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Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023

Volume 827: debated on Monday 30 January 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023.

Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee (Instrument not yet reported by the Joint Committee on Statutory Instruments.)

My Lords, the Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023 were laid before the House on 11 January 2023.

Throughout this winter, the Government have responded rapidly to the unprecedented rise in energy prices. This includes introducing emergency legislation on energy support. The Government’s support package has protected and will continue to protect households and non-domestic consumers across the United Kingdom.

In December, the Government announced details of the merged delivery of the energy bills support scheme, EBSS, and alternative fuel payment, AFP, in Northern Ireland. Householders in Northern Ireland have already received or will soon receive £600 in a single payment for support with their energy bills. In recognition of the high prevalence of alternative fuel usage in Northern Ireland, the AFP will be delivered to all domestic households in Northern Ireland. The total of £600 is composed of £400 of EBSS, which provides support for the energy costs of all domestic households, and the AFP, which provides an additional £200 of support.

To deliver the scheme, in December the Secretary of State made a direction pursuant to Section 22 of the Energy Prices Act. This placed requirements on Northern Ireland electricity suppliers to provide this crucial support to households this winter. Delivery has commenced and households are already benefiting. We expect the vast majority of eligible households to have benefited by the end of February.

Turning to the pass-through requirements, these regulations will place a legal obligation on intermediaries to pass any benefits received through the schemes to end-users. This will help ensure that the energy support is received by the intended beneficiaries. These regulations have been created under the Energy Prices Act 2022. They are essential secondary legislation to fully implement the schemes.

The regulations are modelled on the pass-through requirements for other energy schemes, such as the EBSS in Great Britain. In that, we are not waiting for intermediaries to act on their own accord; we are legally requiring that they pass on the financial benefit to end-users.

An intermediary is any individual who is party to a domestic electricity contract, has a domestic electricity meter and is the recipient of government energy support. This group includes landlords. An end-user is an individual who consumes the energy and pays for this energy usage. This includes tenants. The regulations also outline when and how intermediaries should communicate with end-users about information regarding pass-through of benefit from the schemes.

The enforcement approach for EBSS AFP NI is consistent with other support such as the energy bills support scheme in Great Britain and the UK-wide energy price guarantee. Namely, if the intermediary does not pass on the benefit, the end-user could pursue recovery of the benefit as a debt through civil proceedings. Should a court rule in the end-user’s favour, they would be entitled to the payment plus interest. The interest is set at 2% above the Bank of England’s base rate.

The Government continue to ensure that the intermediaries and end-users are clear on their obligations and rights. In particular, we have published guidance on GOV.UK to help support intermediaries to discharge their obligations. There are also template letters to support tenants, should they wish to raise concerns with their landlords about their energy bills and the pass-through.

I thank the Secondary Legislation Scrutiny Committee for its view on these regulations. I have noted that its concerns remain the same as those it previously raised on the pass-through requirements of the energy bills support scheme in Great Britain. The committee’s concerns relate to the definition of “just and reasonable”, and to an “inequality of arms” and how that affects vulnerable groups.

The energy market is complex. There is a vast range of contracting structures relating to the supply, resale, provision and charging of energy. This means that there are many different circumstances for how energy can be consumed. That is why it continues to be important that the regulations can account for the numerous configurations of an intermediary/end-user relationship. It is highly risky to draw a narrow and limiting definition which could result in some intermediaries falling outside the pass-through requirements. By requiring landlords to pass on the financial benefit in a just and reasonable manner, end-users will be treated fairly and lawfully.

The fact that the regulations require intermediaries to pass on the amount in a just and reasonable manner means that situations where there could be an inequality of arms are also covered. For example, if a landlord owns multiple properties and receives the scheme benefit on them all, he or she must divide and allocate the amount among their end-users and inform them how they have calculated the financial benefit.

The committee’s other concern, about vulnerable groups, is of course valid. The Government are also making sure that all groups in scope of the pass-through regulations, including vulnerable groups, receive what they are entitled to through our engagement with those impacted. Over the past several months, we have engaged with consumer groups, landlords, housing associations and charities to disseminate communications and to underline the obligations placed on intermediaries and the rights of end-users. Our extensive engagement activities include organisations in Northern Ireland.

In conclusion, these regulations are essential to ensure the effectiveness of the energy bills support scheme and the alternative fuel payment Northern Ireland scheme and that the support reaches the people it is intended to help. Without the regulations, there would be a risk that intermediaries did not pass on the £600 benefit in a just and reasonable way, leaving some households in Northern Ireland exposed to high energy costs. I therefore commend the regulations to the Committee.

