Thursday 22 September 2022
Business, Energy and Industrial Strategy
Following the Prime Minister’s announcement on 8 September, yesterday, the Government published further details of the support we are offering to people and businesses in the face of soaring energy prices. This package of unprecedented assistance for the whole UK provides the certainty families and business owners need to help them manage their energy bills.
Details of the energy price guarantee for domestic consumers and the energy bill relief scheme for business and non-domestic properties are available on gov.uk. The Chancellor of the Exchequer will set out more details of the costs of the Government’s support as part of his fiscal statement on 23 September.
We have designed the schemes to be simple for energy consumers. Families and eligible businesses do not have to take action or apply for support, energy suppliers will automatically apply the appropriate reduction via their energy bill. Households will receive an equivalent level of financial support wherever they are in the UK. The same is true for businesses across the UK too.
The energy price guarantee will ensure that a typical household in Great Britain pays an average £2,500 a year for their energy from 1 October 2022, for the next two years. Households in Northern Ireland will see equivalent benefits on the energy bills. On average usage, a household in Great Britain will save £1,000 a year. This is in addition to the already announced £400 energy bills support scheme for households across the UK. The most vulnerable UK households will also continue to receive £1,200 of support. For consumers in Great Britain who pay for their energy through a monthly, quarterly or other regular bill, the energy price guarantee will be applied when their bill is calculated. The guarantee limits the amount the bill payer can be charged per unit of gas or electricity, so the exact bill amount will continue to be influenced by how much energy is used.
The energy bill relief scheme will provide protections for all businesses, voluntary sector and public sector organisations in Great Britain which face excessively high energy bills over the winter period, whether they are on existing fixed price contracts agreed on or after 1 April 2022, signing new fixed price contracts, variable or deemed tariffs or flexible purchase contracts. To administer support, the Government have set a supported wholesale price—expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter—which is a discounted price per unit of gas and electricity. Suppliers will pass the reduction in the wholesale price through to their customers.
The energy bill relief scheme will run initially for six months covering energy use from 1 October 2022 until 31 March 2023. There will be a review of the operation of the scheme, to be published in three months’ time. This review will consider how best to offer further support to customers who are the most vulnerable to energy price increases. These are likely to be those who are least able to adjust, for example by reducing energy usage or increasing energy efficiency.
A similar scheme will be established in Northern Ireland, providing a comparable level of support. We intend to provide more information on the comparable support for non-domestic customers in Northern Ireland by the end of September.
The scheme for domestic consumers will be different, because of the different way the electricity and gas market operates in Northern Ireland. But it will provide households with an equivalent level of support as for those in Great Britain. Households do not need to take any action to receive this support, although it may take a little longer than for Great Britain for relief to take effect. However, the savings will be applied to energy used from October onwards so that households get the same overall benefit as those in Great Britain. The energy price guarantee limits the amount you can be charged per unit of gas or electricity, so households’ exact bill will continue to be influenced by how much energy is used.
Households in Northern Ireland will also receive the £400 discount on their bills through the Northern Ireland energy bills support scheme, which will offer the same level of support as for households in Great Britain. We aim to provide this £400 discount for Northern Ireland as soon as possible.
A comparable scheme to the energy bill relief scheme will be in place for businesses and other non-domestic customers in Northern Ireland. This will follow a similar structure to the GB scheme. We intend to provide more information on the comparable support for non-domestic customers in Northern Ireland by the end of September.
As the Prime Minister said on 8 September, the Government are bringing forward emergency legislation to underpin the delivery of our support package. We will introduce a Bill immediately after parliamentary recess. It will include measures for the GB energy price guarantee for domestic consumers and the energy bill relief scheme for businesses and non-domestic properties so all of GB receives equivalent support; and enable the delivery of comparable schemes in Northern Ireland. It will provide powers to enable low carbon generators to move on to fixed prices to end the situation where electricity prices are set by the marginal price of gas, ensuring consumers pay a fair price for their energy.
I have laid before Parliament a departmental minute describing contingent liabilities arising from the energy price guarantee. It is normal practice when a Government Department proposes to undertake a contingent liability of £300,000 and above, for which there is no specific statutory authority, for the Department concerned to present Parliament with a minute giving particulars of the liability created and explaining the circumstances.
