Welcome to the Public Accounts Committee on Thursday 6 February 2025. Domestic and industrial energy bills in the UK have significantly increased since autumn 2021 due to a variety of factors, including increased global demand for gas following the pandemic, as well as the impact on the energy markets of Russia’s invasion of Ukraine. Government responded to this by introducing a range of financial measures designed to help to reduce the impact of the increases on consumers. In June last year, our predecessor Committee examined energy bill supports and found that the support took too long to get to those most in need—I am sure that is a subject we will examine today. We are examining the schemes using the findings of the NAO’s follow-up Report from November 2024. We will ask the witnesses what lessons they have learned from the introduction of the schemes, how they plan to ensure that no consumer is left behind with any future support, and how the Department can ensure that the UK energy market is sufficiently resilient to any future shocks. We give a warm welcome to all our witnesses. From the Department for Energy Security and Net Zero we have Jeremy Pocklington CB, who has appeared before this Committee many times. Jeremy has been permanent secretary at DESNZ since February 2023, and was previously permanent secretary at DLUHC, now known as the Ministry of Housing, Communities and Local Government. We also have Jonathan Mills, who is the director general of energy markets and supply. Jonathan became director general for energy markets and supply at the then Department for Business, Energy and Industrial Strategy in November 2022. Welcome Jonathan. Finally, we have Ben Golding, who is the director of the clean power 2030 unit. Ben was previously the Department’s director of strategy. We have three eminently well-qualified people to help us with what I think will be quite a complex session. You are all very welcome indeed. We will start with Anna Dixon on insulation schemes.

Good morning, witnesses. I want to raise an issue that is affecting not only my constituents but constituents quite widely, and that is retrofit schemes. Under the previous Government’s scheme there were a number of companies that went around quite aggressively selling the retrofitting of cavity wall insulation, including by targeting some fairly poor-quality housing. It was found that 10% of the work was defective. Some of the companies that carried out that work folded. Legal proceedings were then taken forward, first of all by Pure Legal, on a no win, no fee basis—but they then folded. They were trying to take the construction firms’ insurance companies to court. They then passed it to another law company, SSB, which also went bankrupt. Now, individuals themselves are being pursued for significant amounts of money, sometimes between £5,000 and £30,000—sums of money that poorer constituents cannot afford. Could you please tell me what action the Department is taking to protect such individuals from the liabilities following substandard home insulation schemes? How is the Department supporting those individuals who have been affected, as well as ensuring that future warm home schemes have more reliable contractors in place?

Thank you very much for that question. I appreciate the difficulties and the difficult position that your constituents and others are in as a result of what is clearly a serious situation. There are different issues involved: there is the cavity wall insulation itself, and then there is the action of the solicitors you refer to and the claims management companies. Let me talk about the second issue. It is a serious matter. The claims management companies in question, which have largely gone out of business, are being investigated by the Solicitors Regulation Authority, as you would expect. That is an ongoing investigation that I know is being taken seriously, but I cannot comment to the Committee today about an ongoing investigation. There are wider issues about measures that are taken to improve energy efficiency in homes, the quality of which is very important. In general, cavity wall insulation is a good way to insulate homes, but it must be carried out according to required standards. Where Government schemes provide that, it comes with a guarantee, as you would expect. Actually, the number of genuine issues that have arisen is, as your question implies, very small, but the Government are taking these things very seriously. I would be happy to keep the Committee updated, but unfortunately I cannot comment on the ongoing investigation.

We have to be very careful in this Committee about matters that are sub judice.

A 10% fault rate is not ideal and has certainly undermined confidence. The main issue is to address that defective rate and ensure that the contractors under the Government scheme meet the standards.

Absolutely. The focus at the moment—the Minister gave a statement about it recently—is the question around solid wall insulation that has occurred under the ECO4 and GBIS schemes as well. The question of standards is one that the Department is taking very seriously, and it will be part of the warm homes plan that the Department is working on and we have said we will publish. We have to do that after the spending review, unfortunately, but as we look at the schemes that will be in place for the future, the quality of those schemes and the consumer protections that are put around them is something that we are looking at very closely.

We were going to ask you about the recently announced changes to the warm homes plan. While you are on the subject, do you want to cover that off now?

I am happy to do that. Do you want me to cover the solid wall insulation issue, or our future plans for the warm homes plan?

Both, because they will both be of interest.

I know they are of interest. The Department uncovered examples of substandard wall insulation that had been fitted under the ECO4 and GBIS schemes, which have been in place since 2022. We took very swift action as soon as we uncovered this issue. Together with Ofgem, we have suspended the installers that were involved—I think 39 installers were suspended—and we have instructed Ofgem to undertake checks of the solid wall insulation that was installed under those schemes. A comprehensive audit is being carried out that involves not only desk-based reviews and audits but inspections on site. Of course, households should not pay or be liable for that: it will be the installer that is liable. There is also a guarantee scheme in place if the installer has gone bust. These things need to be remediated at no cost to the household. We have also said that the installers will remain banned until they have put the issues right, as you would expect. It is a serious issue and the Department is taking action, working closely with Ofgem, which is in the process of writing to all the households involved—some of the letters have gone out and some are going out on a regular basis. It has also set up a helpline to help anyone who has any concerns.

Thank you for your Department’s prompt action on both of those insulation issues. There was a parliamentary question, and I think you have recently announced changes to the warm homes scheme.

Yes. We have said we are going to look at what the future arrangements should be for energy efficiency in the warm homes plan that we will publish this summer. We have already taken a lot of decisions to accelerate the delivery of schemes. Quite a lot of money was allocated in the budget last year over a multi-year period, providing certainty to the supply chain. In terms of the future, looking at the Parliament as a whole, we will set out those details in the warm homes plan. We need to ensure that consumers have confidence in the quality of the work that is done and the regulatory regime around that. We will need to look at that regime, including the certification of installers.

That is really helpful. I want to move on to the really important issue of energy security in the grid. Before I do, I should declare an interest: in the farm partnership of which I am a partner, we have a Government scheme for a feed-in tariff for photovoltaics to generate electricity. Any remarks that I make should be taken with that in mind. I am going to quote from a document that I do not think has been provided to the Committee officially, but I am going to state what it is because it is an extremely good document by a very well-qualified person. It is called “Blackout Risk in the GB Grid” by Kathryn Porter and is published by Net Zero Watch. She says that “on 8 January 2025 during the tightest day since 2011”, the “spare margin—the surplus generation capacity available to meet demand—fell to worryingly low levels, with a real risk of demand control”—that is compulsorily cutting off certain areas of electricity—“or even a blackout.” She goes on to say that there were a number of reasons for that. Do you want to comment on that, permanent secretary, because, when events such as certain weather conditions, an interruption to the interconnector or one or two power stations going down due to lightning strikes all occur together, we seem, particularly in the winter months, to be getting to a situation where the grid supply is getting dangerously low. Do you want to comment on that and on what can be done about it in future?

Energy security and the security of supply is obviously the highest priority of my Department. In relation to the events in early January, the National Energy System Operator, which we have established, confirmed that at no point were electricity supplies less than anticipated demand—margins actually remained healthy. Something called an energy margin notice was issued around that date. That is a normal part of the system operation and is not an unexpected event. That has happened on previous occasions, so it is not infrequent for that to occur. My colleague, Jonathan, leads on this for the Department, so I will bring him in to say a little more.

Of course. Jonathan, just to preface anything you might say, I gather this was the most serious incident to date, and it cost NESO £20 million to buy in extra capacity to deal with it. As demand rises—which it is likely to do with increased demand for digital and electronic supplies, electronic car chargers and the new homes we are going to build—presumably the demand on the grid is going to grow. If this was the worst incident yet, it looks to me as though there is a concern about the long-term supply. Taking all that into account, along with the Government’s 2030 clean energy aims and the stability and frequency of the grid, there are some worrying factors in there, are there not?

As Jeremy said, we work really closely with the National Energy System Operator to manage the system on a strategic and tactical basis. It is worth saying that, in terms of the longer-term outlook, the National Energy System Operator advises us on the horizon on a four-year-ahead basis in order to inform our capacity market auctions, and then, ahead of every winter, produces a winter outlook that assesses the resilience of our electricity system to exactly the sort of risks and issues that you have talked about—the risks of adverse weather, interruptions to pieces of transmission infrastructure or to generation. In the early January period that you talked about, we were in close touch with the National Energy System Operator. They used a range of tools that they have had their disposal in order to ensure that there is a healthy margin every day. In reality, the lowest margin on that day was 3.7 GW, so well within the tolerances that are needed. They did not have to use any unusual interventions; electricity margin notices are routine signals to the market about supply needing to be available. They did not have to use demand control measures, which have been used on previous occasions. I think they were used in 2014 and 2018, but they were not used on this occasion. Although some balancing costs were incurred, they were not unprecedented and they were lower on this occasion than they were the last time that an electricity margin notice was issued. We will work with the system operator to ensure that we have a full assessment, at the end of the winter, of how the winter has played out, in the way we usually do to inform next year’s winter outlook. In terms of the strategic questions you raised about the changing nature of the grid, the changing nature of generation, the different sorts of demands we are seeing both through the electrification of heat, transport and other services and through new demand sources like data centres, we absolutely work with the system operator to make sure they are factored into the four-year-ahead capacity market assessments and, beyond that, longer-term assessments such as those you saw in the clean power 2030 action plan.

So the worry about the clean power action plan is not the action plan itself. I am not an expert in this subject, but I understand from this paper that gas is particularly useful for maintaining the stability of the grid and its frequency—this 50 Hz that the grid produces, which I gather is very important for sensitive electronic machines. There is a concern that if you reduce gas, which is part of the plan, the stability of the grid could become more difficult to manage because renewables, such as wind and solar and so on, do not have the same ability to keep the inertia of the grid going.

