Contribution
My Lords, more than 3 million customers are now in energy debt or arrears, owing a total of around £6 billion, with an average debt of approximately £1,800 per household. No household should be trapped indefinitely by energy debt accumulated during an exponential national crisis. Non-targeted support, as we have seen in the past, has been prohibitively expensive and not terribly efficient. I have called for better information sharing to enable the better use of targeted support by government. The purpose of these regulations is therefore one that we support. They amend the Digital Economy Act 2017 to enable data sharing for Ofgem’s purposes of a proposed debt-relief scheme.
The Government estimate that this scheme could clear between £500 million and £1 billion of outstanding energy debt. This is a significant intervention, with the potential to help many households directly. It should reduce the burden of uncoverable debt that is ultimately socialised across all customers’ bills. We welcome the role of Ofgem. The principle of the common framework is sound. We further recognise that part of this instrument corrects an earlier administrative error. The addition of DESNZ is a necessary one. Adding DSIT may also be reasonable if it allows the Government to co-ordinate support more effectively.
These regulations authorise an important extension of data sharing. However, they must be fair, proportionate and accountable, and I note the assurances that the Minister has given. The first phase will target people receiving means-tested benefits, subject to other eligibility and engagement criteria. That may be administratively convenient, but it is not a true test of vulnerability. There are obviously, as the Minister knows, people just above the benefit threshold who still struggle to pay their energy bill, and there are those who are entitled to support but do not claim. There are older people, disabled people, carers and people and people with fluctuating incomes, and there are households which are not digitally confident or which have not been able, for numerous reasons, to claim in the past. We must ensure that the people who most need help are not excluded because they are the least able to complete administrative processes.
I ask the Minister: what is meant by engagement criteria within the SI? Does it mean customers must actively respond to gain this relief? If that is the case, it is still a serious obstacle to people being able to claim these benefits. The scheme should provide accessible routes through telephone and post, advice agencies, trusted intermediaries or, better still, an automated identification process, which I think is where this is ultimately going. Perhaps the Minister could say just a word on that. Where households are plainly eligible, the presumption should be that relief is delivered automatically wherever possible.
The Minister talked about limited and specifically defined information, but could she just say what that means in practice? I think she has been clear on that, but could she confirm that it does not mean it will be shared with any further agencies and will not be sent to debt collectors, or for credit scoring or marketing? The information should be collected solely for the purposes here and overseen by the Information Commissioner. These safeguards are really important, particularly in light of the Government’s wider ambition to link household data to further aims for targeted support.
The Explanatory Memorandum says that the Government will conduct an expanded annual assessment, but these regulations do not contain a statutory review clause. Given the sensitivity of the information involved and the scale of the proposed debt relief, is that felt to be sufficient? Regular information on the number of eligible households, the value of the debt cancelled, complaints, corrections, exclusions and any data breaches should be publicly available. We should know whether people who change supplier are protected and continue to receive the benefits that they are entitled to through that process.
It would also be useful if the Government published the operational rules. These regulations create a legal gateway, but many of the questions that matter most to households will be answered in the Ofgem requirements and the administrative guidance. I also feel that these documents should be available to both Parliament and the public.
These regulations address a genuine problem, and I welcome them. I have personally called for greater data sharing so that we can target this support, but that alone is not the sole solution to the problem. I will ask just one question about timing. Obviously, the cap rises by 4% on 1 October, and we are coming into winter. Is it expected that once this SI is passed, this process will move swiftly? Can the Minister give me some indication whether that will happen at all this winter for energy bill payers?
To conclude, targeted debt relief is necessary, but alone it is not sufficient. We still need further and broader work across government to bring down energy bills, to take levies off those bills and to fundamentally reform the energy markets, but we welcome these regulations as a step in the right direction. They do need some careful and firm controls of the data. I think the Information Commissioner has been clear, and we generally welcome these regulations.