I regret that because of the urgency of establishing this scheme before 1 October, I have not been able to follow the usual timelines for issuing notice at least 14 parliamentary sitting days before the liability begins to be incurred.
The Treasury has approved the scheme in principle. I will continue to update Parliament on this scheme.
New oil and gas licensing
We are scaling up renewables, nuclear, and lower carbon energy sources, to boost Britain’s energy security in the long term, and reduce our exposure to high fossil fuel prices set by global markets outside our control. While we do this, there will continue to be ongoing demand for oil and gas over the coming years during this transition, with oil and gas needed to maintain the security of the UK’s energy supply. Making the most of our own domestic resources under the North sea will make us less dependent on foreign imports.
In the light of Putin’s illegal invasion of Ukraine and weaponisation of energy, strengthening our energy security is an absolute priority, and—as the Prime Minister said—we are going to ensure the UK is a net energy exporter by 2040. To get there we will need to explore all avenues available to us through solar, wind, oil and gas production, so it’s right that we’ve lifted the pause to realise any potential sources of domestic gas.
In 2021, it was decided that a climate compatibility checkpoint should be put in place, so that compatibility with the UK’s climate objectives is assessed as part of the decision on whether or not to endorse continued oil and gas licensing rounds.
In December 2021, a consultation on the design of this checkpoint was launched, running until the end of February 2022. A large number of detailed and thoughtful responses were received. The HM Government response, which is being published today, engages with many of the arguments put forward, and sets out the Government position on these. HM Government has also designed a checkpoint which takes the responses to the consultation into account; a document setting out this design and the tests to be included in the checkpoint is also being published today.
Having reviewed the results of these tests in the context of a 33rd licensing round, it has been decided that a 33rd licensing round is compatible with the UK’s climate objectives.
The Government understand that the North Sea Transition Authority will shortly be launching a new licensing round for oil and gas exploration. This round could result in the award of more than 100 licences to developers, strengthening the UK’s vital offshore oil and gas sector, putting more UK gas on the grid for longer, and bolstering the future energy security of the UK.
Shale gas extraction
The current pause (moratorium) on shale gas extraction was put in place on the basis that HM Government would only support shale gas exploration if it could be done in a safe and sustainable way, and that it would be led by the science on whether this was possible. The stated policy aim was to minimise disturbance to those living and working nearby, and to prevent the risk of damage.
Much has changed, however, since 2019.
In April this year, HM Government commissioned the British Geological Survey to advise on the latest scientific evidence around shale gas extraction, to assess progress in the scientific understanding which underpins Government policy, and to allow Ministers to consider next steps. Having considered their advice carefully, HM Government are publishing this report today.
The report makes clear that forecasting the occurrence of felt seismic events remains a scientific challenge for the geoscience community. It also makes clear that to improve our understanding we need more exploratory sites to gather the necessary data.
Geomechanical modelling has been an important tool in the United States for this purpose, but requires accurate mapping of sub-surface faults, for which more data is required in the UK. There have only been three test wells which have been explored for shale gas in the UK to date.
On the wider geopolitical stage, Putin’s invasion of Ukraine and the resulting restrictions on gas supply to Europe have impacted on global energy prices and the energy security of our neighbours and allies. This emphasises the need for “home grown” sources of energy to reduce our reliance on imports.
The Government remain committed to net zero by 2050, but we have to get there, and to get there we are going to need oil and gas. And domestic sources of gas clearly have a lower climate impact than shipping liquified natural gas by tankers halfway across the world.
Under these circumstances, HM Government consider it appropriate to pursue all means for increasing UK gas production, including shale gas extraction. The Government are therefore lifting the pause on shale gas extraction and will consider future applications for hydraulic fracturing consent with the domestic and global need for gas, and local support for developments, in mind.
While HM Government will always try to limit disturbance to those living and working near to sites, tolerating a higher degree of risk and disturbance appears to us to be in the national interest given the circumstances described above. With this in mind, it is important that the policy relating to shale gas extraction reflects this. HM Government will be reviewing this aspect of shale gas policy as part of a wider reflection on how to better support the industry throughout the whole life cycle of the investment, from initial exploration to large-scale production and I will provide an update on this in due course.