As you say, there are two different aspects that are brought out in this transition and the role of gas. The first is that we need to ensure that, across the grid, we have sufficient flexible generation to be able to respond to weather conditions. What we call intermittent renewables—technologies like wind—vary according to the weather conditions, and we need to ensure that generation is available to back that up. But also, on a technical level, we need to ensure that there is, as you say, what is called inertia: the ability of the grid to sustain a consistent pace of operation. This is an area that the system operator has been working on with Ofgem. You are right that gas has historically provided that system service for the grid. There are a number of options for other ways in which that can be provided in the future, including what is called synthetic inertia. The system operator could probably advise in more detail on how that works in practice, but it is a known engineering problem and exactly the sort of thing that the system operator is there to work on.

At least you are looking at these very important issues. That is very helpful. We have a short question from Luke Charters, and then we will move on to the main session.

Can I check my understanding? In terms of megawatt shortage, the January incident was the closest the UK has got to a blackout in over a decade—yes or no?

The National Energy System Operator has advised that the margin was at 3.7 GW, which was healthy and well within the tolerances that we looked to in the winter outlook.

We do not agree with the analysis in that report.

Okay. This subject is so important that I am sure we will return to it.

It is a very serious issue.

Thank you very much for your help on that. We now move into the main session, and it falls to me to ask the first question, which relates to the NAO’s excellent Report on the detail of how you managed energy bills during the steep rise in prices from 2021 onwards. What would you do differently today from what you did over that period? Incidentally, this is not a critical question, and I think the Committee will be complimentary about the speed and effectiveness with which you brought in those schemes. It is not a critical question; it is really a question about the lessons learned as to how you might do it differently next time if there was a spike in bills.

Thank you. There are a lot of different aspects to this, and perhaps I can set out some themes that I am sure we can explore further through the hearing. I have three themes that I think we need to explore if the exam question is about how to avoid, and what you would do if there were, further spikes in energy prices. The first thing to highlight is the importance of the clean power mission, to which you have already referred, in getting us off the rollercoaster of international fossil fuel markets and volatile prices. Deploying low-carbon renewable electricity, mainly through fixed-price CfDs and other low-carbon sources of generation, is going to reduce our reliance on volatile gas and limit our exposure to price spikes. In the medium term, that is a very important element of our strategy. Electrification will be important as well, and we will see less reliance on gas overall in the economy. A second theme we will want to explore is how, if there were to be a further spike in prices, we are ready. I want to stress at this stage that there is no evidence that there will be a further price spike. That is not what the futures market shows and that is not what forecasts show. The other caveat is that any interventions would have to depend on the context of the circumstances of the time, and would be for Ministers rather than officials. It is important that the Department captures the knowledge, learning and capability from the schemes that we launched, particularly in 2022-23. It is also important that we maximise and efficiently use the data and have it available to assist with that. I know that we will want to talk about the work we have under way with the Department for Work and Pensions and others on that. This is a worrying time right now for families and households faced with high energy bills, and the Department is very conscious of that. The third theme is the ongoing action and work we have under way to make the system that we have as affordable and fair as possible. We cannot insulate households from all the impact of movements in international gas prices, unfortunately, but we do work with Ofgem on, for example, the winter support commitment—the additional £500 million of support that suppliers offered this last winter for vulnerable consumers. We have the warm home discount, and we ourselves have policies in the Department. Then, as we have already alluded to, we have the warm homes plan: how can we make sure that energy efficiency and clean heat mechanisms reduce people’s reliance on volatile gas prices and lower their energy bills? There are a number of themes there. They are all important, and I am sure that we will unpack them during the hearing.

We certainly will. One advantage of having been on this Committee for a long time is you get a long corporate memory. This whole episode was, of course, epitomised by the Bulb Energy incident. The system of supplier of last resort means that any losses are passed on to remaining suppliers and their customers. You had over 30 suppliers that failed, and this has left behind £6 billion in costs, which all consumers must pay through higher standing charges. One wonders whether the current system—supplier of last resort—is the right one, and whether it is robust enough to cope with another spike in energy prices, which may cause financial pressure on yet more suppliers.

It is a very important question, and I will say a few things in response. You mentioned Bulb, but that was not about the supplier of last resort; because of its size and scale, it was the only one of those companies that went through the special administration regime, so it was essentially brought into the public sector. There is an outstanding legal challenge there, so there are limits to what I can say, but I have written to the Committee to confirm that our latest forecast is ultimately that that special administration regime will have been undertaken at zero cost to the taxpayer. When I was last before the Committee, the initial estimates were that that would cost many billions of pounds. That ultimately shows the value of these regimes—that it is possible to bring these companies through a regime like that, repair them and then put them back into the private sector. There are limits to what I can say, because of the administration regime. All the other companies did go through the supplier of last resort regime, and in a way, that regime worked. In one way, the overall regime did not work, but in one way it did: customers continued to receive their supply, credit balances were appropriately transferred and that was managed. But it did impose a cost on the system, as you allude to. The problem, which we and Ofgem have already talked about, is that the financial resilience of the suppliers was not adequate to deal with the energy crisis. Ofgem has taken a number of steps on this, essentially learning from the changes that happened in financial services following the financial crisis. It has introduced a number of measures to strengthen suppliers, including things like capital adequacy requirements—energy suppliers have to keep an amount of net assets per customer. They are required to ringfence their renewable obligation receipts, reducing the cost of any failure. There is a level of principle, in that suppliers are required to abide by the financial responsibility principle and have evidence for the regulator that they have sufficient capital. Also, Ofgem now has stronger powers than it had to direct the ringfencing of consumer credit balances. So Ofgem has taken a number of steps. I think the regulator itself recognised that it had more to do, and these steps are designed to protect consumers in the future, but action also needs to be proportionate. The costs that analysts sometimes say were socialised in the system were real costs and they put up bills, so we need to minimise the chance of that happening in future. However, it would also be wrong to say that there will never be another supplier failure, because in that case that might not be a proportionate response. Nevertheless, the balance was not in the right place, and Ofgem has taken action. We are much more confident in the regime that we have now.

Permanent secretary, thank you for that answer on this very serious matter. We will look at it very carefully and perhaps come back to the subject. As Chair, I apologise to the rest of the Committee; I am raising too many issues today, but I have just one more important matter that I want to raise. Some people think that today’s power market suffers from poor liquidity, with too few buyers and sellers trading energy ahead of time, adding to risk and uncertainty, and therefore additional cost to consumers. How do you react to that, permanent secretary?

I think you are referring to the operation of the wholesale market?

Correct.

As you know, Ofgem operates across the wholesale market as well as the retail market, and there have been a number of incidents in the last few years where it has undertaken investigations into the operation of the wholesale market, and taken steps against market players who have been—I will choose my words carefully—not operating consistent with the correct regulatory approach. You also know that we are in the process of conducting a review of electricity market arrangements, which looks at the structure of those markets, including whether the current national market provides the right link between supply and demand. As I am sure we will come on to later, we are considering whether Ofgem more widely has the powers, the remit and the capability to undertake the role it needs to undertake in the market going forward.

Thank you for that helpful reply.

To get these schemes up and running quickly, they were universal schemes rather than schemes targeted at particular households who really needed that financial support. We could argue from a value-for-money point of view that there was quite a lot of dead-weight cost in the schemes, and I think there was also some sense in which they were somewhat fragmented, overlapping in places and so on. We are again on your second theme, Jeremy, around readiness if this were to happen again. In what circumstances, if any, would you repeat that work with a universal scheme? If you would not, and if you agree that it would be better value for money to have targeted schemes, are you ready to do that? If you are not, what further steps do you need to take?

I completely understand the questions. I think the question around targeting is a very important one that we will come on to. The first thing to say is that whether or not any scenario requires a broad-based scheme or a targeted scheme is a very real policy decision for Ministers at the time to take. You rightly say that broad-based schemes can result in dead weight, and ultimately there are strong arguments to target interventions at those who need the support the most—vulnerable households. However, there were also advantages during the energy crisis in having a broad-based scheme. In part, that stemmed from the sheer scale of the price rises, which meant the number of households and families in the country who were affected was such that a very broad-based intervention was required. Prices were rising to, I think, approximately £4,000, which was very impactful on a great number of households in the country. The other argument for a broad-based scheme is the macroeconomic impact that that can have in terms of market stability and confidence. The EPG scheme, which is essentially the £2,500 cap that was introduced—sorry, there will be a lot of acronyms today—lowered headline measures of CPI by 2.8 percentage points. There can be macroeconomic reasons for needing broad-based schemes, but I shall park that and move on to the question of targeting.

Before you do, one of the reasons for universality is that targeting is simply administratively not possible. Obviously, we want to be in a position where future Ministers actually have a choice, even if on balance, and from what you have said universal is occasionally appropriate. Had we wished to target, could we have done so?

It would have been possible to do some targeting in some ways, but not necessarily the ways that a Government or Ministers at the time would have wanted to target. Sorry, that is not a particularly helpful answer. It would be possible to target where there is existing machinery in place—for example, the warm home discount—if there were sufficient advance notice. I want to go a little bit broader and perhaps bring in one of my colleagues. Targeting is something that we are looking at. Obviously, it requires data and data linking to be effective. We already do some of that in the electricity system, in particular through the warm home discount, where there is a strong linkage to people on pension credit and means-tested benefits. The question is whether we can go further. We have a lot of work under way to improve our understanding of data flows and create those options, but it is not a straightforward issue. To give one very concrete example of why it is not easy, we supply energy on a household basis; that works well with the benefits system, which also works largely on a household basis, but the tax system, which is where you get income data from, works on an individual basis. That immediately creates a very real complication in data. That is the sort of thing we need to look at.

