Contracts for Difference (Miscellaneous Amendments) Regulations 2022

Lord Callanan Excerpts

Thursday 19th May 2022 Lords Chamber

Moved by

[Lord Callanan]

That the draft Regulations laid before the House on 31 March be approved.

Relevant document: 37th Report from the Secondary Legislation Scrutiny Committee, Session 2021–22. Considered in Grand Committee on 17 May.

Motion agreed.

Contracts for Difference (Miscellaneous Amendments) Regulations 2022

Lord Callanan Excerpts

Tuesday 17th May 2022 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Contracts for Difference (Miscellaneous Amendments) Regulations 2022.

Relevant document: 37th Report from the Secondary Legislation Scrutiny Committee, Session 2021–22

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, these regulations were laid before the House on 31 March 2022.

The recent British Energy Security Strategy spoke of ensuring a new lease of life for the North Sea in low-carbon technologies such as carbon capture. The Net Zero Strategy set out the Government’s ambition to have a carbon capture and storage sector with an operational capability of capturing 20 megatonnes to 30 megatonnes of carbon dioxide per year by 2030. In its Sixth Carbon Budget, the Climate Change Committee re-emphasises the crucial role that carbon capture and storage—CCS—will play in reducing emissions from industrial processes, combustion, electricity generation and hydrogen production. The energy White Paper 2020, set out the Government’s view of how to achieve a low-cost, low-carbon electricity system.

While we cannot predict today exactly what the generating mix will look like in 2050, we can be confident that renewables will play a key role. However, in order to decarbonise while maintaining security of supply and keeping costs low, we will need to balance renewable variability against demand. To do this, we will need system flexibility, energy storage, and non-weather dependent low-carbon generation. We consider that thermal power with carbon capture and storage is one technology that can provide this at scale. In the subsequent Net Zero Strategy, the Government committed to using consumer subsidies to support construction of at least one power CCS plant to be operational by the mid-2020s.

In the round, these strategies illustrate the critical importance of carbon capture and storage technologies. To enable this, we have developed the dispatchable power agreement. This is a carbon capture and storage subsidy for gas-fired projects connected to a full carbon capture and storage system that are intended to provide low-carbon flexible power generation. The dispatchable power agreement contract is a bespoke contract based on the standard terms of the contracts for difference used in the allocation rounds; it has been amended in consideration of specific amendments to ensure suitability for power carbon capture and storage. The dispatchable power agreement will be a key tool used to encourage low-carbon electricity generation by bringing forward investment in power carbon capture and storage plants and to incentivise such facilities to operate in a manner which benefits the UK energy market. It is commonly referred to as a business model and is intended to implement this commitment.

The regulations were laid before the House on 31 March. The amendments in this instrument are needed to ensure that existing regulations under the Energy Act 2013 can be used to award dispatchable power agreements. These regulations are used to award contracts for difference currently. The proposed amendments are not intended to impact the standard contract for difference for the current allocation round or future allocation processes of the standard contract for difference.

This statutory instrument introduces three changes to the existing regulations, which are: the Contracts for Difference (Allocation) Regulations 2014, which we shall refer to, for the purposes of ease, as the “allocation regulations”; and the Contracts for Difference (Definition of Eligible Generator) Regulations 2014, which we shall refer to, for the purposes of ease, as the “eligible generator regulations”.

This statutory instrument, first, amends the eligible generator regulations, specifically the definition of an eligible generator. Currently, generating stations connected to a complete carbon capture storage system are eligible generators. The change allows for retrofitted carbon capture storage projects to constitute an eligible generator. It does this by widening the criteria for carrying out a generating activity to include altering an existing generating station into a generating station connected to a complete carbon capture storage system. By making this change, retrofitted power carbon capture storage plants can be eligible for the dispatchable power agreement.

This statutory instrument, secondly, amends the allocation regulations. Currently, the allocation regulations include a specific reference to contracts granted pursuant to Section 10 of the Energy Act 2013. The regulations refer to such contracts and suggest that they will include a “strike price” and “reference price” within their payment mechanism. The amendment retains the references to a strike price and a reference price, but by amending the language to state that a strike price and reference price “may be included”. An alternative payment mechanism which does not use these terms could also be used. This ensures that contracts which do not specify a strike price and a reference price can therefore be contemplated. This means there will not be a requirement for these specific terms to be used in a dispatchable power agreement and the alternative payment mechanism can be used, which will allow for the alternative payment mechanism under the dispatchable power agreement. Further details of this payment mechanism have been set out in the recent dispatchable power agreement publication.

The third change that this statutory instrument makes is to amend the eligible generator regulations. Currently, an eligible generator is defined as connected to a “complete CCS system”, which means

“a system of plant and facilities for … (a) capturing some or all of the carbon dioxide (or any substance consisting primarily of carbon dioxide) that is produced by, or in connection with, the generation of electricity by a generating station; … (b) transporting the carbon dioxide (or substance) captured; and … (c) disposing of it by way of permanent storage”.

The amendment proposes to add into sub-paragraph (b), after “transporting”, the words

“including by way of non-pipeline transport methods”,

to contemplate potential alternative transport methods. The consultation responses noted that it would be helpful to clarify that transport could be carried out by way of non-pipeline method. The proposed amendments in this statutory instrument intend to facilitate non-pipeline transport generally in the regulations, as has been set out. The proposed changes to the eligible generator regulations aim to be neutral regarding the different possible configurations of non-pipeline transport and will not exclude any particular form of non-pipeline transport.

In accordance with the Energy Act 2013, a consultation was carried out from July to September 2021, and the response was provided by the Government in March of this year on GOV.UK. We received 16 responses to the consultation from businesses and organisations, some directly involved in power CCS, and from trade associations, non-governmental organisations and other interested parties. The responses were largely positive in favour of the proposed changes but respondents requested some clarifications, which we have responded to in the published government response. These proposals will enable the award of the dispatchable power agreement, but they do not create any new commitment to offer support.

In conclusion, the measures introduced by the SI are aligned with the Government’s carbon budget and net-zero targets and help to enable power carbon capture and storage projects. I commend these regulations to the Committee, and I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank my noble friend and congratulate him on presenting the regulations to us this afternoon. He will be aware that there were great hopes, particularly off the Yorkshire and Humber coast, that facilities had been identified which would be appropriate for exactly the type of venture that is set out in the regulations before us today. So I welcome the regulations, but is my noble friend able to confirm that he believes that the take-up on the proposals for carbon capture and storage will increase and multiply because of the content of the regulations before us this afternoon?

Separately—he might think I am going off-piste here, and I probably am—can my noble friend explain something? If I understood it correctly, one of the difficulties we have with wholesale gas prices impacting the UK as they have—though perhaps not as badly as in other European countries, which rely heavily on Russia—is that we have gas storage of only 60 days, which is about two months. That strikes me as being terribly low. I do not suppose that that would benefit from these proposals, but I would like to understand why, historically, we seem to have a lower storage capacity than other European countries. Is that something that the Government might be minded to look at that?

The only other point I wish to make, which I am sure my noble friend is very familiar with, is the point raised in the 37th report of the Secondary Legislation Scrutiny Committee, which I find myself in some sympathy with. Even though I am a lawyer by training and spent about nine months of my training going through all the scientific evidence—produced mostly by scientists rather than lawyers—on whether fluoride was a carcinogen, I find that even these small regulations before us this afternoon are full of jargon. There is a request in paragraphs 22 and 23 of the 37th report that the Explanatory Memorandum perhaps be revised to enable us humble Members of the House to understand better its contents. Can my noble friend simply confirm that that is the case? If that could happen in advance next time so that, when we see the Explanatory Memorandum we are better able to follow it, it would be very welcome indeed.

I thank my noble friend and his department for all they are doing at this particularly difficult time, and I give a warm welcome to the regulations this afternoon.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

My Lords, although it is a little tangential, I declare my interest as set out in the register as a commissioner on the UK Hydrogen Policy Commission, which is within the same field though not directly relevant to this SI.

First, as other noble Lords have done, I thank the Minister for his explanation of the regulations before the Committee. As we have heard, they make a few minor but important amendments to two previous sets of regulations—the eligible generator regulations and the allocation regulations. Before I dive into those, I reiterate our support for the continuation of contracts for difference as a method of securing energy capacity while ensuring that developers, government and customers can be confident in the security of long-term, high-cost and high-investment projects.

Regulation 2 in the draft regulations ensures that non-pipeline transport methods are included within the definition of complete CCS systems. My reading of the 2014 eligible generator regulations, and that of many who responded to the consultation, certainly did not appear to exclude this system. I am not convinced how necessary it is. I agree that non-pipeline transport of carbon dioxide is essential to decarbonised projects outside the clusters. As the noble Lord, Lord Teverson, said, we would hope that transport around and inside the clusters would be by pipeline.

The noble Lord, Lord Teverson, presumed that this would be on trucks. My presumption was that it would be on rails. Again, it would be interesting if the Minister had any information from the department about how non-pipeline transport would take place, as there is an environmental difference between rail and road transport.

Regulation 2 also widens the criteria for carrying out generating activity to include alterations of existing generation stations to connect them to a CCS system. As other noble Lords have said, this makes perfect sense. I agree that it is an important step to help retrofit a station to give access to the benefits of contracts for difference.

That change is appropriately repeated, in Regulation 3, for the allocation regulations, but the main thrust of Regulation 3 is to allow contemplation of contracts that do not specify a strike price and reference price, in line with the new payment method under the DPA business model. Instead, the DPA business model will implement an availability payment for low-carbon generation capacity and a variable payment, which links the new power CCS plants—again, there is a long time lead-in here, since we are hoping they will be in operation by 2030, so perhaps the Minister can confirm the dates for the completion of the CCS plants—with an unabated reference plant. This is said to incentivise availability and enable more flexible operation. Of course, it is right to ensure that the regulations are updated correctly, to allow for these new developments to take place, but perhaps the Minister could elaborate somewhat on how these changes will incentivise availability and when we can expect to reap the benefits from the new power CCS plants.

The noble Baroness, Lady McIntosh, has already picked up on—and I am sure that the Minister has read with excitement—the Secondary Legislation Scrutiny Committee’s 37th report. In paragraphs 21 to 23, as has been stated, the committee was critical. To be fair, all our interventions have been quite detailed. In the produced documentation, I have been able to understand clearly that it is of importance. We have already had from the department an Explanatory Memorandum on that. I hope that, before all future debates, these points raised on page 9 of the committee’s report will be taken into consideration.

[Lord Callanan (Con)]

First, I thank my noble friend Lady McIntosh, and the noble Lords, Lord Teverson and Lord McNicol, for their constructive points and comments. Let me start by emphasising that the changes contained in these regulations are essential to enable the award of power carbon capture and storage contracts. The Government are committed to reaching net zero and, of course, to decarbonising our electricity system. All noble Lords will be aware that the Climate Change Committee has described CCS as a necessity and not an option to help us on the road and transition to net zero. Therefore, CCUS will be essential to meeting the UK’s 2050 net-zero target—I think that all three speakers agreed with that point.

Decarbonising the power sector has so far led the UK’s efforts to reduce greenhouse gas emissions. Thirty years ago, fossil fuels provided nearly 80% of the UK’s electricity supply. In 1990, electricity generation accounted for about 25% of total UK emissions, but by 2018 that was down to only 15% of total UK emissions. Today, I am pleased to say that the country gets over half of its power from low-carbon technologies, and the majority of those are renewable.

We can be confident that renewables will continue to play a key and increasing role in our generation mix on the overall journey to net zero, to decarbonise while maintaining security of supply, and keeping costs low. But for when the wind is not blowing and when the sun is not shining—something that applies particularly to the homeland of the noble Lord, Lord McNicol—we will need to balance renewable variable against demand. To do that, of course, we need system flexibility and energy storage, and we need non-weather dependent low-carbon power generation. That is why we consider that thermal power with carbon capture and storage is one technology that can provide that at scale. Therefore, carbon capture storage technologies will be important for the trajectory to achieving our 2050 net-zero target, and they will play a vital role in levelling up the economy, supporting the low-carbon economic transformation in our industrial regions and helping to create new high-value jobs.

On the specific points that were raised, starting with my noble friend Lady McIntosh, I am pleased to say that these regulations will indeed facilitate the rollout of the Government’s CCUS programme but of course will not bring projects forward in themselves. However, I am pleased to say that we have also seen significant interest in the programme, particularly from the east-coast cluster that my noble friend mentioned. We will seek to bring forward at least one power CCUS plant in the mid-2020s. This will be achieved through the CCUS cluster sequencing process and is subject to the outcome of that process, including, as always, value for money and affordability considerations. I am sure that my noble friend would agree with that.