We will look to the North Sea Transition Authority and other licensing authorities to be proactive in extending existing consents and permissions where practicable, to support the development of energy resources in the national interest.
It is clear that we need more exploratory sites in order to gather better data and improve the evidence base and we are aware that some developers are keen to assist with this process. We look forward to seeing these proposals in detail.
Offshore energy strategic environmental assessment
HM Government have completed an offshore energy strategic environmental assessment (OESEA) of a draft plan/programme to enable further offshore licensing/leasing for offshore marine renewables, including wind, wave and tidal energy, oil and gas, gas storage including carbon dioxide storage, and offshore production and transport of hydrogen.
The renewable energy elements of the draft plan/programme cover the relevant parts of the UK exclusive economic zone and the territorial waters of England and Wales; for hydrocarbon gas storage it applies to UK waters, territorial sea and the relevant parts of the UK exclusive economic zone, and for carbon dioxide storage it applies to UK waters, the UK exclusive economic zone and relevant territorial sea, excluding the territorial sea in Scotland; for hydrocarbon exploration and production it applies to the UK territorial sea and the UK continental shelf; and for offshore production and transport of hydrogen it applies to UK waters.
A public consultation on the OESEA4 environmental report was undertaken between 17 March 2022 and 27 May 2022. All comments received on the draft plan/ programme and the environmental report have been considered by HM Government and a HM Government response for OESEA4 has been prepared and will be placed on the gov.uk website. This summarises stakeholder comments and HM Government’s clarifications and responses to them. The environmental report and the comments received have informed the HM Government’s decision on whether to proceed with the draft plan/programme.
HM Government have decided to adopt the draft plan/programme, with the area offered restricted spatially through the exclusion of certain areas together with a number of mitigation measures to prevent, reduce and offset significant adverse impacts on the environment and other users of the sea. On the basis of the evidence set out in the environmental report, which discussed the alternatives to the chosen approach, and the comments received during consultation, HM Government conclude that there are no overriding environmental considerations that would prevent the achievement of our draft plan/programme of offshore marine renewables leasing wind, wave and tidal technologies, offshore oil and gas licensing, offshore gas storage and carbon dioxide storage leasing/licensing, and offshore production and transport of hydrogen, provided appropriate mitigation measures are implemented along with future research. In all cases, the relevant competent authority should undertake any appropriate assessments prior to awarding licences or leases, where screening in accordance with the relevant conservation of habitats regulations shows this to be necessary.
The plan/programme based on OESEA4 will have a lifespan of approximately four years. HM Government, therefore, commit to refreshing the OESEA in two to three years’ time to account for the higher ambitions relating to offshore wind and hydrogen in the BESS that are expected to be delivered in the period 2026-2030 and any additional changes to the energy policy context, technology, and understanding of the environmental baseline and effects assessment. The associated documents have been placed in the Libraries of both Houses.
Retained EU Law
On 31 January, to mark the two-year anniversary of the UK’s departure from the European Union, the Government set out their plans to bring forward the Retained EU Law (Revocation and Reform) Bill.
Retained EU law is a category of domestic law created at the end of the transition period. It consists of EU-derived legislation that was preserved in our domestic legal framework by the European Union (Withdrawal) Act 2018 to ensure continuity as we left the EU.
However, retained EU law was never intended to sit on the statute book indefinitely. The time is now right to bring the special status of retained EU law in the UK statute book to an end on 31 December 2023, in order to fully realise the opportunities of Brexit and to support the unique culture of innovation in the UK.
To achieve this, the Bill I have introduced today includes the following provisions;
Sunsetting retained EU law
The Bill will sunset the majority of retained EU law so that it expires on 31 December 2023. All retained EU law contained in domestic secondary legislation and retained direct EU legislation will expire on this date, unless otherwise preserved. Any retained EU law that remains in force after the sunset date will be assimilated in the domestic statute book, by the removal of the special EU law features previously attached to it. This means that the principle of the supremacy of EU law, general principles of EU law, and directly effective EU rights will also end on 31 December 2023. There will no longer be a place for EU law concepts in our statute book.
