Offshore Petroleum Licensing Bill

(Limited Text - Ministerial Extracts only)

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2nd reading
Monday 22nd January 2024

(4 months, 3 weeks ago)

Commons Chamber
Offshore Petroleum Licensing Bill 2023-24 View all Offshore Petroleum Licensing Bill 2023-24 Debates Read Hansard Text Watch Debate
Claire Coutinho Portrait The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
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I beg to move, That the Bill be now read a Second time.

Britain is the first major economy to halve its emissions. That is an incredible achievement. How have we done it? We have increased our renewable electricity capacity fivefold since 2010—nearly half our electricity comes from renewables now, up from 7% in 2010—and just two weeks ago, I set out the largest nuclear expansion for 70 years.

We continue to have some of the most ambitious climate change targets of any major world economy. Here in the UK, we are committed to reducing emissions by at least 68% by 2030 from 1990 levels. Where is everybody else? The EU is committed to 55%, having recently rejected a move to 57%, and the United States is at just 40%. It is clear that, when it comes to climate change, we can be proud of our record and the work that we will do.

We have managed to achieve that while acting to help families with their energy bills. We stepped in to help families struggling with energy prices after Putin’s invasion of Ukraine, and our total support for the cost of living stands at £104 billion—a package that is among the most generous in Europe. Last year, we passed the landmark Energy Act 2023, which lays the foundation for a cleaner and more secure energy system. Our changes to competition, to managing energy consumption and to incentivising investment in new technology will mean billions in savings for consumers as we work towards net zero. We have overseen a huge increase in the number of energy-efficient homes from 14% in 2010 to almost half today, and we are investing more over the next Parliament to continue that important work.

Sarah Champion Portrait Sarah Champion (Rotherham) (Lab)
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The Secretary of State paints a very rosy picture, particularly on renewables, so why has her own energy tsar resigned in protest?

Claire Coutinho Portrait Claire Coutinho
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We do not actually have an energy tsar, but we have an energy Secretary of State. I respect the former Member for Kingswood and wish him well in his next job, but if we care about reducing emissions, the question that everybody in this Chamber needs to answer is, “Why would you import fuel with higher emissions from abroad?”

We are investing in more renewable energy, we are starting a nuclear revival, and we will support new technologies, such as hydrogen, carbon capture and fusion. This is our plan to have a balanced energy policy. However, we need to ensure that the transition works for the British public and the British economy. Our plans cannot be based on ideology; they must be based on common sense.

Even the Climate Change Committee’s own data shows that when we reach net zero in 2050, we will still be using oil and gas for a significant portion of our energy. That is because it is not absolute zero; it is net zero. In other words, while our use of oil and gas will diminish rapidly, we will still need both for decades to come. Our Bill will improve our energy security and that of Europe. In the past two years, Europe has had to wean itself off Russian oil and gas. We have responded by tripling gas exports to the continent, and we were a net exporter of electricity to Europe in 2022 for the first time in more than a decade. We do not live in a world in which we can simply turn off oil and gas.

Clive Efford Portrait Clive Efford (Eltham) (Lab)
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Is the right hon. Lady saying that the only licences the Government intend to issue are for gas and oil destined for the British market?

Claire Coutinho Portrait Claire Coutinho
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I am glad that the hon. Gentleman asks that question, because the Labour party has been spouting an awful lot of nonsense when it comes to this area. In the UK, we are blessed with the geological gift that is the North sea—it is an incredible national asset. Virtually all the gas produced there goes straight into the UK gas transmission network, and it is equivalent to about 50% of our overall gas needs. When it comes to oil, 90% of what is refined abroad is refined in Europe. We are a net importer overall.

The question that the hon. Gentleman should answer is this: if Europe did not get that oil from the UK, where would he like Europe to get it from—from Russia, or from further afield? That question is at the heart of the Bill. We know that we are going to need oil and gas—where do we want it to come from? Only an ideologue would argue that we are better off importing dirtier fuels from abroad than using what we can produce at home. However, it is not just energy security that dictates that we should use our own resources; the economic case also shows that introducing annual licensing is the right thing to do.

Sammy Wilson Portrait Sammy Wilson (East Antrim) (DUP)
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Does the right hon. Lady accept that, despite the way in which some Members of this House have tried to rubbish that idea and argue that having our own oil and gas does not mean any energy security for the UK, 88% of the gas that we extract at present stays in the UK? Would they prefer to import that?

Claire Coutinho Portrait Claire Coutinho
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I thank the right hon. Gentleman for making that point. Not only is it better for energy security, but gas that we bring in from abroad in the form of liquefied natural gas has emissions four times higher, so if Members care about the environment, they should back this Bill.

Domestic oil and gas production adds about £16 billion to the UK economy annually and brings in tens of billions of pounds in tax revenue. To give an example of how that has helped support families with the cost of living, we raised £9 billion in tax revenue last year from the oil and gas sector. That is money that we can use to support families, as we did last winter, paying half the average family’s energy bill, which amounted to roughly £1,500 per household. If we had no oil and gas sector, £9 billion more would have fallen on taxpayers’ shoulders. Why should we concede that tax revenue to other countries? What possible benefit could the British public feel from billions of pounds in tax revenue that could be raised here being sent abroad, all to import fuel with higher emissions?

I now turn to perhaps the most important reason to back this Bill: the workers. There are 200,000 people supported by the sector, in communities such as those in Aberdeen, Grimsby and the north-east of England, and including 93,000 people in Scotland, over 10,000 people in Yorkshire and the Humber, and 14,000 people in the north-west.

Caroline Lucas Portrait Caroline Lucas (Brighton, Pavilion) (Green)
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The right hon. Lady knows as well as I do that most of the gas we import comes from Norway, where gas production is half as polluting as it is in the UK, so let us not have all this nonsense about imports being so much higher in carbon intensity, because those from Norway certainly are not. Does she accept the fact that most of the emissions are produced when we consume the oil and gas, and therefore will she start looking at scope 3 emissions and not just the production emissions, which are not the greatest emissions in question?

