Rolls-Royce
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Greaves
To ask Her Majesty’s Government what discussions they (1) have had, and (2) propose to have, with Rolls-Royce about that company’s plans to transfer the manufacture of wide-chord fan blades to Singapore; and what steps they are taking to ensure that that company maintains advanced manufacturing jobs in the United Kingdom.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the Government are in regular dialogue with Rolls-Royce and will continue to engage to understand what more can be done to save jobs and capabilities across the United Kingdom. The Government are supporting the aviation and aerospace sectors with around £9.5 billion in grants, loans and export guarantees over the next three years, which will help to create new, well-paid jobs for decades to come.
Lord Greaves (LD) [V]
Do the Government understand that this is a catastrophe for high-tech manufacturing in the UK; for the retention of a skilled workforce—some of whom went to Singapore to help set up there on the promise that it would not affect their own jobs; for the critical mass of the aerospace industry of east Lancashire, with some 22,000-plus workers and four to five times as many ancillary workers; and for the future of the small north-of-England town of Barnoldswick, which locals call Barlick, which was the birthplace of the jet engine and is a genuine centre of engineering excellence? Is it not time for the Government to take more action and to take back control?
Lord Callanan (Con)
I totally understand and sympathise with the points that the noble Lord is making, but Rolls-Royce is a global company and it is having to make some very difficult decisions about its footprint everywhere as demand for its products and services has fallen significantly in the current pandemic. As I said, we are offering significant support to it and other aerospace companies.
Viscount Hanworth (Lab)
My Lords, as has already been said, the closure of the plant at Barnoldswick and the assignment of its activities to a factory in Singapore would devastate a highly skilled workforce. I fear that it would also pose a threat to the intellectual property of the company and the nation. Will the Government take steps to ensure that that does not happen? Will they also seek to sustain the company in the face of its financial difficulties by commissioning high-tech projects that will assist the process of decarbonisation?
Lord Callanan (Con)
The noble Viscount makes a very good point. We are working closely with the company to ensure that the UK remains at the heart of its operations, and we are currently supporting the development of the next generation of engine through the ATI programme, as well as discussing longer-term possibilities around new, clean aviation technologies.
Lord Fox (LD)
My Lords, in moving this vital skill to Singapore, Rolls-Royce was obviously responding to financial inducements. In his Answer to my noble friend, the Minister threw up his arms metaphorically and said “There’s nothing we can do. It’s the global market”. The Government had leverage and are giving support to the company. Why did the Government not tie that support to the retention of these jobs and skills in this country?
Lord Callanan (Con)
The noble Lord needs to understand the difficult environment in which Rolls-Royce is operating. Its revenues have fallen off a cliff, and we all know what has happened to the passenger jet market. It has to consolidate its operations across two sites, and that was the commercial decision it took. As I said, we are offering it extensive support and we are in regular and ongoing dialogue.
Lord Balfe (Con) [V]
Will the Minister include trade union representation in any discussions and acknowledge the hard work put in by the two trade unions at Rolls-Royce to maintain in the UK jobs which are vital to keeping a skilled workforce and helping us to build back better?
Lord Callanan (Con)
I know my noble friend feels strongly about these matters. The unions are involved in the aerospace growth partnership, which is our main method of engaging with the UK aerospace industry, and we continue to have regular dialogues with Unite and other unions.
Lord Houghton of Richmond (CB)
In the aggregated context of the retention of advanced manufacturing jobs, the pursuit of clean energy, sustainability targets, the Government’s future energy White Paper and the expertise of Rolls-Royce in small modular nuclear reactors, what plans do the Government have to help Rolls-Royce realise its potential as a key contributor to our future national energy requirements?
Lord Callanan (Con)
The noble Lord has correctly predicted that the energy White Paper will be out shortly to provide more details on these schemes. We are extensively supporting Rolls-Royce. It has received £300 million from the Covid corporate financing facility, it has made extensive use of the job retention scheme for almost 5,000 employees, and we are providing it with large amounts in R&D support from the £26.8 million in grant funding for research activities. We think Rolls-Royce is a key company for the future of the UK, and we are supporting it extensively.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, Rolls-Royce is one of the world’s premier engineering companies. Despite substantial government support, the Barnoldswick site’s workforce has been slashed from nearly 1,000 two years ago to half that today. Now, 350 more jobs are on the line, threatening the future of not just the site itself but local communities, given the impact it will have. Once highly skilled jobs are gone, they are gone. What is the Minister doing to protect those important jobs, not just for the current workforce but as an investment for the workers of the future?
