil services in and around Aberdeen, in many other parts of the United Kingdom and, now, worldwide. I think we ought to be proud of what this country has achieved, and we ought to be doing what we can to support those well-paid and important jobs as we go towards net zero.

I am not going to divide the House today. I do not think I would get a seconder, as I am probably the only person who is against the windfall tax at the moment, but we will see how this transpires. I think that a stable tax system in which people in the oil and gas industry can look decades ahead—because investment decisions sometimes take decades—is a much better way of dealing with the situation.

Kerry McCarthy (Bristol East) (Lab)

I understand the hon. Gentleman’s arguments, although I do not agree with them, but has he an alternative proposal for helping people to bring down their energy bills? I am sure that many of his constituents are deeply worried about how they will make ends meet, particularly with the next increase in bills coming this autumn. How does he suggest we help them?

Sir Robert Syms

I am not sure that the £5 billion raised from the oil companies will find its way into the pockets of people who are worried about their energy bills. As far as I know, it is going into the Treasury.

I return to my original simple point. The Government have already undertaken a number of measures to help with bills; the problem is the lag between the decision making and the assistance that they are giving. So there is always more pressure to do more. I am hopeful that, as we proceed, people will suddenly see some of the bail-out help with bills that the Government have already factored in. But I think that a stable tax system is a better way of proceeding than adding a higher levy on top of corporation tax rates, which are already higher than the rates for most other companies. Let us not forget that many of these oil companies were losing money 18 months ago when we were in lockdown.

I am unhappy with this policy. I will find it interesting to see how the Government bring the positives forward. I am pleased that they have listened to representations—and the former Chancellor was talking to the oil industry—but I think that in the long term this is bound to have a negative effect on investment in the sector, and that what we should be doing is cherishing and encouraging the sector so that we import less from other countries and give ourselves more resilience and security of supply.

That is really all that I wanted to say. I wanted to make my reactionary right-wing comments about windfall taxes, and I did not want the motion to go through without my putting them on the record.

July 6, 2022
James Murray – 2022 Speech on Energy (Oil and Gas) Profits

The speech made by James Murray, the Labour MP for Ealing North, in the House of Commons on 5 July 2022.

We have been waiting for many months for this day to come, but here we finally are: I am referring not to the news that has broken within the last hour outside this Chamber, but to the fact that the Government are finally implementing a windfall tax, even if the Minister absolutely refused to say those words in her remarks.

The Conservatives are finally introducing a windfall tax on oil and gas producers’ profits more than seven months after the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), first set out Labour’s plans for one. In the seven months since Labour first called for a windfall tax, the cost of living pressures facing people across the country have grown relentlessly and oil producers’ profits have soared.

Since the start of the year, energy bills have spiralled by £700 for a typical household. Inflation has risen to 9.1%, the highest level in 40 years, and taxes on working people’s pay have jumped thanks to the Government’s decision to hike national insurance contributions. This year has seen the cost of living rise unremittingly, while oil and gas producers’ profits have in some cases tripled.

A fair solution has been staring the Government in the face: levy a one-off windfall tax on North sea oil and gas producers’ extraordinary profits and use that money to help to cut people’s energy bills at home. Yet when, on 9 January this year, the shadow Chancellor first called on the Government to levy such a tax, Conservative MPs were falling over themselves to oppose it. The Education Secretary—as it happens, a former oil industry executive—came out firmly opposing a windfall tax on oil and gas producers on the ground that they, the oil producers, were already “struggling.” The Business Secretary said:

“I’ve never been a supporter of windfall taxes.”

The Northern Ireland Secretary said that he thought that a windfall tax

“sounds attractive but doesn’t work”.

The Deputy Prime Minister claimed that it would be “disastrous”.

Ministers and their Back-Bench Conservative colleagues then went on to vote against our plan for a windfall tax on three separate occasions. So, despite our common-sense plan for a windfall tax receiving wide support across the country—with even some oil producer bosses backing its logic—Conservative Ministers simply refused to get on board until 26 May, the day after the Sue Gray report was published, when the Prime Minister and the former Chancellor suddenly changed their minds. It seems clear that what finally caused the Conservative leadership to change course and back a windfall tax was the need for a different set of headlines in that week’s news. Whatever it took to get the Prime Minister and the former Chancellor over the line, we were relieved that they finally agreed to back a windfall tax. We were relieved that some help with soaring energy bills was finally on its way.