Claire Coutinho Portrait Claire Coutinho
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I thank the hon. Lady for her question, but I think it fundamentally misunderstands the energy market. When we cannot get Norwegian gas and when we have made the most of all of our gas, what is the marginal gas that we use? It is LNG, which produces emissions four times higher than the gas we can produce here. If we produce less UK gas, we will need more LNG.

Coming back to what is a really critical part of the Bill—the workers—a recent report from Robert Gordon University found that a faster decline in our oil and gas sector, which the Opposition are proposing, could halve the workforce by 2030, leading to a significant loss of skills for the future energy sector. Those are the workers whose skills we will need for our future energy production. The same report found that over 90% of the UK’s oil and gas workforce have skills that are transferable to the offshore renewables sector. However, if we do not manage that transition correctly—everybody in the Chamber today agrees that we need to transition—we will lose those very important workers and their skills. It is the same people who are working on oil and gas rigs today who we will need on the offshore wind farms of tomorrow: our subsea installation engineers who lay cables, our technicians who remotely operate subsea vehicles, our divers, our project managers, and our engineering specialists servicing our offshore rigs. Those are all essential oil and gas jobs that we know will be critical in the roll-out of our low-carbon technologies. If we do not protect our world-leading specialists, we will see communities decimated, and ultimately a skills exodus that would put at risk the very transition that we are working so hard to achieve.

Alexander Stafford Portrait Alexander Stafford (Rother Valley) (Con)
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My right hon. Friend is making a very powerful point about both energy security and getting those jobs—those British jobs. Recently, I visited the Falkland Islands with a cross-party delegation, and when we met the Falkland Islands Government, they said that they are desperate to unlock the Sea Lion oilfield and to get British workers to operate that field—obviously, the Falkland Islands is a British overseas territory—yet they are being stymied by the UK Treasury, which will not underwrite it. Does my right hon. Friend agree that the next thing we should do is back overseas territories by developing their oilfields, so that we can have good British overseas territories oil and gas in the UK and British jobs in the overseas territories, and support our one big happy Commonwealth and overseas territories family?

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Claire Coutinho Portrait Claire Coutinho
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My hon. Friend makes an interesting point, and I would be very happy to meet him to discuss it further.

Let me turn to investment in the sector. I think we agree across all parties in the House that we want to be a world leader in clean energy technologies. Here in Britain, we have many competitive advantages, and we want to exploit all of them to have a brighter energy and economic future. Right now, the oil and gas sector is investing in hydrogen, carbon capture and offshore wind. A well-managed transition helps ensure that as we get more investment and grow these sectors people can transition alongside in an orderly and organic way. To shut down the oil and gas sector too soon would not only risk that investment, make it harder to do the transition and see those sectors grow more slowly, but risk people’s livelihoods.

The Offshore Petroleum Licensing Bill will give the industry the certainty it needs to invest in this important sector. If we need oil and gas in the decades to come, it should come from Britain where it can. Using the resources on our doorstep to benefit Britain is simple common sense. This new legislation will require the North Sea Transition Authority to run an annual process for new exploration and production licences on the UK continental shelf, subject to key tests being met: first, that the UK is projected to remain a net importer of both oil and gas; and secondly, that carbon emissions associated with UK gas are lower than for imported liquefied natural gas. These tests are in place to provide assurance that proceeding with annual licensing remains the right thing to do.

This Bill will provide the industry with certainty on the future of licensing rounds, increasing investor and industry confidence. It will increase our energy security, protect 200,000 jobs, secure tens of billions in tax revenue and help us reach net zero. Members should not just take my word for it; voices across industry recognise the need for new licences for net zero and for our energy security. In fact, Stuart Payne, the chief executive of the North Sea Transition Authority, recently wrote that

“producing as much of the oil and gas we need as possible domestically is the right thing to do, for security and the economy.”

Offshore Energies UK has said:

“The UK needs the churn of new licences to manage production decline”.

National Gas has said that by backing gas today

“we can create jobs, secure energy independence, deliver net zero, and keep costs down for households and businesses.”

The general secretary of the GMB has said that not proceeding with new licensing risks

“leaving the UK even more dependent on energy imports to heat homes and power industry in future. That’s bad for our national security and prosperity.”

I have no doubt that the Opposition will whip their MPs against the Bill. They want to shut down new oil and gas licences, and they have been very clear about that. I suspect there are many in the Labour party who understand what turning off the taps would mean for British workers, and they will vote against this Bill with a heavy heart. They know that the right hon. Member for Doncaster North (Edward Miliband) has got this wrong. Is it not just common sense that, if we need oil and gas, it should come from UK waters rather than from foreign and often unreliable regimes abroad? Is it not better to produce our own gas instead of shipping in liquefied natural gas that has four times the production emissions of our own? Is it not right that the billions of pounds in tax that we raise from this sector stays here rather than being sent abroad? Is it not the position of an ideologue to say, “We will not support 200,000 British workers, but we are happy for those jobs to go to Russia or further abroad”?

The position of the Labour party and the SNP is not right for the environment, not right for the economy and not right for the energy security of this country. As the head of the GMB warned this weekend, it would be “exporting jobs” for the sake of “importing virtue”. It would mean thousands of jobs lost, communities decimated, tax revenue forgone, and all so that the right hon. Gentleman can appease his friends in Just Stop Oil. They are putting the interests of extreme climate ideologues over those of ordinary workers.

What of Labour’s wider energy policy? The truth is that, when it comes to this critical policy area, its policies are as clear as mud. We know that it hinges on borrowing £28 billion, which would mean thousands of pounds in extra taxes for every family. While we are cutting taxes, the Opposition would see them soar, which is not what the people of this country need. The right hon. Gentleman should level with the British public: what taxes would he raise to pay for this extra £28 billion of borrowing? When he was shadow Business Secretary, he said that £28 billion is the “scale of investment required”. The Opposition have said that they need to spend £28 billion to meet their 2030 decarbonisation ambition. So why will the right hon. Gentleman not set out which taxes he would raise? How is he going to squeeze more money out of hard-working families to achieve his 2030 pipedream? If he really thinks £28 billion in extra spending is essential, he should have the courage to explain how much worse off taxpayers will be.

