Energy Developers Levy

Alistair Carmichael Excerpts

Wednesday 25th February 2026 Westminster Hall

[Jenny Riddell-Carpenter]

I thank the hon. Member for his well-timed intervention; I have that heard said before and was just coming to that issue. I suspect that the Minister may have similar concerns. As the hon. Member points out, there may be concerns that a levy would increase consumer bills. That grates on me given that the National Grid reported an adjusted operating profit of £2.29 billion for the six months ending 30 September last year.

Let us be clear. This is not about asking bill payers to shoulder more of the burden; it is about asking developers, when they are developing multibillion-pound investments and returning substantial profits, to absorb a proportionate cost and ensure co-ordination.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The hon. Member has really come to the nub of the matter: the energy companies that are building and installing the renewable capacity are making a lot of money out of it. In my constituency, there are turbines whose owners are being paid for not generating anything, while we have the highest levels of fuel poverty in the country. Does that not speak to the fact that we need wholesale reform of the way the energy market is regulated?

[Jenny Riddell-Carpenter]

I thank the right hon. Gentleman; I am sure that the Minister will address that issue, which has long been talked about.

I was discussing the incredible profits that the energy developers are making. For me, this issue is about simple fairness: those creating the disruption and generating the return should fund the systems to manage the cumulative impact. More importantly—most importantly, perhaps—what I am suggesting would not lead to higher bills. Proper co-ordination would reduce bills: reduce the duplication, prevent redesign and avoid the need for repeated construction and legal conflict. Proper co-ordination saves money. This is not anti-growth, but smarter and inclusive growth.

Suffolk Coastal must not become the unmanaged frontier of energy development. So many in my constituency are pro-net zero, pro-investment and pro-growth, but we are asking the Government to be pro-co-ordination. What we have now is a fragmented planning system and eroding trust in the energy transition that we all support. If we are serious about delivering clean energy power at pace, we must treat host communities as partners, not afterthoughts, in that transition. We must do more to bring communities with us.

I am asking two things of the Minister today: first, a meeting with officials to examine this proposal; and secondly, a departmental feasibility study into the merits of an energy infrastructure co-ordination levy and how that could support both growth and nature recovery. The Government have already consulted on mandatory community benefits for low carbon energy infrastructure. The question now is whether we go further—by creating a clear levy model that funds meaningful co-ordination between clustered projects, such as those on the Suffolk coast; that builds local accountability and capacity; and that provides independent oversight, delivering tangible community and environmental mitigation. Communities such as mine are not asking for less ambition. We ask simply for better co-ordination when projects are approved.

If we get this issue right, we can deliver the green revolution in a way that communities support, nature benefits from and the country can be proud of.

[The Minister for Energy (Michael Shanks)]

It is a pleasure to join this debate under your chairship, Mr Twigg; I know that you take a great interest in these issues. I thank my hon. Friend the Member for Suffolk Coastal (Jenny Riddell-Carpenter) for securing the debate. The hon. Member for Strangford (Jim Shannon) was right: my hon. Friend is making a name for herself as a hard worker in this space. Our meetings about this issue have been genuinely really helpful and insightful for me—and her as well, I hope. She is right to flag these issues.

I should also say at the outset that I genuinely welcome the tone that my hon. Friend has taken since she has become MP for Suffolk Coastal. In this place at this time, it is very easy to take the view that the easy answer is simply to say that we should not build anything anywhere ever again and let the country continue to slide further and further backwards; many on the Opposition Benches, who of course are not here at all, would say that.

My hon. Friend concluded her speech by saying something worth repeating: many in her community and across the country are pro the energy transition—they are pro-investment, pro-growth and pro-building the infrastructure—but they rightly want to know that that will be well planned and benefit their community. It is entirely legitimate for communities to ask for that and to be concerned when it does not happen. Given that spirit, she has raised this debate in the right way.

I want to pick up on a couple of things and also go back to why the infrastructure is so important in the first place. We sometimes lose sight of why it is so important for us to build energy infrastructure—in particular, much of the transmission infrastructure that is in my hon. Friend’s constituency. She said that the previous Government had not done that work, and I will come back to that.