Around half of our demand for gas is met through domestic supplies, but in meeting net zero by 2050 we may still use a quarter of the gas that we use now. So, to help to reduce our reliance on fossil fuels, we have to fully utilise the great North Sea reserve: we have to use the empty caverns that we have created for CO₂ storage, and we must bring through hydrogen to use as an alternative to natural gas and help to use our offshore expertise to support our offshore wind sector. As a result of those plans, the North Sea will still be a foundation of our energy security, but of course we will have reduced our gas consumption by over 40% by 2030.

As clarified by the noble Lord, Lord Teverson, who was doing my job for me, the Explanatory Memorandum was revised on 5 May with in-depth footnotes to explain the acronyms and technical terms. I apologise if it was not clear; obviously, it is a complicated subject.

On the points made by the noble Lord, Lord Teverson, we consider that the capacity for T&S networks to be able to accept CO₂ from dispersed sites and from international sources, transported by ship, road or rail—which would be non-pipeline transportation—may be important for our long-term objectives of achieving our carbon budgets and net zero, so we do not want to exclude power CCS projects that can transport and store CO₂ by non-pipeline transport. We will need significant volumes of new-build, low-carbon capacity to meet growing electricity demand and to take the place of retiring capacity. To complement expanding intermittent renewables, it is important that some of this capacity is flexible and can operate for extended periods when renewable output is lower.

Our existing gas generation capacity is ageing. Most of it was built in the 1990s, during the so-called dash for gas. Advances in gas turbine technology mean that a purpose-built, modern, new-build gas-fired power station with CCUS would be more efficient than an older design retrofitted with CCUS technology. However, utilising existing assets can of course improve value for money in some cases, and to decarbonise our electricity system in line with the targets of the fifth and sixth carbon budgets, we consider that we will have to use existing generation as well as new-build capacity, both of which of course would need to be abated.

On the capacity market, CCUS requires more support for capacity given the co-ordination problem with infrastructure yet to be built, and the DPA incentivises investment to bring forward low-carbon generation capacity. The availability payment also acts as a way to incentivise those power CCUS projects and helps to maintain high capture rates throughout the DPA. I will come back to the noble Lord in writing on his question regarding the “payback” from CfDs for departments, but I think the answer will revolve around the fact that the money goes into Ofgem and is therefore used to offset other CfD payments. I certainly do not think that any of it appears either in the BEIS or Treasury budgets, but I will come back to the noble Lord and confirm the details of that.

On the points raised by the noble Lord, Lord McNicol, we wanted to ensure that non-pipeline transport was explicitly and unambiguously included in these regulations, and there is certainly no presumption in favour of road transport. Indeed, rail or shipping may also be covered and are probably more likely forms of transport. To take one pertinent example, at the moment Norway is currently shipping CO₂. I hope that clarifies the point for the noble Lord.

To close, I underline once more that these regulations are a vital part of the UK’s efforts to reach net zero and to decarbonise our electricity system. With that, I commend these draft regulations to the Committee.

Motion agreed.

Queen’s Speech

Lord Callanan Excerpts

Monday 16th May 2022 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, as always, it has been a great pleasure to hear so many varied and valuable contributions over the last five hours and I thank everyone who has contributed to this important debate.

First, it was, of course, a great pleasure for the whole House to be able to welcome the right reverend Prelate the Bishop of St Edmundsbury and Ipswich to this House, and I congratulate him on his excellent maiden speech. The House will know that I am a great football fan, so on maiden speeches I always try to look at the football affiliations of the Member joining. Of course, Ipswich Town is where the right reverend Prelate comes from—or, rather, represents in his bishopric —but when I saw that the nickname of Ipswich Town is the Tractor Boys, I thought, maybe we will not go there on this occasion. He joins this House with much valuable experience, gained domestically and internationally, and I am glad that he is now recovered enough to speak today on the challenges that we face on the climate. To that end, I hope that his horticultural pursuits, with which he entertained the House, continue to flourish, and I agree with him that planting trees is a symbol of hope and faith in the future. We will all look forward to his contributions when the energy security Bill is brought before this House later in the Session.

Many of us have years—perhaps more years than we care to remember—of experience under our belts. We have seen many crises come and go, but these past couple of years have of course been particularly testing. The war in Ukraine has shocked us all, but, beyond the horrors it has wreaked on the poor people there, it has increased the cost of energy and food across the entire world. Many in this country have moved from worrying about living through a pandemic to worrying about the cost of simply living. But, as my noble friend set out, and to answer the question of the noble Lord, Lord McNicol, the Government’s legislative agenda for the coming year will aim to meet many of these challenges head-on.

The Government of course know that the rising cost of living is making life harder for people. We know that people are worried, and we do not seek to minimise that worry, but we do seek to alleviate as much as we can. The noble Baroness, Lady Jones, raised a number of points when she spoke on behalf of the Opposition at the beginning of this debate and I hope that, over the course of this speech, I can respond to many of those points. I start by reassuring her and other noble Lords, including my noble friend Lady Noakes, the noble Baroness, Lady Drake, and my noble friends Lord Bridges and Lord Horam, who all rightly talked about the challenges we face on the cost of living, that we stand ready to help shoulder the burden and we have already provided support worth more than £22 billion in 2022-23. We are boosting the incomes of the lowest paid and helping families with their energy costs.

As the noble Lord, Lord Wood, pointed out—I do not know whether he is in his place; I cannot see him—inflation adds another layer of concern, particularly for families. As noble Lords will know, monetary policy is of course the responsibility of the MPC of the Bank of England, but my noble friends Lord Tugendhat and Lord Forsyth spoke about the make-up of this committee and the efficacy of the 2% inflation target. I hope noble Lords will understand that separation of fiscal and monetary policy is a key feature of our economic framework, but, on the first point, appointments are made on merit following fair and open competition, and, on the second, the Chancellor has reconfirmed the 2% inflation target. The Chancellor is also taking practical action that will help households ride out this extremely stormy period. He has increased the national insurance primary threshold and the lower profits limit to £12,570. The Government have cut fuel duty and the universal credit taper rate. We have increased work allowances by £500 a year and, of course, increased the national living wage to £9.50 an hour.

The noble Lord, Lord Bilimoria, speaks with authority when he tells us about the current attitude of business and the current tax rates. However, I reassure him and my noble friend Lady Noakes that the tax plan announced at the spring Statement will allow further tax cuts in the future—conditional, of course, on fiscal sustainability and robust levels of headroom.

Equally, my noble friend Lord Bridges asked for more help for the most vulnerable in our society. I can tell him that our modelling shows that the poorest 60 % of households receive more in public spending than they contribute in tax and that households in the lowest income decile will, on average, receive more than £4 in public spending for every £1 that they pay in tax.

My noble friend Lord Altrincham asked, rightly, about bank closures. I of course recognise the importance of appropriate access to banking. However, the way that consumers interact with their banking is changing. Decisions on opening and closing branches are a commercial issue for those banks and building societies. Clearly, banks need to carefully consider the impact of planned closures on customers and ensure that those customers are treated fairly. I hope noble Lords will also agree when I say that by growing the economy and investing in the long term, and through levelling up the United Kingdom, we can help to mitigate the worst effects of the cost of living crisis.

As the noble Lord, Lord Londesborough, noted, productivity has long been a puzzle that remains unsolved. The Government recognise that vacancies are at a record high of 57% above the pre-pandemic level. However, unlike the puzzles given as Christmas gifts, this is one that we are determined to complete. That is why the Government launched the Way to Work campaign to get 500,000 jobseekers into work by the end of June 2022. We are quadrupling the scale of employer-led skills bootcamps to provide more retraining opportunities for adults in high-growth sectors. It is also why, as noted by the noble Lord, Lord Monks, we must ensure that employers play their part in improving conditions and pay to attract workers. I am of course delighted to remind the noble Lord—I know he does not like hearing this—that the UK has one of the best employment rights records in the world. It is well known that in many areas the UK goes much further than the EU on worker protections.

My noble friends Lord Colgrain and Lord Shinkwin spoke about making a more favourable environment for part-time workers, retirees and disabled people. I share their views that we cannot and will not neglect these important groups.

The noble Lords, Lord Haskel, Lord Monks, Lord Hendy and Lord Woodley, my noble friend Lord Colgrain and the noble Baroness, Lady Donaghy, all asked why there is no employment Bill. I reassure them all that as we rebuild our country after the hardships of the pandemic, the Government are committed to building a high-skilled, high-productivity and high-wage economy worthy of the people who worked so hard to get us through that pandemic. I reassure noble Lords that the Government remain committed to bringing forward legislation to deliver on their manifesto commitments on employment as soon as parliamentary time allows.

As we look towards how we grow the economy, I agree with my noble friend Lord Hunt on the importance of competitiveness within the financial services market. The sector plays a critical role in ensuring that this country remains an attractive place to do business; indeed, it helps to attract investment. I am sure that my colleagues in the Treasury will welcome his scrutiny of the Bill, and that of my friend Lady Noakes, when it eventually comes to this House.

Let us remember that this is still a country that other nations want to do business with and one which, with its spirit of enterprise and openness, still delights in attracting global investors. The noble Lord, Lord Razzall, said that Brexit has not worked. I would respond that we are still very much a country to be reckoned with and that between 2019 and 2027, the UK is forecast to see the third highest growth in the G7, behind only Canada and the United States. Our fintech community is thriving and, as my noble friend Lord Holmes noted, can continue to play its part in growing our economy. The Government have confirmed that they will provide £5 million of seed funding for the creation of new industry-led centres for finance, innovation and technology to help tackle the barriers to growth and accelerate the UK fintech sector.

The noble Lords, Lord Davies and Lord Sikka, asked about audit and corporate governance reform. The audit, reporting and governance authority—ARGA —will protect and promote the interests of investors, other users of corporate reporting and the wider public interest. The noble Lord was right to say that regulation should be proportionate, and I welcome his further engagement as we refine the legislation. I particularly enjoyed the trenchant criticism from the noble Lord, Lord Sikka, of a Bill that he has not actually seen yet. Perhaps the noble Lord should wait, as we will shortly publish the Government’s response to the White Paper consultation in which we will demonstrate our approach to many of the issues that he raised.

Let me respond in this section of my speech to the noble Lord, Lord Fox, who also asked about the economic crime Bill. I cannot give him a precise date for its introduction yet, but I assure him that work is proceeding at speedily as possible: lots of draftsmen are beavering away furiously on the Bill as we speak. On the implementation of the first Act, we are also proceeding speedily with that, and I will be contacting the noble Lord shortly, he will be delighted to know, to invite him to a meeting to discuss the 12 statutory instruments that we will shortly be introducing to implement the provisions—[Interruption.] He asked the question and I am responding to it. Other noble Lords also took an interest in that, so, as I promised during the passage of the Bill, I will want to involve them in the discussion, because we want the register of overseas entities, in particular, to be implemented as quickly as possible.

On the subject of energy, we can all be proud of the way that this country has stepped up to support our friends in Ukraine: from sending packages of military aid for generators for hospitals to opening homes up for refugees, we the British people have shown that we will not abandon our allies during their darkest hours. Like many in this House, I am sure, it makes me so proud to see those brave Ukrainian soldiers saying “God save the Queen” as they launch more UK-supplied missiles at Russian tanks.

My noble friends Lord Howell and Lady McIntosh spoke about the impact of the crisis in Ukraine on oil and gas supply, and we continue to divest ourselves of Russian oil and gas. The Government are clear that we will not be the financial backers of Putin’s war crimes. Indeed, this crisis has highlighted the need for a secure British energy supply, one that is not disrupted by war or influenced by rocketing global prices. Ultimately, we want lower energy prices so that hard-working people do not worry about the basic right of a warm home. A bold drive to create energy for the UK in the UK was outlined in our recent British Energy Security Strategy. I am glad that the noble Lord, Lord Haworth, with his long-standing interest in this area, supports it. We will supercharge our renewables, knowing that the hostile actors I referred to cannot control the offshore winds of the North Sea or stop the sun from shining occasionally in Kent and Wiltshire, where some of our biggest solar farms have been built.

Following on from that, the noble Lord, Lord Haworth, and my noble friends Lord Bourne, Lord Moynihan and Lord Wakeham also rightly spoke about nuclear. As we decarbonise and look for a steady load of clean electricity to complement our renewables mix, the size and importance of the nuclear sector will continue to grow. We have an aim of delivering up to 24 gigawatts of nuclear power by 2050, approximately three times the level we have today. That requires reversing decades of underinvestment in this sector. The new energy security Bill strengthens and complements that strategy, and it will secure our energy needs and build a more affordable system that is fit for the future. The Bill will complement the action we are taking right now through our £9 billion package of financial support to protect consumers from the full impact of rising prices. It will also provide high-skilled jobs and help to rejuvenate our industrial heartlands up and down the country.