Before that date, Government Departments and the devolved Administrations will determine which retained EU law can be reformed to benefit the UK, which can expire, and which needs to be preserved and incorporated into domestic law in modified form. They will also decide if retained EU law needs to be codified as it is preserved, in order to preserve specific policy effects which are beneficial to keep.
The Bill includes an extension mechanism for the sunset of specified pieces of retained EU law until 2026. Should it be required, this will allow Departments additional time where necessary to implement more complex reforms to specific pieces of retained EU law, including any necessary legislation.
Ending of supremacy of retained EU law in UK law by 2023
Currently, retained direct EU legislation still takes priority over domestic UK legislation passed prior to the end of the transition period when they are incompatible. This is not in keeping with our status as an independent, sovereign trading nation, and the Government’s 2019 commitment to remove this.
Therefore, the Bill will reverse this order of priority, to reinstate domestic law as the highest form of law on the UK statute book. Where it is necessary to preserve the current hierarchy between domestic and EU legislation in specific circumstances, the Bill provides a power to amend the new order of priority to retain specific legislative effects.
Following the removal of the special features of EU law from retained EU law on 31 December 2023, any retained EU law that is preserved will become “assimilated law” to reflect that EU interpretive features no longer apply to it.
Facilitating departures from retained EU case law
To ensure that EU law concepts do not become “baked in” through over-cautious court judgments, the Bill will also provide domestic courts with greater discretion to depart from the body of retained case law. It will also provide new court procedures for UK and devolved law officers to refer or intervene in cases involving retained EU case law.
Modification of retained EU legislation
To correct an anomaly created by European Union Withdrawal Act which gave some retained direct EU legislation legislative parity with Acts of Parliament for some purposes, despite it not having been properly scrutinised, the Bill will downgrade the status of retained direct EU law for the purposes of amendment. The Bill will modify powers in other statutes, to facilitate their use to amend retained direct EU law in the same way they can be used on domestic secondary legislation. This will enable the amendment of retained direct EU law, with the appropriate level of parliamentary scrutiny.
Powers relating to retained EU law
The Bill will also create powers to make secondary legislation so that retained EU law or assimilated law can be amended, repealed and replaced more easily. This Bill will allow Government via Parliament to clarify, consolidate and restate legislation to preserve its current effect. Using these powers, the Government via Parliament will ensure that only regulation that is fit for purpose, and suited for the UK will remain on the statute book.
Business impact target
Having left the EU, the UK has further opportunities to reform its regulatory regime. The UK Government published their consultation response to the “Reforming the Better Regulation Framework” and is in the process of implementing the wider reforms outlined.
As part of these reforms, the Bill repeals the business impact target, which is outdated and not fit for purpose. Any subsequent replacement of the business impact target, when combined with the other wider reforms, will ensure that the UK’s regulatory framework is fit for the UK economy, business and households, into the future.
UK’s Updated 2030 Nationally Determined Contribution
The Glasgow climate pact, agreed by almost 200 countries at COP26 in November 2021, recognised the need for accelerated action to limit global warming to 1.5° C above pre-industrial temperatures. It called for all countries to “revisit and strengthen the 2030 targets in their Nationally Determined Contributions (NDCs) as necessary to align with the Paris Agreement temperature goal by the end of 2022, taking into account different national circumstances”.
During its COP presidency, the UK has been working with partner countries, non-state actors and civil society to encourage countries, particularly major emitters, to respond to this call. And the UK has shown leadership by revisiting its own NDC to ensure it remains a fair and ambitious contribution to global action on climate change. The latest science from the Intergovernmental Panel on Climate Change—IPCC—published earlier this year highlighted the closing window for action to keep 1.5° C in reach and made clear the urgency of delivering on the Glasgow climate pact.
In revisiting the UK NDC, the Government considered a range of factors including the latest available science, expectations in the Paris agreement and the Glasgow climate pact, the UK’s existing 2050 net zero commitment, and energy security, as well as advice and evidence from the Climate Change Committee and other independent commentators.