But that is no way to run the country—and what a cost those months of delay have had. For every day that Conservative Ministers refused to act, £53 million has been added to Britain’s household bills during this cost of living crisis. Next Monday, when we consider the Bill that will follow the resolution, the Opposition will urge Ministers to make right their delay in introducing the windfall tax. Otherwise, their months of delay will leave the public finances missing out on billions of pounds of tax revenue that could have supported further help for people with the cost of living.

We know from the draft Bill and from what the Minister said that the Government are planning to introduce a brand-new tax break for oil and gas producers. That will give money back to the same firms that are supposed to be paying their fair share through the windfall tax. The Minister was unable to answer when my hon. Friend the Member for Bristol North West (Darren Jones) intervened, but our analysis shows that that tax break could lead to a third or more of any revenue from the new levy being handed straight back to the oil and gas producers.

It is a subsidy that even oil executives do not seem to think necessary. It will subsidise projects that would almost certainly have happened anyway, and it will see 20 times more being given in taxpayer incentives to oil and gas producers than to firms investing in the renewable energy of the future, yet the Government seem determined to push ahead with their tax break. When we consider the Bill next Monday, we will urge Ministers to think again about that unnecessary tax break for oil producers, which will undermine both the impact of the windfall tax and our country’s wider efforts to tackle the climate crisis.

We are relieved that the Government are finally proceeding with a windfall tax, and we will support the motion, but the Conservatives’ whole approach has shown so much of what is wrong with the way they conduct themselves in power. When we called for a windfall tax, they spent months opposing it as strongly as they could. They dismissed a fair and common-sense way, which was staring them straight in the face, to help people who face soaring energy bills. Then they changed course, not because it was the right thing to do, but because they needed a new headline to take attention away from the Prime Minister’s lack of integrity in office. Now, as they finally reveal the detail of their windfall tax proposals, they immediately undermine its effectiveness, and any wider efforts to tackle climate change, with a new tax break for oil producers. Their instincts are wrong. Their priorities are wrong. The way they run our country is wrong. With the windfall tax, we have shown that Labour is winning the battle of ideas in Britain, and that Labour will provide the leadership that our country needs.

July 6, 2022
Lucy Frazer – 2022 Statement on Energy (Oil and Gas) Profits

The statement made by Lucy Frazer, the Financial Secretary to the Treasury, in the House of Commons on 5 July 2022.

I beg to move,

That provision may be made for, and in connection with, imposing a charge on ring fence profits of companies (within the meaning of Part 8 of the Corporation Tax Act 2010).

This Bill deals with the taxation of extraordinary profits in the oil and gas sector, but it is important to remember that its effect is to allow us to focus on supporting families up and down the country at this difficult economic time. The Bill will help us to raise revenues and support families while continuing to encourage investment in North sea oil and gas.

Darren Jones (Bristol North West) (Lab)

I wonder whether the Treasury has made any assessment yet of how much money will be raised by this windfall tax, given the debt that will need to be taken on as a result of the tax cut for those drilling for fossil fuels. Is there an estimate of how much the Minister intends to raise by these means?

Lucy Frazer

The estimate of the amount that the measure will raise is £5 billion over the course of the first year. I start by highlighting the context for our introducing the Bill. The oil and gas sector is making extraordinary profits. Those profits are not the result of recent changes to risk-taking, innovation or efficiencies; they are the result of surging global commodity prices, driven in part by Russia’s war. The profits are over and above what analysts and businesses in the sector could have expected to earn. Indeed, since early last year, oil prices have nearly doubled and gas prices have more than doubled. The Bill is being introduced at a time when many of our constituents are struggling with the cost of living, and at a time when we have said that the Government will support the most vulnerable and the least well off in getting the support that they need.

I would like to touch on how the Bill ensures that we tax extraordinary profits fairly while incentivising investment. To do that, we are introducing the energy profits levy, a new 25% surcharge on the extraordinary profits that the oil and gas sector is making. At the same time, the new 80% investment allowance will mean that businesses will, overall, get a 91p tax saving for every £1 they invest. This provides them with an additional immediate incentive to invest. That nearly doubles the tax relief available and means that the more investment a firm makes, the less they will pay. As set out in the energy security strategy, the north will still be a foundation of our energy security, so it is right that we continue to encourage investment in oil and gas. The Government expect the energy profits levy, with the investment allowance, to lead to an overall increase in investment.