I turn to the amendment in the name of the noble Baroness, Lady Bennett. Of course, she will know that, although I disagree with many of the points she raised, I respect her passion and commitment to the green agenda. She will know that the Government are already taking a joined-up approach to delivering world-leading climate commitments through our net-zero strategy, the Environment Act and the environment improvement plan. Further, our 10-point plan, together with the net-zero strategy and the energy security strategy, is driving an unprecedented £100 billion-worth of private sector investment by 2030 into new British industries, including offshore wind, and supporting about 480,000 clean green jobs by the end of the decade.

Having said that, our oil and gas sector is still important to the UK and continues to keep us warm and strengthen our security of supply. Maximising economic recovery and oil and gas need not be in conflict with the transition to net zero: they can and should be fully integrated. The North Sea Transition Authority has therefore integrated expressly into its strategy where industry can assist the Government in meeting our net-zero target.

The noble Baroness, Lady Bennett, also spoke about the rights of way Act, which I must say we have no plans to change. Easy access to the beauty and restorative nature of the countryside is so important for people’s health and well-being. That is why we have created and restored some 360,000 football fields-worth of habitat since 2010.

Many noble Lords, including the noble Baroness, Lady Kramer, the noble Lords, Lord Wood and Lord Low, and my noble friends Lord Howell and Lord Bourne, raised the topical subject of a windfall tax on oil and gas companies. The noble Lord, Lord McNicol, also raised it, as he should do as an Opposition Front-Bencher. I understand, as we see these energy companies report record profits just as ordinary people start to dread opening their latest bills, that the call is getting louder. However, noble Lords will know that the Government already place additional taxes on those companies which extract from the continental shelf. Indeed, their tax rates are double those paid by other businesses.

In response to the question posed by my noble friend Lord Forsyth, according to HMRC tax receipts and national insurance contributions for the UK statistical table, net offshore tax receipts from oil and gas production were approximately £1.4 billion in 2021-22. However, as always, the Chancellor and Government keep all taxes under review and the Business Secretary has made it clear that these companies must reinvest in the UK and in renewables.

[Lord Forsyth of Drumlean (Con)]

I hesitate to interrupt my noble friend, but I asked my noble friend Lady Penn how much the Government were getting in additional receipts as a result of the increase in the cost of oil, petrol and so on. Some £1.4 billion is a small fraction of that; it ought to release resources which were otherwise not there and could be used, for example, to deal with universal credit.

[Lord Callanan (Con)]

Of course there will be other increases in the likes of VAT and other taxes, which are estimated by the OBR. I will certainly speak to the Treasury and ask whether we can give my noble friend a more complete number. However, as I said, the Government keep all these taxes under review. We made it clear that companies must reinvest in the UK. In fact, Shell and BP are already investing hundreds of millions into our economy, including carbon capture infrastructure in the Humber and on Teesside.

But it is not just about energy production. Many noble Lords, including the noble Baronesses, Lady Jones, Lady Parminter and Lady Hayman, the noble Lords, Lord Teverson and Lord Birt, and my noble friends Lord Bourne and Lord Moynihan, talked about the important subject of energy efficiency. Huge progress is already being made in the energy efficiency of UK homes. In 2008, 9% had an energy performance certificate, or EPC, of C or above; today, the figure is 46%. We are already investing more than £6.6 billion over this Parliament to improve energy efficiency, much of it targeted at the poorest in our society. This includes a £1.1 billion home upgrade grant and the energy company obligation scheme, which has been extended from 2022 to 2026, boosting its value from £640 million to £1 billion per year.

Furthermore, the noble Lord, Lord Teverson, and my noble friend Lord Bourne rightly spoke about the importance of reducing energy demand. We are scaling up our consumer advice and information service to help households understand how to reduce their energy demand effectively and what longer-term actions they may need to take as part of the transition to net zero. Noble Lords also asked me about protecting those 4 million consumers on pre-payment meters. Not only were special measures put in place in March 2020 but customers are also protected by the price cap.

To move from the local to the global, my noble friend Lord Howell called on the country to stand up to OPEC. He will be pleased to know that we are in fact working with partners across the G7, the IEA, OPEC+ and other oil-producing countries to press for measures to stabilise oil prices, and with the IEA and our allies on strategic oil reserve releases. However, the current—

[Lord Howell of Guildford (Con)]

It sounds as if my noble friend is coming to the end of his very good speech. I actually asked why, when our ports are crowded with frozen gas ships anxious to put gas into the British system—this is bearing down on the gas price now—this is not coming through to consumers in the way that surely it should.

[Lord Callanan (Con)]

We hope that it will do. Of course the market is in turmoil at the moment, but the noble Lord rightly pointed out that we have some very advanced LNG offloading facilities in the UK. We can play our part in helping parts of the EU that do not have LNG terminals, through the interconnection pipeline. But it is an international market; there is reduced supply and, of course, we all know that the price is at sky-high levels at the moment.

However, the current volatility in global energy prices and security concerns only underscores the importance of building strong home-grown renewable sectors and reducing our reliance on all fossil fuels. The ultimate way to deal with the high gas price is of course to use less of it. That is why this Government are so excited about hydrogen, which the noble Lord, Lord Bilimoria, and others asked about. My noble friend Lord Liverpool and the noble Lord, Lord Grantchester, asked specifically about our plans for so-called green hydrogen. I am pleased to tell the House that we are introducing a comprehensive package of measures to get these projects off the ground and help this outstanding new technology to thrive in the British marketplace. The global market for these technologies is for the taking, and we have the innovation and engineering expertise to be world leaders, just as we are becoming world leaders in EV battery technology.

I reassure my noble friend Lord Young that we have provided £30 million-worth of funding to support vehicle-to-everything projects, and we will provide a further £11.4 million of innovation funding. The noble Lord, Lord Birt, and my noble friend Lord Leicester raised an important point about electric vehicles—EVs. We recently announced our electric vehicle strategy, which sets out our vision and action plan for the rollout of effective vehicle charging infrastructure in the UK; I actually agree that there is much that we can do to improve that. Of course, electric vehicles will not take off unless the appropriate charging infrastructure is in place.

The noble Baronesses, Lady Whitaker and Lady Hayman, and my noble friend Lord Liverpool all spoke about the important subject of tidal power, and they are right in some respects. Along with copious wind, the UK is also blessed with strong tides. The Government’s position is that tidal power could well contribute to our energy mix, as we transition towards a carbon-neutral power sector. Indeed, the energy security strategy commits to aggressively exploring the potential of tidal power to contribute to our net-zero ambitions.

Of course, building these projects requires finance, which is why the Government are introducing the UK Infrastructure Bank. This also answers the question of the noble Baroness, Lady Kramer—

[Baroness Whitaker (Lab)]

I apologise, but my questions were about wave power as well as tide power. It would be very helpful if the noble Lord could tell us what the Government are doing to further wave power.

[Lord Callanan (Con)]

We are funding a number of innovative projects—from memory, I think that there was one in the Scottish islands—helping to explore the potential for wave as well as tidal power. I would be happy to write to the noble Baroness with more details on that.

I turn to the question of the noble Baroness, Lady Kramer, on the financial capacity of the infrastructure bank compared to the European Investment Bank, which used to invest around £5 billion a year in the UK. However, the EIB has a broader focus than the UK Infrastructure Bank, which is not a direct replacement for it.

The noble Viscount, Lord Chandos, asked why the Government chose to privatise the green finance bank. The bank had a targeted mandate to mobilise private finance, and, when it did so, it was sold. However, as I said, the UK Infrastructure Bank has a broader mandate, spanning both investment in green technologies and infrastructure projects needed to tackle climate change and support economic growth across the UK.

The noble Lord, Lord Redesdale—I do not see him in his place—asked me about carbon reporting. The UK’s economy-wide sustainability disclosure requirements regime will require businesses and investment products to report on their impact on the climate and the environment. Legislation introducing these changes will be brought forward when parliamentary time allows. I apologise; I can see the noble Lord now.

Moving on to the environment, we know that we live on one interconnected planet and that it is our duty to guard it for the next generation. I welcome my noble friend Lord Harlech’s contribution to the debate on rural issues. His father was a champion of the countryside, and I am glad that he continues to speak passionately about rural issues. I am sure that he, my noble friend Lord Smith and the noble Baroness, Lady Donaghy, have already acquainted themselves with the Levelling-up and Regeneration Bill introduced to the other place last week, and I encourage their contributions when that Bill makes its way to this House.

We also want to ensure that there is enough food for everyone, even as the climate changes. That is why we are positioning the country to become a world leader in precision breeding technologies such as genetic editing. I welcome the recognition from the noble Baroness, Lady Hayman, that this can be of huge benefit to the country.

Alongside this, leaving the EU has enabled us to improve our animal welfare standards. The Animal Welfare (Kept Animals) Bill delivers on three government manifesto commitments on animal welfare and is a high priority for the Government.

I reassure my noble friend Lady McIntosh that the Government are committed to securing free trade agreements that are tailored to British firms and the economy, and, of course, are not compromising our environmental, food and animal welfare standards. We are also working hand-in-hand with farmers on our plans for a renewed agricultural sector, which will transform the way we support farmers in the UK.

In conclusion, I thank all noble Lords for some excellent contributions. I apologise that, with almost 60 speakers, I was not able to address all the points made in the time I have available; in fact, I am already over my allotted time. However, we covered from financial services to farming, economic crime and energy security. The Queen’s Speech we have debated this evening will help to strengthen our country after a turbulent few years.

[Lord Fox (LD)]

I appreciate the Minister giving way and the time constraints. I asked some specific questions on ARIA. I am sure the Minister has the answers in his head, but if he could write to me with them, I would be very appreciative.

[Lord Callanan (Con)]

I will be happy to write to the noble Lord, as always. I seem to write lots of letters to the noble Lord at the moment, but I will be happy to write another one.

We will continue to stand by workers and businesses while boosting economic growth the length and breadth of the UK. As always, I look forward to working closely—as do all Ministers—with every Member of this House as these Bills come to fruition and pass through the legislative process.

Amendment to the Motion

Tabled by

European Research Council

Lord Callanan Excerpts

Wednesday 27th April 2022 Lords Chamber

[Viscount Stansgate (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and update the House on my interests in the register, as I was recently elected president of the Parliamentary and Scientific Committee, which, as the House may know, is Parliament’s oldest all-party group.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the UK government guarantee means that eligible successful ERC applicants will receive the full value of their funding at a UK host institution and need not leave the UK. Therefore, this communication from the ERC does not accurately reflect the options available to UK applicants. The UK remains committed to association, but the EU is not honouring commitments made when the TCA was agreed. If the EU continues to delay, we will introduce a bold alternative package.

[Viscount Stansgate (Lab)]

My Lords, I thank the Minister for his reply, but it is still disappointing. I shall put it in context for the House: €625 million-worth of grants were announced this week, with 61 grants to people based in Germany and the second highest number, 45, to people based in the UK. It is these people who have been told that they will lose their money if the Horizon Europe agreement is not reached by the deadline, which the European Research Council today told me is 19 September this year. Does the Minister accept that time is running out for an agreement to be reached between the EU and the UK on Horizon Europe? Does he accept that the problem is the Northern Ireland protocol and that, to some extent, science is being held hostage by the failure to agree the protocol arrangements between the UK and the EU? Is this a situation that we should be proud of when all of us in this Chamber want the UK to be a science superpower? Finally, the last time I raised this question, the Minister said that the money was safeguarded. Can he assure the House that the amount allocated by the Treasury will be spent on science and, if so, on what, where and by what mechanism?

[Lord Callanan (Con)]

I partly agree with the noble Lord. I agree that time is running out but not that the Northern Ireland protocol is the problem. The EU entered into an agreement which it is now refusing to implement; that is the long and short of the problem. As soon as some Members stop making excuses for the EU’s bad behaviour, we might succeed. We stand ready to associate with the Horizon programme as soon as the EU is prepared to sit down and implement the agreement that it signed.

[Baroness Ludford (LD)]

My Lords, everyone agrees that UK participation in Horizon is of benefit to researchers in the UK, the EU and beyond, but also of mutual benefit is the UK’s commitment to stick to legal engagements that it has made. I am afraid that there is some pot and kettle going on from the Minister. Why are this Government again threatening to breach the Northern Ireland protocol and to take powers—we expect this in the Queen’s Speech—and undermine the trust that is essential to making other co-operation work? This is linked to the Northern Ireland protocol, but it is the Government’s failure to honour their commitments which is the problem.

[Lord Callanan (Con)]

I am sorry that the noble Baroness refuses to accept where the blame lies in this circumstance. The UK has not breached any agreements that we signed with the European Union. We have abided by all of them. The EU signed an agreement to say that we would associate with the Horizon programme but is refusing to implement that agreement. The Liberal Democrats and others should stop thinking that everything which the EU does is perfect and believe that there are some cases where it gets things wrong.

[The Earl of Clancarty (CB)]

My Lords, despite what the Minister has just said, the problem is the Northern Ireland protocol, as the last two questioners have said. The EU Research Commissioner confirmed last September that this is why we are being shut out of Horizon Europe while other non-EU countries are being welcomed on board with open arms.