While the Labour party struggled to back its own plans, over the past few months we have secured £30 billion-worth of private investment in clean energy. That is the difference between them and us: we know private investment is key to transition, but they would rather taxpayers shoulder the costs alone through more borrowing and higher taxes.

That is the choice the House must make today: do we support the oil and gas sector and the private investment that comes with it or do we leave taxpayers to foot the bill? We cannot afford to lose the skills, the revenue or the investment the sector provides; to do so would put net zero in jeopardy. We must deliver this transition in a proportionate, pragmatic and realistic way, ensuring that we make the most of the energy we produce right here in the UK.

That is common sense, and that is what the legislation represents. With this Bill we will protect 200,000 jobs, strengthen our energy security, secure tens of billions of pounds in tax revenue, ease the transition to renewable energy, and supply ourselves with gas that has only a quarter of the production emissions of LNG imports. Or we could follow the approach of the Opposition and decimate communities that rely on the oil and gas sector, rack up borrowing by £28 billion a year, send taxes soaring to pay for it and send British jobs and tax revenue abroad, all to import fuel with higher emissions. The choice is very clear: we are on the side of common sense, not ideology, and I commend this Bill to the House.

Edward Miliband Portrait Edward Miliband (Doncaster North) (Lab)
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I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House, while affirming the need for urgent action to tackle the UK’s energy insecurity, the cost of living crisis, and the climate crisis, and for a managed, fair and prosperous transition for workers and communities, declines to give a Second Reading to the Offshore Petroleum Licensing Bill because mandating annual oil and gas licensing rounds will not reduce energy costs for households and businesses as the Secretary of State for Energy Security and Net Zero has stated, will not enhance energy security, offers no plan for the future of the UK’s offshore energy communities, will ensure the UK remains at the mercy of petrostates and dictators who control fossil fuel markets, is entirely incompatible with the UK’s international climate change commitments and is a totally unnecessary piece of legislation which will do nothing to serve the UK’s national interest.”

I want first to express my deep condolences to the families of the two people killed by storm Isha and my sympathies to all those facing power cuts and disruption from the storm.

The proposed legislation we are considering today will not cut bills or give us energy security, drives a coach and horses through our climate commitments and learns nothing from the worst cost of living crisis in memory, which the British people are still going through—a cost of living crisis caused by our dependence on fossil fuels. Since the launch of the Bill two months ago, the case for it has disintegrated on contact with reality. Let me remind the House of the series of unfortunate events that has befallen the Bill since its publication. On day one—launch day—the Energy Secretary went on TV with the big reveal, telling the public the Bill would not cut bills. Next we discovered from confidential minutes of the North Sea Transition Authority that it thought the Bill was unnecessary and compromised its independence. [Interruption.] The Minister for Energy Security and Net Zero, the right hon. Member for Beverley and Holderness (Graham Stuart) says from a sedentary position that that is not the case. He is wrong and I will read him the minutes:

“the Board expressed a unanimous view that such a proposal was not necessary for the NSTA…The Board noted that the proposal would significantly challenge one of the tenets of independence for the NSTA”.

Claire Coutinho Portrait Claire Coutinho
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As the right hon. Gentleman is enjoyably quoting the NSTA minutes not its on-the-record comments, will he also support its position that we should maximise all of the oil and gas production in the North sea?

Edward Miliband Portrait Edward Miliband
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That is not the NSTA position, as I have discussed with it.

Next, Lord Browne, the former CEO of BP, attacked the Bill and said it was

“not going to not make any difference”

to energy security. Then Britain’s most respected climate expert, Lord Stern, pilloried it as “a deeply damaging mistake”. Then on the eve of COP—the conference of the parties—the former Prime Minister the right hon. Member for Maidenhead (Mrs May), who signed net zero into law, said she disagreed with the Bill; to my knowledge, she does not support Just Stop Oil.

Edward Miliband Portrait Edward Miliband
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Of course I don’t.

Then the former COP president—[Interruption.] Let’s be serious. Then the former COP president the right hon. Member for Reading West (Sir Alok Sharma), a man respected around the world who we were lucky to have playing that role at COP26, said the Bill was

“smoke and mirrors…not being serious…the opposite of what we agreed to do internationally”.

Finally, their own net zero tsar—the man they trusted to guide them on questions of energy—is so disgusted by the Bill that he is not in the Chamber today. In fact, he is so ashamed that he has fled to the Chiltern Hundreds. That is certainly getting a long way away from the right hon. Lady the Secretary of State and her policies. It shows how far people will go. It is not so much the oil and gas extraction Bill but the Conservative MP extraction Bill that she is putting forward today. The former net zero tsar said:

“I can no longer condone nor continue to support a government that is committed to a course of action that I know is wrong and will cause future harm.”

We should take all these voices—Lord Browne, the former Prime Minister, the former net zero tsar and the former COP President—[Interruption.] I will come to all the arguments that the Secretary of State made, if she will give me a minute, as I develop my argument. The bigger point is that we face massive challenges as a country, but it is not the scale of our problems that is so apparent today, but the smallness of the Government’s response. We have a risible two-clause Bill that she knows will not make any difference to our energy security, because everyone who knows anything about this subject says so.

As the Bill has fallen apart, the Government have thrashed around to try to find a rational justification, and they have made one futile argument after another. Let us take each in turn. The first argument was that the Bill will cut prices. In case the House is thinking, “Did they really make that claim?”, the claim was made by the Prime Minister in a tweet. At 9.57 am on launch day, he said that the Bill will

“help reduce energy bills as we’re less exposed”—

Claire Coutinho Portrait Claire Coutinho
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indicated assent.

