Electricity and Gas (Energy Company Obligation) (Amendment) Order 2025
Debate between Lord Wilson of Sedgefield and Baroness Coffey
Lord Wilson of Sedgefield (Lab)
I thank noble Lords for their contributions, questions and general support for these technical adjustments to regulations. This Government remain firmly committed to supporting the households that need it most to live in warm homes with lower bills, while ensuring value for money and maintaining high standards of consumer protection. The instrument under discussion introduces targeted amendments to ECO4 and GBIS. These changes will help energy suppliers meet their obligations, improve scheme delivery and ensure that more households benefit from warmer, more affordable homes. Importantly, the measures will do so without increasing costs to bill payers and will support the continuity of the energy efficiency supply chain.
I thank the noble Baroness, Lady McIntosh, for her questions and her involvement with the NEA, which is obviously based in the great north-east. She asked about VAT; there is no change to VAT status due to this SI. VAT is applied to all retrofit work including that under ECO4 and GBIS. The figures in the impact assessment include VAT.
On her points about the warm home discount, we estimate that expanding the scheme in this way would offer support to an additional 2.7 million households, so around 6.1 million in total for this winter, 2025-26. Around one in four households with the required energy cost exceeding 10% of their after-housing-costs income currently receive a £150 rebate. By extending the scheme to all households on means-tested benefits, this figure will rise so that about 45% of such households will receive the rebate. Extending the scheme will also almost double the number of households with children that receive the warm home discount to about 1.9 million.
The noble Earl, Lord Russell, mentioned the timing of the warm homes plan. The Government are working hard to develop the warm homes plan as a unified, forward-looking approach that will revamp the delivery and consumer protection model. Such extensive changes necessarily take time to develop, as we are looking to make far-reaching and robust improvements to deliver this key government priority at scale.
I thank the noble Baroness, Lady Coffey, for sharing her experiences. While I am not aware of the specifics of her case, there is no specified single approach to engaging with customers in ECO4 or GBIS. We do not specify that there needs to be a legal agreement in place between installers and households before an assessment. The approach is that it is down to individual installers in the supply chain to engage with customers. We are looking at reforms to the consumer journey as part of the warm homes plan, which I hope will consider the points that the noble Baroness made.
Again, I welcome the support for these measures from the noble Earl, Lord Russell. He asked a number of questions, and I will write to him with fuller details on some of them.
I thank the noble Lord, Lord Offord, for his support for these measures. He asked a number of questions across the energy space. He will appreciate that nuclear energy storage and the other issues that he raised are wider than the measures we are here for today. All I know is that we need to decarbonise the grid. We need to move towards clean energy by 2030. We also need to invest in nuclear, which we are doing in small modular nuclear, and in wind and solar farms. We need just to have sufficient gas to make sure that the grid and security of supply are there. We are moving in the right direction, as I said earlier. The alternative is to do nothing, but that would make the situation worse.
Baroness Coffey (Con)
I asked the Minister two specific questions about the number of rural households affected by this change. I appreciate that he may not have that number to hand but I am very happy for him to write to me. The other question I asked was about the performance—what these changes will do—and how Parliament will be regularly informed about the impact of the changes that we are voting on today.
Lord Wilson of Sedgefield (Lab)
I do not have the figures in front of me about the number of homes in rural communities and how they are affected. However, I can say that we are aware that rural properties face additional costs in installing energy efficiency measures. This may be because these properties are more likely to be older and have traditional solid walls and floors—including my house, which is exactly the same, and probably the noble Baroness’s house—and because they are in harder-to-access areas, making them more expensive to treat. That is why, across GBIS and ECO4, rural off-gas properties in Scotland and Wales, for example, will receive an uplift of 35% to reflect the additional energy costs these households are known to experience more acutely. I will write to the noble Baroness with the figures. As for updating the House, I am sure that as these regulations evolve, we will be doing that in due course over the months to follow.