It is worth remembering that since this Government came to power we have sought to tackle the energy trilemma: how we bring down bills and make the cost of living more affordable—today’s decision on the price cap is an important statement of how seriously we take that mission; how we deliver our long-term energy security in an uncertain world and how we move away from the volatility of fossil fuels, which have cost us so dearly in recent years; and how we build infrastructure that sets the country up for the future. This is about connecting not just renewable energy but the demand projects that will stimulate economic growth across the country. If we do not do these things, all we will do is harm that economic growth. Those decisions are incredibly important.

[Mr Carmichael]

I urge the Minister to learn from the experience of Shetland and Sullom Voe, 50 years ago. We took the most important step on North sea oil and gas coming ashore in Shetland, but on our terms: there was a genuine funding stream coming to the community. If we give the whip hand to the corporates, they will always use it to their benefit.

[Michael Shanks]

The right hon. Gentleman makes a good point; a generation of lobbyists should look back at the history books of Shetland Islands council at the time, because it is an extraordinary story of how it seized the opportunity of what it knew then would be decades North sea oil and gas and has still benefited from it.

I was also going to come to the right hon. Gentleman’s other point, around the Viking wind farm, which I have seen in the Shetlands myself. The scale of it is extraordinary, but the community benefits are not where they should be and the community is not feeling enough of the benefit of it. It is important that we do everything we can to reduce the constraints on wind, so that local communities benefit directly from it and the country as a whole benefits from cheaper power on the grid, bringing down bills.

Let me turn to some of the actions that we have taken since we came into government. We have set up Great British Energy—a really important moment for us to say, for the first time in 70 years, that we want the public to have some ownership stake in our energy future. We have delivered the most significant programme of investment in home-grown clean energy in our history. Just a few weeks ago, we published the local power plan, the biggest shift of wealth and power in the energy space in British history, to make sure that energy projects are not just built by developers, but owned by local communities that have a real stake in their energy future. We also published the warm homes plan, so that we can have the biggest upgrade to homes in British history.

Any infrastructure, in the energy space or elsewhere, brings local impacts, and there is no point in anyone pretending that those impacts do not upset local people. That is why we have an extremely rigorous planning system, why we take great care over decisions that are made and why, at times, there is great frustration about the length of time it takes for planning decisions. However, that is because the public rightly have a voice in that process, and important determinations should take time. We should always remember the fundamental outcome: since the poorest in our society have paid the price from our exposure to fossil fuels, the infrastructure we are building today is imperative, and it is important that we move faster than ever before.

My hon. Friend the Member for Suffolk Coastal and I have talked about cumulative impact before, and I have said repeatedly in the House that it is a serious issue. All nationally significant infrastructure projects must take account of cumulative impact, including the range of those cumulative impacts—not just the number of projects in a particular place, but the impact on other local services and other bits of infrastructure. They must submit a local impact report, which makes the examining authority aware of what those potential impacts are. That process must demonstrate that the applicant has taken seriously the concerns of local communities. If they have not, that will count against them. Consultation cannot be an exercise to tick a box; there must be some demonstrable engagement with that process. Local communities have a voice in that process through early consultations, but they can also register through the Planning Inspectorate in the pre-examination stage. All those various issues are taken into consideration.

Let me also speak to the broader point about how we plan the future energy system. My hon. Friend made a correct observation: while the previous Government now want to run a mile from all the renewable energy projects that they developed, which we would support— I think I am the only person still cheerleading the previous Government’s drive for renewable energy, because they certainly are not—they did not design and co-ordinate the system such that we were not building unnecessary grid to connect all those projects. My hon. Friend’s constituency is a good example of where better co-ordination at a strategic level would have got the same outputs from the system, but with much less local impact.

We are taking forward a number of things—this is where we get into the acronym soup that is the energy world. First, and most importantly, the National Energy System Operator will design the first ever strategic spatial energy plan, or SSEP, which will be published by the end of next year. This is an important opportunity for us to design the future of our energy system holistically: to take into account what can be built where and what the future energy system looks like for our needs, not now, but in the future. As a result of that planning, we can design the most efficient network and transmission system that goes with it. The centralised strategic network plan, which will be the holistic design of the network, will follow that. This is something that we should have done 15 or 20 years ago, but we start from where we are now, and we are determined that the future of our energy system will be much more strategically planned and aligned.