The UK has strengthened its NDC by making the following updates to the accompanying information to facilitate clarity, transparency and understanding—ICTU—in line with international best practice and the Paris agreement rulebook:
clarified how the target—which remains a commitment to reduce all greenhouse gas emissions by at least 68% by 2030 on 1990 levels—aligns with the Paris Agreement temperature goal;
explained more fully how the UK will deliver the NDC by 2030;
updated on the progress made in expanding the territorial scope of the NDC to include the UK’s Crown Dependencies and Overseas Territories; and
included more, detail on levelling up, gender, green skills, public engagement, Just Transition and how the UK is supporting other countries with delivery of their NDCs.
The UK’s NDC requires the fastest rate of reduction in greenhouse gases between 1990 and 2030 of any major economy and is on a trajectory to net zero by 2050. The Government are committed to net zero by 2050 and looks forward to the review led by Chris Skidmore to ensure that it is delivered in a way that is pro-business and pro-growth.
Since submitting the NDC in December 2020, the UK has published a range of sectoral strategies and plans and has signed up to numerous pledges and actions to deliver on the 2030 target. The Prime Minister has also announced an ambitious package of measures to tackle soaring energy prices and ensure the UK’s energy security, following Putin’s illegal invasion of Ukraine.
The UK will submit its updated NDC to the UNFCCC in time for the deadline for inputs to the NDC synthesis report, 23 September 2022, and will lay a copy in the House at the same time.
Health and Social Care Levy (Repeal) Bill
Today the Government have introduced the Health and Social Care Levy (Repeal) Bill.
This Bill delivers the Prime Minister’s promise to reverse the temporary 1.25 percentage point increase in national insurance rates from 6 November and will cancel the levy coming in as a separate tax from April 2023.
In cancelling the tax rise for employees, the self-employed and employers, the Government are acting to support individuals with the cost of living by allowing them to keep more of what they earn, as well as to support businesses to pursue growth, innovate and invest.
This will be an average tax cut of around £135 for workers this year and around £330 next year. Taking into account the increase to national insurance contributions thresholds at the spring statement and the levy reversal, almost 30 million people will be better off by an average of over £500 in 2023-24.
Around 60% of businesses with NICs liabilities will see a reduction in their NICs bill, with 20,000 of these businesses being taken out of paying NICs entirely due to the combination of this measure and the employment allowance. The average savings for businesses will be £9,600 for the 2023-24 tax year.
The Government are implementing the change as soon as possible, to maximise the cash benefit for people and businesses this year. Most employees will receive a cut to their national insurance directly via payroll in their November pay.
The self-employed will pay NICs at 9.73% on earnings between £11,909 and £50,270 per annum. The blended figure is equivalent to seven months at the higher rate 10.25% and the remainder at 9%
While the tax rise will be cancelled, funding for health and social care services will be maintained as planned. The additional funding used to replace the expected revenue from the levy will come from general taxation. The Government remain committed to ensuring fiscal discipline over the medium term.
Further Education Funding and Accountability System Consultation
Following an initial consultation in July 2021, the Government published a second consultation into implementing a new further education funding and accountability system in July 2022.
This consultation sets out further detail on our reforms to deliver a fairer FE system across the country that effectively supports learners to develop the skills they need to secure high-value jobs and support growth of the economy, and seeks views on how these can best be implemented. We believe our reforms will enable providers to ensure that they are meeting the needs of their learners, employers and the wider area, putting taxpayer investment to the best effect.
The consultation was due to close for responses on 21 September 2022. After listening to the feedback of the sector over the summer, with some stakeholders asking to extend the length of the consultation period, I am announcing that we have extended the consultation’s closing date by three weeks. This means the consultation will now remain open for responses until 12 October 2022.
We will consider the feedback we receive through our consultation and publish a response in due course.
Economic Crime and Corporate Transparency Bill
The Government are today introducing the Economic Crime and Corporate Transparency Bill, as committed to in the Queen’s Speech at the start of this parliamentary Session. Building on the recently enacted Economic Crime (Transparency and Enforcement) Act 2022, the measures in this new, significant Bill enable us to bear down further on kleptocrats, criminals and terrorists who abuse our open economy, strengthening the UK’s reputation as a place where legitimate business can thrive while driving dirty money out of the UK.
