I first thank noble Lords for their contributions to this debate. As I said, the Government have implemented the EBRS GB and NI schemes to ensure that non-domestic consumers are protected from excessively high energy bills over the winter period. The schemes will make sure that the amount that eligible businesses pay for their wholesale energy costs comes down to a reasonable level, with some saving over 50% on those costs.
I am sure it is reassuring for the House to know that the schemes are already in force and delivering support to organisations across the UK. I hope this reassures the public that the Government are committed to taking decisive action to alleviate at least part of this energy crisis.
As well as providing immediate relief, these schemes will support economic growth and have the happy effect of limiting inflation caused by increasing energy bills and the knock-on effects on prices, labour, goods and services. As I said at the start, we are confident that the schemes will seek to avoid firm closures and redundancies and will ensure that vital public services and charities can continue to operate over the winter.
We will continue to monitor the schemes to ensure that this support is provided to the people and businesses that they are designed to help. We are committed to reviewing the schemes by the end of the year and will continue to work with stakeholders to ensure that their feedback is taken into account. We will use the review to look at how best to offer further support to customers who are most at risk from energy price increases beyond April 2023.
I start off with the contribution of my noble friend Lady McIntosh, who asked whether the House would have the opportunity to review the rules accompanying the statutory instrument. It is worth pointing out that the schemes have been set up at pace, and the House of course helped by passing the legislation at pace, to deal with the crisis. Therefore, it is right that the more technical details of the scheme have been included in statutory rules, which have been published on GOV.UK. The first tranche of EBRS GB and NI rules were published on 1 November; amendment rules relating to discount recovery were published on 4 November; and a third tranche of amendment rules relating to disputes and treatment of financially disadvantaged customers was published on 9 November. Minor changes made via amending rules were published on 10 November. If the noble Baroness wants to check on GOV.UK, she can while away her weekend reading the rules in detail. The business support scheme is intended to give immediate relief to businesses and other non-domestic consumers from the current level of inflated electricity and gas prices.
The noble Lord, Lord Lennie, and my noble friend Lady McIntosh asked the good question about what will happen in six months’ time, once these schemes come to an end. I cannot say that I have an answer for the Committee at the moment, because we are still to conduct the review of the scheme, which we have said that we will do by the end of the year. Perhaps if I set out what the review will consider, that will give the Committee some clues as to where we intend to go with this. The review will consider how best to offer further support to customers who are most at risk of energy price increases. By their very nature, they are likely to be those who are least able to adjust—for example, by reducing their energy uses or increasing their energy efficiency. Of course, any further support will begin at the end of the initial six-month support scheme.
My noble friend Lady McIntosh asked something that, I have to say, has nothing to do with these regulations, about lessons learned from Storm Arwen. We have had extensive discussions on that subject in
this House. We published a comprehensive review of the recommendations for improvement of the electricity sector in response to Storm Arwen. There were a number of key recommendations covering enhancing system resilience; protecting customers; and additional support, such as compensation. The recommendations are due to be finalised by December 2023, but the majority are already complete, ahead of this winter.
My noble friend also asked about the assessment of the impact of administration and resource costs to Ofgem. Of course, we are working very closely with Ofgem to ensure the effective enforcement of the scheme requirements, and we will ensure that it has the necessary resources to carry out its role in this and many other government schemes operating in the energy sector. Given the pace at which we had to deliver the impact assessments of this time-bound intervention, we have focused on the largest and most significant impact—of course, the direct costs to the Exchequer.
My noble friend also asked about the 28-day disqualification policy. The arrears rule already referred to applies only to the additional discounts that suppliers are required to apply to those qualifying disadvantaged on deemed or out-of-contract contracts. That is in addition to the main EBRS discount.
On the points made about suppliers increasing energy bills, the EBRS scheme is shielding businesses across the country from soaring energy prices. The vast majority of energy suppliers are operating responsibly and within the spirit of the scheme. Of course, we are aware of reports that some companies are being faced with excessively high quotes this winter. I can tell the House that we will take a robust approach to this, and we are working with Ofgem to ensure that the licensing conditions have not been breached and that businesses are able to see the full effects of support offered by the scheme.