That plan will take into account local impacts and views, and the regional energy plans in particular will take a much more granular and local look, engaging with local authorities and others to make sure that those plans really take into account both local needs and local opportunities. Those will be designed for Scotland, Wales and nine English regions, and we will bring together various people to share their views on how the plans should meet local priorities. I want to be really clear about the scale of that work. The reason why the Government are taking longer than perhaps we would like is that that is the best way to plan long into the future what the system will look like, and to give communities a real opportunity to shape it at an early stage. That is important for the planning of the system and for community benefits, which other Members have raised.

It is really important that we fundamentally recognise that communities who host energy infrastructure are doing a service for the country. Infrastructure has to be built somewhere. There is not some third place that would let us say, “Well, we are in favour of this, but please don’t build it in my area.” At some point, it has to go somewhere; as a Government, we are done with dither and delay and we are going to build things again, but communities should get a benefit from that infrastructure being built. We are committed to making sure that communities who host infrastructure will benefit. As my hon. Friend said, we have consulted on whether community benefits should be made mandatory—at the moment, they are voluntary and a patchwork across the country, and they have different degrees of impact on communities, even where the funding is being delivered—and we will respond to that consultation soon.

In the Planning and Infrastructure Bill, we have also outlined the very first community benefits and bill discounts for people close to transmission infrastructure, recognising that often they have been left behind in terms of community benefits, as pylons and transmission wires flow through communities. That scheme will be up and running soon. It will directly deliver money off bills for those people living within 500 metres of new transmission infrastructure, but also millions of pounds of investment in communities next to significant pieces of transmission infrastructure such as substations. The grid is critical for the future of the country, and those who host grid infrastructure should get some benefit from that. In July last year, we also published guidance on voluntary community benefits to make sure that they are as robust as they can be.

My hon. Friend mentioned a levy, and I am happy to meet her to discuss that further. I pay tribute to the fact that, having identified a problem, instead of just bringing that problem to the House—I do not want to criticise other hon. Members here—she has worked on a solution. I am happy to engage with it and to look at it further.

There are two things that I want to say clearly. First, the affordability crisis is this Government’s No. 1 objective. It is driving decisions right across Government. It is what has led to a 7% reduction in bills from the next price cap period, which was announced today. Every single penny that might find its way on to bills has to be scrutinised very carefully. I am initially hesitant at the idea of an additional levy. Although my hon. Friend made the point that these energy companies are making significant profits, and I would not disagree with her on the scale of some of those profits, we should also be aware that, unless the Government are going to take a power to cap those profits, it is likely that the cost of a levy and the costs of the projects themselves would simply be passed on. Consumers, at the end of the day, would pay for it. I will look into her suggestion further, because every penny on bills makes a difference.

Finally, on section 106 agreements, in addition to community benefits arrangements locally, developers are already required to mitigate specific local impacts through 106 agreements. They are legally binding agreements that are paid to local authorities. With section 106 agreements and community benefits together, we think work is being done to invest in and enhance communities, but I am happy to look at what my hon. Friend has proposed in more detail.

To conclude, I reiterate two things. First, my thanks not only to my hon. Friend the Member for Suffolk Coastal, but to right hon. and hon. Members across the House who made serious points and suggestions on how not to turn away from necessary investment, but to ensure that communities genuinely benefit from it. They are absolutely right to champion their local community and to ensure that everyone benefits from the energy transition. Secondly, we should not for a moment think that building that infrastructure is optional, or that it can all be done somewhere else. There are those in this House who believe that we can simply go backwards to deliver energy security and affordability without a serious and credible plan to do so, but simply tying communities to fossil fuels for longer is not a serious proposition.

I reiterate what I said at the beginning. My hon. Friend rightly made the case that all the polling that we have seen points to the country being in favour of the energy transition. Every piece of research points to the importance of tackling the climate crisis, which is not a future threat, but a very present reality. Infrastructure, which for too long has been held up in this country, is necessary to do that. It is necessary to get clean power, cheaper power, to people’s homes and businesses, and to bring down bills, but it is also absolutely necessary to unlock the economic growth that this country needs. There is no shortcut to doing that. We have to build the infrastructure that the country has been crying out for, for many years.

I thank hon. Members for their participation in the debate, including my hon. Friend the Member for Suffolk Coastal. I am happy to meet her to discuss the issues further. As I said at the beginning, we take seriously the role that communities play. We thank them for putting up with disruption when infrastructure is built, and for hosting that infrastructure on behalf of the country. We want to ensure that they benefit from it.

Question put and agreed to.