The UK is at the forefront of global efforts to tackle illicit finance and economic crime. There have already been a number of important strides forward in the effort to confront and address economic crime in recent years, including:
being the first G20 country to establish a public register of domestic company beneficial ownership in 2016 (the “people with significant control” register);
the introduction of new powers in the Criminal Finances Act 2017 to include unexplained wealth orders and account freezing orders;
allocating £400 million through the spending review and new economic crime levy to support law enforcement over the next three years, as well as a £63 million spending review settlement over the next three years for implementation of Companies House’s transformation programme;
the publication of the economic crime plan in 2019 and the progress made against it by both the public and private sector;
establishing the national economic crime centre to co-ordinate the law enforcement response to economic crime and the combatting kleptocracy cell in the National Crime Agency to focus on targeting corrupt elites and their assets in the UK; and
most recently, passing the expedited Economic Crime (Transparency and Enforcement) Act.
The economic crime landscape is constantly evolving, and we cannot be complacent about the threat. That is why we are bringing forward this further legislation to help tackle these problems and transform our fight against illicit finance.
The key elements of the Bill include:
broadening the registrar’s powers so that the registrar becomes a more active gatekeeper over company creation and custodian of more reliable data, including new powers to check, remove or decline information submitted to, or already on, the companies register;
introducing identity verification requirements for all new and existing registered company directors, people with significant control, and those delivering documents to the registrar;
providing Companies House with more effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies;
tackling the abuse of limited partnerships (including Scottish limited partnerships) by strengthening transparency requirements and enabling them to be deregistered;
creating powers to more quickly and easily seize and recover cryptoassets;
creating new exemptions from the principal money laundering offences to reduce unnecessary reporting by businesses carrying out transactions on behalf of their customers;
enabling businesses in certain sectors to share information more effectively to prevent and detect economic crime; and
providing new intelligence gathering powers for law enforcement.
These new measures will tackle economic crime, including fraud and money laundering, by delivering greater protections for consumers and businesses, boosting the UK’s defences, and allowing legitimate businesses to thrive. They will also protect our national security, by making it harder for kleptocrats, criminals and terrorists to engage in money laundering, corruption, terrorism financing, illegal arms movements and ransomware payments. And they will support enterprise by enabling Companies House to deliver a better service for over four million UK companies, maintaining our swift and low-cost routes for company creation and improving the provision of data to inform business transactions and lending decisions across the economy.
This Bill forms a key part of the wider Government approach to ensure that law enforcement and the private sector have the tools needed to help tackle economic crime, sitting alongside the key provisions in the Online Safety Bill which will tackle online fraud, as well as the upcoming second economic crime plan and fraud action plan.
This Bill has been developed in close partnership with law enforcement agencies, as well as with the financial sector, professional and business groups, and civil society organisations. This reflects the breadth of the measures in the Bill, the nature of the threats posed and the importance of working across sectors to tackle economic crime.
The Government remain committed to tackling economic crime and illicit finance, and to strengthening the business environment across all of the UK. We will continue to work with the devolved Administrations on these measures and the formal legislative consent motion process.
A47-A11 Thickthorn junction development consent order
This statement confirms that it has been necessary to extend the deadline for a decision on the A47-A11 Thickthorn junction development consent order made under the Planning Act due to the national mourning period.
The DCO would authorise works for the improvement to Thickthorn junction and related works linking the A47 to the A11. The proposed development is situated within the administrative boundaries of Norfolk County Council and South Norfolk District Council. The Secretary of State received the examining authority’s report on 20 June 2022 and the current deadline for a decision is 20 September 2022. The deadline is now extended to 14 October 2022.
Under section 107(1) of the Planning Act 2008, the Secretary of State must make her decision within three months of receipt of the examining authority’s report unless exercising the power under section 107(3) to extend the deadline and make a statement to the House of Parliament announcing the new deadline.
The decision to set new deadlines is without prejudice to the decisions on whether to give development consent for the above applications.