Energy-Intensive Industry Electricity Support Payments and Levy (Amendment) Regulations 2026

Lord Fox Excerpts

Wednesday 25th February 2026 Grand Committee

I am honorary president of National Energy Action, which advises the Government on the warm home discount, and I would have preferred it to have stayed at £350 to help those most in fuel poverty, rather than it to have been reduced and spread more thinly to the £150 it now is. I am grateful for the opportunity to have raised those issues.

[Lord Fox (LD)]

My Lords, it is always a pleasure to follow the noble Baroness, Lady McIntosh of Pickering, who is forensic in her detail. I should say that she has somewhat mixed her drinks with this measure and other things, but this measure and her comments indicate that the energy market in this country, which this Government inherited from their predecessor, is broken, in essence, and is not working properly.

While we are talking about this particular statutory instrument, it would be useful to have an indication from the Minister that the Government understand the malfunctioning way that energy works for both and consumers, and for him to undertake a process whereby the whole thing is properly reviewed. It is quite clear that there are many pushes and pulls, puts and takes, within our energy market: some are to do with green energy and some of them not; and some are to do with the way that the overall energy cost is assessed based on a floating gas price, rather than the actual cost of the energy being generated. It would help for the Minister to indicate, on behalf of the Government, that he understands that a proper root and branch review of the way in which the energy market is structured is long overdue. I do not blame the Government for what it is now, but I would blame them if they just sat on their hands without doing something about it.

Measures to bring down some of the highest industrial energy prices in the world—if not the highest—obviously come as welcome news to those businesses that have received them. Energy-intensive industries, as the Minister said, such as steel, chemicals, glass, ceramics and brickmaking, as the noble Baroness mentioned, face much higher energy costs than competitors overseas. They really are competing with not just one arm tied behind their backs but most of their limbs. They cannot pass on these prices because of the international market in which they operate. It is welcome that these EII businesses have been recognised, but we are concerned about the lack of support for other businesses across our manufacturing and energy use sector, which includes consumer businesses and the high street.

It is not just EII businesses that are facing an energy cost crisis; it is right across business. If we look in particular at small businesses, energy can be a high proportion of their total costs. They are the backbone of our economy and the heart of local communities. They create many of the jobs on which those communities rely, but they are struggling with uncertainties and changes around the cost of energy on top of the other costs that the Government have decided to put on those businesses, such as NIC costs and the change in the business rates system.

This is all part of a huge burden that all businesses are suffering, but SMEs are proportionately suffering more. They are exposed to the energy market with little support after the previous Government’s decision to slash energy bill support for businesses by an average of 85% when they replaced their energy bill relief scheme with the energy bills discount scheme, which itself ended in 2024. We estimate that 3.1 million SMEs saw a total bill increase of £7.6 billion when the initial energy bill relief scheme ended. That is a huge burden that the sector had to take during the previous Government’s oversight.

We welcome Ofgem’s announcement in December 2024 on enabling SMEs with up to 50 employees to use the Energy Ombudsman to challenge unfair energy rises and charges.

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

I hate to interrupt the noble Lord but a Division has been called—

[Lord Fox (LD)]

I have literally three words and then I will sit down. What about the ones with more than 50 employees? That is just the start of the problems that we have in our energy market.

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

That is most considerate of the noble Lord. A Division has been called in the Chamber; the Grand Committee stands adjourned until 5.02 pm.

--- Later in debate ---

[Lord Leong (Lab)]

Well, it is one of the arguments, I will accept that. At the same time, I accept the point that this is a policy decision that was taken. But the mission is to make Britain a clean energy superpower, whereby we will reduce this dependency by transitioning to a diverse energy system based on renewables and nuclear.

At the end of the day, we also need to address—as the noble Baroness, Lady McIntosh, asked—the cost to consumers. The Government will continue to fund the NCC scheme through the EII support levy, which is charged on all licensed electricity suppliers to Great Britain, as the noble Baroness mentioned. To offset this, the Government will bear down costs across the energy system to ensure that domestic and non-domestic energy consumers do not see a net increase in their electricity bills as a result of the uplift of the NCC scheme. We are also taking action to reduce costs across the energy system, helping to ensure that the British industry supercharger and the British industrial competitiveness scheme are delivered in line with our wider priority of providing affordable power for businesses and households. The Government’s clean energy superpower mission sets out a long-term plan to strengthen energy security and reduce electricity prices by expanding clean energy and improving interconnections with EU markets.

The noble Lord, Lord Fox, asked about the broken energy market. This is precisely why the Government have the clean energy superpower mission, which is, as I have just said, to strengthen energy security and reduce electricity bills by expanding clean energy and improving the interconnection with EU markets. The noble Lord, Lord Fox, also made a point about other businesses. The supercharger is currently targeted at the EIIs most prone to carbon leakage. However, the Government will undertake a review of the eligibility criteria for the supercharger this year—we are undergoing a review of the various sectors.

[Lord Fox (LD)]

I thank the noble Lord for his response. The supercharger is in itself a good thing, but unless it is combined with a real understanding of the financial mechanisms by which the market is organised, it will not deliver energy at a price that will be less than our competitors around the world. So there is a second part; it is not just the generation and the distribution but the financial engineering behind that which will make it work.

On the second point on other businesses, I am very glad that the Government are having a review, but could they hurry up? If you sit down with any manufacturing business, anywhere in the country—not the ones that are benefiting from this scheme but those that are not—it will list energy costs as its number one or number two major concern. If this review does not get on with it, some of those businesses—hopefully not too many—will not be there to benefit from whatever the review comes up with.

[Lord Sharpe of Epsom (Con)]

Before the Minister comes back in, can I add to the noble Lord’s question? Of course, it is not just the manufacturing businesses that we are interested in; we need to attract data centres, which have enormous power requirements. That is partly for sovereign security reasons, as regards how we maintain our own data and the integrity of that data. What is being done to attract those businesses here? What sort of financial mechanisms are in place? Are there any plans to expand this sort of scheme to businesses that are not yet located here but that we so urgently need?