Energy Prices Act 2022 (Amendment) (Northern Ireland) Regulations 2026

Considered in Grand Committee

18:12:00

Moved by

Lord WhiteheadThat the Grand Committee do consider the Energy Prices Act 2022 (Amendment) (Northern Ireland) Regulations 2026.

The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab): My Lords, these draft regulations were laid before the House on 16 March 2026 and consist of one of the briefest SIs that I have had the pleasure to introduce in this House. The SI consists of two clauses, one of which is a citation and commencement clause. The other one is a very straightforward amendment to Schedule 5 of the Energy Prices Act 2022, which amends the period to which certain powers in respect to Northern Ireland may be exercised from 26 months to six years. Therefore, this is a very brief SI, but I think it will be helpful to noble Lords to explain why this is being put forward today.

In the Autumn Budget on 26 November last year, the Chancellor announced changes we would be making to reduce costs on energy bills in Great Britain. We committed at that time to working with the Northern Ireland Executive if they chose to develop a comparable offer. These regulations show us delivering on that commitment.

In Great Britain and Northern Ireland, the energy bill changes rely on Energy Prices Act powers subject to different sunset provisions. On this occasion we are altering the sunset relevant in Northern Ireland to facilitate the Executive’s delivery. In Great Britain, the changes announced were to discontinue the energy company obligation home insulation scheme, and to transfer 75% of renewables obligation costs in respect of domestic supply to the Exchequer. The energy company obligation has never applied in Northern Ireland. As a result, the Executive’s comparable proposal to reduce bills relates only to the latter scheme. The Northern Ireland renewables obligation is a scheme to incentivise renewable electricity generation in Northern Ireland. As with the renewables obligation in GB, it closed to new applications in 2017.

Following ongoing official-level engagement, my colleague the Minister for Energy Consumers received a letter from the Minister for the Economy in Northern Ireland on 2 March. Minister Archibald asked that we take forward Energy Prices Act regulations to support her department’s powers to deliver. We laid these regulations two weeks later.

As noble Lords may know, the context here is that most energy policy issues are transferred matters for the Executive in Northern Ireland to decide on. We in the UK Parliament have a role in these regulations because the primary legislation was passed in 2022 when the Northern Ireland Assembly was not sitting. None the less, I should be clear that the powers we are ensuring that the Northern Ireland department can access relate to a transferred matter and are entirely for it to exercise. It will be for the Executive to announce the full details of the policy they are taking forward.

18:15:00

In precise terms, what these regulations do is amend the time period in which Energy Prices Act powers are available to the Northern Ireland Department for the Economy. The effect is that that period will end in February 2030, as I have set out. Noble Lords may recall that, on 13 April, we discussed an instrument to extend the period in which an Energy Prices Act power was available to the Secretary of State. In that case, we could extend the power by only six months. The difference arises from a limit imposed by the Energy Prices Act for the Secretary of State’s power only.

The key point is that the powers to which the Northern Ireland department will retain access due to these regulations include a spending power and a direction-making power. It will be able to use these powers to deliver a renewables obligation to Exchequer policy analogous to that recently implemented in GB. Once these regulations are in place, I know that colleagues in the Executive will work to put in place that analogous policy as quickly as they can. It is right for them to do so in this transferred policy area, and for the Northern Ireland Assembly to hold them to account.

Before I conclude, it is worth saying that my ministerial colleagues and the department itself continue to engage closely with counterparts in Northern Ireland to ensure that energy policy takes account of relevant differences. That joint working has led us to these regulations today and to reflecting Northern Ireland’s unique reliance on heating oil in the £53 million of support announced more recently.

We will continue to engage openly as we monitor the situation in the Middle East, considering whether any further responsive and responsible action is required. These regulations alter the period in which the Northern Ireland Department for the Economy can exercise powers, based on a request from that department, ensuring that it too can act to reduce energy bills. I beg to move.

Lord Bew (CB)My Lords, I thank the Minister for his statement, particularly his concluding words acknowledging Northern Ireland’s unique dependence on heating oil and how his department will maintain a vigilant eye.

There are issues of timing around this SI, which I am sure will be debated this evening. There were also issues of timing around the last SI that the Minister introduced, in March. I had substantial doubts about that one, more than I have about this one, but, in both cases, I am mindful of the fact that there has been serious dialogue with the Northern Ireland Assembly and the Executive. Although I was very uneasy about the last SI, which was on greenhouse gases and was introduced in the Chamber, I did not vote against it because the fundamental job of the Government here is to pay close attention to and have a proper dialogue with the Executive in Northern Ireland.

That said, I will say something in favour of this SI, as against the last one. The danger with the last SI on greenhouse gases was that paragraph 51 of the Windsor Framework commits the United Kingdom Government to ensuring that Northern Ireland goods appear in the UK market without any advantage to either Scotland or Wales, on exactly the same equality of treatment. That seemed to be a major problem—an implicit conflict—because the last statutory instrument favoured Scotland. But this one, by and large, is driven by a proper and correct concern with the future of energy supply in Northern Ireland, and I thank the Minister for his introduction to it.