I can say a little more about this. It is worth saying that within the suite of interventions that we put in place, there was quite a lot of targeting in some of the schemes. For example, the schemes that targeted those who were off grid had to identify those who were using alternative fuel sources and so on. In terms of the sorts of targeting that you are referring to, based on the characteristics of the household; the fundamental thing we are trying to do is ensure that we have the best possible infrastructure in place to enable us to have choices, should that be necessary in the future, recognising that the precise response will depend on the conditions at the time. To do that, there are three main streams that I would pull out. The first is working with others in Government to make the best use of existing data available to us. As Jeremy said, that involves in particular the relationship with DWP and the ability to make the best use of benefits data. The second is working with others in the wider system to make use of data and information that may not principally be held by Government. We may talk later about the £500 million winter support package; the energy companies delivering that are making use of the information they have about their customers, such as who is experiencing hardship and how those people can be target for support most effectively. Similarly, there has been some really interesting work with the NHS, where local health trusts or GPs may have information about individuals who have particular vulnerabilities or are in particular need of support. There is an area of work around that. The third and probably the most difficult nut to crack, as Jeremy says, is the relationship with income data, which is collected on an individual basis rather than by household. There is also a number of different technical issues, including lagging in self-assessment data, so it is quite a long way out of date by the time it is fully organised, and different categories of income may be taken into account, for better or worse. The Chancellor said in the Budget that she wanted work to progress to identify better ways of household information being used to target economic support. We are closely involved in that work with the Cabinet Office, HMRC and others, because if that could be cracked, it would provide a wider range of options. I do not underestimate the very significant technical and practical challenges in doing that. Those are the three levels that we are working on.

Obviously, that sort of infrastructure will be useful not only if there is another spike, but potentially in targeting particular schemes around warm homes. We know some of the poorer homes are the worst insulated and their occupants are the most affected by fuel poverty, so they benefit the most from home insulation. We are going to come back to the question of vulnerable customers in particular, but before we move on, would you confirm my sense that you have some data linkage with the DWP currently?

Correct.

And you are exploring it with the NHS to a degree.

We are working with a range of people outside Government, including suppliers, the health service and local government.

But with HMRC, you feel, because of the nature of the data—

We are working to see what is possible, but we are clear that it is significantly more complicated than using benefits data, for the reasons we have outlined.

Thank you.

Let me come in on the back of Ms Dixon’s excellent questions. The Government were able to act at speed during the middle of the pandemic—in my area, for example, a combination of health and the local authority worked to target those who actually needed deliveries of food, which I was involved with. That was a good example of how government can act at speed. You are not in an emergency now, but could we look very carefully at this data matching between different Departments and be prepared if there is another spike? Being prepared is halfway towards solving the problem.

I strongly agree. As Jonathan said, our job in the Department is to make sure we have the tools ready to go. It is a little bit hypothetical, but contingency planning is what a Government Department should be doing. Obviously, we have to work with what is possible, and that is what we are working through at the moment.

Brilliant. Thank you.

Going through the NAO Report, it is interesting to see that it has been quite difficult to judge the impact of support schemes for energy. With that in mind, and building on what Anna said, could you touch a bit more on what has been learned about the energy support schemes that were in place during the covid pandemic, and whether or not you deem them to have been successful? I appreciate that we do not really know the full impact, but what is your initial takeaway?

We do think the support schemes were successful. The Report itself says that they were undoubtedly successful at protecting the vast majority of consumers from the extremes of energy price increases. Based on that core objective, they were successful. We have several evaluations under way, reporting mainly in the summer. They will provide us with more evidence about the schemes, but the energy price guarantee scheme, which is the biggest single scheme for householders, did prevent the 75% rise in bills that would have happened in the final quarter of 2022. It set a £2,500 limit. The EBRS, which was the equivalent scheme for businesses, also made a very significant saving. We know as well that the schemes limited the impact of the crisis on fuel poverty. It is complicated, because different devolved Administrations have different definitions of fuel poverty, but, looking at England, our analysis suggests that 289,000 households would have been in fuel poverty without the support provided. Fuel poverty did still rise, but 289,000 additional households would have been in fuel poverty. Therefore, we do know that the schemes helped. They also stabilised the market, which was important. It was not really about supporting the suppliers, but they stabilised the market, so they were important. We want to evaluate this properly and robustly. That is why we have independent evaluations under way. They are going to be looking much more comprehensively at whether the schemes were effectively designed. What was the awareness and understanding like among the different recipient groups? I know we will come on to that in this hearing. Were the schemes effective at supporting the different groups; hence, were they value for money? Those will be looking at the programme design, the outcomes, the costs and benefits, and the macroeconomic benefits. They will be looking at things like the impact on fuel poverty: did they prevent self-disconnection, which is something we worry about in the Department? They will be looking at the impact on jobs—on insolvencies—from our support. We are in a confident position, but there will be more to come through the evaluations that will be concluded this summer.

When will that work conclude? The covid pandemic was a few winters ago now.

It was. It is frustrating for me as well as for the Committee, but evaluations like this do take time. We need the schemes to conclude before we can properly evaluate them, and then we need the evaluations to be undertaken robustly. We will have some interim evaluations looking at the domestic schemes—there are two separate interim evaluations for Great Britain and for Northern Ireland—which will report in the spring. Then, we will get the final evaluations, both for the domestic interventions and the non-domestic interventions, in the summer.

This year?

Yes.

Next up is Sarah Olney.

I think Lloyd has just asked my question. It was about when the evaluations will take place, but the permanent secretary has answered that.

All right. Lloyd, carry on then.

If we look at the world picture at the moment, there are a number of reasons that we could see further instability in the cost of energy; there could be similar events to what happened with the pandemic or with conflicts in Europe. It is reassuring to hear that this will be concluded by the summer, but, with that in mind, do you think there is enough preparedness in the Department, if there was a future spike in energy and a need to quickly intervene with domestic energy support?

Something that has been a priority, through the energy crisis and beyond, has been to capture the knowledge and the capability that we learned through undertaking these interventions. Although we think it was a success, we want to be better prepared in case we need to make this sort of intervention in future. That is something that we are able to do in the Department. We know what it would take to reintroduce these schemes or a variant on these schemes, and we are making sure that we properly understand, for example, the lead-in times, the skills and the capabilities that are required. That means that we would be better prepared in future. The evaluation will help, of course. I am sure we will come on to the challenges around some vulnerable groups, and reaching them—which we discussed already with a previous version of this Committee—but the evaluation will help us on areas like that. The Department has been making sure that it is maintaining and improving its capability even in advance of that evaluation.

To go into more detail, if possible, when you look at some of the challenges we face—whether that is a conflict around tariffs, further instability in Europe or further conflict in the middle east—do you feel confident the Department is ready for the potential knock-on impacts in terms of energy, and therefore the price of energy for consumers?

I am confident that the Department is ready to deal with whatever happens in international energy markets. That is the key essence of our job. We are absolutely not complacent about that. I should say, though, as I said earlier, that there have been rises in the European gas markets in recent months. They are obviously a concern. We have not seen any evidence of the sorts of spikes that we saw previously in that, but it is obviously something that we monitor very closely. I have an international energy unit that is a joint unit between my Department and the Foreign Office that focuses in particular on some of those geopolitical risks that you are also referring to, and of course we monitor those closely.

I am glad the work is concluding this year but, to get this clear for the Committee, if the work around whether the previous energy support schemes have been successful does not conclude until this summer, how can the Department be fully confident that it is prepared to offer support in the event of another spike caused by geopolitical events?

It is a process of continuous improvement in the Department, as you would expect. We have already reflected on what we have learned and the skills and capabilities that we need. We understand what would be involved in reintroducing these schemes or some variants of these schemes, but of course we will learn more through the evaluation process as we get more information.

These are all very important issues that you are raising. First, on gas storage, the National Energy System Operator also oversees that and has confirmed that gas storage remains healthy. Our gas system in this country is very different from that in many European countries, but it is something that we constantly look at and ask ourselves about. I cannot comment on Rough, because that is an asset owned by Centrica, and I do not want to talk about commercial matters in this environment. You raise the wider question of rebalancing, which is an important issue. The issue that we have is that a lot of the policy costs and network costs in this country are placed on electricity rather than on gas. The ratio is high compared to many comparative countries. There is a good argument for looking at that and looking to rebalance those costs. What our Ministers have said is that, yes, it is right that we look at that, but that we do so carefully, in a way that is affordable and fair for those involved. That is because there are some households that currently use both electricity and gas, and there are some households that only use electricity or are not connected to the gas grid. I think I am right in saying that 100% or thereabouts access electricity and I think it is only about 80% that access gas. That creates, essentially, distributional questions that need to be looked through, and that is what we are doing with our Ministers.

We are looking at that. The thing I would say, compared to the previous statement, is that we have had a general election and we have a new Government. I think it is clear that we have been working incredibly hard in the Department to set out our plans and approach to the mission. This is something we are now looking at. We have not set out a specific timetable on rebalancing, but the assurance I would give the Committee is that it is something we are looking at seriously.

I appreciate that you do not want to comment on Rough, but is it not the case that the UK’s total gas storage capacity is around 10% less than France, Germany or the Netherlands? Our storage levels are concerningly low. We are an outlier from the rest of Europe when it comes to the role of storage and our energy system. Indeed, Chris O’Shea, chief executive of Centrica said, “As we work towards Clean Power 2030, long-duration energy storage will be needed more than ever in order to help balance a system that is increasingly reliant on renewables.” Is the amount of gas storage in this country a concern?

It is factually correct to say that we have less gas storage than some of the European countries you mention. However, the question is whether we have enough and whether it is secure for the system we have in this country. The National Gas operator recently confirmed again that gas storage levels are healthy for the system we have. Our gas storage levels remain healthy. We have a more complicated system because there is more access to, for example, LNG. We still have the remains of the UK continental shelf as well. We are confident that we have the storage levels that we need, but we are not complacent, and we do continue to look at this. You raise the wider question of long-duration energy storage. There are a wider set of important issues that we are looking at very closely. I might bring my colleague in here.