Edward Miliband Portrait Edward Miliband
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The Secretary of State nods, but I put on record my thanks to her, because she has been an internal one-woman rebuttal unit against the Prime Minister. She went on breakfast TV—before the tweet, so we might call it a prebuttal—and said that the Bill

“wouldn’t necessarily bring energy bills down, that’s not what we’re saying.”

She is right, because oil and gas is traded on international markets.

Claire Coutinho Portrait Claire Coutinho
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If the right hon. Gentleman had read the full quote, I said that indirectly, through support to the renewables sector, the Bill brings down bills. The fact that we can raise tax to help people with the cost of living also brings down bills. If he would like to bring down bills for people in this country, he should back this Bill.

Edward Miliband Portrait Edward Miliband
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That is great, because the Secretary of State anticipates my rebuttal of the second bad argument for this Bill, which is the argument she has just gone on to make. She said that the tax revenues we get from fossil fuels justify this policy, and we have heard it again today. If anything, that is an even more complete load of nonsense than the Prime Minister’s argument, because these are the facts: it is our reliance on fossil fuels that has caused rocketing energy bills. That meant that the Government were forced to step in to provide support for households and businesses [Interruption.] Ministers should just listen.

The cost to Government of the support with bills has far outweighed any tax revenues. According to the Office for Budget Responsibility, the windfall tax receipts from oil and gas companies raised £25 billion, and the cost of Government support is more than £70 billion or, the Government say, £104 billion. The idea that our dependence on fossil fuels can be justified by the tax revenues we get, when they have spent £100 billion trying to help people, is obviously nonsense.

There is a third bad argument, and again we heard it today, which is that somehow this Bill strengthens our energy security. Again, it is important to have a few facts in this debate. Here are the facts: the UK’s North sea gas production is set to fall with new licences by 95% by 2050, or without new licences by 97%. That is the equivalent of four days of our current gas demand. All this absolute codswallop about the Bill guaranteeing our energy security and somehow guaranteeing 200,000 jobs is risible nonsense.

Here is the thing. We have had a real revelation in this debate—the Government have admitted the truth—which is that the vast majority of oil is not used in this country; it is exported elsewhere, and 70% of our remaining reserves are oil, not gas. The idea that this makes any difference to our energy security is nonsense—these are private companies selling on the private market—and the Government have absolutely no response.

The fourth bad argument is that the Bill will somehow protect jobs. That is wrong. We owe it to oil and gas communities to protect them in the transition, but given the Conservatives’ record in constituencies such as mine, we will not take lectures from them on just transitions. We should admit a truth: the fossil fuel market is not just deeply unstable for consumers, as we have seen over the last two years, but deeply unstable for workers. It is a total illusion that new licences will somehow guarantee jobs for North sea workers. In the last 10 years, the number of people working in oil and gas has more than halved. The International Energy Agency predicts a peak in fossil fuel demand by 2030. That is why its head said:

“New large-scale fossil fuel projects not only carry major climate risks, but also business and financial risks for the companies and their investors.”

That applies to workers, too.

The right way to have a managed transition in the North sea is to carry on using existing fields—a Labour Government will do that—and to have a plan for North sea workers by driving forward with jobs in the industries of the future: offshore wind, carbon capture and hydrogen. But that is not what the Government have done. We had a graphic example of that last week. The world’s largest floating wind prototype sits off Peterhead—that is a good thing—but it needed maintenance, so where did the maintenance happen? Not in Scotland, and not anywhere in the UK; it has been towed back to Norway. That is the scale of their industrial policy failure; we know it very well.

The Government have not generated the jobs that British workers deserve, and their fossil fuel policy and net zero roll-back has sent a terrible message to investors around the world. This is what Amanda Blanc, the chief executive officer of Aviva and the head of its UK transition plan taskforce, says about oil and gas and the Government’s position:

“This puts at clear risk the jobs, growth and the additional investment the UK requires to become more climate-ready.”

It is Britain losing the global race in clean energy jobs that will destroy the future of oil and gas communities. The Government have no proper plan for those workers; Labour does have a proper plan.

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Alok Sharma Portrait Sir Alok Sharma (Reading West) (Con)
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I refer the House to my entry in the Register of Members’ Financial Interests.

I agree with the Secretary of State, who I hold in high regard, that the United Kingdom has been a leader in climate action internationally. We have cut our emissions in half over the past 30 years, faster than any other major economy in recent years. We have set ambitious domestic emission reduction targets, in particular ahead of COP26. Through our COP26 presidency, we managed to get over 90% of the global economy signed up to net zero. Just about every G20 nation signed up to a net zero commitment. We led on climate action domestically and we translated that into leading the world on climate action.

Just a few weeks ago at COP28, the UK, alongside other nations, signed up to transition away from fossil fuels. On his return from COP28, the Minister for Energy Security and Net Zero, my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) welcomed that global agreement from the Dispatch Box. He spoke about the importance of listening to the voices of the most climate-vulnerable island nations, who, as we know, wanted the world to agree to stronger language to phase out fossil fuels. Indeed, my right hon. Friend himself tweeted at COP28:

“There must be a phase-out of unabated fossil fuels to meet our climate goals.”

I commend the work that he and the whole UK team did in Dubai.

But today we have a Bill before the House, the sole purpose of which is to double-down on granting more oil and gas production licences. I do not believe, and it pains me to say this, that the Bill will advance that commitment to transition away from fossil fuels. I also do not believe that those climate-vulnerable nations my right hon. Friend referred to will think the Bill is consistent with the pledge that we, along with every other nation, made in Dubai.

As for the substance of the Bill, I think that, as currently drafted—and it pains me to say this—it is something of a distraction. I do not think it is necessary. The North Sea Transition Authority can already grant licences annually, or, indeed, when it considers it necessary. It has been doing that regularly for the past few years. The Department’s own explanatory notes make that clear by stating:

“ The NSTA will remain free to grant licences outside this new annual duty in the usual way, whether or not the new statutory tests are met.”