[Lord Callanan (Con)]

The Northern Ireland protocol is a completely separate agreement. It is different from the agreement that the EU signed. I am sorry, but we should not accept the EU’s excuses on this. The EU signed an agreement, and it should abide by it. I wish that noble Lords would sometimes be on the UK’s side rather than wanting to see fault in everything that we do. We should allocate the blame where it belongs.

[Lord Lennie (Lab)]

We should all live by the agreements that we sign. Should the European research grants be withdrawn from the UK-based researchers, have the Government sought or received any assurances that these grants will be restored once associate membership of the Horizon Europe programme is re-achieved?

[Lord Callanan (Con)]

The UK has provided a guarantee to all those researchers. If the ERC continues to say that they will not be eligible for grants, as long as the EU itself refuses to agree participation in the Horizon programme, then the Government have said that we will guarantee all those researchers’ grants.

[Lord Hannan of Kingsclere (Con)]

My Lords, of the world’s top 40 universities, seven or eight—depending on which ranking we use—are in the United Kingdom. None is in the European Union. Does the Minister really think that the success of our higher education sector is dependent on participation in the Horizon programme?

[Lord Callanan (Con)]

My noble friend makes a very good point. We think on balance that it is worth associating with the Horizon programme, which is why we agreed to participate, paying our full amount into it of course for that participation. However, if the EU refuses to stand by the agreements that it signed, we will put alternative arrangements in place, and all the sums that would have been allocated to researchers under the Horizon programme will instead be funded directly by the UK.

[Viscount Hanworth (Lab)]

My Lords, we should soon be admitted to the Horizon Europe programme for funding research and innovation if the Government were to undertake not to invoke Article 16. However, what progress can the Government report in their endeavour to seek collaborative research arrangements with other countries, in particular with the Swiss, who have also not been readmitted to Horizon?

[Lord Callanan (Con)]

The noble Viscount makes a very good point and, of course, alludes to the previous answer that I gave to my noble friend Lord Hannan. There are many good universities around the world, not just necessarily in the EU. We have a number of different, collaborative research programmes with other parts of the world. Ironically, under the Horizon programme, it is of course possible for third countries to associate in collaborative research programmes, provided they pay their fair share of the bills. The EU is not just treating us unfairly in terms of the agreement it signed, but is actually treating us differently from other countries in the world.

[Lord Davies of Brixton (Lab)]

My Lords, does the Minister understand that top-quality academic research is inherently an internationally co-operative effort? Oh, my phone is ringing. Pending the completion of the Horizon project, the UK’s universities—despite what his noble friend Lord Hannan might suggest—are inherently at a disadvantage, because of the complexity and the fact that they will no longer, in practice, be able to be the co-ordinator of the project, with the loss of the academic prestige and indeed funding that it involves.

[Lord Callanan (Con)]

Perhaps we should all have musical accompaniments to our answers and questions; I am sure they would be much improved. The noble Lord makes an important point: the leadership of these programmes is important and international collaboration is important in science, but we should not make the mistake of thinking that the EU is the repository of all knowledge and wisdom on scientific matters. There are many other parts of the world. Yes, of course we want to co-operate with EU institutions, but we also want to co-operate with others across the world.

[Lord Wallace of Saltaire (LD)]

My Lords, I am sure the whole House welcomes what the noble Lord has said about the importance to the UK Government of observing international treaties and agreements that we have signed. Does he intend to imply clearly, and would he like to clarify, that this means there is absolutely no question that the Government will go back on the Northern Ireland protocol?

[Lord Callanan (Con)]

The Northern Ireland protocol is built into the treaty. The exercising of the Northern Ireland protocol, if we chose to do so, would be in compliance with the treaty obligations. It is a section of that treaty. I merely make the point that the UK has not broken any of its obligations that it signed with the EU. It is the EU that is in default, and it is about time the Liberal Democrats recognised that.

[The Earl of Kinnoull (CB)]

My Lords, the Horizon programme is actually very complex. It would not be completely easy for us to begin the programme, say, 18 months late, without some element of further negotiation. Are the Government already dealing with that on a “what if” basis or will be a further delay, assuming that the protocol is finally sorted out?

[Lord Callanan (Con)]

As I said, we stand ready to commence negotiations for our association as soon as the EU is prepared to do so. In the meantime, of course, as the House would expect, we are putting in place alternative arrangements if that proves not to be possible.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank my noble friend for making good the shortfall if we are not remaining part of the Horizon programme. But does he accept that universities have benefited from match funding from other universities in other member states and that that is going to be lost? Do the Government intend to replace that with other establishments from outside the European Union?

[Lord Callanan (Con)]

I am afraid I do not understand the point my noble friend is making; there is no shortfall as such. The UK pays its fair share for our participation in Horizon and has always done so, and a similar amount of money will be made available in the future if association proves impossible.

Energy Security Strategy

Lord Callanan Excerpts

Wednesday 27th April 2022 Lords Chamber

[Lord Oates (LD)]

My Lords, there are things to welcome in this Statement but unfortunately, there are also many missed opportunities. Energy security is obviously critical at this time, but we must understand that it is about not just security of supply to the United Kingdom but the fact that millions of households right now feel a complete lack of security regarding their ability to pay their energy bills going forward, and particularly as we go into the next cold period.

The Government had an opportunity to take up my right honourable friend Edward Davey’s proposal: a windfall tax on the super-profits of the oil and gas industry, which the Labour Party has also argued for. That could have unlocked finances to give further support to people who will be desperately vulnerable this winter.

As the Liberal Democrats and many others in this House have repeatedly stated, curtailing the wasted energy that leaks out of our buildings should be the No. 1 priority in the hierarchy of measures we take to improve our energy security, reduce carbon emissions and cut costs for households. But there was nothing new in the Statement on this front. I asked the Minister at Questions yesterday why the number of insulation measures installed annually in the UK had fallen from a high of 2.3 million during the coalition to an average of less than 10% of that peak since then. He did not really give me an answer, to be honest, but I do not blame him for that. If he was unconstrained by collective responsibility, he would be able to be clear that it was down to the myopic foolishness of the Treasury, which has kyboshed many of the schemes that have been brought forward in the past. Not least of these is the green homes grant, which was destroyed by its lack of understanding that this has to be a long-term project, not a short-term stimulus measure. I hope the Minister will not be deterred, however, by that myopia, and will continue to urge his government colleagues to take a more creative approach to this issue, including fiscal measures such stamp duty discounts and council tax rebates for homes that improve their energy performance certificate ratings.

Can the Minister also tell us when the new ECO4 regime, which he mentioned yesterday, comes into effect? Am I correct in thinking that there is gap between ECO3 and ECO4 coming into effect? If so, why is that being allowed to happen?

Like the noble Baroness speaking for the Labour Benches, I welcome the extra commitments on offshore wind, but I also share her view that this is a massive missed opportunity for onshore wind. Onshore wind, as has been said, is one of the cheapest ways of powering green energy, and it is absolutely reckless that we are putting it aside.

On oil and gas, I hope the Government are really thinking about the danger of stranded assets on any new exploration. That is a dangerous thing.

I should declare my interest as a member of the UK Hydrogen Policy Commission in saying that I very much welcome the Government’s commitment to doubling their ambition to 10 gigawatts by 2030, and that for the first time, at least half of that will be green or electrolytic hydrogen.

Our ambitions are now similar to those of many of our international competitors, which is welcome, but the funding allocation behind them is completely different. We are not putting in anything like the money that our competitors are. Could the Minister look at that issue in particular?

Finally, will the Minister also look at the support that will be needed by local authority planning departments and councillors, which will have to deal with an increasing number of hydrogen-related planning applications? Currently, most do not have the necessary skills or resources to deal with them or to address the inevitable concerns. Will he also look at the regulatory environment that will be required? The hydrogen strategy suggests that regulations will be made on a piecemeal basis as hydrogen is scaled up, but this misses the point that regulatory certainty is absolutely required if the scale-up is to happen at all. I hope he can address a few of those questions.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

I thank the noble Baroness, Lady Blake, and the noble Lord, Lord Oates, for their relatively constructive comments. I know they do not necessarily agree with everything we are doing and would like us to go further in some respects, but I know that in general, their hearts are in the right place. The strategy is of course a long-term plan to accelerate the transition away from expensive fossil fuel prices that, obviously, are set by global markets we cannot control. I know that both the noble Baroness and the noble Lord will support us on that.

Starting with the vital issue of concerns about energy prices, correctly raised by the noble Lord, the strategy reconfirms that the Government are committed to helping with the cost of living. That includes over £9 billion of help for families struggling with their bills. We are aware, of course, that Ofgem will set the next price cap in August, and we will want to review the current support arrangements at that point, well in advance of them taking effect in October.

The noble Lord also raised issues concerning energy efficiency. I know that he and I agree on the critical role that energy efficiency plays in both our energy security and in helping consumers to manage their energy bills. I disagree with him, however, in that this Government have gone further than any other in setting out an ambitious energy efficiency strategy, including through our landmark heat and buildings strategy. I know he will want to push us to go further but, in essence, we are heading towards the same destination—although apparently, we have different rates of getting there.

In response to the noble Lord’s question about ECO, there is no gap between ECO3 and ECO4. There is a delay due to legal considerations in tabling the SIs to implement ECO4, but we are certainly in touch with the industry bodies to explain that, and there is no gap in the implementation. The increased budget associated with it, at £1 billion a year, takes effect.

The noble Baroness, Lady Blake, raised the subject of onshore wind—I am sure there will be further questions on this as we proceed through the Statement—and also solar. Noble Lords are correct: onshore wind and photovoltaic solar are the cheapest forms of renewable energy. We are fortunate to have more onshore wind that pretty much any other country in northern Europe, and we continue to promote it passionately.

That said, both onshore wind and large solar projects —which can be controversial in some circumstances—should be pursued on the basis of local community support. Clearly, where that local backing exists, the strategy includes support for new projects and the enabling national network infrastructure.

Offshore wind is an area in which we have been hugely successful, and it has had a transformative effect compared to other renewables. Offshore wind is especially suited to the UK’s geography, and we truly are leading the world in its technology and capacity. It rightly forms one of the centrepieces of the strategy. As the noble Lord, Lord Oates, referred to, we are increasing our ambition to deliver up to 50 gigawatts by 2030, including up to five gigawatts of innovative floating wind capacity. By 2030 we will have more than enough wind capacity to power every home in the United Kingdom.

In response to the question by the noble Baroness, Lady Blake, I say that this is all bringing vital investment into the UK, particularly to our coastal communities. It will support 90,000 direct and indirect jobs by 2030. I met the Mayor of Tees Valley last night, who was telling me about some of the enormous projects being built on his patch, entirely to benefit from this expansion of offshore wind capacity.

I also welcome the support of Labour—if not the Liberal Democrats—from the noble Baroness, Lady Blake, for nuclear. It is very welcome. Energy security means being able to meet demand even on the coldest days of winter when there is neither sun nor wind. We need a baseload of decarbonised power to complement the renewables we are installing and while most of the current nuclear fleet is reaching the end of its lifespan and will be decommissioned this decade. We will be reversing decades of underinvestment and we will build back British nuclear.

In response to the question from the noble Baroness, Lady Blake, about the new body, I say that this will be set up immediately to bring forward new projects backed by substantial funding. We will launch the £120 million future nuclear enabling fund this month. We intend to take one project to a final investment decision in this Parliament and two in the next—subject to value for money and the appropriate approvals, as always.

On the subject of fracking, which the noble Baroness, Lady Blake, also asked about, it is right and sensible that, with wholesale gas prices around 10 times their level at the end of 2019, we review the science and evidence picture around fracking. The strategy commits to assess whether the previous conclusion against licensing has shifted or if scientific developments have changed, and we will do that.

I welcome the support of the noble Lord, Lord Oates, for hydrogen. I am happy to look at the comments he made about support for local authorities in terms of progressing hydrogen applications. I am sure we want to provide as much technical support as necessary and I agree with his comments about the importance of regulatory certainty in this area.

[Lord Howell of Guildford (Con)]

My Lords, I declare my interests in energy as in the register. Can I couple that with a plea that we have a full debate in the new Parliament on all these issues? There are things here which affect both the immediate situation for all of us—certainly most of the households in this country—and the long-term condition of this country facing its energy needs in the future. We have heard some very unchallengeable and sensible ideas on this, but I am not sure they meet the immediate crisis effectively.

Can I draw the Minister’s attention to the section in the energy security policy paper which points out that there is “no contradiction” at all between short-term concerns to boost oil and gas production, referring to the North Sea, and the long-term climate aims? On the contrary, the two are linked together; that is what it rightly says in the paper. Can the Minister extend that thought to say that there is no contradiction in now seeking major oil producers in the Middle East to produce a lot more oil and gas to cause prices to tumble and partly replace Russian exports? It would really help bring down electricity, petrol and gas prices, and begin to meet the further huge increase coming our way like a rolling wave in October.