To build on the points about our gas system, we are in a much stronger position geographically than a number of other European countries with our access to liquefied natural gas import terminals. Our interconnection into Norwegian gas fields and our own domestic production provides a diverse range of supplies. When looking at the contribution that storage can make to our system, it is worth the Committee looking at the rate at which it can be provided on to the grid as well as the total amount in storage. The issue that National Gas look at in testing the resilience of our system for the winter is the ability to deal with days of particularly high demand or interruptions to significant infrastructure. That means in our system that the total volume of gas we have in storage is often much less important than our ability to respond rapidly to pressures on the system. Our system is optimised for that, if you like, with fast-releasing storage. Long-duration electricity storage is an important area for how the grid works in the future. It is something that comes out in the clean power action plan as an important area. There are a range of technologies, including pumped hydroelectric storage and other more nascent technologies that are being developed, which are a critical part of the clean power action plan to promote those technologies for 2030 but also beyond 2030, when we will see higher variability on the grid.

That is quite a complicated summary. We will leave that there, though there are other questions around that.

Mr Mills, the original estimate for how much it was going to cost to run the schemes was £139 billion, but we think the final cost was only £44 billion, and even the interim estimate was £69 billion. That is not just a big difference, but a really significant one in terms of the acceptability of the scheme. As I recall, when it was first brought before Parliament, the enormous estimated cost was much discussed. The NAO Report reveals that there was a large range of estimates, and you had to take a central estimate, but why was there such a large range? Why was it so difficult to predict with any greater certainty what the cost would be?

By far the greatest part of those forecasts was the two schemes at the time: the energy price guarantee and the energy bill relief scheme. Their costs were directly related to the price of energy. The fundamental logic of what they were trying to do was to take that risk away from consumers and businesses, who could no longer bear the scale of the uncertainty, and to put it on to the Exchequer. That meant that the amount that those schemes would spend was very heavily determined by the future trajectory of energy prices, and particularly of international gas prices. In the period from when the schemes were announced, particularly as we went through the winter of 2022-23, the global market responded effectively to the crisis situation. Markets were sufficient, European gas storage was filled and resilient for those markets, and liquefied natural gas continued to flow to markets, where it was imported. As a result, the futures markets brought down their forecasts of future spending significantly. We saw the spending required by the energy price guarantee in particular come down, because it was no longer needing to make up anything like so much. That explains the vast majority of the variance in the forecast. Looking back, I do not think I can claim that it would have been possible to forecast those costs with any greater precision at the time. Given the nature of international energy markets, the uncertainty there was fundamental to what we were trying to do. It is explicable in those factors, when you look to the out-turn.

The situation we were in in September and October 2022 was pretty much unprecedented in terms of those future estimates. I suppose you are saying that it was sort of impossible to predict.

On your first point, it is worth highlighting to the Committee how unusual the energy forward market was from the perspective of 2022. It was not just that there was a spike in the prices; it was that the market was finding it very hard to forecast when that spike would come down. We have seen short duration spikes in prices before, but there are not really any recent comparable examples of the market expecting prices to go up dramatically and not being confident in knowing when they would come down at all. That was a very particular situation. As I said, the economic rationale for those schemes was to try to take the uncertainty of future prices off consumers and businesses to somewhere where it could be borne. That was for the benefit of those households and businesses, but also because of the wider economic impacts that Jeremy alluded to earlier. It was pretty fundamental to the way the schemes were operating that it would be difficult to forecast the costs at the time. If you review the language that the Treasury and the OBR used in describing their assessments of the costs, you will see that they were at pains to highlight that as well.

I do not know whether you are aware, permanent secretary, but we have got into the habit of taking a five-minute break in the middle of the hearing, so I am now going to call a five-minute break. Sitting suspended. On resuming—

Welcome back to the Committee’s hearing on energy bill support. To help us further with that, I turn to Clive Betts.

Permanent secretary, you have already said that the schemes you introduced to help people with the cost of energy stopped a number of households—I think you said the figure was nearly 300,000—getting into fuel poverty. Even on the same measures, 238,000 households did go into fuel poverty, despite the support. Indeed, we can use different analysis. It depends on how you define fuel poverty—we have already said that there are different ways of doing it. On estimates of whether people found energy affordable, the number of households that found it was not affordable doubled during the same period. In other words, the support was helpful in part, but not helpful for many people, in terms of stopping fuel poverty. Could you have done more? Would better, more targeted interventions have helped people who were in great difficulty during that period?

I will say two things. The first thing I would note is that these were ultimately very difficult decisions that Ministers had to make at a very challenging time, balancing the right level of support to offer, given the constraints on delivery, with wider questions of affordability. Ultimately, a great deal of support—more than £40 billion—was offered, but Ministers had to make a choice in balancing that. Secondly, we have been talking today about support being offered through, or quite closely aligned with, the energy system, but that is not the only route available to provide support to low-income households. Other changes were made to the benefit system to provide support to vulnerable people during the crisis, so it is also important to look at it in the round. Obviously, I agree that even with the support, it was a challenging time for many people in this country. Energy bills were higher and remain higher today than they were several years ago because gas prices ultimately have not reduced to pre-crisis levels.

Right. I am just trying to unpick what you were saying there. Was less support offered than what might have been effective in helping people in fuel poverty because it was practically—administratively—very difficult to do, or because Ministers did not consider it affordable?

As Jeremy said, the schemes were attempting to deliver a range of objectives. They were aiming to address the direct impact on households, including the most vulnerable households. They were aiming to have a wider macroeconomic impact. They were aiming to tackle inflation and manage the impact of the energy price shock. As we discussed earlier, the schemes aimed to be universal in their scope, but sat within a wider Government response, including cost of living payments, the extension of the household support fund and other changes in the benefit system that were more specifically targeted in relation to income and other measures of need. The objective was to provide a response that hit all the objectives as well as possible, within what was ultimately, even with the cost of these schemes, a very significant fiscal cost that therefore put constraints on what could be delivered overall.

So practically—administratively—you could have done more to stop people getting into fuel poverty, but a decision about affordability stopped it.

I am sure we will come on to the issues that the evaluation is looking at later. You started by asking whether there are things that we can learn from this and do more on in the future. I think there is a range of issues that we will be looking to that to inform us about, like issues around take-up for some of the more targeted scheme—whether there are lessons there around communications and so forth. But as I have said, the schemes overall, and the overall Government response, were aiming to ensure there was a strong response for those in need.

I think we have heard that in your response. If the answer is yes, will you just say it?

It is perfectly possible that you could have set the support offered by these schemes at a different level. The discount of £400 that was offered to all households—you could have set that at a higher level, but ultimately there was an affordability constraint on Government at the time, and they were decisions that were ultimately taken by Ministers at the time.

Of course. But administratively you could have done more, particularly to help people in fuel poverty and those on the brink of fuel poverty. It might have been challenging, but administratively you could have done it. However, in the end it would have cost more, and that was an issue that could not be dealt with by yourself.

That is for Ministers. An awful lot of support was offered, but ultimately there were limits on that. Administratively there were other options that could have been undertaken. Administratively there were other options that could have been taken to provide more support, including to certain groups—not necessarily perfectly matching a particular definition of fuel poverty, but obviously you could offer more to some characteristics of vulnerable households. I will see if my colleague wants to say anything to unpack that.

Just to draw a distinction between two things, there is the general point around schemes like the energy price guarantee, which could absolutely have been set at a different level. It effectively capped bills at £2,500 for a typical household. There is a separate question of the ability to target through the schemes. That comes back to some of what we have discussed already: could we have done more through targeted schemes? Could we have targeted an element of that at a particular group? That gets into the very real trade-off between the speed of implementation, the breadth of the impact on households—the number that were in scope—and the ability to get this out. The question, “Could you do more in absolute terms and set the level differently?” is one thing; it is an affordability judgment. The question, “Could we have done something more for a more targeted group?” is quite challenging and gets into some of those questions of available data.

Okay. Mr Mills mentioned that you were now looking at what is practical going forward. Have you learned lessons about how you might better target help, to make sure that we reduce the number of households in fuel poverty?

A lot of this goes to the conversation we had earlier about the different sources of data we can use. A particular challenge in the period we are talking about was targeting people who might not be in the benefit system but might have relatively low incomes. Finding ways of improving the ability of the Government overall to target economic interventions in relation to income is an administrative constraint at the moment, and one that, as I said, the Chancellor has tasked Departments with trying to improve options on.

So it remains something that you are aware of but haven’t got an answer to at this stage.

I would say haven’t got a full answer to at this stage, because of that very real challenge of income data being largely on the individual basis and benefit data and the energy system largely being on a household basis.

Can I come on to one other aspect of the help you gave? It is hard-to-reach groups, particularly those individuals who did not have an electricity bill so you could not say, “There’s a bill; that’s what we can give the assistance to.” Retirement homes and places like that have been mentioned. I have a retirement village in which people have their own individual properties and the landlord—the owner of the property—is an RSL. Why could you not have got the RSL to give you the names of all the people who live there and provided the help to them? That would have got the help through a lot quicker and with a lot more certainty to all the people who needed it, but you didn’t—you wouldn’t.