I want to make clear what the investment allowance will apply to. First, the allowance will be calculated in the same way as the investment allowance for the existing supplementary charge. Therefore, if capital or operating expenditure qualifies for the supplementary charge allowance, it will qualify for the energy profits levy allowance, but unlike the supplementary charge, it will be available to companies at the point of investment. This makes it both more immediate and more generous. As the levy is targeted at the extraordinary profits from oil and gas upstream activities, it makes sense that any relief for investment must also be related to oil and gas upstream activities. Such spending can be used to decarbonise oil and gas production—for example, through electrification—so any capital expenditure on electrification, as long as it relates to specific oil activities within the ringfence, will qualify for the allowance. Examples of activity that may be carried out for specific oil activities include expenditure on plant and machinery such as generators, which includes wind turbines, transformers and wiring.

We have also been listening closely to feedback from industry. We published draft legislation for the Bill on 21 June to seek technical feedback. Two weeks ago, the former Chancellor met industry stakeholders in Aberdeen to discuss the levy—not just to communicate the aims of the levy and how it will fund vital support for families, but to ensure that the levy works as the Government intended. That is why I can confirm that the Government are making a change to the legislation. I confirm that tax repayments that oil and gas companies received for petroleum revenue tax related to losses generated by decommissioning expenditure will not be taxed under the levy. Since wider decommissioning expenditure is also left out of account for the levy, that change is consistent and fair. We are very grateful for the engagement that we have had with industry on the matter. When the Bill is published, this will be made clear. To reassure the House, with this change, the Government still expect the levy to raise about £5 billion over the next year.

Finally, let me turn to how long the levy will be in place. It will take effect from 26 May this year and it will be phased out when oil and gas prices return to historically more normal levels. A sunset clause will also be written into the legislation so that, by the end of 2025, the levy will automatically cease to be in place. The energy profits levy is temporary, with a set lifespan that raises about £5 billion revenue over the next year, so that we can help families with the cost of living in the shape of significant, targeted support to millions of the most vulnerable.

July 6, 2022
Greg Hands – 2022 Statement on Energy Efficiency

The statement made by Greg Hands, the Minister for Energy, Clean Growth and Climate Change, in the House of Commons on 22 June 2022.

Upgrading our homes to be more energy efficient is the best long-term solution for reducing our energy costs, keeping ourselves warm and healthy in winter and tackling fuel poverty. It is also essential for our transition to net zero and in supporting local jobs and growth. This is why the Energy Company Obligation scheme remains a key policy in supporting low income and vulnerable households to upgrade their homes with energy efficiency and heating measures.

Making homes more energy efficient reduces heating costs permanently, mitigating the impacts of current and future price rises. There are wider benefits; energy efficient homes are more comfortable to live in, with consequent improvements to householder’s health and wellbeing.

The Energy Company Obligation has a good track record of delivering such upgrades to homes. Since 2013, it has installed around 3.5 million energy efficiency measures in 2.4 million homes across Great Britain.

In April, we published the response to the consultation on the future of the Energy Company Obligation across Great Britain, committing to an expansion of the scheme from £640 million to £1 billion a year and extending it by four years to 2026. Today the Government have laid the regulations for the scheme.

The last iteration of the Energy Company Obligation scheme, EC03, came to an end on 31 March 2022 and since 1 April 2022, EC03 measures could continue to be delivered to previous scheme rules—subject to some exceptions—until 30 June 2022. Similarly, suppliers have had the option to deliver to the new scheme, EC04, rules from 1 April 2022.

EC04 will be focused on low-income and vulnerable households in Energy Performance Certificate (EPC) Band D-G homes. The scheme will bring positive value to society, with estimated installations of around 800,000 measures in around 450,000 homes. Households could save on average £290 annually off their energy bills over the lifetime, or up to £1,600 in the least energy efficient homes. However, those savings could average £600 next winter. 360,000 homes will be upgraded to EPC Band C, helping more households out of fuel poverty.

Government will mandate minimum energy efficiency improvements requiring Energy Performance Certificate (EPC) Band F and G homes to be improved to a minimum Band D and Band D and E homes to be improved to a minimum Band C, contributing to our statutory fuel poverty target and interim milestone.