Can I plead that we go back to the great oil producers and press them hard that, unless they do this, they are financing Putin’s child murder in Ukraine? If they do it, we will begin to see a much greater easing of prices than any of the present well-intentioned short-term subsidies and additions we have had so far. That is the aim. Anything else is splendid, but it does not help the huge crisis in energy which will affect 70% of households of this country. I have heard nothing from either opposition party which will do that.

[Lord Callanan (Con)]

As usual, given his experience of the subject, my noble friend makes important points. On the subject of a debate, regrettably that is above my pay grade, but I will pass on his comments to the Chief Whip. Obviously, I stand ready to assist the House in any debates that it wishes to have. Regarding my noble friend’s comments about North Sea oil and gas, I say that he is completely correct. We are clear that oil and gas will continue to have a role as a transition fuel in the medium term. In carbon footprint and security terms, it makes eminent good sense to source these from the North Sea. That has to be preferable to importing them either from Russia or as LNG. That is why we will ensure a future for the North Sea, making use of our great reserves as we transition. We are holding a new licensing round in the autumn subject to the climate compatibility checkpoint.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I am going to ignore the quagmire of nuclear, which cannot come on stream for decades, and the quagmire of fracking, which is a ridiculously expensive and disruptive process, and all the other ridiculous ideas about more oilfields in the North Sea. I will talk specifically about biomass companies like Drax, which in fact produce more carbon than burning fossil fuels, yet the Government choose to give them renewable subsidies. Will the Minister meet me and one or two scientists who can explain the whole process to him, and possibly take that back to his department?

[Lord Callanan (Con)]

I am sorry that the noble Baroness has ignored the quagmire, as she puts it, of some very important subjects. I am sure we will want to debate them in future. She raised this matter with me yesterday. In principle, I understand the point she is making, but I point her to the website of Ofgem, which does the appropriate sustainability checks on the biomass used in Drax. It is from waste sources, and it is renewable. The Greens are shaking their heads, but I am afraid there is a case for it. It is sustainable and renewable, which is why it qualifies, but it is subject to strict sustainability criteria. They are checked and published.

[Lord Kerr of Kinlochard (CB)]

There is much in the Statement to welcome about the long term but, as Keynes said, in the long term we are all dead. What worries me is that there is not a word in the Statement about how we are going to help people deal with the very real household energy crisis we are in now that will vastly increase in October. The reference period that will decide by how much the cap goes up ends in July. We know now that there is going to be a big increase again; there is no reason for us to wait. It is not very reassuring to be told that

“the Chancellor has promised to review his package of support before October”.—[Official Report, Commons, 19/4/22; col. 75.]

Why is he not doing it now? I suggest that, when he looks at it, he looks not just at little packets of money here and there, but at the possibility of indexing the energy element in universal credit to the energy component in the household expenditure of the people on universal credit. That is the most efficient way of targeting it. It is sad to see a long-term strategy which tells us nothing about onshore wind, storage or the improvements to the grid which are badly needed. The more we invest in wind, the more we will need grid improvements.

[Lord Callanan (Con)]

The noble Lord’s question was somewhat contradictory. He complained that the strategy did not address some of the short-term problems but in the end, he referred to it as what it is: a long-term strategy. The clue is in the title. The reality is that it takes many years to put in place energy infrastructure, and it is right that the Government address these factors and look to the long term to make sure that we are putting in place the appropriate steps, such as the nuclear RAB Bill, to provide the long-term security of supply and power that the country needs. That does not obviate the difficulties that we have in the short term. As I suspect the noble Lord knows very well, I cannot comment on what the Chancellor may do in response before any future fiscal event, before the next price cap comes in. However, I can assure the noble Lord that the problems the nation faces with high energy prices are at the forefront of the Government’s consideration.

[Lord Rooker (Lab)]

I will make two brief points to the Minister, but as an aside on Drax, if memory serves me correct, when it started using the pellets, they were from trees in north America that had been grown for the printing industry, and the paper industry completely collapsed. Communities had been destroyed, and the fact that they could use this wood seemed a positive benefit. However, that may not currently be the case—it has been many years since I paid a visit.

On the nuclear issue, my noble friend is right in the sense that in 2009 the Labour Government left half a dozen sites for nuclear power stations, but the Statement is correct in that we lost 20 years. The Labour Government Cabinet was discussing this issue in late 2002 and early 2003. I was a simple Minister of State—I was not involved in that—but I remember writing a note for my Cabinet colleague, my senior. That is the kind of thing I remember because it was Christmas Day and I was sitting in Charing Cross Hospital at the time, as a visitor. The issue had been discussed but it was flattened by two or three members of the Cabinet. I will not name anybody, but that was a lost period.

The central issue I want to ask the Minister about was not referred to: batteries. The International Energy Agency has said that because of the use and storage of batteries for transport, propulsion and homes, the world will need a sixfold increase in lithium, cobalt and rare earths. Where are they processed? Some 60% of the world’s lithium is processed in China, as is 65% of the world’s cobalt, although it is mined in the Congo, where 40,000 children are involved in mining it. Some 87% of the world’s rare earths are processed in China. Therefore, the issue has to be, what do we do with colleagues and friendly countries—we cannot do it ourselves—to avoid in 20 years’ time being in the same position we are in now with gas and oil from Russia: being hooked to China for the metals we need for batteries? It is a grip that has enormous potential, and it needs dealing with now. I used the word “processing”; China is not mining it all but is controlling the process from the mining. A huge amount of cobalt comes from the Congo but it ends up being processed in China. China has a grip on this and I know people are trying to deal with it—I think the EU is—but the Government have to be part of a plan. They will not be able to do it on their own; they have to work with others. We need to cease dependence on such a large scale on metals that will be vital for our industries and our energy security.

[Lord Callanan (Con)]

The noble Lord raises a number of important points. On the biomass supplying Drax, he is right that it is mainly produced from waste-wood sources that would otherwise not be utilised. I think he was agreeing that that was a mistake on the part of the Labour Government, who got elected in 1997 on a manifesto that said there was no case for new nuclear. It is easy for us to look back at mistakes made in the past but in retrospect, that was a mistake. This comes back to the point made by the noble Lord, Lord Kerr: that in an advanced industrial country, this infrastructure takes many years to put in place. We let the UK nuclear industry wither on the vine because, of course, at the time we had ample supplies of clean gas and not so much concentration on climate change.

The noble Lord is in essence right about rare earths, but the Government are very well aware of this. A number of innovative battery technologies are also being developed but we are looking very closely at the necessity of various rare earths for existing battery technology, such as cobalt and lithium, and at where alternative supplies can be procured.

[The Lord Bishop of Manchester]

My Lords, I declare my interest as both a Church Commissioner and a board member of a housing association. As things stand, a community with local renewable generation is not allowed to sell the energy it generates directly to local people. Instead, it has to sell it to a utility, which sells it on to customers, creating disproportionate costs. Moreover, community-level generation could be further promoted by ensuring that new housing developments include green energy or even a requirement that they place no increased demand on the grid by generating more of their energy needs. The Bible assures us that the sun shines on both the righteous and the unrighteous. Indeed, I can assure the Minister that it does so even in my notoriously rainy city of Manchester. Can he outline what will be done to promote greater take-up of community energy generation programmes?

[Lord Callanan (Con)]

I thank the right reverend Prelate for saying that the sun shines on all of us—I am delighted to hear that. Community energy is important and we are supporting a number of community projects within Ofgem. I realise that there is a campaign to increase the take-up of community energy and we are in principle supportive of that. However, if those community energy projects also wish to be connected to the national grid and take advantage of other forms of energy and supply, it is right that they pay a proportionate share of costs for that. They are not insulating themselves from the national grid and from other forms of energy production and supply. Nevertheless, we want to see what we can do to support community energy, Ofgem is engaged in it, and we will look at what more we can do to help.

[Viscount Stansgate (Lab)]

My Lords, reference was made in the Statement to low-carbon hydrogen production. Does the Statement mean that the Government have in effect taken a long-term strategic decision—by which I mean well beyond 2030—that the hydrogen they intend this country to produce will be green and not blue?

[Lord Callanan (Con)]

Ultimately, yes, but in the short term we will want to support both forms of hydrogen production to get the market started and we will look towards providing something similar to the contracts for difference scheme for hydrogen production. As the noble Viscount is aware, we announced an expansion of hydrogen production in the strategy.

[Lord Teverson (LD)]

My Lords, is it still the case that despite this plan, just one person in a local community can in effect veto an onshore wind plan for that community?

[Lord Callanan (Con)]

I do not think so—I do not think it would be that specific. We will not have one person vetoing an application. However, we would want to make sure that there was general community support for further onshore wind capacity before development proceeded.

[Baroness Foster of Oxton (Con)]

Ukraine has certainly focused all our minds and minds in all countries, particularly across Europe. In particular I welcome the Government’s policy on expanding our nuclear energy programme and that they have now agreed to acknowledge that shale gas extraction should be considered. Notwithstanding that the shale gas extraction programme was halted, the initial work has been done. The technology has improved and horizontal extraction techniques take up a much smaller land area. This could come on stream as soon as 18 months’ to two years’ time, given the work that has already being done, albeit that it will be a long-term programme. Will my noble friend assure the House that the Government will crack on with this programme, as it is vital that we become energy self-sufficient as soon as possible?

[Lord Callanan (Con)]

I know that my noble friend feels strongly about this subject but it is important that we take account of the recent scientific consensus, and we will do that. We have always been clear that the development of shale gas must be safe and cause minimum disruption and damage to those living and working near sites, and that is not a new position. However, my right honourable friend the Secretary of State has asked the British Geological Survey to look again at this process. I think my noble friend is wrong in thinking that we could get large amounts of fracking on stream within 18 months. So far, we have had maybe two wells; to get significant amounts of fracked gas you would need many hundreds if not thousands of such wells, so it is quite a disruptive process and can take quite a long time. Nevertheless, we will be guided by the science and will look again to see whether it is possible to do it, with the consent of local communities.

[Baroness Hayman (CB)]

My Lords, I declare my interest as co-chair of Peers for the Planet. I return the Minister to his answer to the noble Lord, Lord Teverson: he said that he would not want one person to be able to veto an onshore wind development. Is that not precisely what is implied by the ministerial Statement that now governs these issues? Is that not why we have had a complete standstill on onshore developments? In an earlier answer, the Minister said that community support was important; it is in all planning applications, but why should these planning applications have a far higher standard, which requires unanimity from the local community? I ask why the Statement said that we would double down on every available technology, yet did not look at that issue, and why it makes a very limited proposal for developments that would support local communities in terms of cheaper electricity. That is fine but it does not give the volume that we need. May I ask specifically about the part of the Statement that says that we will look at arrangements to support the repowering of existing onshore wind sites? This is a real issue: we will not only not expand but contract because of the difficulties of repowering. What is the nature and timescale of the inquiries that will be made?

[Lord Callanan (Con)]

I know that the noble Baroness is a passionate supporter of onshore wind. She brought her Bill on it recently and we debated the subject at great length. I know she will continue to probe and push me, as is correct, on this subject about which she feels so strongly. The Government are clear: we want to see an expansion of onshore wind and we would like to see the communities that host this new Bill’s infrastructure benefit from developments in their areas. We hope that will drive greater levels of community consent, which will allow more of the procedures to come forward. I will write to the noble Baroness with details of repowering existing onshore wind infrastructure.

[Baroness McIntosh of Pickering (Con)]

Will my noble friend look closely at the possibilities for energy from waste and distance warming that are tried and tested and work so successfully, not just in this country but across most of Europe? Will he also ensure that many of these projects could be fed into the local grid rather than into the national grid, as happens currently?

[Lord Callanan (Con)]

Energy from waste is an important topic, both in generating electricity but also for heat networks. I have visited a number of very innovative energy from waste plants; there is one in particular in east London that is extremely successful and powers and heats thousands of local homes in the community. By the very nature of a heat network, under an energy from waste plant, it does of course benefit and help the local community.

International Energy Agency Report

Lord Callanan Excerpts

Tuesday 26th April 2022 Lords Chamber

[Lord Rooker]

To ask Her Majesty’s Government what steps they are taking to implement the recommendations in the International Energy Agency report, Playing my part: How to save money, reduce reliance on Russian energy, support Ukraine and help the planet, published on 21 April.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, we are working closely with the US, the EU and other partners to end dependence on Russian oil and gas in response to Russia’s aggression in Ukraine, recognising the different circumstances and transition timelines. The net-zero strategy is the Government’s plan to achieve a green, sustainable future, including how we will support the public to play their part in this transition. We note the report’s recommendations and will continue to consider further steps to support the public.