Let me broaden out for a moment and then I will narrow down to residential social landlords. On all of these, the starting point was that we were trying to get support to everyone. That in itself makes this very challenging, because there is a huge array of different circumstances when you are trying to reach the entire population of the country. We did work with local authorities on some of what we called the alternative fund schemes, which were targeted at those households that did not have an individual relationship with an electricity supplier. They, in turn, worked with residential social landlords and with their own housing stock, and we introduced some regulations around what we call the intermediary process, requiring people to pass through those costs that were made at that level. We tried a lot of means of outreach. It is worth saying that there are a lot of different populations in this. I will give a couple of other examples: as well as social landlords, there were care homes, and park homes was another that came up a lot. We had something called the continuous cruisers scheme for those people who travelled on canal boats. So there was vast complexity in this, which meant that we needed to try to reach all these groups with lots of communications. One of the principles, and one of the things we focused on in delivering these schemes, which I think led to the very high levels of overall take-up we saw, was trying to deliver as far as possible through the energy system. That was our starting point, and the way we could reach most people. That meant that, where we had to adapt the schemes where there was no relationship with an electricity supplier, it was naturally much more complex and required a lot more outreach—and, indeed, required an application-based element that there was not in the main parts of the schemes.

I get that for many arrangements. With park homes, for example, you may not have a clear understanding of who the owner is; it may be complicated. I understand that, but with an RSL, it is pretty clear that these are registered bodies, and they are clearly accountable to their regulator. Could you not have trusted them to give you a list of the people who lived in the properties, and circumvented all the need for applications, the delays, and the fact that some people missed out?

For a number of the schemes, we did exactly that. Where there were intermediaries such as social landlords, the money was given to the landlord with a requirement to pass through to the tenants. I totally accept that there were places where those communications did not work and we did not track the right people, but as far as possible, that was what we sought to do, and the overall levels of take-up were very high. But absolutely, there are lessons to learn in how we can do that. We have got a lot out of these schemes that we could deliver in future.

As these schemes evolved—we went from the energy bills support scheme, the £400, through to the schemes like the energy price guarantee and the energy bill relief scheme—we were trying to learn that. As you say, when it got to the schemes where people received electricity but did not pay for it themselves because it was included in their rent, we required the landlord to pass it on automatically. That was a lesson we were learning from the first part. We will look to the evaluation to tell us whether there was more that we could have done, the impact of the trade-off we were trying to strike between fraud controls and other objectives, for example, and where that came out in practice.

Moving on from that important line of questioning, I think it is important that this Committee reflects on areas where a Report highlights good work, and where we have seen success. It is clear from the Report that the levels of fraud and error across energy support schemes were low, and lower, perhaps, than elsewhere where financial support was given by the Government. It would be useful if you could outline a little more how you made sure that those fraud and error levels were low, and if you could then go into a bit more detail about how we can ensure that those successes, and the lessons, are disseminated across Government more widely.

I will say a little and then perhaps bring in my colleague to add to it. We are pleased with the overall outcome on fraud, although obviously any fraud is undesirable. The percentage of irregular payments was very low—well under 1% for most of the schemes. How did we achieve that? We benefited, to an extent, from some of the lessons from the pandemic. First and foremost, we designed the schemes to work with the energy system and to avoid the need for applications. That is probably the single most important thing. The moment you start to get applications is when things can get more complicated. By limiting that, we were essentially minimising opportunities for gaming, using existing systems that already have checks and balances in place. We also designed the schemes to ensure that there were careful boundaries between them. Yes, there were one or two gaps that we need to continue to think about, but we tried to minimise the overlaps that were needed. It is not possible to completely avoid applications, as we have discussed, for people without that direct relationship with an energy supplier. As far as possible, it is about putting checks in place, automating those wherever possible, and making sure that those checks were both pre-application and post-application. Those are the key things I would highlight. I will bring in Ben, who was very involved at the time.

I will say a little about how we designed this. Some of the other things we did were simply to make sure that we were learning from previous schemes and drawing in the right expertise. For instance, we drew across some of the staff who had worked on the covid schemes who had that experience. We also brought in some expertise from HMRC and brought in people whose careers were dedicated to work on fraud and counter-fraud, so that we had the expertise in the schemes as quickly as possible. It was also important that we worked with the Public Sector Fraud Authority, which was involved from the outset in assuring the fraud risk assessments that we did on every one of the schemes as we generated them. Those were very extensive. We worked through a whole range of scenarios and ways in which it would have been possible to commit fraud or game the schemes and tried to close every gap that we could find. I will go into a small amount of detail on some of the pre and post-payment checks, because there is a lot of valuable learning in them. There was a huge amount we could do because we were working through the energy system to do things like compare the claims that we were getting in from energy suppliers with actual metering data quite close to real time before payments were made. We then had external auditors look across each of the schemes and test those payments as quickly as possible after they were made. So we were able to respond very rapidly to some of these things. One thing I would draw out is that the level of complexity varied somewhat between the domestic and non-domestic schemes. For the business market, we learned a lot from getting in the meter data and the scheme data about how that market was operating. We put additional checks and internal boards in place to look at some of the more complex payments and claims individually, so we could put a lot of extra scrutiny on those before payments were made. In some cases, we held payments back while we tested those and looked for any irregularities. There was a huge amount in this and there is still a lot to learn.

Particularly during the pandemic, we saw much higher levels of fraud in other areas, such as the bounce back loan scheme. As you said, it is important that work is going on to ensure that we do not repeat the mistakes that we saw with that scheme. My final point is that we saw slightly higher levels of fraud where there were automated support payments. I wonder if you can explain why that was the case.

We saw slightly higher levels of what I think we would call irregular payments, formally, in the EPG scheme compared with some of the other schemes. It is probably worth sharing what we have done about that as a Department. It was the largest single scheme that we ran during the period. Our approach to those irregular payments has been that we as a Department, on behalf of the taxpayer, have been paying to suppliers only what they should have been paid. In the very small number of cases where suppliers have been overpaying consumers, we have not made those suppliers good for that. Where customers lost out, it has been for the supplier to make them whole. As far as possible, we have been minimising the impact on the taxpayer. Some of the issues that arose are very technical issues about whether meters were registered correctly in properties. We are getting into very technical elements of the energy system here. That is why I refer to some of these as irregular payments rather than fraudulent payments. Ben, do you want to unpack some of that?

Yes, and I should have said earlier that I was the SRO for the energy price guarantee, so I was very close to this. I think it is very important to say that the figures you have here are for fraud and error, rather than fraud along, and actually the vast majority of the 0.94% figure that we have for the energy price guarantee is error. Where we investigated these things, we found, for example, there was an error in someone’s payment system or calculation rate—things it is possible to make good. As part of the design of the scheme, we built in what we called a reconciliation process. That is what Jeremy was referring to—that ability to look at this and ensure that suppliers make it good after the fact. There was a delay, if you like. We were not paying in full; payments were always made in arrears, although not very far in arrears, to ensure liquidity for suppliers. But there is something of a long tail in the scheme, where we hold back a proportion of the final payments and allow a reconciliation process where we true up what we paid with actual meter data and make sure that we only end up paying the right expense, and taxpayer exposure is kept very low. So even those relatively small figures for fraud and error will, to a large degree, zero out over time.

Mr Golding, can I close off one issue? The Committee has previously examined this issue of energy suppliers forcibly breaking into houses to alter meters. Ofgem has banned the practice for gas, but I gather there is only a voluntary arrangement with electricity suppliers. Is that satisfactory? Can you guarantee to us that this will never happen again?

May I come in on this? As you say, Ofgem took action after unacceptable practices were revealed in the installation of prepayment meters. They have been looking further at the specific practices and put in place stronger controls regarding the conditions in which such installations can be made in the future, including requiring additional welfare visits, further assessments and so forth, to ensure there is no repetition of the previous behaviour. We are working really closely with Ofgem to monitor the effectiveness of the measures in practice. The use of this practice is much, much lower than it was previously, but it is something we will pay close attention to.

I still slightly worry about that reply, Mr Mills. You say that it is “much, much lower than it was”, but you are not absolutely ruling it out and saying that it could not happen in future without at least proper warning.

The view that Ofgem have taken is that it would not be appropriate entirely to remove the option of compulsory installation of prepayment meters in circumstances where there are no other viable options. They are enforcing that with, as I have said, the code of practice, which sets strict conditions around when that happens, to ensure that it is only in the circumstances where it is appropriate and does not pose unacceptable risks to the households involved. That is what the code of practice says. We and Ministers pay very close attention to how that is playing out in practice. As I say, to date, the energy companies’ practice has been radically different from what it was previously.

We will look at that reply, but my question was carefully phrased around warnings, so we need to—

The suppliers are obliged to make 10 attempts to contact an indebted customer. They are required to carry out a site visit before forcibly—before changing the meters in the way that you outline; and they must refrain from doing so when a vulnerable person is present in the house.

That is really helpful clarification, permanent secretary; thank you.

I want to do a quick follow-up. Previously, Mr Mills, I was asking you about the forecast costs being much, much greater than they turned out to be. Subsequently, you have explained to Mr Betts why cost considerations meant that you were not able to save many more households from going into fuel poverty. I am interested in the interplay of those two factors. How did you balance knowing how uncertain your figures were with the decision that it would be too expensive to save more families from going into fuel poverty? Would it have been possible at any time to take a different view of what the future cost of energy was likely to be, against the fact that many more households would struggle to pay for their heating?

In our previous answers, we talked about a range of factors that would have informed Ministers’ policy decisions at the time. One of them was the overall cost of the schemes involved. We also talked about the options that were or were not available at the time in terms of targeting, and particularly targeting that went beyond the benefits system. Those were the constraints at the time. Your question was what other options could we have considered had we had more resources? As I said, I think there were a range of factors.

I am struck by the fact that you said to Mr Betts that there were households you could not reach; you made a decision, based on cost considerations, that there were households that you could not prevent from going into fuel poverty. Yet the scheme has ended up costing so much less than you predicted. I am keen to learn whether a different balance could have been struck.

