Lord Moynihan (Con)

My Lords, I thank the Minister for introducing this statutory instrument. The passage of time points to the boiler upgrade scheme’s own record. Regrettably, there have been years of missed installation targets: the original goal was 600,000 a year by 2028, but barely a tenth of that figure has been met. It is now self-evident that expanding the scheme’s budget and eligibility in 2026 will escalate spend on a mechanism that has structurally underperformed without any intention to reform it coming from either the Government or the Liberal Democrat Benches. At this point, I should declare my interest as the chairman of Buckthorn, Acteon and Amey. The clearest recent articulation of this comes from the shadow Business Secretary and former shadow Secretary of State for Energy, Claire Coutinho, fronting a report from the think tank Onward. It argued that UK electricity prices are too high and that cheap power itself, achieved partly by using more gas and cutting green levies, will do more to drive heat pump and EV uptake than continued subsidy and mandates. It is compelling economic sense, and it is the belief on this side of the Committee that this approach would make electrification more attractive, while delivering prosperity and a better environment. In other words, no one is arguing that heat pumps are bad, but we believe that a BUS-style subsidy is now proven to be the wrong lever and that removing green levies from bills would achieve similar ends without state spending. Moreover, my colleagues in another place have consistently pressed Ministers about the stronger evidence that costs associated with the wider agenda for the decarbonisation of heat, including mechanisms such as the clean heat market mechanism boiler tax on manufacturers, are being passed to consumers via higher gas boiler prices. In other words, the current approach taxes conventional boiler households to subsidise heat pump adopters, and this is regressive. There are a number of specific points, and I am grateful to the Minister for having raised them. The first was a constitutional process concern. This SI amends primary legislation via secondary legislation. That is not unusual but, because it touches Section 100 of the Energy Act 2008, it requires the affirmative procedure. Regulation 2 modifies the list of sources of energy and technologies as set out in Section 100(4) of the 2008 Act to include “thermal energy storage systems” and, as stated: “By virtue of section 105(3A) and (3B), these Regulations attract the affirmative procedure”. Instruments that amend an Act of Parliament rather than just delegated regulations routinely draw scrutiny from committees such as the Secondary Legislation Scrutiny Committee or the JCSI over the appropriateness of using a Henry VIII-style power for what is a fairly narrow technical expansion. A related 2026 BUS amendment instrument, SI 2026/390, had to be reissued because the original published version did not reflect the version signed by the Minister and had to be removed and replaced. That is not this specific SI, but it illustrates the concerns about drafting quality that Members of Parliament in the other place and committees have been raising about the pace of legislation on the boiler upgrade scheme. My second point—I am grateful again to the Minister for raising this—relates to the question of heat batteries or thermal storage. This came out clearly in the Government’s consultation on the eligibility of expanding the BUS, which took place in November last year and which underpins this SI. I would be grateful if the Minister, in responding, could update the Committee on whether any product standards yet exist. Currently, as I understand it—and things may have moved on since November—there are no product standards for the thermal energy storage performance of heat batteries. These technologies will become eligible for scheme funding only once the relevant standards have come into force, which means that the law will permit funding for a technology category that cannot actually be certified or verified yet. On efficiency and running costs, some respondents raised concerns about direct electric heating’s lower efficiency relative to a heat pump, its running costs and a lack of evidence on the performance and suitability of the various technologies. Some respondents preferred excluding the heat battery category altogether, arguing that funding should stay focused on technologies with proven carbon savings rather than diluting the budget across less tested electric heating options. The Minister rightly pointed out the importance of the Regulation 22 payment offset amendment, which is a much more mundane and fairly straightforward change clarifying that the administrator may take one or a combination of the actions available to recover payments, provided that the total does not exceed the sum of payments due. As I understand it, it has not attracted any public objections, but it is worth flagging and I am grateful the Minister did; it is a tidying-up clause that gives Ofgem a somewhat broader discretion to recover overpayments and clawbacks. A point that scrutiny committees sometimes probe is whether it expands administrative power beyond what was originally debated, but, as the Minister said in her opening remarks, that would not be the case on this occasion. I believe that the Government should stop increasing the cost of gas boilers for families through their boiler tax and stop wasting money forcing people into buying heat pumps that they do not want to make marginal reductions to our already limited contribution to global emissions. The Government must, above all, make electricity cheaper and back consumer choice, if they truly want families to adopt electric heating technologies instead of simply forcing people into changing the way that they live their lives to meet their self-imposed, unachievable net-zero targets. That is why we have called for the scraping of the boiler upgrade scheme along with the clean heat market mechanism that places an obligation on gas and oil boiler manufacturers to install a minimum number of heat pumps at an estimated cost of £340 million in the first year. This goes far further than the boiler upgrade scheme introduced in 2022 under the Energy Act 2008, which encouraged the use of renewable heat by providing financial support for families to install heat pumps to replace fossil fuel boilers. As the Minister said, this instrument amends that Act to extend financial support eligibility to heat batteries, electric heating tech and thermal energy storage systems. Many of us on this side of the Committee who have studied this consider it to be a case of excessive government intervention and cost to ease the effects of other government interventions. Energy prices are currently high, not despite our transition to renewable sources and green policies but because of them. The Government have acknowledged the fact that policies are to blame by removing VAT from energy bills. Similarly, their focus on renewables, inextricably linked to firm power—oil and gas—has caused the cost of using gas-fired power plants to rise, as they are forced to operate on an ad hoc basis dependent on the weather and are thus far less efficient and very expensive. Taxes and renewables are the two core policies that have led to the increase in energy bills, which are now the highest of any IEA member country, both including and excluding taxes, for industrial and domestic bills. The Government should not be subsidising the cost of renewables by promoting higher bills for some instead of bringing them down for all through more systemic changes, which will be a subject we will return to, no doubt, on the long overdue introduction of the supremely misnamed energy independence Bill, which will increase energy dependence on imports and not decrease them. That said, on a personal note, I welcome the Minister to the Dispatch Box for this SI and look forward to further debates and discussions with her.