Draft Electricity and Gas (Energy Company Obligation) (Amendment) Order 2025
(1 day, 15 hours ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Miatta Fahnbulleh)
I beg to move,
That the Committee has considered the draft Electricity and Gas (Energy Company Obligation) (Amendment) Order 2025.
The draft order was laid before the House on 11 June 2025. This Government are committed to delivering warmer homes that are cheaper to heat. That is not just a slogan—although I say it quite a lot—but a necessity for millions of households across the country.
At the heart of that mission is our warm homes plan, a bold, long-term strategy to cut energy bills, tackle fuel poverty and strengthen our energy security. I am proud that the plan has been backed by £13.2 billion of investment by the Chancellor. The funding will support the roll-out of solar panels, heat pumps, batteries and insulation to reduce bills and tackle fuel poverty. To deliver that ambition, however, we must ensure that existing schemes are working as hard as they can for the people who need them most. That is why we are introducing this draft statutory instrument.
The energy company obligation, ECO4, and the great British insulation scheme, GBIS, have been a key part of the effort to upgrade homes across the country. They impose obligations on the larger energy suppliers to achieve annual bill savings for households by upgrading the energy efficiency of their homes. The draft instrument introduces important changes to improve the performance of the schemes for their duration. The legislation makes targeted, practical changes to both ECO4 and GBIS. Those changes will enable suppliers to meet their obligations, while maintaining high standards and delivering better outcomes for consumers.
The most significant change is to allow up to 75% of an energy supplier’s GBIS target to be met through reassigned ECO4 delivery. That is not just moving the goalposts; it is the most pragmatic approach to enable energy suppliers to meet their GBIS targets while maximising bill savings for households and the number of homes treated within the original GBIS cost envelope. In reassigning bill savings from ECO4 to GBIS, we will apply a conversion factor to enable GBIS to come in on time, on target and on budget.
Crucially—I stress this—the changes will not increase consumer bills. They use existing funding already accounted for under the Ofgem price cap. There is no additional cost to households. If we did not act, the GBIS scheme would severely underdeliver and thousands of households would miss out on crucial energy efficiency upgrades.
Alongside that, we are making other important improvements: updating technical standards to reflect the latest best practice; enabling more flexible combinations of insulation measures, especially for low-income households; and encouraging smart meter uptake, helping people to take control of their energy use. The changes are not just administrative; they are essential to meeting our fuel poverty target to ensure that as many fuel-poor homes as reasonably practicable reach an energy efficiency rating of band C by 2030. The changes also support the continuity of the energy efficiency supply chain, protect value for money for bill payers and ensure that the benefits of the energy transition are shared fairly.
I now turn to the critical issue of consumer protection. On 23 January, I informed the House of the discovery of widespread non-compliance with industry standards in the installation of solid-wall insulation under the ECO4 and GBIS schemes. As soon as my Department was made aware of the issues, we worked at pace to establish an expanded programme of checks, which I asked Ofgem to oversee. I am pleased to report that those checks have progressed quickly and, where issues have been identified, they are already being resolved.
Alongside the checks is a comprehensive plan to remedy any poor-quality installations. Where substandard work is identified, it is the installer’s responsibility to put it right at no cost to the consumer. I am pleased to report that, as of last month, 90% of all the issues identified as being not up to standard at the time that I was alerted to this matter had already been fully remediated. We need to do a huge amount more to reach the standards that we want across industry and to do the key job of ensuring and maintaining consumer confidence, but we are absolutely committed to doing what is necessary.
We inherited a situation in which many organisations with different roles and responsibilities are involved in assuring the quality of retrofit activity, which results in a fragmented and confusing system of protection for consumers. We are pressing ahead with large-scale reforms through our warm homes plan, which we are committed to sharing in October. Members can be assured that the draft order will enact important changes to ECO4 and GBIS so that they can continue effectively to deliver warmer homes that are cheaper to heat.