Just to be clear, I was not saying that that was the only consideration or constraint. I said that Ministers at the time were seeking to deliver a range of objectives, including the wider macroeconomic objectives that the universal scheme could deliver; technical deliverability, as we have talked about in terms of the availability of different data for targeting; and the overall costs of those schemes. As I also said to the Committee earlier, the nature of these schemes meant that the costs were inherently uncertain, because they were attempting to transfer the risk of uncertainty in future energy prices away from consumers, including the most vulnerable consumers, to the Exchequer.

We talked earlier about some of the issues relating to the administrative ability to target. Looking at the impact of the programmes, my colleague Clive Betts has talked about the impact on low-income households. I would like to go a little bit further into the so-called vulnerable customers and look at how the support for different types of energy consumer has played out through those schemes. Also, coming to the third theme that the permanent secretary set out at the beginning, how do we ensure affordable and fair prices in the future? As a Committee we received evidence from Sense, a charity that works with disabled people. Disabled people’s energy costs are about 25% higher than those of non-disabled households. They are also much more likely to be on prepayment meters—28% compared with 16%. However, their awareness of the support that was available to them during this period, according to surveys that Sense has done, was as low as 34%. I do not like to call disabled people “vulnerable customers”, but they generally are. We have talked about some of the challenges, and that you mainly used energy customers, but obviously prepayment meters in particular are very difficult. Can we start there and talk about how effectively you reached customers who were on prepayment meters?

Let me start, and then I may bring Ben in as well, who was very involved at the time. Can I make a distinction between smart prepayment meters and traditional prepayment meters? For smart prepayment meters, which new prepayment meters are, it was possible to make adjustments effectively on the meter. It was adjusted remotely by the energy supplier so that the customer could benefit from the support that was offered—they did not have to make an application. Those on traditional prepayment meters were sometimes referred to at the time as the edge cases. Support needed to be offered, and for EBSS, which was the £400 discount, it was offered to these customers through vouchers. Of the vouchers that were issued, 87% were redeemed and 13% were unredeemed. That is the overall picture for vouchers.

How many customers fall into that bracket of using traditional PPM?

On traditional PPM, one of my colleagues may like to—

Just to give us a sense of scale.

Eleven and a half million vouchers were issued, but I cannot remember how many vouchers per customer. It will be some fraction of that. That was where the start of the challenges was. We made a very significant effort. I talked more than once to the Committee at the time about the marketing that we did, the engagement with local government and a range of stakeholders, including those in the charitable and third sectors, and with MPs we provided constituency-level data as well. At a time of great pressure and pace, we tried to make sure we were using as many channels as possible to raise awareness. I completely accept we did not succeed, otherwise we would have an even higher number, getting as many as ideally we would have liked. However, we did have several successful campaigns. That is what the evaluation is going to look at in more detail. Does either of my colleagues want to correct anything I have said or add to it?

Nothing to correct. I will just add that there is an important distinction between the two very important sets of issues you raised. One is prepayment meters, which impacts a range of customers. You also talked about disabled customers in particular. On disability, the way we designed the schemes was very valuable. The energy price guarantee, in particular, is a volumetric scheme, which meant that the higher your bills and the more energy you use, the more support you received. We were very conscious of disabled consumers in particular and those who might have, for instance, very high energy using medical equipment. That was also something we engaged with the Department of Health on, to understand what data it had on those customers and whether it had channels that could be used to reach out as part of communications and marketing. Beyond that, it was very important we used every channel we could for those who needed vouchers. The vast majority of the scheme’s customers, and potentially many disabled customers, will have benefited through the automatic part of the scheme—that volumetric basis.

I want to make sure I have covered the prepayment meter issue. You are talking about how many vouchers were redeemed, but for this sort of scheme, these people are the most vulnerable customers and they are the hardest to reach, as you have described, particularly those on the traditional type of meter. I am keen to know how many people were reached rather than just how many vouchers were cashed in, because that would give us a better idea of the situation. Also, what further insights have you gained into mitigating the impact of high energy prices on these customers? Even now, we still have high energy prices. How do you make sure these people are not avoiding turning on their heating or using electricity and gas through this winter?

On the first issue, the number of traditional prepayment meter households, I cannot get the answer during the hearing. I will write to you with the number, what proportion it is of the vouchers. That is a very fair, factual question and information we should provide to you. I will see that one of my colleagues gets the answer. You raised broader issues as well. The first thing is that there has been renewed focus on differences between those on prepayment meters and those on conventional metering. One of the actions that we took following the crisis was to stop the practice where those on prepayment meters were being charged more. Ofgem has intervened to stop that, to make sure that the supplement that was being paid is no longer there. That is an important change that has been made. We have talked about the action that has been taken about forced installation as well. Interestingly, one of the things the Department learned from the schemes was about the practice in Northern Ireland, where prepayment meters are much more common than they are in England, Wales and Scotland. We were able to learn from that. Regarding the support that we are offering to different types of households, that is something we are working on very closely. Probably the biggest item of support that we have through the system is the warm home discount, which we offer to certain groups of people, largely those on benefits—pension credit or certain means-tested benefits—although there is some role for energy suppliers to manage applications. As our Ministers have said, we are looking at that scheme. The legislation for it runs out after next winter, so the Department needs to look at which regime is the right one to have in the future. That is one area we are looking at. Secondly, we are learning from what happened this winter, when we worked with Ofgem and suppliers on something called the winter support commitment. This was a £500 million commitment, packaged and organised with the Department, Ofgem and Energy UK, to ensure that suppliers were offering additional support to vulnerable consumers who were struggling to pay their bills. We are looking at this at very closely. We have wider questions about energy efficiency, but that is the warm homes plan, which is related to bills, but not directly.

Because we keep bandying the term around, as you know from previous hearings, can you give us a sense of who you and the suppliers are defining as “vulnerable customers” for the purposes of this winter support?

It is a very good question. It depends a little bit on the scheme. We are operating in a very challenging and complex landscape. I will see if any of my colleagues wants to come in with the precise definition, but essentially, the warm home discount is provided to those who are in receipt of the pension credit. I think there are other means-tested benefits that feed into who is eligible.

But at the moment, those with a disability are not eligible. I do not believe it is linked to attendance allowance, carer’s allowance or the disability personal independence payment.

Because those are not means-tested benefits.

Indeed, but one might otherwise have assumed that they were vulnerable customers so I think it is important that we are clear about which schemes are supporting which type of customer, and who therefore may be left out of some of the energy support schemes.

I strongly agree with that. I think the winter support commitment did have a broader definition.

There will be people with disabilities who do not qualify for the warm home discount, either because they are in receipt of benefits but not qualifying benefits, or because they are not currently in receipt of benefits. The winter support commitment that Jeremy mentioned has a wider reach because, as part of that, suppliers are able to use all the information they have available to them about potential customer needs. It is not limited by the benefit receipt boundaries in the same way.

I just have one more point of detail around the warm home discount. We have discussed the main qualifying things, but there is an element called “industry initiatives”, where a proportion of the warm home discount can be allocated more flexibly by suppliers, and they can propose schemes based on what they know about the customer base and particular groups that need support.

Okay. I am really keen to understand more about the data used previously to identify high-volume customers—for example, data from the NHS about people with chronic conditions or conditions that mean they are higher energy users. That is also true of disabled people and some older people who may be housebound. It is really important that, in this winter support scheme, the lessons you have learnt about how to share data and identify those customers are used so that they get volumetric support, because it is the volume they are consuming that is critical. Do you want to say anything else about that? Otherwise, I will move on to another aspect.

The point is well understood, and I am sure we will consider carefully any recommendations from the Committee.

Thank you. The other targeting was around what you understood about the non-domestic sector. In answer to my colleague’s question, you said that, at the start of this, you probably knew least about the non-domestic sector. So what have you learned, and how are you using that data, particularly where we are looking at energy-intensive but potentially smaller businesses? I have a number of breweries in my constituency, which would probably fall under that heading, in terms of being small-scale but energy-intensive industries that could have benefited greatly from energy support. Could you tell us a little more about that?

I will start on this, and perhaps my colleagues would like to come in after. As you allude to, we absolutely had the least contact, if you like, with the non-domestic market, relative to domestic, so we had less data in the Department, and we got a lot more through the operation of these schemes. It threw up a number of issues and complexities, one of which was simply the sheer variety of contracts and arrangements in the non-domestic market, particularly for small and medium-sized businesses. If I can draw out a couple of key learnings from that, one was the importance of the role of what are referred to as third-party intermediaries—the people who broker or arrange those contracts for non-domestic suppliers. We are looking at a review of that role and the need for regulation in that sector, to ensure consistency of approach and fairness in the way that that part of the market operates. Another, which partly came out of that, was access to the energy ombudsman, particularly for small and medium-sized businesses, where there were particular issues, such as disputes with suppliers or indeed intermediaries. We have worked with Ofgem to expand access. So there is quite a lot of depth in this. The other thing we learned a great deal about was the operation of heat networks within the non-domestic market. We had a legal requirement for heat network registered owners to apply into the scheme. It was quite complex to engage them in the right way, and we learned a lot from this work, including that these are non-domestic contracts but they impact domestic populations in many cases.

Excuse my ignorance, but could you just explain for the Committee what a heat network is?

Apologies. Heat networks are essentially where heat is generated in a single place—a boiler or a combined heat and power plant—and then piped to properties through hot water or steam pipes under the street. They are an important part of the non-domestic market, but in some cases they also link into homes as well as into businesses.

On industrial estates and so on.

Exactly. So that was a third learning.

Now that you have a better sense of that, how would you target support differently in the non-domestic sector in future, particularly for those that are higher energy but perhaps more susceptible because they have not got the buying power of some of the bigger non-domestic customers to get good deals? How are you supporting them?