[Lord Rooker (Lab)]

My Lords, the UK is a member of the International Energy Agency, and I expected a more positive view. I fully accept that it is the Government’s role to take the national and the global view, but people want to be able to play their part and feel that they are contributing, above donations and above helping refugees. The nine points in the plan are voluntary except for one: speed limits. We could save an enormous amount of energy if we reduced the speed limit to 60 miles per hour, as we did during the three-day week. It is not a massive inconvenience for people and it saves a lot of energy. While I am uncomfortable talking about boiler temperatures when millions of people in Ukraine are living below ground at the present time, the estimate is that this plan could save 220 million barrels of oil and 17 billion cubic metres of gas. It is worth a real push by the Government to get people to play their part.

[Lord Callanan (Con)]

I do not disagree with the noble Lord. We are encouraging people to play their part and, of course, we encourage people to drive as slowly as possible and responsibly. We encourage people to turn down the temperature of their boiler if this can be achieved while still heating their home properly and providing the appropriate levels of comfort. Of course we will support people to make responsible choices.

[Lord Howell of Guildford (Con)]

My Lords, I declare an interest in energy matters, as set out in the register, and a long time ago I was a rotating chairman of the International Energy Agency. The noble Lord, Lord Rooker, is quite right that increased efficiency and reduced oil intensity are ways to reduce the growth of demand and renounce Russian exports. However, is not the best way, in the very short term, to get the OPEC producers of oil and gas to increase their supply, which they can easily do, and bring down petrol and gas prices very quickly, which that would do? As OPEC has broken with the IEA recently, should we not be pressing that issue much more directly with our so-called friends in the Gulf?

[Lord Callanan (Con)]

My noble friend makes an important point. As well as encouraging OPEC to increase production, we are trying to increase production from our own domestic sources and ensure that there is increased investment in our own resources in the North Sea.

[Lord Oates (LD)]

My Lords, has the Minister had a chance to read the excellent blog on this subject by the former clerk to the Lords Science and Technology Committee, Dr Simon Cran-McGreehin, which reminds us that, in 2012, 2.3 million insulation measures were installed in the UK before policy changes reduced that to an average now of 10% of the peak? Does he therefore agree that the quickest way to restore these levels would be immediately to appoint Liberal Ministers back to government, given that this was during the coalition? Failing that, will he consider which of the policies in place at that time could be adopted now to speed up building insulation, which I know he is as keen to do as the rest of us?

[Lord Callanan (Con)]

The noble Lord will forgive me if I do not accept at least one of his policy recommendations. For that to happen, the Liberal Democrats would need to win an election, which is vanishingly unlikely in the current circumstances.

[Noble Lords]

Oh!

[Lord Callanan (Con)]

However, the noble Lord knows well my support for insulation measures. Insulation—energy that we do not use—is the most efficient form of energy. We are rolling out a considerable number of measures. He will aware that, under ECO4, we are introducing support of up to £1 billion a year, as well as the social housing decarbonisation fund, the local authority delivery fund, the home upgrade grant, et cetera—all of which are rolling out insulation measures for the poorest members of our community.

[Baroness Worthington (CB)]

My Lords, we are fortunate in the UK that our dependence on Russia for energy has been diminished thanks to successive policies to support renewable electricity, but is the Minister aware that just less than one in five litres of diesel comes directly from Russia? What plans does the noble Lord’s ministry have to speed the transition from diesel to electric vehicles, which will save drivers money, increase our energy independence and clean our air?

[Lord Callanan (Con)]

We are seeking to end imports of Russian oil by the end of this year. We already have one of the fastest transition periods to electric vehicles in the western world; we will ban the sale of petrol and diesel cars by 2030. We are already rolling out more efficient vehicles, although we should be aware of the cost of these to many families at the moment.

[Lord Lennie (Lab)]

My Lords, the International Energy Agency report contains useful recommendations for citizens to use energy more efficiently and highlights the many benefits of doing so, but the Government do not seem to be leading by example. Why did the energy security strategy fail to deliver in this area and what steps will the Government take to ensure that sensible personal decisions are backed by them?

[Lord Callanan (Con)]

Of course, it was regrettable that we did not manage to include some more insulation measures within the energy security strategy, but the Government always back people to take responsible decisions, as I mentioned in my Answer to the noble Lord, Lord Rooker. We want to support people to make responsible choices, whether in heating their home, in travelling or in their personal circumstances.

[Lord Flight (Con)]

My Lords, surely it is time to develop fracking in the UK.

[Lord Callanan (Con)]

The House has debated this subject on many occasions, and we will continue to be led by the science. My noble friend will be aware that the Secretary of State recently commissioned the British Geological Survey to have another look at the scientific evidence for fracking, but we cannot ignore the problems that were caused by the Cuadrilla test wells. If those objections can be overcome and we can gain the support of local communities, there is no reason why we cannot do it, but let us not think that this will be a short-term answer to our problems.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, speaking of responsible decisions, the last three words of the title of the International Energy Agency’s report are “help the planet”, yet the Government are currently subsidising polluting companies—for example, Drax—to the cost of £2 million a day. Will the Minister take that back to his department and explain that biofuel companies such as Drax do not produce renewable energy?

[Lord Callanan (Con)]

To respond to that point would take longer than I have for this answer, but I disagree with the noble Baroness—although I have great respect for her—that biomass is not renewable. This has been studied at great length, and supporting Drax and other power stations to move to renewable sources of power with waste wood is an environmentally responsible thing to do, in our view. The energy pathway for that is audited.

[Baroness Sheehan (LD)]

My Lords, in response to my Written Question of 24 March about government plans to encourage people to turn their thermostats down, the Minister referred me to the Met Office’s WeatherReady campaign. This turns out to be a web page to help people prepare for severe-weather measures, such as putting on sunscreen and drinking more fluids. Therefore, let me put the question a different way: when will the Government launch a full-throttled campaign asking the British public to turn down either the heating or the air conditioning? This will save money, end once and for all our import of Russian gas, show support for Ukraine and reduce greenhouse gases—everything the Government say they want to achieve.

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[Lord Callanan (Con)]

There are, of course, very few people in this country who benefit from air conditioning; rather, it is heating that is the issue. Nothing will drive people to turn down their heating at the moment more than the current high gas prices. I am not sure that we need much of a government information campaign to encourage people to save money where they can, but we do not want it to be at the expense of people living in cold homes.

[Baroness Neville-Rolfe (Con)]

My Lords, I echo the tributes paid to the amazing career of Lord Plumb, whom I remember so well in a previous commodity crisis as an interlocutor with the then Agriculture Minister, John Silkin. He was very effective. Given the somewhat limited scope of the IEA-promoted self-help that we have seen in this report, can the Minister remind us of what the Government are doing to insulate consumers, the elderly and struggling small businesses from the mushrooming of energy prices that we have seen?

[Lord Callanan (Con)]

Indeed, I would be happy to help my noble friend and build on the answer I gave to the noble Lord, Lord Oates, earlier. We are spending from £750 million up to £1 billion a year on ECO 4. We are spending £6.6 billion over this Parliament on all the different insulation and energy-efficiency schemes that I mentioned earlier, delivering practical measures in hundreds of thousands of homes up and down the country. These very successful schemes are driving up the energy efficiency of the poorest households in the country. They are excellent schemes and worthy of the House’s full support.

Vaccine Manufacturing and Innovation Centre

Lord Callanan Excerpts

Monday 25th April 2022 Lords Chamber

[Baroness Bakewell]

To ask Her Majesty’s Government whether they still intend to sell the Vaccine Manufacturing and Innovation Centre; and if so, what progress they have made.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, VMIC is a private company and, as such, decisions regarding the future of the facility were made by the VMIC board of directors, not the Government. As Minister Freeman set out in his letter to the noble Baroness, Lady Brown, Catalent announced that it had purchased the VMIC facility on 6 April. It plans to invest £120 million and envisages providing up to 400 additional jobs, which of course further strengthens the UK’s life science ecosystem.

[Baroness Bakewell (Lab)]

My Lords, within days of my tabling the Question, I discovered that this jewel in the crown of our vaccine policy had been sold off to a major American pharmaceutical company for a great deal of money. The process was not made public. Can the Government assure me that taxpayers will get a benefit from the £200 million that they invested in this enterprise? What safeguards exist against the exploitation of the UK talent and workforce by a company run according to the profit-led motives of American pharmaceuticals?

[Lord Callanan (Con)]

I am sorry but a number of assumptions behind the noble Baroness’s question are wrong. First, this is a private company that sold off its facilities to a very successful US manufacturer that produced virtually all the Moderna vaccine, with great success. The vast majority of the vaccines that we have used and successfully deployed were also rolled out by private companies. All the employees who work there are being guaranteed their jobs, on the same terms and conditions, and indeed the facility will be expanded. She needs to rethink her questions on this.

[Lord Fox (LD)]

My Lords, I think that everyone across the House agrees that we were ill prepared when this pandemic arrived, and planning for future pandemics is very important. The security and investment Bill was intended to secure private facilities that might be needed to secure the future of this country. Was that legislation applied, and was this sale evaluated by the unit in the Minister’s department? If not, why not?

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[Lord Callanan (Con)]

Of course the legislation applies, as it does to all transactions that have taken place in this country since 1 January, so we would bear any appropriate security considerations in mind in any potential call-in. I obviously cannot comment on any particular circumstances, as the noble Lord will understand, but we are happy for this transaction to proceed.

[Baroness Watkins of Tavistock (CB)]

Could the noble Lord explain whether we would be able to contain vaccines in this country from the centre in the event of us needing mass inoculation again?

[Lord Callanan (Con)]

The centre has not been completed —it is still under construction—so it has not produced any vaccines yet. Obviously whether it does so will be a matter for its new owners. But the Government have a wide range of emergency powers that we may need to deploy in the event of any future pandemic.

[Baroness Blake of Leeds (Lab)]

My Lords, the sale of the Vaccine Manufacturing and Innovation Centre has been described as akin to defunding fire brigades after they have extinguished a major blaze. Can the Minister tell us in detail what steps the Government have taken with the sale to ensure that this is not the case and that the UK remains well prepared for any future pandemics?

[Lord Callanan (Con)]

I assure the noble Baroness that this is indeed not the case. Her question is fundamentally misconstrued. The centre was originally set up a number of years ago to look at the development of vaccines for Ebola; it was a private company then and remains a private company now. It was grant-aided during the pandemic as a precautionary measure in case we needed additional facilities. All the facilities which delivered vaccines were also all delivered by private companies. I am not sure where the Opposition are going with this question. Of course, the facility remains in the UK. It will expand its production and another £120 million will be invested in the facility; it will be able to contribute to vaccine production in the future if we need it.

[Lord Watts (Lab)]

My Lords, if the Government do this, can the Minister guarantee, first, that if there is a need for a mass vaccination programme, we will have the ability to do it? Secondly, can he guarantee that it will be in the same cost frame as we have seen recently? When compared with the Americans, it seems a very cost-effective way of delivering things.

[Lord Callanan (Con)]

As I said, there are a number of other sites in the UK which also manufacture vaccines. If the Government need to procure vaccines for a future pandemic, I am sure that we will want to procure from this site, in addition to all the other sites which exist in the UK—all of which, I might add, are in private hands.

[Lord Newby (LD)]

My Lords, in his response to my noble friend’s question, the Minister said that he could not give us any explanation of the process which had been followed for reasons which we would all understand. I did not understand why the Minister could not answer that question. I wonder if he could answer it now, as it seems to me that there are no reasons, in terms of commercial confidentiality, why he cannot answer that question.

[Lord Callanan (Con)]

The investment security unit looked at the transaction, as it does all transactions. Obviously, as the transaction has proceeded, we have decided not to intervene.

[Baroness McIntosh of Hudnall (Lab)]

The UK has an unfortunately long history of investing in research, developing products and then selling them and not getting the benefit of their extensive exploitation. Can the Minister say whether he thinks that there is any danger of that happening on this occasion? What efforts are the Government making to protect the research facilities which are, after all, the most remarkable thing about the way in which the vaccines were developed in the first place?

[Lord Callanan (Con)]

This received grant funding—as did a number of other R&D facilities. The noble Baroness makes an important point that we need to ensure that R&D funding is used to develop and benefit companies, individuals and employees in this country. This is one of a number of different vaccine manufacturing facilities and, as I said, it is not yet operational. When the additional investment goes in, I hope that it will be operational in the future. It will offer the UK another excellent, world-leading production platform for vaccines.