Lord Callanan (Con)
As I said in previous answers, we are supporting Rolls-Royce extensively, but Covid-19 has had a devastating impact on the aerospace industry globally—Airbus and Boeing, the two largest companies, have reduced production by around 40%. We are doing all that we can to help companies such as Rolls-Royce at this difficult time—as its chief executive, to be fair, made clear when making this announcement.
Lord German (LD)
My Lords, this pre-Covid decision by Rolls-Royce has an appalling effect upon the skilled workers in that company and, at the same time, on those workers who are to follow. Advanced manufacturing technology is an important part of the apprenticeship programme and apprenticeship numbers are tumbling. How are the Government going to rectify that matter and put back into place the sort of advanced manufacturing skills which the apprenticeship scheme should provide but is failing to do?
Lord Callanan (Con)
We are providing extensive support for training opportunities. I have already outlined the enormous support that we are giving to Rolls-Royce and other high-tech manufacturing facilities. I agree with the noble Lord that we need to do more in this field; we need to get more people online and more jobs in these sectors.
Baroness Kennedy of Cradley (Non-Afl) [V]
My Lords, the loss of these jobs to Singapore is short-sighted and a disaster for that town, the local region and the UK economy. This decision reflects the crisis facing Britain: a pandemic and an economic collapse, made worse by uncertainty over a trade deal with the European Union. Can the Minister explain further to the House what the Government’s strategy is for getting such decisions reversed, and outline how they will stop further jobs in manufacturing being lost to companies moving their operations abroad?
Lord Callanan (Con)
My Lords, when companies announce these decisions it is, of course, a difficult time for all concerned. We are in extensive dialogue with Rolls-Royce and other high-technology companies to do whatever we can, within the limits of what is possible, to retain those jobs in the United Kingdom. I have already outlined the massive and enormous support that we are giving to Rolls-Royce at this difficult time.
Lord West of Spithead (Lab)
My Lords, in August, Rolls-Royce reported a first-quarter underlying operating loss of £1.7 billion, £1.2 billion of which was to do with civil aerospace and is Covid related. That is presumably why it has broken an agreement it had with the UK Government and moved work promised to UK workers to Singapore. Rolls-Royce is well placed, looking ahead, to provide low-carbon power solutions with the support of the UK Government—and that government support should depend on its benefit to highly-skilled UK workers. Will the Minister confirm that the Government will prioritise the work by the UK small reactor consortium—building on Rolls-Royce’s long history of providing nuclear reactors to the Royal Navy—thereby ensuring affordable nuclear power operations, and that this work will take place in the United Kingdom?
Lord Callanan (Con)
I congratulate the noble Lord on getting the Royal Navy, a matter close to his heart, into his question again. But to be serious, I agree that we need to develop the next generation of small modular reactors, and we are providing support to enable that to happen.
Lord Ravensdale (CB) [V]
My Lords, I declare my interest as in the register. The East Midlands, where Rolls-Royce has its headquarters, has the lowest public sector research and development spend in the UK, at £83 per head. R&D and the skilled jobs that it generates are essential to the levelling-up agenda. What plans do the Government have to increase R&D spend in the Midlands, making the most of its strengths in the rail, aerospace, nuclear and other vital sectors?
Lord Callanan (Con)
We are happy to support good R&D projects. Rolls-Royce is a major beneficiary of our R&D support operations through the £1.95 billion Aerospace Technology Institute programme. It is also one of our largest UK investors in R&D.
Lord Liddle (Lab) [V]
My Lords, I was working for my noble friend Lord Mandelson in 2009 during a similar economic crisis when, as Secretary of State for Business, he secured assurances from Rolls-Royce that the establishment of the plant in Singapore would not lead to closure of the UK plant at Barlick or severe job losses. Given the crucial importance of Rolls-Royce to the British economy and the financial links between the Government and the company, why has the Secretary of State not made a personal intervention to save the Barlick plant?
Lord Callanan (Con)
The plant is not closing. Rolls-Royce has made it clear that it sees it having a long-term future and will continue to invest in it. However, we have to understand the context: the Covid-19 pandemic has dealt it a devastating blow. In its first half-yearly results, Rolls-Royce announced that the company’s revenue fell by 24% to £5.6 billion, while for civil aerospace, the area in which it operates, revenue fell by 37%. This is a devastating time for many companies, including Rolls-Royce. We are doing all that we can to ensure that it survives the pandemic and can go on to generate secure, well-paid jobs in the future.
The Lord Speaker (Lord Fowler)
My Lords, all supplementary questions have been asked and we now move to the second Oral Question.
Alternative Dispute Resolution for Consumer Disputes (Extension of Time Limits for Legal Proceedings) (Amendment etc.) (EU Exit) Regulations 2020
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Callanan
That the draft Regulations laid before the House on 29 June be approved. Considered in Grand Committee on 16 September.