To make greater progress on upgrading the least energy efficient homes, there is a minimum target of upgrading 150,000 Energy Performance Certificate (EPC) Band E, F and G private tenure homes. This will ensure the least energy efficient homes are not left behind. Furthermore, a minimum target of 90,000 solid wall insulation measures is introduced to maintain the focus on insulating harder to treat homes, while supporting the solid wall insulation industry.

Under the scheme, support for repairs and replacements of broken gas and electric storage heating systems will be limited to 5,000 homes per year and the repair of inefficient oil and liquefied petroleum gas (LPG) systems will be permitted as a last resort where renewable heating cannot be installed. This will ensure measures installed under EC04 align with the Government’s Heat and Buildings Strategy and net zero targets.

Homes in off-gas rural areas will be incentivised in Scotland and Wales, to ensure homes that may be harder to reach and more expensive to deliver are not left behind. EC04 has been designed to complement the Home Upgrade Grant in off-gas homes in England, social housing funding and the private rented sector regulations. It will continue to work alongside existing energy efficiency and fuel poverty policies in Scotland and Wales.

Up to 50% of a supplier’s obligation may be delivered under the reformed Flexible Eligibility mechanism (EC04 Flex), an increase from 25% under the previous scheme. EC04 Flex enables local authorities, the Scottish and Welsh Governments and energy suppliers to target and refer other low-income households who may not be in receipt of means tested benefits.

A new scoring methodology will be introduced, providing greater support to the worst performing homes. Support will continue for new and innovative installation methods and measures via a reformed innovation measure mechanism. Only fully tested measures with adequate consumer protection will be eligible.

This expansion of the scheme forms part of the wider support package to help households with rising energy bills.

In May, in recognition of increased cost of living and continued rising energy costs, a package of support worth £37 billion was announced, which includes the Energy Bills Support Scheme. Most vulnerable households will receive at least £1,200 of support this year and, all households will receive a £400 grant as a credit from energy suppliers from October 2022 onwards, which does not need to be repaid.

June 23, 2022
Greg Hands – 2022 Comments on the Boiler Upgrade Scheme

The comments made by Greg Hands, the Energy Minister, on 23 May 2022.

The Energy Security Strategy showed our strong commitment to powering Britain with homegrown renewable and nuclear energy.

Thanks to the government’s Boiler Upgrade Scheme, heat pumps using this clean, cheaper electricity will be the cheaper, obvious choice for households choosing to replace their fossil fuel boiler.

It will also kick-start a British manufacturing industry that will help bring down prices even further whilst creating huge investment and job opportunities.

May 24, 2022
Zarah Sultana – 2022 Speech on the Cost of Living Crisis

The speech made by Zarah Sultana, the Labour MP for Coventry South, in the House of Commons on 17 May 2022.

Thank you, Madam Deputy Speaker.

The annual profits of oil giant Shell were £12 billion. BP’s profits were £9.5 billion. The company’s boss said that his pay had more than doubled to just under £5 million, and then the company complained that it is

“getting more cash than we know what to do with”.

In the next year, the combined profits of those two companies are expected to double to £40 billion.

It is not just oil giants; bankers’ bonuses are booming, too. They are higher than at any time since the 2008 financial crisis. Posh bars in the City say that they have had a run on their most expensive champagne. While the vast majority are struggling like never before, the wealthy few are raking it in. The Institute for Fiscal Studies says that the booming incomes of the top 1% are driving rising inequality. It is a crisis for the majority, but a bonanza for the few.

This is not inevitable. This crisis was made in Downing Street. It is the result of political choices made by this Tory Government. Last year, they let Shell pay zero tax on North sea oil and gas production, with the Treasury actually paying Shell £92 million. Earlier this year, the Tories voted to give bankers a tax cut worth £1 billion a year, and just a week later they voted to slash social security payments in real terms and to cut pensions by about 4%, once inflation is factored in. A couple of months earlier, they implemented the biggest overnight cut in the history of the welfare state, scrapping the £20 a week universal credit uplift, and then they let energy bills soar by a whopping 54%. Their choices are why my constituents and millions of people across the country are struggling while the super-rich line their pockets.