My Lords, I thank the Minister for going through yet another of these SIs. I am sure he will not mind if I ask him some just and reasonable questions about it.

First, I note that the measure came into force on 12 January, so it is already in place. Obviously, it is administered, to a degree, by the energy companies, but who is policing it? Is it the Northern Ireland civil servants, or is it BEIS directly? I would be interested to understand that. If it is Northern Ireland officials, are we confident that sufficient management governance will take place from here?

I welcome that the Government and the department have spoken at length to consumer organisations in Northern Ireland. I am interested to understand whether there have been any complaints yet of end-users not receiving this when they feel that they should have, to get some idea of how well it is working.

The Minister talked about the method of civil law, and having fines—plus, generously, an interest-rate benefit if people manage to get through a whole court process. We have said before that it is very unlikely that much of that would happen, but, if an intermediary ignored the need under this legislation to pass on those payments, would the Government have the ability to prosecute that person? I can imagine there being a certain number of landlords who will just think, “No one’s looking at me, there’s not a lot of publicity about this, I’ll just keep the money”. I would be interested to understand whether there is, at the end of the day, a criminal long-stop prosecution ability in terms of fraud and so on. Also, will the Minister say how many more SIs around these schemes are still to come?

My Lords, I thank the Minister for introducing this scheme. If he feels a bit of déjà-vu, it is because we have already been here. We discussed this on the UK scheme. This scheme is to ensure that support provided to intermediaries on behalf of the end-user in the energy bill support scheme and the alternative fuel payment in Northern Ireland must be passed to the intended recipients. This is welcome and important, but there are questions about what difference the instrument will make to intermediaries if they do not do it.

The Explanatory Memorandum states:

“Relevant intermediaries are any individual that is party to a domestic electricity contract … and passes on the costs of the energy supplied under this contract to an end user of the energy supplied … Intermediaries should pass on the discount irrespective of how the end user pays for their energy use … If an intermediary does not pass through the whole of the scheme benefit provided to them, then they must demonstrate to the end user that the amount they are passing on is just and reasonable, including taking into account the extent to which the intermediary’s charges to end users reflect the increased cost of energy as a result of the energy crisis.”

The Minister said that intermediaries include landlords. They do indeed, but they also include sublets, student accommodation, social housing providers, local authorities, site owners, site managers, marinas for onshore power, combined heat and power operators, electric vehicle charging operators and other residential building managers. It is possible for an intermediary also to be an end-user because they can live in the scheme that they manage. Given the variety and range of intermediaries and the complexity of this calculation, will it have any impact on the number of intermediaries that do or do not pass the benefits through?

The Explanatory Memorandum also states:

“The intermediary must, within 30 days of a scheme benefit being provided, provide information to the end user in writing ... The intermediary must ensure the end user receives the pass-through amount as soon as reasonably practicable ... Where an intermediary fails to effect a pass-through to which an end user is entitled, that end user may recover the amount from the intermediary as a civil debt.”

How many end users will be aware of this? How many will know about this scheme at all? If I am a landlord, is it worth the risk of not passing it on and sitting and waiting to see what happens? If I do not get any orders to justify, I can just keep the funds. It is a small amount of money to a court—a maximum of £600—but to a landlord who may have multiple lettings, it can be a considerable amount of money. Do the Government expect end users will do this for £600? Will fees make it not worth while for them to do it? How will intermediaries be disincentivised from taking this gamble? There is no penalty if you are found not to have passed on the money. Intermediaries are just ordered to pass on the funds in the scheme, plus 2% above interest rates. It does not seem to be a huge gamble that the intermediary might be taking. Will the Government not be enforcing this in any way? As the SLSC said, there is inequality of arms. It almost encourages intermediaries to take a chance, and the victims are the tenants and the end-payers of the scheme.

I thank the noble Lords, Lord Teverson and Lord Lennie, for their comments. I guess they do not disagree with the principle, but nevertheless had some notable questions which I will address in a second.

These regulations are critical to the successful implementation of the energy bills support scheme and alternative fuel payment in Northern Ireland. The Government’s focus has been on delivering this support to those who need it in Northern Ireland. That is why we focused on creating a delivery mechanism which could be rapidly implemented this winter and allow consumers to feel the benefit immediately, which is quite a challenge in government. This includes combining the support from two schemes into a single payment. Now that delivery has commenced, more than 800,000 households in Northern Ireland will benefit from this support. This comes on top of support households in Northern Ireland have received and will continue to receive through the energy price guarantee.

Spearheaded by the energy bills relief scheme and energy price guarantee reviews, the Government are considering the broader energy affordability landscape. Naturally, our considerations will include the needs of those in Northern Ireland.