As for those two statutory tests, they seem to override the already non-binding climate compatibility checkpoint, and I have to say that I think they have been designed in such a way that the computer will always say yes to new oil and gas licences. Overall, the ability of the NSTA to grant new licences will not change materially as a result of the Bill.

Sadly, however—this is my opinion, and others will have theirs—what the Bill does do is reinforce the unfortunate perception of the UK’s rowing back from climate action, as indeed we saw last autumn with the chopping and changing of some policies, and that does make our international partners question the seriousness with which we take our international commitments. I said “it pains me to say this” because I know that the Government have been coming forward, under this Secretary of State, with commitments to try to tackle climate change and deliver on a clean energy transition.

We have heard that the Bill is about improving domestic energy security, but I think we all understand that the oil and gas extracted from the North sea is owned by private enterprises and the Government do not get to control to whom it is sold. Moreover, I think it is acknowledged that the Bill would not necessarily lower domestic energy bills in the UK, given that the price of oil and gas as a commodity is set internationally. I think that the best way to enhance our energy security, and ultimately bring down bills, is for the Government to continue to deliver on their ambitious plans for expanding home-grown clean energy, to which I know the Secretary of State and her Ministers are absolutely committed. That means more wind power, more solar and more nuclear as part of a diversified clean energy mix, and I back the Secretary of State in the work that she and her team are doing in delivering that clean energy mix.

We have heard that the Bill will secure 200,000 jobs. Of course people’s jobs and livelihoods matter, and we must ensure that we secure those jobs, but we must recognise that we are in the process of an energy transition. I support an orderly transition; for me, this is not about turning off the taps overnight on oil and gas. We must also acknowledge that more than 200,000 jobs, supported by the oil and gas industry, have been lost over the past decade, despite hundreds of new drilling licences being issued. We know that many of the skills used in the oil and gas sector are transferable to clean energy—to offshore wind and geothermal. If we want to truly turbocharge a clean energy transition, we need to help, support and retrain the workers who are making the transition, over time, from the fossil fuel sector into the many tens of thousands of jobs that are being created in clean energy as a result of the work that the Secretary of State and her team are doing.

Matt Western Portrait Matt Western (Warwick and Leamington) (Lab)
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The right hon. Gentleman is making some powerful points, and I have huge respect for him when it comes to this topic. Does he agree that we are in real danger of turning off the interest and the investment appetite among many other nations, such as Korea and Japan, which see the UK as having vast expertise in offshore wind development sites, and that legislation of this kind will undermine that market?

Alok Sharma Portrait Sir Alok Sharma
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There was some commentary expressing concern about investment appetite following some of the statements that were made in the autumn, but I think we must acknowledge that, over the last few months, the Government have managed to secure billions of pounds of extra investment committed within clean energy to the UK.

Turning to the carbon intensity test for granting new licences, I have to say again that I am not sure that the Government recognise the whole picture of where we get our imports from. The majority of the gas that the UK imports comes via a pipeline from Norway. It is not imported LNG. The carbon intensity of Norwegian gas production is around half that of UK domestic gas. If that is the test that the Government want to apply in deciding whether to issue new licences, I think they should take into account the average carbon intensity of all imported gas, not just LNG. Given that around 70% of remaining North sea reserves are oil, perhaps the tests should also include the carbon intensity of UK-produced oil, which is higher than the global average.

Lloyd Russell-Moyle Portrait Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
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I put that very point to the Secretary of State in our Select Committee, and her response was that because almost all our oil is exported out of the UK for processing, we do not know what its full carbon intensity is. Is that not a great example of why our oil is not used in Britain and why this will not help British people?

Alok Sharma Portrait Sir Alok Sharma
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The Secretary of State has set out her position very clearly and eloquently. I am trying to set out my position on the Bill.

The Government said that the independent Climate Change Committee’s own data showed that we were going to need new oil and gas in the decade ahead, but I respectfully say that that is not the same as saying that new licences should be granted. The weekend before this Bill was originally due to have its Second Reading, the interim chair of the committee put out a tweet to reconfirm the CCC’s position. He wrote that

“@theCCCuk evidence is that continued expansion of new oil and gas reserves is inconsistent with our climate commitments, especially more so in light of the recent Global Stocktake COP agreement we just signed.”

For the reasons that I have outlined, I will not vote for this Bill today, but assuming that it proceeds beyond its Second Reading, I hope that it will be possible to work with like- minded colleagues—and indeed the Government, the Secretary of State and her Ministers—to amend and improve the tests that are required to be met before any new oil and gas production licences are granted in the future.

In conclusion, delivering on the UK’s clean energy transition matters on many levels: for jobs, for inward investment, for lower bills, for real energy security and of course for the environment. We see the impacts of the changing climate around us daily: 2023 was the hottest year on record globally, and in recent weeks many people have faced flooding again in our country, including in my own constituency. We really should not need any more wake-up calls to put aside the distractions and act with the urgency that the situation demands.

--- Later in debate ---
Barry Gardiner Portrait Barry Gardiner
- Hansard - - - Excerpts

I am well aware of that—of course I am—but the hon. Member will have heard the discussion that took place earlier about global leadership. He will know that other countries around the world are not declining at the required rate, and leadership is about taking a lead.

The logic of drilling for more when the world has already more than it can safely burn is that of the myopic salesman, not the visionary politician, or to use the Prime Minister’s words, it is the logic of the zealot. The Government’s actions are already making the UK a less attractive place for green investment. Three quarters of all North sea oil and gas operators currently invest nothing at all in UK renewables. The largest operator, Harbour Energy, has ruled out such clean investment altogether, yet last year the five oil super-majors—BP, Shell, Chevron, ExxonMobil and TotalEnergies—rewarded their investors with record payouts of more than £79 billion, so we know the money is there to do it.