Nick Timothy (West Suffolk) (Con)
It is a pleasure to serve under your chairmanship, Mr Stringer. I am pleased to respond on behalf of the Opposition.
The draft order makes modest technical changes to the administration of the energy company obligation scheme, and we will not press it to a vote today. We agree that it is important for low-income households to get the help they need to save money on their energy bills and escape the hardships of fuel poverty. However, Ministers should reflect on how their policies are making energy more expensive for everyone by increasing dependency on costly and unreliable renewables. According to the Office for Budget Responsibility, environmental levies will increase from £9.9 billion last year to £14.8 billion by 2030. That is a result of policy choices made by this Government, and the cost will inevitably fall on the vulnerable and make fuel poverty harder to escape.
Last week, I raised with the Minister Labour’s claim on social media: “£129 off your bills, delivered by Labour”. Will she accept that that was wrong, because that fall in prices was driven by reductions in wholesale gas prices? The Government are trying to take the country off gas, while policy costs imposed by Ministers are actually increasing. She disassociated herself from those social media posts last week, so—
Leigh Ingham (Stafford) (Lab)
Is the position of the official Opposition now to oppose the good jobs generated by the net zero industry, in particular in my constituency of Stafford, Eccleshall and the villages, where the largest employer is a manufacturer for the offshore wind sector?
The Chair
Order. I would be grateful if hon. Members focused on the statutory instrument, which is relatively narrowly drawn.
Nick Timothy
I will just invite the hon. Lady to look at the bigger picture. Manufacturing jobs are being lost because of high energy prices driven by Government policy, the costs of which are increasing, so I invite the Minister to respond to my question. Instead of allowing policy to run faster than the technology will allow, Ministers should focus on how to make energy cheaper and more reliable. That is the real pathway to fighting fuel poverty.
Miatta Fahnbulleh
I thank the shadow Minister for his support for these important technical standards. I will address his question and then reiterate why we believe that the proposed changes are so important.
It is incredibly important to stress that levies on bills are funding critical infrastructure. We inherited a situation of under-investment in our networks and transmission and, critically, in the energy mix that we need in order to diversify our energy supply and ensure energy security. That was the Conservative legacy. We are now fixing it, which requires investment, but we are absolutely clear that every pound of investment has to be combined with a very clear plan to get to clean power. That is important because the last five years have shown us that our dependence on fossil fuel markets has left consumers exposed; people have faced record energy bills because of it. The Conservatives were happy with that when they were in government, but it is not something that we are happy with, which is why we are committed to getting to clean power.
Nick Timothy
If it was clear for such a long time that infrastructure needed to be improved and that the right way to do that was increasing levies on bills, why was that not in the Labour manifesto? Why did the Labour manifesto instead promise that bills would be £300 a year cheaper?
The Chair
Please reply briefly, Minister. We are getting off the subject of the statutory instrument.
Miatta Fahnbulleh
It was clear to us, but sadly we were not in government. It should have been clear to the Conservatives, and they did absolutely nothing over 15 years. We are committed to getting bills down—they are coming down—and we will take action through our clean power plan to break our dependence.
Alongside energy security, we are clear that upgrading homes is the way to ensure that the benefits of clean power filter through to consumers. Taking us back to the technical change made by the draft order, we need to ensure that we are doing what we need to, with all the levers we have, from the obligation on suppliers to our capital schemes, in order that households can have the insulation, solar panels, batteries, clean heat solutions and so on that will drive their bills down.
Millions of households are in fuel poverty, people across the country are feeling the pinch of a runaway energy system that is broken and is not working for them, and we are exposed to global fossil fuel markets. We are clear about our determination to fix the mess that we inherited and drive upgrades across the country, through both the obligations that we are discussing today and a warm homes plan backed by £13.2 billion of investment, which will deliver the objective of 5 million households upgraded, with cheaper bills and warmer homes. I commend the draft order to the Committee.
Question put and agreed to.