To ensure that households know their rights and landlords know their pass-through obligations, which is the essence of the question by the noble Lord, Lord Teverson, we have updated our online guidance to stress that the pass-through requirements apply in respect of the energy bills support scheme and alternative fuel payment in Northern Ireland. We have also engaged extensively with stakeholders in Northern Ireland to promote and disseminate these requirements as widely as possible. This includes delivery partners, such as the Northern Irish electricity suppliers and the Utility Regulator, and key stakeholders including consumer groups, landlord and housing associations, and charities. Additionally, we continue to seek views and feedback from those impacted by these regulations, as well as key Northern Irish delivery partners.

I will respond to the questions raised by the two noble Lords. The noble Lord, Lord Teverson, asked who will police the scheme—the Northern Ireland Civil Service or BEIS. The Northern Ireland Executive were originally created to provide support equivalent to the energy bills support scheme to Northern Ireland households separately, using Barnett consequentials. However, in August, Northern Ireland Ministers requested that the British Government step in to provide the support, due to the lack of a functioning Executive. Therefore, in September, the UK Government announced that they would directly deliver the energy bills support scheme in Northern Ireland as soon as possible this winter. That is why we are considering the statutory instrument.

The noble Lord, Lord Teverson, also asked about feedback from stakeholders. We continue to engage, and listen to feedback from, stakeholders to understand the effectiveness of the pass-through regulations. We do not consider that there have been substantial challenges with the enforcement regime, and we will continue to provide clarity around the requirements to ensure that intermediaries are fully aware of their obligations. To be fair, the vast majority of landlords are aware and are complying. Nevertheless, we endeavour to help as many end-users as possible to know their rights under this scheme. To date, feedback from consumer groups and charities does not indicate that there are any complaints. Officials continue to listen to their feedback and improve the guidance that we have published on GOV.UK.

The noble Lord also asked whether the Government could prosecute landlords who do not follow this process. We expect landlords to discharge their legal obligations in passing through the benefit in a just and reasonable way, but the enforcement is through the tenants or end-users themselves, who will take action through the civil courts. That is the enforcement mechanism that we have set up. We have provided guidance on GOV.UK to aid conversations between intermediaries and end-users if there are concerns that the requirements have not been met.

Outside these regulations, there are bodies that can help and support with dispute resolution. This may help avoid an end-user challenging an intermediary through the courts if the matter can be settled between them. For example, the Northern Ireland Executive and its Housing Executive fund a mediation service for registered landlords and their tenants to resolve disputes outside of the courts system. This service will alleviate the problem of individuals potentially having to navigate the courts system. We continue to explore with the Executive how we can further work together to make sure that individuals are supported should they feel the need to take legal action.

The noble Lord asked how many more SIs are to come. The answer is one more after this, in about five minutes’ time. We will discuss it immediately after this debate has concluded.

I move on to the question by the noble Lord, Lord Lennie. He asked for clarity on the definition of “intermediaries” and who was in scope. Relevant intermediaries are any individuals who have received EBSS AFP NI support because they hold an electricity contract and have a domestic electricity meter, and they pass the costs of the energy supplied under this contract to an end-user of the energy supplied. This clearly includes landlords but can also include others, such as a tenant paying bills on behalf of others who they cohabit with—for instance, in a shared student household or whatever.

The noble Lord also asked a similar question about whether end-users will know their rights under the scheme. Let me build on the answer that I gave to the noble Lord, Lord Teverson. We recognise that there are challenges. We continue to publish extensive guidance and liaise with both the Executive and various representative groups to ensure that the obligations are understood by all those who are affected.

In addition, as I said earlier, we engage with Northern Ireland consumer groups, housing associations and charities so that they can help us to amplify the message for their members and affected individuals. My ministerial colleague, Graham Stuart, was in Belfast last week and discussed this extensively both in the media and at a round table, hosted by the Consumer Council for Northern Ireland, with local charity and consumer groups. He was able to thank them for helping to develop the scheme and communicating how it works to households. Crucially, he was able to hear first-hand how delivery is progressing and how we can continue to work together to resolve any operational problems.

I think I have addressed all the questions. I commend these regulations to the Committee but we will delay the Motion of Approval in the House to wait for the Joint Committee on Statutory Instruments’ report, as we are interested to hear about it.

I wish to comment on the Minister’s reply. It seems just a little supine that the only threat to intermediaries and means of enforcement is their tenants having to go through a civil court process for a fairly small amount of money. To me, that seems to have no consequence whatever. I have that concern but, as the Minister has explained, that is the situation.

Motion agreed.