Barry Gardiner Portrait Barry Gardiner
- Hansard - - - Excerpts

The Minister is asking whether I will give way. The right hon. Member has long confused the scoring of party political points with the ability to debate an issue to arrive at the truth and get decent policies out the other end. However, if he has changed the habit of a lifetime, I will happily give way to him.

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

I thank the hon. Gentleman. He mentioned a specific company, Harbour Energy, and it is absolutely investing in the Viking carbon capture centre and playing a positive role. That is true of the whole oil and gas supply chain in this country, which the hon. Gentleman, if he went to visit them, would find are working right across the energy sector. Weakening one part, as he would with no new licences, would damage the new clean emerging sectors, too.

Barry Gardiner Portrait Barry Gardiner
- Hansard - - - Excerpts

I recognise the work that Harbour Energy is doing and I also recognise the work that the Government have done in trying to attract more investment into green energy and renewables, and I welcome that work. I want us to have a cross-party consensus around getting to net zero. The trouble is that—and the Minister knows this to be true—he and many people on his side, including the Prime Minister, have tried to make this a wedge issue, a political issue to divide people. I think he really does need to step up to the plate. If he wants cross-party consensus, he has to try to build it, not score cheap political points.

--- Later in debate ---
Alan Whitehead Portrait Dr Alan Whitehead (Southampton, Test) (Lab)
- View Speech - Hansard - - - Excerpts

We have had an excellent and pointed debate this evening. Certainly, Opposition Members have together pointed out the deficiencies in the Bill, pointed out what a specious and potentially damaging Bill it is and, indeed, questioned why the Bill was brought to the House in the first place. All that is what I very much want to do.

My hon. Friend the Member for Rotherham (Sarah Champion) called this Bill “illogical and damaging” and pointed out that it could put marine protected areas at risk. My hon. Friend the Member for Llanelli (Dame Nia Griffith) pointed out that it makes us look ridiculous on the world stage. My hon. Friend the Member for Brent North (Barry Gardiner) pointed out that the Bill itself was based on a series of lies and, indeed, quoted the UN Secretary-General stating that “the truly dangerous radicals” are the countries that are increasing their oil and gas output.

My hon. Friend the Member for Coventry South (Zarah Sultana) pointed out strongly that this Bill, contrary to its claims, is not about energy security. My hon. Friend the Member for Warwick and Leamington (Matt Western), who reminded us of the real effects of climate change right now, pointed out that the future is largely electric and this Bill is a “great deception”. The hon. Member for Bath (Wera Hobhouse) called it stupid, unnecessary and dangerous—she did not mince her words very much. My hon. Friend the Member for Nottingham East (Nadia Whittome) laid many of the myths of the Bill to rest and questioned why the Government are pushing it in the first place. The hon. Member for Brighton, Pavilion (Caroline Lucas) pointed out the “political theatre” behind the Bill and why it is completely incompatible with our climate change commitments.

This really is a reprehensible Bill. It is a Bill based on a number of myths and, frankly, lies, which require people to believe that there are people around really saying that oil and gas is going to be stopped immediately and will not continue to play a substantial role, as it will in the energy economy up to 2050. No one is saying that oil and gas will not continue up to a period of time and no one is saying that the existing fields in the UK will not continue to produce and contribute their products in the future. There will be jobs in that continuing North sea oil operation.

However, this is a one-clause Bill with effectively two sections in it. The first section ostentatiously requires the Oil and Gas Authority to do what it is already doing; indeed, both the hon. Member for Angus (Dave Doogan) and the hon. Member for Brighton, Pavilion reminded us that the Oil and Gas Authority has been carrying out regular licensing rounds every 18 months since 2016. It is required to do so because it is bound by the maximum economic extraction requirement. All that is already in legislation and the Oil and Gas Authority is already doing it.

The second section sets out an entirely bogus climate test, which by definition cannot be failed. That is achieved by skewing the test conditions to test UK gas production emissions only against aggregate liquefied natural gas imports, which are overall likely to be dirtier in production than UK gas, and not against pipeline-delivered gas that, in the case of our main importer Norway, is half as dirty in production as gas in the UK.

There is no emissions test for oil, despite its constituting 70% of North sea fossil reserves—80% of which, as we have heard, is shipped and refined overseas. For oil there is a “net importer” test, which requires the OGA to issue licences if the demand for oil and gas products in the UK is greater than the production—when that has been the case in the North sea for 20 years, with no prospect of reversal. It is a Bill built on completely bogus premises.

Graham Stuart Portrait Graham Stuart
- View Speech - Hansard - - - Excerpts

The hon. Gentleman is talking about bogus premises, but he just suggested that we could get more pipeline gas from Norway. Does he not recognise that if we do not produce as much gas here, it will not be gas from Norway that we can access but will inevitably be LNG with higher emissions? Will he please, for the benefit of the House, step up and be honest? We do not have the option to get massively more gas from Norway—if we did, we would have done it already.

Alan Whitehead Portrait Dr Whitehead
- Hansard - - - Excerpts

I think I am going to get injury time for that intervention. If the Minister had been listening to what I was saying, he would know that I was stating that the Bill, in a very bogus way, has deliberately sidestepped the fact that there is gas available for import that is much cleaner than ours in its production. We should use that as a test, but the only test carried out was on LNG which, conveniently, is a little bit dirtier than the gas we produce in this country.

The Bill is about not what it says as much as what it does. As the former Energy Minister and author of the Government net zero report, the former right hon. Member for Kingswood, said recently, the Bill goes against everything the UK is saying internationally about moving away from oil and gas, and it has already damaged our international stance by appearing to double down on precisely the thing to which we are saying the opposite on the world stage. The right hon. Member for Reading West (Sir Alok Sharma), the former president of Glasgow COP, said in a courageous and precise speech this evening that the Bill puts into legislation something that already happens under the agency of the OGA. He also stated that its sole purpose is to double down on more oil and that nations around the world will not take that very kindly as far as our commitments are concerned.