Earl Russell (LD)My Lords, we welcome and support the Energy Prices Act 2022 (Amendment) (Northern Ireland) Regulations 2026—and particularly the continued effort to ensure that consumers in Northern Ireland receive appropriate protection from the continued volatility of energy costs following the war in the Middle East. I thank the Minister for introducing this.

We are supportive of the Government’s removal of the energy obligations and ECO policies from consumer energy bills that were, in the UK, brought in under the Autumn Budget. Consumers in Northern Ireland should be able to benefit, as consumers in Great Britain have, from these powers. We welcome this SI, but I have some questions for the Minister.

It is ultimately for the Northern Ireland DfE to decide how to use these powers. We welcome the work that is being done to provide it with support in designing that system. That inter-government co-operation is welcome. I note that the exact design of the comparable offer is yet to be finalised, as drafted in the Explanatory Memorandum. I recognise that the Minister might not be able to answer this, but does he have an idea of when the work on this will be completed from the DfE in Northern Ireland? As has been mentioned, it is extremely important that these measures are put in place so that consumers in Northern Ireland can enjoy the same benefits as their counterparts in the rest of the UK.

It is well understood, and the Minister mentioned, that some 61% of households in Northern Ireland are dependent on oil central heating as their primary source. Those figures are from 2024 or 2025. I recognise some of the work that the Government have done since the conflict in the Middle East on trying to prevent price gouging. The Minister has mentioned the £53 million support package that has been provided. We welcome that package, but the Minister will recognise that there is more to be done there. Knowing that Northern Ireland is dependent on this fuel oil and that those prices have been particularly hard hit because of the conflict, will some of these measures help to deal with those problems?

More generally, what further consideration is being given by the DfE in Northern Ireland and GB Energy, as a community energy scheme, to replacing those outdated heating systems and moving to more cost-effective and efficient heat pump technology? Is that perhaps a project for GB Energy, a community energy project? Has any consideration been given to that in government? Also, can the Government outline how long these amended measures are intended for? Is it expected that they will remain in force until 2030, as is possible under the SI? What criteria will determine whether they are withdrawn or extended? We support this instrument and have no objection to it.

Lord Moynihan (Con)My Lords, this instrument underpins the measures that we have already debated. It creates no new powers and His Majesty’s Opposition are supportive of it. More broadly, as the Minister knows, we do not believe that the Government can lower the structural cost of energy for families and businesses in Britain simply by moving policy costs around from energy bills on to tax bills. But I accept that we have debated the content of the RO and the policy context in which this SI has been brought forward at some length already.

This measure is very specific to Northern Ireland. It is something of a surprise because it extends by six years from a date that has already passed, 3 April. So we are in an unusual position whereby this does not apply but is going to apply retrospectively. I regret that; it should have been brought back at a much earlier stage.

The questions asked by the noble Earl, Lord Russell, just now were very relevant. The Explanatory Memorandum specifically states:

“The UK Government is working with the Northern Ireland Executive as they consider developing a comparable offer”—

at least they know that that is what is intended—

“to the RO to Exchequer policy, and the exact design of this comparable offer has not yet been finalised”.

That makes it clear that we are pretty close to it. We are just short of the exact design.

It is useful for the Committee, I think, to hear from the Minister a bit more detail on the status of the discussions and the status of the project that is being proposed so that we are not simply writing a blank cheque. I accept that, elsewhere in the SI, there is an important recognition that this is clearly a matter for the Northern Ireland Assembly, but, given that they have used the words “exact design”, it is incumbent on the Minister and the Government to provide details to Members of the Committee—not least Members from Northern Ireland—so that they can study them following this debate.

I appreciate that the EM goes on to say that this is an enabling measure and

“does not itself provide financial support or determine the design, timing or announcement of any scheme in Northern Ireland”.

However, we are already well on the road to a final proposal. My noble friend Lord Bew and the noble Earl, Lord Russell, focused on the timing and how long it will take. Given that we now know that the exact design of the comparable offer is yet to be finalised —we are clearly making very good progress—are we talking about six weeks or six months? Are we talking about a year? Why are we talking about six years, rather than three or 16, in the SI?

I would be very grateful if the Minister could give us clarity on the status of the negotiations with colleagues in the Northern Ireland Executive and on what the Northern Ireland Executive are thinking about in this context; after all, they have known about this since the Budget. I ask him to provide as much detail as possible so that Members who are interested in matters relating to Northern Ireland are well briefed. I say that with renewed emphasis today. Regrettably, yesterday evening, we had a debate in the Chamber in which there was real concern from Members from Northern Ireland—or Members with a particular interest in Northern Ireland; they happened to be from Northern Ireland as well. They were worried that Northern Ireland was a sort of afterthought and that the policy had not been properly designed in recognition of the fact that Northern Ireland is absolutely an inherent and important part of the United Kingdom.