Energy Security Strategy

Lord Callanan Excerpts

Thursday 7th April 2022 Lords Chamber

[Baroness Hayman]

To ask Her Majesty’s Government, in the light of the publication of the Energy Security Strategy on Thursday 7 April, whether they will give further details on their proposals for onshore wind and home insulation.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

The Government’s energy security strategy sets out a comprehensive package of measures to improve the UK’s energy security. We will support the deployment of onshore wind across the UK. This includes a commitment to consult this year on onshore wind partnerships in supportive local areas in England. On the second part of the noble Baroness’s question, we are spending a total of £6.6 billion across the lifetime of this Parliament to retrofit the nation’s buildings, and the Chancellor announced the removal of VAT on energy efficiency measures.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register and apologise, because I may have inadvertently misled the House in saying that the strategy had been published today. In fact, what was published yesterday was a four-page press release, two pages of which were supportive quotes about the policy. Perhaps as a starter, the Minister could tell us when we will actually see the policy. With what has been published, in the week of the IPCC’s most frightening warnings yet on global warming, and when customers and consumers face horrifying energy bills, it is deeply disappointing to see a set of policies outlined that concentrates on the expensive and the long term and fails to support what would work immediately and help both consumers and the climate.

I have two specific questions for the Minister. Why are there no extra measures to support consumers in insulating their homes? We have some of the worst housing stock in the world, and that is an absolute no-brainer to reduce demand, so we should support it. Is that the result of the cold hand of the Chancellor? Why, when the figures from both his own department and the Conservative Environmental Network this week show that more than 80% of the public support onshore wind, are the Government being so timid and refusing to allow normal planning procedures to go ahead? Is that the dead hand of the Government Chief Whip?

[Lord Callanan (Con)]

There were a number of questions from the noble Baroness. I think she may have unfairly maligned my noble friend Lord Ashton. I am not aware that he has any strong views on the subject. I am sure he will communicate with me if he does, but he has not so far. The strategy will be published later today, and I apologise that the noble Baroness has not had a chance to look at it so far.

With regard to her other questions, we are rolling out the development and formation of low-carbon sources of power, be they nuclear or offshore wind, and we are going to go further on onshore wind. I know it is a subject that the noble Baroness feels passionately about. We must do so in full recognition of the concerns of many local communities. We want to take people with us when we do that, so we will seek a number of pilots to take those policies forward.

We are already spending a lot of money on energy efficiency programmes. I have outlined them numerous times in this House before, but I would be happy to do so again. It would have been good to go further but, regrettably, that was not possible in this case.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I think there may be a theme to these questions. The Minister is well aware of these Benches’ support for nuclear and offshore wind. However, onshore wind and solar power are the electricity sources that can reduce our reliance on Russian gas the fastest, given their short construction times. Bottlenecks in planning can be resolved through changes to regulation, and doing so would unlock new power to eliminate Russian gas from our energy mix. Yet our understanding is that specific targets for onshore wind, which is the cheapest and fastest, have disappeared or been removed. Could the Minister explain why? Surely it is not possible that the Government are once again prioritising internal party politics rather than the national interest.

[Lord Callanan (Con)]

There is a lot of good news in this strategy for those who believe in the development and deployment of low-carbon power: the expansion of nuclear and of offshore wind, further developments in hydrogen, et cetera. As I said, in terms of onshore wind, we will be looking to develop a limited range of partnerships with supportive local communities. I should add that this is in England; Scotland and Wales have their own separate planning powers. We will look to develop partnerships with a limited range of supportive communities to try to agree further deployment of onshore wind.

[Baroness Bennett of Manor Castle (GP)]

In responding to the noble Baroness, Lady Hayman, the Minister talked about the concerns of local communities about wind power, but CEN polling this week showed that 83% of all voters and 80% of Conservative voters support the expansion of onshore wind. The journalist Paul Waugh has seen a March draft of this strategy with a target of 45 gigawatts of onshore wind capacity by 2035. What happened to that target?

[Lord Callanan (Con)]

I cannot comment on leaks of draft documents to journalists. All government documents go through a long drafting process. As I said, we are supportive of the deployment of onshore wind, but we want to do it in co-operation with and with the agreement of local communities, so we will seek to roll out a number of partnerships to enable us to do that.

[Lord Howell of Guildford (Con)]

My Lords, I declare my energy interests. It is a bit difficult to comment on a paper we have not seen, but by the sound of it, it is going to be full of admirable longer-term proposals, including the nuclear one—although I think that actually, as usual, they are going to get that wrong. Generally, it is in the right direction, as the noble Baroness, Lady Hayman, has rightly emphasised. But is there a recognition of the unavoidable fact that, for the next five to eight years, we are going to remain inextricably embedded in dangerous and volatile global oil and gas markets, and we cannot get out of this? There is only one short-term answer, which is to cut demand—as again the noble Baroness, Lady Hayman, and others, have suggested—and increase supply substantially. What are we doing to get Middle East suppliers, who are supposed to be our friends, to replace Russian exports—which are of course financing Russian atrocities by the day—by pumping much more oil and gas in the short term, which they can easily do? When are we going to get on with that?

[Lord Callanan (Con)]

The noble Lord is right: we will have an ongoing requirement for oil and gas in the transition period. We will seek to obtain as much of that as possible from our own domestic sources and will roll out an additional licensing round for North Sea oil and gas projects this autumn—they will of course all be done in co-operation with our climate compatibility tests—because it is much better to get those resources locally than source from unstable parts of the world. I cannot comment on discussions that have taken place with various regimes in the Middle East.

[Baroness Boycott (CB)]

My Lords, the IPCC report this week was explicit that emissions need to peak by 2025: that is only three birthdays away if we are to have any hope of holding to below 1.5 degrees, yet this press release says that there are new licensing rounds for oil and gas this year. Does the Minister not agree that drilling for oil will not lower the bills and that the surest and cheapest way to do this is to ramp up all forms of renewables and insulate homes?

--- Later in debate ---

[Lord Callanan (Con)]

We are ramping up all forms of renewables, but we have a requirement for oil and gas in the short term. I remind the noble Baroness that the UK’s emissions are falling fast. We have the fastest rate of declining emissions of advanced western economies. We were the first to set a long-term target. The UK is responsible for a tiny proportion of emissions in worldwide terms, and this is a worldwide problem. We are reducing our emissions; we are making progress; we are rolling out renewables, and we are rolling out energy-efficiency measures.

[Lord Oates (LD)]

My Lords, the immediate crisis of energy security relates to the energy security of millions of British people who are facing ruinous bills. In that context, why have the Government chosen a strategy that passes over the cheapest form of energy production —onshore wind—and have instead adopted the most expensive—nuclear—which will be piled on people’s bills through the RAB charge? What is the reason behind that?

[Lord Callanan (Con)]

As we debated many times in this House, we need both. We need nuclear and are pleased to have the support of the Opposition in accepting that we need it for long-term baseload power supplies. We also need renewables, which is why we already have the second greatest amount of offshore wind power in the world. We are seeking to ramp up those facilities as well. We are also deploying additional solar and hydrogen production. As I said, on onshore wind, we will look to go forward in partnership with supportive local communities. It is not a question of picking one technology over another: we need a diverse mix of energy supplies. The noble Lord was wrong to say that there was a problem with the UK’s energy security. There is no difficulty with energy security; there is clearly a short-term difficulty with the price of energy—particularly relating to gas—and we totally understand the difficulties that consumers are going through. That is why the Chancellor announced the £9.1 billion-worth relief package.

[Baroness Blackstone (Ind Lab)]

My Lords, perhaps I can push the Minister a little further on his reply to the last question. While of course it is vitally important that every conceivable measure to deal with our energy problems should be addressed, there is a question about what should be given priority and where the urgency should be attached. While I strongly welcome the Government’s decision to expand our nuclear energy facilities, surely priority should be given to the relatively cheap and relatively popular policy of trying to expand faster our onshore windfarms. More than 80% of the population welcome this, only 4% are opposed to it, so public opinion is behind it. Would it not be helpful to establish priority for that, as well as providing more money—I know the Government have provided some, but not a great deal—for insulation programmes as a matter of urgency?

[Lord Callanan (Con)]

I understand the thrust of the noble Baroness’s question, but we can prioritise a number of different things at the same time. That is why this is a comprehensive strategy. We are rolling out new nuclear, as indeed we should; we are also rolling out additional offshore-wind capacity and additional hydrogen capacity. As I said, onshore wind is also a priority, but it is a priority that we need to act on in cognisance and recognition of the concerns of local communities. With regard to insulation schemes, we are spending something like £6.6 billion over the term of this Parliament on insulation schemes. It would have been good to have gone further, but the Treasury would not support it.

[Lord Lilley (Con)]

My Lords, given that the two forms of domestic energy that can most rapidly come on stream and displace expensive imports are onshore wind and onshore shale gas, why does the Minister not introduce a system where, if a majority of the people in the vicinity of any proposed site to produce onshore wind or onshore gas vote in favour of it in return for cheap electricity or gas, it can go ahead?

[Lord Callanan (Con)]

Both the cases highlighted by my noble friend show the difficulties of proceeding in this environment, because we are a democratic society; we have strict planning rules and we have to try to proceed with these things with care and the support of local communities. I have outlined the position a number of times in relation to onshore wind. With regard to fracking for shale gas, my noble friend will be aware that the Business Secretary commissioned the British Geological Survey to do a further study to see if extraction of shale gas can take place without the unfortunate seismic events that occurred the last time it was tried. We will continue to be guided by the science in this respect.

[Lord Fox (LD)]

My Lords—

--- Later in debate ---

[Lord Fox (LD)]

I appreciate that, and I thank the noble Lord for giving way. As your Lordships’ House knows, the financial risk of funding future nuclear is falling to consumers through the RAB model. Can the Minister tell us when consumers will see their bills go up, and by how much? When will they see the fruits of that investment—in nuclear electricity—coming down their pipes? How long will they have to wait and how much will they have to invest before that electricity comes on stream?

[Lord Callanan (Con)]

We debated these matters extensively during the passage of the Nuclear Energy (Financing) Act. The impact on consumer bills under the RAB model is relatively small. I would be happy to let the noble Lord have the figures that we used during the progress of the Bill. As I suspect he is well aware, new nuclear projects take a number of years to come on stream. This is about the UK’s long-term energy security policy; a mix of policies will be required, which I have outlined at great length. Of course, it will be a number of years before new nuclear comes on stream.

Returning to the question I think the noble Lord, Lord Hunt, was about to ask me when the strategy will be published. The answer is today.

Newport Wafer Fab

Lord Callanan Excerpts

Thursday 7th April 2022 Lords Chamber

[Lord Fox]

To ask Her Majesty’s Government what is their position regarding the acquisition of Newport Wafer Fab by Chinese-owned technology company Nexperia.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the Government are considering the case and no decisions have been made. I am unable to comment on the details of businesses’ commercial transactions or on national security assessments. The Government always stand ready to act, where necessary, to protect the UK’s national security.

[Lord Fox (LD)]

My Lords, the problem here is that we seem to be looking at this issue in a vacuum. The Minister has said in the past that there are no specialist technologies at Newport Wafer Fab, but that ignores the need for industrial capacity to build technology. The Minister will say, and has said, that the factories will not move, so why should we care who owns them? I do care. There is a crippling shortage of microprocessors around the world that is hampering manufacturing. To combat that, the EU and the US have strategies. We seem to be waiting and seeing. So, to put this acquisition into context, can the Minister tell us when will we have a plan? Will he undertake not to allow this business to be sold until such a plan is forthcoming?

[Lord Callanan (Con)]

I cannot comment on the details of that particular transaction, which is still under consideration, but I can tell the noble Lord that DCMS is working on a semiconductor strategy that will also be published shortly.

[Lord Alton of Liverpool (CB)]

My Lords, this about the United Kingdom’s biggest producer of microchips and semiconductors; it is about national resilience and whether or not we wish to become a wholly owned subsidiary of the People’s Republic of China, which has been accused of genocide by Elizabeth Truss, our Foreign Secretary. What can the Minister tell us, for instance, about the value of contracts that his own department has had, or that the Ministry of Defence, perhaps more particularly, has had, with Newport Wafer Fab? What is the value of those contracts, and will the departments become customers of the People’s Republic of China, should this deal go ahead? Why are we not giving consideration to, and why will he not comment on, the remarks of Ciaran Martin, the former head of the National Cyber Security Centre, who said that there are “very real concerns” about the buyout and that it poses a greater threat than allowing Huawei to build the United Kingdom’s 5G network; and this week’s statement by the Foreign Affairs Committee in another place, that

“it potentially compromises national security”?

[Lord Callanan (Con)]

I totally share the noble Lord’s frustration about this, and totally align with his remarks about the People’s Republic of China. On the awful human rights abuses going on there, particularly the treatment of the Uighur people, there is no difference between us. Unfortunately, this is a quasi-judicial decision that will be taken by the Business Secretary under the powers granted to him by the National Security and Investment Act, which many of us debated at great length in this House. I cannot comment on the details of a quasi-judicial decision, or on national security assessments. I apologise to the noble Lord, but that is the position.

[Baroness Blake of Leeds (Lab)]

My Lords, the House of Commons Foreign Affairs Committee found no evidence to suggest that a review into the acquisition of Newport Wafer Fab had taken place, yet Politico reports that the Government’s National Security Adviser concluded that there were not enough security concerns to block it. Can the Government confirm, on record, whether the review that was promised by the Prime Minister took place or not?