The OGA itself emphasised that the Bill was “not necessary”, but

“would significantly challenge one of the tenets of independence for the NSTA, to decide when to run a licensing round.”

Whatever the position in the North sea objectively, the OGA would be forced to scrape up at least a licence a year forever. We know the claim that that would somehow do something for energy security is also bogus. The right hon. Member for Maidenhead (Mrs May) recently said that

“new oil and gas licences only provide for energy security if all that energy is sold into the UK and, actually, it will be sold on the world market”—

a point that a number of Members have made this afternoon.

The whole Bill appears to have come about as a result of a wheeze, cooked up by a couple of strategy advisers over a heavy lunch, to put the Opposition on the wrong foot—or, to put it another way, on the right side of history. Quite honestly, that wheeze should have been put down as soon as the effects of the heavy lunch wore off, but instead it has persisted through the corridors of power and has finally made it to the Floor of the House in the shape of this risible Bill, the contents of which evaporate on the first examination by anybody of its serious purpose.

That says rather more about the state of the Government than anything else. Where were the quality controls on policy making? How did something so evidently content-free and fact-averse as this piece of legislation ever make it so far? How did the present departmental Government Ministers, for whom I have a great deal of respect, allow it to happen on their watch, when they must know it is a load of hokum with no policy merit at all? Now they are forced to go out and try to justify it to the House. It is a very sad reflection of what a tiny, bitter and sad space the Government have retreated into, where serious policy development in the energy sphere—God knows we have enough of that to be working on—is replaced by such ill-advised emptiness. That is what this Bill is, in the end: just empty. If passed, it will linger on the statute book for a short period, make no difference to anything in the meantime and be rapidly overtaken by the reality of the forward march to decarbonisation in energy.

However, the Bill will have one lasting effect, as I have mentioned, because it signals strongly and, I am afraid, potentially lastingly that the UK is not serious about its climate and net zero ambitions and is prepared to say duplicitous things on both an international and a national stage. That is bad news for all the genuine work that has so far been done by the UK on net zero climate leadership. This Bill will not stick, but that charge might. For that reason, if for no other of the many reasons that have been put forward in this debate, it is best that we take this Bill no further than Second Reading and refuse as a House to let it pass to further stages.

Graham Stuart Portrait The Minister for Energy Security and Net Zero (Graham Stuart)
- Hansard - - - Excerpts

I thank my right hon. Friends the Members for Reading West (Sir Alok Sharma) and for Chelmsford (Vicky Ford), and my hon. Friends the Members for Waveney (Peter Aldous), for Moray (Douglas Ross), for Stoke-on-Trent Central (Jo Gideon), for Banff and Buchan (David Duguid), for Broadland (Jerome Mayhew) and for South Dorset (Richard Drax) for their contributions to this interesting debate.

The UK is the global climate leader. It is under this Government that that position has been secured. How is it to be measured? Do we have objective measures? Of course we have. The central challenge is to reduce emissions, and under the Conservatives this country has reduced emissions by more than any major economy on earth. How have we done that? Has it been an accident? No, it has not.

We inherited an absolutely awful situation. We heard from the hon. Member for Llanelli (Dame Nia Griffith) about her time in government, and she talked strongly about the work that Labour did on renewables. Well, it did not add up to much under her and the right hon. Member for Doncaster North (Edward Miliband). Renewables were less than 7% of our electricity in 2010. Now, that has been transformed. Coal—the dirtiest of fossil fuels—is a further ghastly legacy of the Labour party. We hear so much piety from Labour Members, but what was their performance in government? I will tell you, Madam Deputy Speaker: it was failure. Nearly 40% of our electricity came from coal as recently as 2012. By October this year, it will be zero.

It is the Conservative Government who have stayed laser-focused on delivering climate leadership, and it is in that light that this legislation comes before the House. The shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), asked why we have introduced the Bill. The Labour party, the Scottish National party and, of course, the Liberal Democrats say that we must have no new licensing in the North sea, even as our production is expected to halve over the next decade, and despite the fact that if we fulfil our world-leading ambitions for 2030 and 2035, which we will, production of oil and gas in the North sea will fall even faster in the country that is decarbonising more than any other major economy on earth. That is the reality; that is the context for the Bill, which brings in annual licensing.

None Portrait Several hon. Members rose—
- Hansard -

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

The Labour party will support oil and gas jobs—just not in this country. Not having new licences here will make no difference whatsoever to our consumption, but it will make a difference to how much we have to import, and our import dependency will go up. Worse than that for those of us who care about the environment, and to put in their place the pieties that we heard from Opposition parties, it will actually lead to imports with higher emissions than production here, as the right hon. Member for Doncaster North and other Labour Members know, and will worsen our ability to move to net zero in the short term. That is not to mention the 200,000 jobs supported throughout the country, 90,000-plus of which are in the north-east of Scotland and being abandoned by the Scottish National party.

None Portrait Several hon. Members rose—
- Hansard -

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

The measures will make no difference to our consumption and no difference to world consumption because we are net importers. We are not spilling our product on to global markets. Our oil, for instance, which the hon. Member for Brighton, Pavilion (Caroline Lucas) often mentions, is refined at European refineries. It is then turned into product that we can use here. It contributes directly to European and UK energy security.

None Portrait Several hon. Members rose—
- Hansard -

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

If Members oppose the Bill and allow no new licensing, the impact will be higher emissions, and they will not see the investment that we are seeing in new projects such as Rosebank. What is the carbon footprint of the product from Rosebank? It is expected to be much lower than the average across the North sea and what is expected globally. So, again, not only does closing off licensing mean that we will import more, but it will get in the way of investment into and transformation of our base.

John Redwood Portrait John Redwood (Wokingham) (Con)
- Hansard - - - Excerpts

I want to see far less imported LNG. Can the Minister give us some good news on what we might be able to achieve in getting more gas out, and will he ensure that many blocks—not just one—are put up for a licence round to get rid of that LNG?