There is a danger of a similar interpretation with this measure. Quickly coming to the House with an SI that recognises that the timing has now lapsed and that we need a new extension does not look good unless the Minister can demonstrate clearly that there has been detailed discussion of what exactly this policy is going to look like, with information about the design of the comparable offer given to the Committee and the House; I hope that the Minister will now be able to give that.

I am grateful to the Minister for introducing this SI. I hope that he will be able to provide much further information on it either today, in this Committee, or in writing.

Lord Whitehead (Lab)I thank noble Lords for their useful contributions to this short debate. I hope I will be able to provide some of the detail that they were looking for on this measure, and particularly on the enhanced sunset clause that noble Lords are now considering. But, before I do that, I have not yet had an opportunity to welcome the noble Lord, Lord Moynihan, back to his slightly amended place in this House, and to say how delighted I was to see his return. I look forward to the many occasions that are now possible for our convivial and constructive debates across the Chamber on the future of energy policy.

18:30:00

The background to the whole of this for the UK—and Northern Ireland—is the speed at which the UK Government wish to implement these changes as far as the reduction of bills is concerned, both for ECO and for the renewables obligations being either removed or transferred to the Treasury. Some 75% of renewables obligations will be transferred to the Treasury. Frankly, a piece of legislation passed under the last Conservative Government provides a vehicle for that to happen quickly, rather than having to go through the whole process of new legislation all over again.

The Energy Prices Act 2022 is the vehicle. However, as noble Lords will spot, that piece of legislation was quite rightly heavily sunsetted at the time. Therefore, in order to make it appropriate both for Great British purposes and now for Northern Ireland purposes, it is necessary to amend those sunset clauses. I appreciate what the noble Lord, Lord Moynihan, says about the fact that that sunset had already lapsed at the point at which this was applied to Northern Ireland. That was purely a question of getting the arrangements for Northern Ireland sorted out, which could have been done a little earlier but was not possible in terms of the general use of this Bill for the purposes of the Great British arrangements and subsequently for Northern Ireland. Of course, the changes here were as a result of a request from the Northern Ireland Executive to extend the provisions to Northern Ireland, and this was the best way to do it quickly and efficiently. In that context, I very much welcome the support of the noble Lord, Lord Bew, with a clear understanding that that is what we are trying to do, as he welcomed that under these purposes.

The noble Earl, Lord Russell, asked me a number of questions that are answered to some extent by looking at what the Northern Ireland Executive will do subsequent to this SI, hopefully, proceeding through this House. That is, first, a question of looking at how a system that is analogous to the Great British system can be developed in Northern Ireland. It is not our place to tell the Northern Ireland Executive what the scheme will be exactly. The circumstances with renewables obligations in Northern Ireland are different from those in Great Britain. Therefore, the savings and the arrangements for this will differ.

The important point is that the UK Government have made it clear that we would fund a comparable policy in Northern Ireland, if it is taken forward by the Executive. It does not have to be exactly the same, but it has to be funded on the basis of being a comparable policy. The Northern Ireland Executive then had to think through several steps, and we have endeavoured to support that. As I said, we laid the regulations a fortnight after receiving a formal request from Minister Archibald, and I understand that the Northern Ireland Executive undertook work at speed after that. For example, a business case has recently been submitted to the Treasury, which the Treasury intends to consider promptly.

I understand that the Northern Ireland Executive, after they have worked through the various steps, intend to commence delivery as early as this summer. That is obviously subject to approvals and legislation being in place, but they look well set to do that. That is a clear indication, particularly for the noble Lord, Lord Moynihan, who was concerned about whether this would come in early or late, that considerations certainly show a very early delivery.

On the question of funding for heating oil in Northern Ireland, it is clear that the proportion of funding that was supplied to Northern Ireland out of the £53 million was not based on a per capita application for the whole of the United Kingdom. It was based substantially on the understanding that the need for that underpinning was far greater in Northern Ireland, because of the particular situation there concerning the very high percentage of the total homes in Northern Ireland that use heating oil, rather than the much smaller percentage in Scotland, England and Wales. The Northern Ireland Executive again have the leeway to decide how to distribute and what to do with that particular scheme, but it is based on the very high usage in Northern Ireland. I understand that the Northern Ireland Executive have added a considerable sum of money to that £17 million to deal fully with the situation in Northern Ireland as we find it.

The final question from the noble Lord, Lord Moynihan, was particularly about the measure on RO levies to the Treasury. I understand that that will mean a reduction in bills of about £30 to £40. I emphasise that that is a reduction in the bills that would otherwise be there; it does not necessarily mean the bills going down completely. That change is intended to be permanent, but the legislation does not permit that; it permits a sunset clause to be extended to a further sunset clause. In theory, it will be necessary in, say, 2030, to introduce a measure that makes this permanent, but we have a few years to sort that out before this sunset clause finally gives way.

As far as this measure is concerned, I believe that both the UK Government and Northern Ireland Executive, working in tandem, have done their best to get this right in the shortest amount of time. I hope that noble Lords will be very supportive of this measure, because it allows that work to come to fruition early, to the benefit of all concerned. I commend the instrument to the Committee.

Motion agreed.