As Britain jumps out of the frying pan and into the freezer, one unfairly overlooked development is the Business Secretary Jacob Rees-Mogg’s rapid ascension: having emerged as a Victorian cosplay act a few years ago, he’s on the cusp of assuming incredible control over the UK energy sector.
We love a good headline at Alphaville, pun or no pun, so couldn’t help being intrigued by this on the Guardian website yesterday: “Rees-Mogg accused of grabbing absolute power over UK energy industry”.
The controversy is over the Energy Prices Bill, which effectively provides the statutory underpinning for Energy Price Guarantee, and Energy Bill Relief Scheme. The Graun reports:
The government last week introduced the energy prices bill to parliament to formalise the energy price guarantee, Liz Truss’s flagship policy to reduce household bills by limiting the cost of electricity and gas for two years.
However, the Guardian understands that energy suppliers have raised concerns with the business department that the legislation contains proposals for the government to be able to effectively over-rule Ofgem, the sector’s independent regulator.
Fast forward about 24 hours, and Truss’s flagship policy has been majorly kneecapped by new leader-apparent Jeremy Hunt (who somehow has managed to seize the captain’s wheel despite having even less of a mandate than her). Per the FT:
In another dramatic move, Hunt announced that an “energy price guarantee” to households and business would last only until April, and thereafter it would be more targeted.
The scheme, which will cost £60bn for the first six months, would be redrawn so that it would cost “significantly less”, while retaining help for those most in need. A Treasury review will be launched into the scheme.
This is a huge deal, removing a staggeringly large open-ended spending commitment and replacing it with a cliff edge for households, who will face the full-blown scale of price increases from next Spring. Here’s the Resolution Foundation think-tank:
This could save the Treasury up to £40 billion next year (2023-24), at the price of allowing the Ofgem energy price cap to rise to £4,000 next April (on the basis of current wholesale gas prices).
Despite this fiscal kneecapping, the government is still rushing ahead with getting the bill passed today. Not everyone’s happy. Here’s the head of the committee that scrutinises Business, Energy and Industrial Strategy)
Importantly, because the Bill is being rushed through as emergency legislation, there has been little parliamentary oversight or engagement with stakeholders. That means it’s more important than usual that Ministers don’t given themselves unchecked powers.
— Darren Jones MP (@darrenpjones) October 16, 2022
Those “unchecked power” fears look pretty legitimate. Investec’s Martin Young has checked out the bill, and picked out some particularly egregious bits of wording:
From a quick read of the Bill, a few things caught our eye, including the seeming conferral of wide-ranging powers to the secretary of state, and a pathway to extend the periods of price support.
— 13.2: “The secretary of state may take such other steps as the secretary of state considers appropriate in response to the energy crisis.” & 13.3.b: “acquiring, making available or otherwise enabling access to energy or relevant infrastructure…”
— 14.2: “Expenditure to be incurred by the secretary of state… in connection with any one project, must not exceed £100 million…” & 14.3: “But subsection (2) does not apply if the secretary of state is satisfied that the exercise of the power is urgent…”
— 16.2: The windfall tax, that isn’t a windfall tax according to the government, can be directed to suppliers “…for paying to electricity suppliers in connection with reducing the cost to customers of electricity”, or to government “…for meeting expenditure incurred or to be incurred by the secretary of state in reducing the cost to customers of electricity.”
— 16.4: It would appear that, for technologies caught by the windfall tax, all generation output in period will be caught: “…periodic payment to be calculated by reference to the quantity of electricity generated during the period in question by the relevant generating station with which the electricity generator is concerned.”
— 21.2: “The secretary of state may modify (a) an energy licence (including any conditions, standard or otherwise, of a licence);”
— Sch6: In relation to the domestic electricity and gas price schemes, there is provision for possible extension, as there is for non-domestic customers. Support for the latter is initially for six months, but “…may provide for the reduction of charge for electricity supply that takes place during up to four such periods”, with similar provisions for gas supply.
Ruth Fox, head of the Hansard Society — which independently scrutinises Parliament’s operations — has also flagged some potential issues (the full thread is worth reading, but here are some highlights):
Our @HansardSociety focus is on the delegated powers in the Bill. Ministers (the Secretary of State (SoS)) are asking @UKParliament to confer some very broad powers on them… with potentially huge spending implications… over which MPs will have little influence and control 2/
— Ruth Fox (@RuthFox01) October 17, 2022
This is a big power. What does ‘considers appropriate’ mean? How far might it extend? The powers of the SoS are then widened still further by c13(2) where the Minister may also ‘take such other steps’ as he ‘considers appropriate in response to the energy crisis’. 6/
— Ruth Fox (@RuthFox01) October 17, 2022
MPs must decide whether it’s appropriate for Ministers to have the power to expropriate infrastructure (eg property from energy companies?) using powers in this Bill for at least 3.5 years after Royal Assent (under Schedule 6), subject at best to 90 mins debate on the regs. 10/
— Ruth Fox (@RuthFox01) October 17, 2022
Emergency legislation is often bad, and it’s entirely possible that none of these powers will be used before this bill is ditched. But they’re still pretty remarkable — “quite extraordinary” in the words of a former Number 10 legislative director:
The Energy Prices bill, going through all Commons stages today, was written in haste, and ministers will surely have an eye to the issues regarding the powers in the bill, nonetheless it is quite extraordinary. https://t.co/GonosoCc2X
— Nikki da Costa (@nmdacosta) October 17, 2022
It’s pretty ironic that Rees-Mogg of all people should suddenly be on the cusp of assuming state powers of such a godlike degree, but that’s the world we find ourselves in.
In anticipation of the apotheosis of our Eton-grown god of heat and light, we’re raiding the Alphaville library for an appropriate moniker. Reelios? Jacob Ra-Mogg? Reeszilōpōchtli?