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

The estimate from the North Sea Transition Authority is that a billion of barrels of oil equivalent, including gas, would be lost if we did not have new licences. That is lost tax revenue for this country, on top of the 200,000 jobs and lower emissions—[Interruption.] So far, I have not mentioned the tens of billions of pounds of tax. [Interruption.] It is not surprising, given how comprehensively easy it is to destroy the Labour party’s arguments, that the right hon. Member for Doncaster North keeps up his constant chuntering. He cannot win the argument while he is on his feet, so he sits there and tries interrupting those who can. If we do not have new licensing, which is Labour’s policy, we will see emissions go up in the short term; 200,000 jobs undermined; tens of billions in tax not brought into the public Exchequer; and—for those who care about dealing with the climate emergency—we will lose the very engineering skills and talent that we need to retain in this country in order to make the transition.

None Portrait Several hon. Members rose—
- Hansard -

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

In the time I have, I will try to respond to a few of the points that have been made by colleagues.

My hon. Friend the Member for Waveney highlighted the commitment of oil and gas companies to net zero. Oil and gas businesses are funding clean energy work. The hon. Member for Brent North (Barry Gardiner) picked on one such business, and it turned out that it was investing heavily in our clean energy transition. My hon. Friend the Member for Moray talked about fighting for those 90,000 Scottish workers. I have already mentioned the hon. Member for Llanelli and her rather risible attempt to suggest that Labour had any sort of record on renewables. My hon. Friend the Member for Stoke-on-Trent Central emphasised the importance of oil and gas workers to CCUS, which is absolutely essential.

My hon. Friend the Member for Banff and Buchan said that we are reducing production at twice the rate required internationally. That is true, and it is why new licensing in the North sea is fully aligned with net zero; those emissions are part of that. The hon. Member for East Lothian (Kenny MacAskill) talked about oil and gas being essential to deliver renewables, and supported new licensing. I thank him for that. My hon. Friend the Member for Broadland said that what we use is what counts—that is so true. The most important thing is to look at demand: removing and changing vehicles, factories and homes so that they no longer use oil and gas is absolutely central.

My right hon. Friend the Member for Chelmsford rightly said how important it was that we present this policy correctly. Of course, if only the Labour party was playing a proper and honest part in that, we would be able to champion the tremendous performance of this country in tackling climate change. I really do appreciate the speech that my right hon. Friend made.

Barry Sheerman Portrait Mr Sheerman
- Hansard - - - Excerpts

Will the Minister give way?

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

The hon. Member for Warwick and Leamington (Matt Western) talked about the zero-carbon homes standard, and the importance of improving the insulation and energy efficiency of homes. He is quite right; that is why this Government have gone from the terrible position of just 14% of homes having decent insulation—EPC rating C or above—when we came to power, to above 50% today.

I fundamentally disagree with the right hon. Member for East Antrim (Sammy Wilson) about net zero, but he correctly highlighted that we would just be sacrificing well-paid jobs without making any difference to our emissions, apart from putting them up.

Barry Sheerman Portrait Mr Sheerman
- Hansard - - - Excerpts

On a point of order, Madam Deputy Speaker. I have been in this House longer than most people, and it is a courtesy to the House in a winding-up speech to give way in an even-handed way. This Minister has given way to a Conservative Member, but he refuses to take any interventions from the Opposition.

Rosie Winterton Portrait Madam Deputy Speaker (Dame Rosie Winterton)
- Hansard - - - Excerpts

I thank the hon. Gentleman for that point of order. It is up to the Minister to decide to whom he gives way. It would be slightly more usual for him to give way to Members who had been in the Chamber throughout the debate. However, it is up to him to decide. And I really do not like points of order in the middle of winding-up speeches.

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

Thank you, Madam Deputy Speaker.

Barry Sheerman Portrait Mr Sheerman
- Hansard - - - Excerpts

Will the Minister give way?

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

You have given your guidance, Madam Deputy Speaker, which is to give way to those who have been in the Chamber for the debate, not to Johnny-come-latelies who come in and want to usurp them.

The right hon. Member for East Antrim also highlighted an excellent point about the hypocrisy and humbug that is absolutely central to Labour’s response to this Bill.

Barry Sheerman Portrait Mr Sheerman
- Hansard - - - Excerpts

Will the Minister give way?

Graham Stuart Portrait Graham Stuart
- Hansard - - - Excerpts

If the hon. Gentleman, who has hardly been here, would sit down, I will fortunately be able to come to a close.

The amendment put forward by His Majesty’s Opposition suggests that maximising the falling production from the North sea will put us at the greater mercy of petrostates. That is so obviously untrue that I hope they would hold their heads in shame about it. That has been at the heart of the Opposition’s approach to this Bill.

The Bill is designed to send a signal to the industry that we have its back. It is all about ensuring that we get to net zero in the most efficient and effective manner possible, and it will underpin this Government’s continued leadership on climate now and for many years to come. I urge the House to support the Bill.

Rosie Winterton Portrait Madam Deputy Speaker (Dame Rosie Winterton)
- Hansard - - - Excerpts

Well, that was lively. [Laughter.] Now that I have Members’ attention, I want to emphasise how important it is for those who have participated in debates to get back in good time for the winding-ups speeches. When the wind-ups come up early, please just keep an eye out for them and make sure to come back, because people who have participated will be mentioned in the wind-ups and it is courteous to be here to hear them.

--- Later in debate ---
20:51

Division 61

Ayes: 209


Labour: 160
Scottish National Party: 26
Liberal Democrat: 10
Independent: 6
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1

Noes: 292


Conservative: 285
Democratic Unionist Party: 6
Independent: 2

Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.
--- Later in debate ---
21:04

Division 62

Ayes: 293


Conservative: 285
Democratic Unionist Party: 6
Independent: 2

Noes: 211


Labour: 160
Scottish National Party: 27
Liberal Democrat: 10
Independent: 6
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1
Alba Party: 1

Bill read a Second time.