We could choose to do things differently, and that is what amendment (f), tabled in my name, would do. It would use a windfall tax on oil giants to slash energy bills and bring energy companies into public ownership. It would give millions of workers a real pay rise, making the minimum wage a genuine living wage, and implement a real-terms public sector pay rise. It would rebuild the social security safety net, with a real-terms increase in social security and pensions, including restoring the £20 a week universal credit uplift. It would pay for that by raising taxes on the richest, not on ordinary workers, including an end to the tax-dodging loopholes that Conservative Members are so fond of, including the non-dom status. Instead of the political choice to squeeze the livelihoods of working people, we could squeeze the profits of the rich. That is what my amendment would do, and I urge Members to back it.

May 19, 2022
Kwasi Kwarteng – 2022 Comments on New Nuclear Power Projects

The comments made by Kwasi Kwarteng, the Secretary of State for Business, Energy and Industrial Strategy, in the House of Commons on 13 May 2022.

Our new £120 million fund will push forward our plan to deploy a new fleet of nuclear power stations as part of a British nuclear renaissance.

By encouraging new companies to come forward and build in Britain, we can spur greater competition in the market to cut development costs so consumers benefit in the long-term.

Nuclear is central to our long-term plan bolster the UK’s energy security with cheaper, cleaner, home-grown power, while creating thousands of high-skilled jobs across our country.

May 13, 2022
Greg Hands – 2022 Statement on the Warm Home Discount

The statement made by Greg Hands, the Minister for Energy, Clean Growth and Climate Change, in the House of Commons on 12 May 2022.

Upgrading our homes to be more energy efficient is the best long-term solution for reducing our energy costs and keeping ourselves warm in winter. However, this takes time, which is why the warm home discount remains a key policy for tackling fuel poverty now. For 11 years, the warm home discount has provided vital help with energy bills to households on the lowest incomes. Last summer, the Government consulted on the future of the warm home discount scheme in England and Wales, and today, the Government have laid the regulations for extending, expanding, and reforming the scheme to 2026.

From this winter, the Government are expanding the warm home discount scheme. The annual spending envelopes will increase from around £350 million to £475 million (in 2020 prices), and the value of the household rebates will rise from £140 to £150. As a result, around 2.8 million households in England and Wales will receive a rebate every year, 750,000 more compared to the previous scheme. We are also lowering the energy supplier participation thresholds from 150,000 domestic customer accounts to 50,000 in 2022-23 and 1,000 in 2023-24, meaning that almost all customers will be with a participating supplier and thereby reducing the barriers for people switching energy suppliers.

Under the scheme, around 1 million low-income pensioners will continue to receive their rebates automatically through the core group 1 element of the scheme. It is right that we protect this low-income vulnerable group susceptible to the effects of living in a cold home.

From this winter, the Government are replacing the former application-based broader group element, under which low-income and vulnerable households had to apply to their energy supplier every year. Broader group rebates have often been awarded on a first-come, first-served basis or by lottery, as there have been more eligible households than there were rebates available.

Instead, around 1.9 million households will receive rebates under a new core group 2. These households will be those on the lowest incomes and with high-energy costs, determined by using data on property characteristics. Through data-matching between Government Departments and energy suppliers, the vast majority of these households will be identified automatically and receive their rebate without having to take any action. These reforms will improve the fuel poverty targeting of the scheme, ensuring more of the rebates go to households in, or at risk of, fuel poverty.

Lastly, the Government recognise the value of industry initiatives, taking the form of additional financial and energy-related support measures, that energy suppliers and industry partners provide to fuel poor households. It will therefore become mandatory for all energy suppliers participating in the scheme to provide or fund industry initiatives.

The Government are consulting on a warm home discount scheme in Scotland for the period until 2026 and shall lay separate regulations, subject to the outcome of that consultation.

This expansion of the warm home discount scheme forms part of the wider support to help households with rising energy bills. The Government have announced £9.1 billion of support through the energy bills rebate in 2022-23. This includes: a £200 discount on energy bills this autumn for domestic electricity customers in Great Britain; a £150 non-repayable council tax rebate for households in England in council tax bands A to D; and a £144 million discretionary fund to support households not eligible for the council tax rebate. Meanwhile, the devolved Administrations will receive around £565 million corresponding funding through the Barnett formula.

More information on the warm home discount scheme will be made available over the summer on www.gov.uk/the-warm-home-discount-scheme.

May 13, 2022