[Lord Callanan (Con)]

I can confirm that the review is taking place.

[Lord Forsyth of Drumlean (Con)]

My Lords, what does my noble friend make of the remarks by the adviser to the Board of Trade, Tony Abbott, that the sale of Newport Wafer Fab would not go ahead were it happening in Australia? What discussions have been had with him, and with our allies in the Five Eyes network?

[Lord Callanan (Con)]

What would happen in Australia is a matter for the Australian Government. Tony Abbott is a member of the Board of Trade, and of course we value his insight and opinions, but this is a quasi-judicial decision that will be taken in the interests of the United Kingdom by the Business Secretary.

[Lord Purvis of Tweed (LD)]

The Minister will know that trade with China over the last few years has doubled, but that doubling has occurred because we now import £40 billion more than we export. This trade deficit is the biggest in this country’s history—with any country. We are now dependent in many sectors on imports from China, while at the same time, imports and exports with our closest trading partners have declined dramatically. Why does the Minister think that is the case?

[Lord Callanan (Con)]

I suspect there are a number of different reasons for that, particularly the importation of consumer goods. Globalisation and imports from China of consumer goods, consumables, et cetera, are a good thing in terms of global trade, but we have to be wary of dealing with companies from the People’s Republic of China. When it comes to matters of national security, we are incredibly vigilant. The NSI Act gave us new powers in this area, and we will not hesitate to act on anything that threatens the UK’s national security.

[Lord West of Spithead (Lab)]

My Lords, as the Minister says, the National Security and Investment Act was passed—it shot through this House, actually—to stop things like this happening, because we have been caught out in the past. There is absolutely no doubt—it is known across all our intelligence communities, Five Eyes and everywhere—that this factory has strategic significance and is strategically important to our nation. Therefore, while I understand the Minister’s saying that this is quasi-judicial, it would be nice to have some commitment from the Government that they understand how important this is in strategic terms, and they will not let this go through by some sort of error.

[Lord Callanan (Con)]

Nothing will go through in terms of an error, I can assure the noble Lord of that. This transaction is being considered very closely and there is an ongoing review by the National Security Adviser, as I said in response to the noble Baroness, Lady Blake. But the decision has to be taken, as outlined under the terms of the Act, by the Business Secretary. It is his decision and his alone, in quasi-judicial terms.

[Lord Stirrup (CB)]

My Lords, I realise that the structures and processes of government can be something of a mystery, but I am at a bit of a loss to understand—perhaps the Minister can help me here—how something so crucial to the security and defence of this country and our national infrastructure can be an issue for the Business Secretary.

[Lord Callanan (Con)]

I can certainly help the noble and gallant Lord on that. That is what Parliament decided under the NSI Act: that these decisions are a matter for the Business Secretary to take under the terms of that Act, under the powers granted to him by Parliament under that Act, and he will take those decisions. Obviously, a lot of advice is coming his way from all different parts of government, and from the National Security Adviser, but the decision is his alone to take.

[Lord Howell of Guildford (Con)]

I thought that an investigation into this whole matter had been announced in the other place. What happened to that investigation? Is it under way?

[Lord Callanan (Con)]

I am not sure I can help my noble friend—I do not know what investigation he is referring to. If he is referring to the question the noble Baroness, Lady Blake, asked earlier, on the review by the National Security Adviser which the Prime Minister announced, as I said to the noble Baroness, that review in ongoing.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, have the Tory Government learned nothing from the flirtation with Russian oligarchs? Why do they continue to put the interests of their friends, for the obtaining of a quick buck, ahead of national security?

[Lord Callanan (Con)]

I am sorry, but that comment is unwarranted. This is a commercial transaction between a company called Nexperia and Newport Wafer Fab. There are a lot of jobs involved—people are employed by Newport Wafer Fab—and this is an important issue. The Government will consider it properly with appropriate due diligence, based on the advice from a number of other government departments and from the National Security Adviser. The Business Secretary will take a decision in due course.

[Lord Campbell of Pittenweem (LD)]

My Lords, did not the Prime Minister announce on 7 July last year an investigation and a review into this matter? What has happened to that review?

[Lord Callanan (Con)]

The Prime Minister announced that the National Security Adviser would be asked to look at the transaction, and he is indeed doing that.

[Lord Cormack (Con)]

My Lord, some of us find it difficult to understand why Chinese involvement is even being considered.

[Lord Callanan (Con)]

This is a commercial transaction. Nexperia already has existing semiconductor facilities in the United Kingdom. It entered into an additional commercial transaction and, therefore, that is being considered under the terms of the National Security and Investment Act.

[Lord Judge (CB)]

I wonder whether the Minister thinks it would be a good idea for him to advise Parliament to be more careful about entrusting these wide powers to government Ministers.

[Lord Callanan (Con)]

The noble and learned Lord entertains us royally with his views on delegated powers. On every Bill I have brought before this House on behalf of the Government we have had a long discussion about the use of delegated powers, and I am sure we will do so again. At the end of the day, these are difficult issues. Someone has to take a decision, and the proper person to do so, in my view, is the Business Secretary. That was the power granted to him under the Act. He will do so in due course, and I am sure that when he has we will have further debates on this matter.

Employment Bill

Lord Callanan Excerpts

Wednesday 6th April 2022 Lords Chamber

[Lord Hendy (Lab)]

My Lords, in the unavoidable absence overseas of my noble friend Lord Woodley, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the Government are committed to building a high-skilled, high-productivity, high-wage economy that delivers on our ambition to make the UK the best place in the world to work. We will do that by continuing to champion a flexible and dynamic labour market. As we build back better, we will continue to make it easier for people to both enter and remain in work.

[Lord Hendy (Lab)]

My noble friend Lord Woodley’s Question could not be more topical. Our employment laws failed utterly to protect the jobs, incomes and careers of 800 P&O seafarers, sacked without consultation or warning and marched off their ships by security guards. The Government’s proposals in response are set out in the all-Peers letter dated 31 March from the noble Baroness, Lady Vere. Not included is legislation to strengthen, and in particular enforce, employment rights to prevent repetition of such sacking by ambush. I ask the Minister: why not? Is it connected with the reports that the proposal for an employment Bill in the forthcoming Queen’s Speech was overruled last week by the Prime Minister?

[Lord Callanan (Con)]

The BEIS Secretary of State has formally commissioned the Insolvency Service to urgently undertake a thorough inquiry into the circumstances surrounding the recent redundancies made by P&O Ferries that the noble Lord referred to. We will not hesitate to take further action if we find evidence of wrongdoing. He will know that the Secretary of State for Transport has also committed to applying the national minimum wage to seafarers.

[Lord Forsyth of Drumlean (Con)]

My Lords, has my noble friend noticed the catastrophic reduction in the number of self-employed people in this country following the implementation of IR35? What has happened to out manifesto commitment that we would implement the recommendations of the Taylor report, which would have provided an opportunity for us to have an employment situation that would encourage the kind of high-tech investment and growth that the Government say they want?

[Lord Callanan (Con)]

I certainly know the problems that my noble friend is identifying with IR35 and will communicate them to HMRC and the Treasury.

[Lord Touhig (Lab)]

My Lords, if you are disabled you are 30% less likely to have a job than if you are able bodied. In London alone, there are 400,000 unemployed disabled people. In some London boroughs, just one in four disabled people has a job. What will the Government be doing, if they have no Bill, to address this crisis among people with disabilities?

[Lord Callanan (Con)]

We have an excellent record for job creation in this country, and our unemployment rates are much lower than many others on the European mainland, but I totally accept the point the noble Lord is making. We must all redouble our efforts to make sure that those who are disabled get the same opportunities to work as the rest of us do.

[Lord Razzall (LD)]

My Lords, will the Minister confirm that when the Bill eventually arrives, it will progress the so-called good work agenda, enabling workers with variable hours to request a more stable and predictable contract? I am sure the Minister is aware that the EU transparent and predictable working conditions directive will introduce similar rights on an EU-wide basis from August 2022. Will he confirm that the reason for delay in the Bill is not to avoid similarity with Europe on these issues?

[Lord Callanan (Con)]

Of course all EU employment directives were transposed into UK law, but they are a minimum standard in many circumstances. As the noble Lord will know, we go far beyond EU minimum standards and we should be proud of that.

[The Lord Bishop of Oxford]

My Lords, technology has intruded further into the world of work over the last five years. Many developments are helpful, but some are not. Almost 60% of workers now report some form of technological surveillance at work, often through so-called bossware, often introduced without consultation with unions and workers. How will the employment Bill eventually keep pace with this development, and will it introduce a statutory requirement on employers to consult and disclose the use of algorithmic and AI surveillance on employees, and protect workers from excessive surveillance by technology?

[Lord Callanan (Con)]

I am afraid that I cannot commit to any specific measures that might be in any future legislation that the right reverend Prelate will be aware of. I recognise the concerns he addressed; it is very important for employers to consult their workforce fully before introducing measures such as this.

[Baroness Blake of Leeds (Lab)]

My Lords, the 2019 Conservative manifesto stated that it would

“encourage flexible working and consult on making it the default unless employers have good reasons not to.”

On 9 February 2022, BEIS Minister Paul Scully reasserted the Government’s commitment

“to introducing new employment measures”—[Official Report, Commons, 9/2/22; col. 1059.]

covering a range of matters. It is now being reported in the Financial Times that the long-awaited employment Bill is not expected in the Queen’s Speech in May. I am sure that the Minister is aware of the excellent debate led by the noble Baroness, Lady Altmann, exposing the urgent need for flexibility to stem the rapidly increasing loss of older workers from the workplace, especially due to health reasons and caring responsibilities. If there is no employment Bill in the Queen’s Speech, does this mean that the Government no longer believe that employees deserve this right to request flexible working?

[Lord Callanan (Con)]

I cannot commit to any particular measures, as I said in response to an earlier question. However, we have a very good employment law framework in this country, as evidenced by our unemployment rate, which is less than half that of France—which has a much more rigid employment framework. Therefore, flexible working is a good thing in this country because we have lower unemployment. The best right anyone can have is to have a job. It is right that we do not change the employment law framework until we are sure that any changes will address the needs of businesses and workers in the post-Covid economy.

[Lord Balfe (Con)]

My Lords, the response from the Government on P&O has been excellent. It has also shown the need for an employment Bill. At the end of this Session, the pledge in the last Queen’s Speech will disappear. However, we need it in the new Queen’s Speech because, at this moment, many workers are applauding what the Government have done with P&O and are looking to them to honour the promise of the employment Bill made two years—it is more urgent now, not less. I ask the Minister to go back to his department and lobby hard for it to be in the Queen’s Speech.

[Lord Callanan (Con)]

I have heard what my noble friend has said, and I know the close interest which he takes in these matters and his close relationship with the trade unions. I will certainly take his message back to the department but, as he will be aware, I cannot predict what may or may not be in the Queen’s Speech.

[Baroness Blower (Lab)]

My Lords, the all-Peers letter to which my noble friend Lord Hendy has already made reference contains an excellent proposal to ask European ferry operators and unions to agree a common level of seafarer protection on European ferry routes. Will the Minister undertake to consider legislation to achieve such sector-wide collective bargaining at national level too—as was recently implemented in Spain and proposed in New Zealand?

[Lord Callanan (Con)]

Part of the problem with P&O is that the ferries were registered in another European country, so presumably it was applying European law in those circumstances. Clearly there is an issue with ferries, which by their very nature cross borders, and I know that the Secretary of State for Transport has announced nine measures, including minimum wage requirements for seafarers operating from British ports. He will want to take those issues forward as fast as he can.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, will the Minister not admit that this is not the only election promise which this Government have reneged on? They have reneged on the triple lock for pensioners, and now they have reneged on the national insurance rise. When can anyone ever believe what this Prime Minister says ever again?

[Lord Callanan (Con)]

I am sorry to hear that the noble Lord is disappointed with our progress on employment, but I am delighted to share with him the great news that unemployment was down again last month to 3.9%, one of the lowest rates in Europe. If we had adopted some of the proposals of the Opposition to have a rigid, inflexible labour market, unemployment would go up and many people would lose their jobs. Surely that would be a bad thing for workers’ rights.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, it is understandable that the Minister cannot give any commitment to what will be in the Bill when it comes. However, given that it was in the 2019 election manifesto and the Government were elected on the basis of delivering that promise, can the Minister give a commitment that they will in fact implement a Bill before this Government go out of office?

[Lord Callanan (Con)]

I can certainly give the noble Lord a commitment that we are going to attempt to take forward many of the measures that were outlined. There are a number of different vehicles that would enable us to do that, but we have to proceed carefully and cautiously. We do not want to damage the excellent, flexible labour market that we have in this country, which has delivered excellent results, including under the last Labour Government, who also decided not to change our flexible labour market.