I have talked about some of the broad learnings. On the question of targeting in the non-domestic sector, that is a slightly different point, and I might draw it out a little. One of the challenges we had was, again, as with the domestic sector, the level of data to allow us to categorise non-domestic suppliers into particular groups. We used industry codes to understand which sectors were particularly exposed to high energy costs, and which were more energy-intensive, but there are limitations around that data in the way that it groups different sets of customers. There is quite a lot that we would want to learn and work through, just building off the data that we have, understanding the different exposure that different parts of the sector had, and working on how, in a future scheme, we might be able to target that more precisely. So we have a lot of learning, and there is plenty more to do to understand the most effective way we could do that.

I have had colleagues in the House talking about ceramics, and we have industries effectively going to the wall at the moment, largely because of high energy prices. I am just wondering what you are doing, as a Department, to build resilience in these energy-intensive sectors.

As Ben said, there was an evolution during the course of the schemes that we are talking about today—from the energy bill relief scheme to the energy bills discount scheme—which did introduce a degree of targeting. But I think you are also raising the wider issue of the long-term trajectory of energy prices, outside of crisis situations.

Yes, I am asking what we have learned and how that is being used.

I think there is an overall objective, which is critical to the clean energy mission, to try to get us on to a better footing in terms of the cost of our electricity system overall, through the transition to clean power. There are then specific issues in relation to the most energy-intensive industries, where we and DBT have already been working together on schemes to enable some of those companies to have access to more competitive electricity and energy prices. That is absolutely an area that, in the development of the industrial strategy, we will continue to work closely with DBT colleagues on.

Okay. My final question is about those who are self-employed, where, effectively, you do not have a very good record of income. What did you do there to target support? Again, have you learned anything that is useful for the future?

For the non-domestic schemes?

Yes.

In general, the schemes operated in the same way for smaller businesses. The reality is that a lot of what you might call microbusinesses are, in practice, an awful lot more like households than businesses. Where they were households, they will have been gaining support through the domestic schemes, but for the non-domestic schemes, the overall scheme approach was very similar. We tried to do a lot more in communication and reaching out to those very small microbusinesses. Again, I think a lot of what we learned in terms of the operation of the market and the third-party intermediary piece can be applied to how we communicate with those groups in future. It is very difficult as it is, with some of the non-domestic market, to reach those very small businesses. It is a challenge we need to keep addressing.

Some will no doubt be run out of houses, so there is a crossover between domestic and non-domestic. Chair, are you going to pick up some of the issues to do with customers who are in debt?

I am.

Fine. I will leave that then.

I think the first part of that, which DWP colleagues could speak to, is all the efforts they are making to improve the take-up of pension credit; there has been a lot of activity in that area. As I talked about earlier, the winter support commitment takes a slightly different approach, which is to recognise that, whatever formal boundary you set around eligibility, there will sometimes be cases that fall the wrong side of it, so you need to provide some flexibility to deal with that. Ben has also talked about how the warm home discount provides resources for industry initiatives to do something similar. You also saw the wider suite of responses to covid and the energy crisis initiatives, like the household support fund, which provided local authorities with that flexibility. I think that one of the lessons we have taken from setting up these schemes is that, as well as your cross-cutting interventions, you need to have some flexibility at the margins to deal with cases that do not immediately fall on the right side of the boundary.

I know that debt is not your Department’s responsibility, permanent secretary, but I will get into the figures on energy debts in a minute. That now needs to be taken in the context that we are going to see a considerable increase in water bills, so I suspect that the pressure on household budgets is going to get even greater. Perhaps we can consider that context when I ask the question around energy debts. I am going to quote from a document from the consultancy service Clear called “Supporting Households in Energy Debt”, which is publicly available. It says: “Energy is the fastest growing type of debt presenting at debt advice services”. It says that between 2022-23 and 2023-24, the value of energy debts rose by a staggering 33%. So this is really becoming a serious problem. Part of Clear’s study was on what advice one can get for debt and how to deal with that advice. Clear says: “The majority of debt advisers” in a study “said that energy suppliers are the worst, or one of the worst, categories of creditors that they deal with.” It goes on to say that, “Fewer than half (46%) of respondents to the Money and Mental Health survey who were struggling with their bills got in touch with their energy provider” but that—this is critical—of those who did “nearly half (46%) said that they had not received any support as a result.” We all know how difficult it is to deal with energy suppliers, but if you are disadvantaged or disabled in any way, and particularly if you have to rely on a carer or a supporter, how you deal with your energy suppliers is a really serious issue. I wonder what your Department is doing about all of that.

It is a serious issue, Chair, so it is something that we are looking at seriously, along with colleagues in Ofgem. I would probably highlight two things. First, Ofgem themselves have worked very closely with us on preparing their consumer debt strategy. They launched a consultation on that on Christmas eve, and I think it closes today. Ofgem are proposing quite a significant reset of this issue in the energy system. Given the total level of debt—I think the NAO Report mentions that it is £3.7 billion—it is something that will need to be addressed, and there will need be this element of relief. But, ultimately, that will need to be funded within the system, so the consultation that Ofgem have had is quite important. They lead this issue, but we will obviously work closely with them on that. The second thing is that the Department continues to look at this issue and is exploring options as to what else can and should be done, including on the issue of the support and advice that is offered. It is obviously correct that, because in the first instance customers should contact their energy supplier, we need a regulatory regime that requires suppliers to offer good, accurate and helpful advice, and that is something the Department is expecting that of Ofgem. We are also working with others. We are working with Citizens Advice at the moment on whether there is opportunity to do more and to provide a stronger debt advice service to support customers. So, given the seriousness of the issue, it is something that we are looking at in the Department at the moment.

Clear makes lots of accusations against the energy suppliers, but perhaps the most damning is that energy firms are “not complying with the spirit or letter of the rules in place to protect people struggling to pay.” I wonder what more you and Ofgem can do to say that there is a code of practice for people who are struggling to pay these energy firms, and perhaps to get some qualitative advice—qualitative data—to work out which are performing well in this sphere and which are not. Clearly, those which are not are causing potential hardship.

This is a serious issue, and we have very strong expectations that Ofgem will do everything that they can to protect consumers. Ofgem recognise the need to do more, and to have a different approach; that is why they are consulting on the debt strategy that I have outlined. Once they announce the results—once the outcome of that consultation is agreed by Ofgem—I would ask them to write to the Committee with an update on the actions that they are taking.

I would just go back to the review that we have started of Ofgem to ensure that they have the powers and the capability they need to play this role in a market that has changed quite a lot since it was established.

Let us move on to quite a big issue: reforming the energy market. No doubt that is somewhere in your in-tray at present to be looked at. How far have we got with that? Is there a timescale for finishing it?

This is the review of energy market arrangements. Jonathan is the DG who oversees that, so I will invite him to talk at length about the technical complexities of locational marginal pricing.

He gets the difficult questions.

As you say, we have launched the review of electricity market arrangements. That has gone from considering a very wide range of issues to narrowing down on a set of key decisions that we think are important for shaping the market of the future. It is worth saying that we have seen significant reform of the electricity market over the last decade, including the introduction of contracts for difference and the capacity market. The area that the REMA has increasingly focused on is this question of locational pricing—whether the wholesale price of electricity should be more related to supply and demand conditions in particular areas of the country, rather than done nationally. We published on this before Christmas, and in fairly widespread public debate about this we have committed previously to setting out our proposals later this year. That continues to be our timescale.

Right. If you go out to members of the public, who are not aware of all the complications of energy pricing, what they often say is, “Look, we hear all these stories and all this information about wind farms and solar panels, and they are all supposed to be cheaper, but my bills still go up. Why is there no link between cheaper renewables and the price of electricity that I pay?”

Absolutely. That goes to the heart of the clean energy mission that we have. The core of what we are talking about is the impact that very large increases in gas prices had on electricity and gas bills, but also electricity bills for consumers and businesses in the UK. The mission to get to clean power by 2030 is about getting away from that dependence. There are a number of elements to that. The first is to change the balance of the generation that we have in the country, to make more of it low-carbon generation, which does not require fossil fuels as an input and does not have that cost to pass on to the consumer. The second element is the way in which that is going to be supported and paid for. The new infrastructure that is being built as part of the clean power action plan will be built under either particular arrangements for nuclear or contracts for difference for renewables. What those arrangements do is provide stable prices that pass on the benefits to consumers. So wind farms that are built under contracts for difference receive a stable price, and if the gas price is above that, the benefits are passed back to consumers. That is not like the previous generation of renewables, which were built under what was called the renewables obligation. They were more exposed to the gas price, so the benefit was not passed on to consumers in the same way. The key thing is that, by 2030, we will have more of that sort of generation, and things will be built under these arrangements, which pass the benefits back to consumers.

So the link between gas prices and renewables will not be there for new generation, but can you do anything to decouple them in previous arrangements for wind farms that have been built?

That will happen over time as those arrangements come to an end—for example, as older wind farms are replaced by new wind farms that seek support under these new arrangements. The law of the numbers here—the acceleration we are seeing in build towards 2030—means that, by 2030, the vast majority of the renewable generation in operation will be operating under these new arrangements.

So people listening can take it that their energy bills are going to come down.

What we will be doing is protecting people from those price spikes, and the advice we have had from the National Energy System Operator is that doing that will provide us with scope for bills to go down in future. We will be working to make sure not just that we are driving that change but that we are doing so in the lowest-cost way possible, so that when we are auctioning for new contracts for renewable generation, we will have a maximum amount of competition in those auctions to create competitive pressure on those building it, and we will be doing so with the cheapest technologies that we can. You will have seen, for example, the Government change the policy around onshore wind to enable one of the cheapest forms of renewable generation to be built out again.

What role is Great British Energy going to play in getting energy bills down?

Great British Energy is being established in Aberdeen to help drive progress towards that 2030 mission, and to provide part of our framework for the future. We will be saying more about its exact investment mandate and priorities. As part of the spending review we are working with the Treasury on resourcing and on how the profile of that spending will pan out.