My noble friend Lady McIntosh also raised the issue of the UK’s energy resilience in winter. We have a secure and diverse energy system, and we are confident of our plans to protect households and businesses in the full range of scenarios this winter, in light of Russia’s illegal war.
4.45 pm
My noble friend will be aware that to strengthen this position further we have put plans in place to secure supply, and the national grid, working alongside energy suppliers and Ofgem, will launch a voluntary service to reward users who are able to reduce their demand at peak times. Happily, unlike many other parts of Europe, Britain is not dependent on Russian energy imports, and we are at a strategic advantage through access to our own North Sea gas reserves and steady imports from reliable partners, such as Norway, the second largest LNG infrastructure in Europe in Europe, and a gas supply underpinned by robust legal contracts—and, of course, the enormous investment that we are making in clean energy sources. So, although we are not complacent, we are in fact in a much better position than many other countries in Europe.
The noble Baroness, Lady McIntosh, raised a point about consumers who are in credit—she was talking about consumers, whereas this scheme concentrates on non-domestic customers. I will answer the question now, but it is more appropriate for the next debate
about direct debit payments. Ofgem have looked into this and found no evidence that direct debits are being widely inflated, but it identified some weaknesses in some suppliers’ processes that could result in suppliers setting some direct debits incorrectly. It is very important at this time that consumers can trust that their direct debit is an accurate reflection of their consumption and are given enough information to understand why they are paying the amount they are. It is worth pointing out that you can contact your supplier to ask for your direct debit to be reduced. I know that because I have done it myself. My account was in credit and, therefore, I was able to say, “You have put my direct debit up too much. I do not need to be paying this much” and the supplier happily reduced it, so it is possible to do that.
The noble Lords, Lord Lennie and Lord Teverson, both asked about the enforcement of the pass-through requirements, which were in SIs tabled separately. The legislation makes it clear that intermediaries must pass the benefit through to end users and must also ensure that the end user is equipped with the information to understand what benefit they are entitled to and be able to dispute this and/or how it has been applied. We have introduced regulations to allow end users to pursue recovery of benefits as a debt through civil proceedings. End users can recover claims to pass through amounts as civil debts in the county court, in the same way that other outstanding amounts owed to an individual can be claimed.
We have also introduced guidance on the pass-through requirements for energy price support, including a link to how to make a court claim for money. Although I understand the point the noble Lord, Lord Teverson, made about the relative imbalance of power in some of these relationships, we are doing all we can to make sure that people are able to exercise the rights that this legislation has given them. The enforcement system is the same across all the schemes, with a slight nuance for heat networks under the EBRS. The legislation requires heat networks also to pass on the benefits of the EBRS to their end consumers in the form of lower heating bills, and if heat network customers do not receive the pass-through or information from their heat supplier, they will be able to raise a complaint with the energy ombudsman.
In response to the noble Lord, Lord Lennie, who asked how we are ensuring that companies receive these vital discounts, again, we are working closely with energy suppliers on the development of the scheme. Energy suppliers have already submitted their first payment requests to the department and they will be paid shortly. Discounts will start to appear in customers’ bills from this month, backdated to cover their consumption from 1 October.
As I mentioned earlier, rules regarding Part 5 of the regulations have now been published. The additional reductions introduced through this new rule will be applied by energy suppliers in line with the savings they are making thanks to EBRS reducing the overall risk that customers cannot pay their bills on time. A further reduction may also apply if the amount charged is considered unduly onerous under section 7.4 of the relevant standard licensing conditions, which is enforceable by Ofgem.
In response to the noble Baroness, Lady Hoey, who asked about the substantial differences between the Northern Ireland and Great Britain schemes, they are essentially similar, but the Northern Ireland scheme’s delivery approach diverges slightly from GB’s in that it requires suppliers in Northern Ireland to abide by obligations in the regulations enforced by the Northern Ireland utility regulator, UREGNI—I am sure the noble Baroness is more familiar with that than I am. The regulations reflect this and the role of the Northern Ireland utility regulator in enforcing the schemes. There are a number of other technical differences, including an additional contract type, the day ahead index price contract, and there is an extra discount recovery process in Chapter 4 to prevent a Northern Irish recipient of supply eligible for the EBRS NI from then passing on that reduction to an end user in the Republic—which I am sure is something the noble Baroness would strongly support.