What is it going to do that you as a Department cannot?

Having a Government-owned energy company will provide us with a different sort of expertise and a different ability to deploy money into the market, to de-risk projects, to enable things to get developed faster, to unlock technologies like floating offshore wind that can play a critical role into the future, and to go into bits of the market and drive progress that would not happen by itself but that a Government Department is not best placed to drive with our expertise or the resources we have available.

You say there will be more details coming out about how it is going to operate.

Yes, absolutely.

What is the timescale for that?

We will be seeing the first projects being resourced in the next financial year. We set out plans for that in the last spending review. I would expect more detail on their investment framework to be coming forward in that timeframe as well.

In all these conversations, we talk about low-carbon and renewables, but we do not talk about nuclear in that mix. Going back to my question about the stability of the grid, I would have thought nuclear would play a very important part in that. Could one of you outline the announcement today on relaxation of planning permission for nuclear, and say something about what part you expect nuclear to play in our total generation going forward?

Nuclear is a very important low-carbon form of generation. It is included when we are talking about low-carbon forms of generation. It plays a strong strategic role in the energy system. That is because, first, it does not rely on fossil fuels; it does not rely on the gas markets, obviously. It also provides a lot of energy density, which means that, although each plant is difficult to build, there is a high level of confidence in the generation from each individual nuclear power station. There are a lot of benefits that come from that for the energy system. For clean power 2030, given the timescales involved, we are talking mainly about the existing plants and questions around the exact life of the remaining nuclear plants in this country. That is a matter for the safety regulator and for EDF. We are very pleased that some life extensions have been made. We are closely liaising with EDF on the delivery of their project at Hinkley, which will be completed around that timescale. There is then a question about what comes next. We are very focused on Sizewell, where we have a sensitive commercial process under way on the investment. On small modular reactors, Great British Nuclear are making good progress with their technology selection process, which will conclude in the spring. Today we have announced the further steps on the national policy statement for nuclear that will, in essence, make it possible to provide more sites for nuclear power stations, particularly small modular reactors, and simplify that process, both for small modular reactors and perhaps for advanced modular reactors in due course. It will build on the existing system that we have, which is very much around specific sites. This will provide a more flexible and simpler, but one that still has safety at its heart, of course.

Why is it taking so long to get these small modular reactors up and going? Is it to do with regulation? Is it to do with investment? Is it to do with technology? On the fact of it, it seems as though it ought to be a fairly—after all, all our submarines are powered by nuclear reactors. Why is it so difficult?

There is not as yet, anywhere in the world, an operating small modular reactor. There is construction under way on projects in North America. We have established Great British Nuclear to lead this on behalf of the Department. This is a new technology that potentially has significant energy benefits but also industrial strategy benefits. Obviously, we need to run that competition—that procurement process—in the completely appropriate way.

I went with some potential investors to see Ministers and officials nearly two years ago about small modular reactors. We were not asking for Government money, apart from some marginal support with development, and £6 billion of investment was on offer, but it is still sat there. Meanwhile, the Poles and the Czechs are moving ahead; they have chosen their technologies. Is has taken an awfully long time to make a choice about technology, hasn’t it? You said it is moving at pace, but the pace does not seem to be very quick.

Great British Nuclear are working incredibly hard. They are now in the closing stages of the technology selection process. It is important that it is a robust process, given that, as I say, there is not an operating small modular reactor anywhere at the moment—there are some now under construction. Having a rigorous process will give us confidence to move to the next stage. It is obviously very welcome that there is increasing investor interest, and actually the investor interest has continued to increase in this area.

I have one very quick follow-up on a parallel issue. Are we going to ensure that, unlike the offshore wind farms, when we build these small modular reactors, a very high percentage of the content is UK-produced?

That is obviously a very important issue, and it is something that will be very important for us to consider. The other thing I would say, though, is that we need to conclude the procurement in an appropriate way through the technology selection process.

The French don’t do it, do they? When the French build their reactors, they do not come and say, “Are there any British companies that want to join in with this?” They just do it with French companies. Can we not create some British jobs through this?

I will just remark that it is a little bit frustrating, when we were the first and leaders in the world in civil nuclear power generation, that we find others are leapfrogging us on this new technological innovation. I hope we can speed it up and catch up.

The way that energy bills, and electricity bills, are made up in the future is going to change. That is because of the changes in the sort of generation that we have talked about, particularly the increasing use of renewable and nuclear generation, which have a very low marginal cost of generation—once they are built, it does not cost much at all, if anything, to generate additional electricity. That means that we expect the underlying wholesale price of electricity to come down quite significantly by 2030. But in order to get those projects built, there will be some increase in the policy costs, through the contracts for difference or whatever, that are used to support those investments. The work the National Energy System Operator did for us in relation to the clean power action plan showed that to 2030 there was scope in that world for bills to be coming down. The overall effect could be neutral or positive for consumers, but there will be a change in the composition of bills, as we move more towards those sorts of generation technologies that require higher up-front investment to build the asset but, once they are built, generate at a very low cost.

If you look at the analysis that the National Energy System Operator did of the position in 2030, they show that trend. They show that the wholesale price will make up a smaller proportion of bills, and that will to some extent be balanced by the increased support costs. That is exactly part of what we have talked about: decoupling people’s electricity bills from fossil fuel prices makes them more stable and less exposed to those international risks. I should caveat that what is going to happen in any particular year until then is very dependent on gas prices. What is going to happen next year and the year after will be very determined by what happens in international gas markets. What we are doing over time is moving away from that exposure.

You announced in December a change in the way that Ofgem is going to operate, Mr Pocklington. We are promised “stronger protections and improved customer service”. Can you expand a little on what differences consumers can expect to see?

We have launched a review of Ofgem—we launched that in December, as you say—and a call for evidence, which closes at the end of this month. We are seeking evidence on the kind of regulator Ofgem needs to be to meet the future challenges that we have been talking about today with the energy systems and to protect consumers. We want to make sure that Ofgem is fit for the future in a world of a more flexible energy system—one that involves EVs, heat pumps and other forms that we have talked about today, such as heat networks. We are deliberately not closing off options at this stage. We want to look at Ofgem’s mandate, duties, scope and remit, and whether its powers are strong enough to protect consumers and also support economic growth. We are very keen, through this call for evidence, to seek views and ideas from a wide range of stakeholders.

Permanent secretary, the NAO kindly produced for us today your own Department’s figures on international comparisons of energy prices. The figures from April to September 2024 show that out of 25 countries, we have the most expensive domestic electricity prices and the most expensive industrial electricity prices. That means that consumers in this country are paying more than those in other countries, and that our companies are not as competitive as those in other countries around the world. This is not a very satisfactory situation, is it?

It is obviously a serious matter for the Department. What I would say on the evidence, which I am sure you have, is that it is correct that our electricity prices are high compared with comparator countries, but our gas prices are—

We are on the average on gas.

Well, we are around the median for the IEA comparisons; we are among the lowest in the 14 EU countries that we compare with for domestic customers. For industrial customers, we are around the median. That partly comes back to the questions around rebalancing that we spoke about earlier. Other countries adopt different approaches, but our policy costs are predominantly on the electricity system rather than the gas system as well. Unfortunately, there are very complex underlying causes over several decades as to why energy prices are where they are in comparator countries. You talked about the role of nuclear power. France benefits from a nuclear fleet that has now been essentially fully depreciated—the financing costs have been resolved—so that assists energy prices in France. Scandinavia has welcome benefit from its geology and the abundant hydropower that can result. There are quite complex factors that exist over long periods that ultimately drive energy prices, but the importance of creating a system that can lead to lower prices and lower bills is obviously at the heart of what the Department is doing.

Of course. Far be it from me to wish to debate this with such an expert, but actually I do have domestic IEA comparison on gas, and I think it shows us to be on the median—right in the middle, rather than at the bottom, which I think is what you said.

I said the median for the IEA comparison and among the lowest for the EU 14.

Right, okay. Well, obviously, the international comparison is what we want. In this move to clean energy, part of the thrust is to move away from gas towards electricity. If our electricity prices are going to remain high, that is going to put consumers under even more pressure, is it not?

Part of the answer—I come back to this—is around rebalancing. Ultimately, though, of course, electrification will be an important element. In terms of domestic customers, the key question is, what is going to be the future of domestic heating? Electrification will play a key role. There is also the question, though, that this Committee has raised before: what will be the role of hydrogen in domestic—apologies, this is such a complicated area. What we need to do as a Department is—

Hydrogen is still some way off for domestic boilers.

We need to reach a strategic view around domestic heating, and what we have said is that we will undertake that process and reach that decision during the course of 2025.

Sorry, you are generating more questions each sentence.

Apologies—that is probably a mistake of mine.

No, no; you have raised an important point. One of your Department’s key policies is to try to persuade people to move away from either gas or oil-fired boilers to ground source and air source heat pumps. In that process, of course, you are using more electricity and less gas. Again, if you are driving people from gas to electricity, it is all the time exacerbating the problem.

That is why we need to make progress with the clean power mission. That is why we need to move to a world of low-carbon renewable domestic generation that will be based heavily on renewables but will include other sources as well.

We are going to have to call it a day, because we are about to lose our quorum.

Can I just give you an answer to a question I was asked earlier, to save a letter?

Of course—very quickly.

Traditional prepayment meters that benefited from the EBS scheme: 11.8 million vouchers; 1.96 million traditional PPMs in Great Britain. So 1.9 million households, effectively.

Congratulations to whoever gave you that inspiration. They did very well to find that in the time available. I can see some laughter going on behind you. Congratulations to you, permanent secretary, your team and all your support staff. We have covered a lot of ground today, and we will carefully think about it and produce a Report in due course with recommendations. Thank you all very much indeed.