European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) (Revocation) Regulations 2020
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Callanan
That the draft Regulations laid before the House on 13 July be approved. Considered in Grand Committee on 16 September.
Health Protection (Coronavirus, Restrictions) (Obligations of Hospitality Undertakings) (England) Regulations 2020
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Callanan
That the Regulations laid before the House on 17 September be approved.
Relevant documents: 27th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, before we discuss these regulations, it is important to set their context and say why they are being brought in now.
In May, to help businesses operate and reopen safely during Covid-19, we produced guidance, broken down by workplace area. There are now 14 separate pieces of guidance, including five covering DCMS areas. These guides were not written in a Whitehall vacuum but co-created with business and with key safety stakeholders, such as unions, Public Health England and the Health and Safety Executive. Our collaborative engagement throughout this process was robust. Alongside seven round tables chaired by the Secretary of State, there were 900 responses to our consultations on the guidance, and the BEIS ministerial team held extensive meetings with stakeholders. Nearly 500 Covid-focused meetings took place from March to June. This constant dialogue with business produced guidance that enabled many businesses to reopen safely during the national lockdown.
BEIS also led two of the five ministerial task forces to shape additional guidance as the economy began to unlock and formerly closed businesses, such as those in the hospitality sector, were able to reopen safely. Those businesses have been following it: over 2 million copies of the guides have been viewed and I thank businesses for the great efforts they have made to adapt and work safely. It is also important to highlight how the guidance operates under our existing health and safety framework. The guidance forms part of employers’ normal health and safety practice. Employers are legally responsible under the Health and Safety at Work etc. Act 1974 for the health and safety of their employees and others affected by their business, with a duty to make their premises safe and prevent risks to health, including from Covid-19.
Having outlined the policy background, I shall set the context by saying a few words about the current pandemic to convey the gravity of the situation. As we all know from the Prime Minister’s announcement on 22 September, the pandemic has moved into a new phase. Indeed, the significant rise of Covid-19 in recent weeks has been widely reported. The Chief Medical Officer and Chief Scientific Adviser have set out that what we are seeing in the data is clearly very worrying. Regrettably, infections are rising rapidly across the United Kingdom. On 7 October, 14,612 cases were recorded, and we have also had a tragic increase in the number of daily deaths. The Prime Minister informed the nation on 30 September that we face the sad reality that, on these figures, we can expect many more daily deaths.
The rationale behind these regulations is therefore clear. Although the vast majority of businesses have followed the guidance, in cases where there are failings, we believe it is right that there should be swift action to address those failings. Acting now is the only and correct course of action. We can and we will beat this virus. Put simply, we have taken a few elements of our guidance and attached fixed penalty notices to them via these regulations. They are another tool that local law enforcement officers can use to tackle clear and egregious examples of non-compliance. Crucially, they do not go further than the measures outlined in the Covid-secure guidelines, which the overwhelming majority of businesses are already compliant with.
I turn to the specifics of the regulations. Under SI 2020 1008, it is an offence for a pub, restaurant, cafe or other business selling food or drink for consumption on its premises to fail to take all reasonable measures to ensure that no bookings for a table are accepted for a group of more than six persons; that no persons are admitted to the premises in a group of more than six; and that, once on the premises, no persons mingle between their different groups of six. The requirements are subject to any exemptions to the rule of six in the regulations that limit gatherings. I do not intend to go over the discussions on the rule of six itself, which this House approved on Tuesday 6 October: these measures simply ensure that businesses play their part in ensuring that their customers follow the rules.
SI 2020 1008 also provides that businesses must take all reasonable steps to ensure appropriate distance is maintained between tables of seated customers on their premises, to further ensure that social distancing is able to be observed. SI 2020 1046 amends the former instrument to include additional requirements that were considered necessary, including measures to support the requirements for face coverings, as well as amending the penalty regime to more closely align with other measures brought forward and which ministerial colleagues have already had the honour of bringing before this House. The additional requirements brought forward in SI 2020 1046 are the creation of an offence for a relevant business covered by the face covering regulations to fail to display a notice or otherwise inform people present of the obligation to wear face coverings unless an exemption applies as there is a reasonable excuse for not doing so. Again, this provision respects the fact that some people are not required to wear face coverings. Businesses may not prevent people, whether workers or customers, wearing face coverings where they are legally obliged to do so.
Businesses must take all reasonable measures to prevent customers singing while on the premises in groups of larger than six, save where exemptions apply to the rule of six, and to prevent customers dancing, save for newlywed couples or civil partnership couples who have just wed. They must also limit recorded music noise levels to 85 decibels in public houses, cafes, restaurants and bars, when measured at the source of the sound.
The existing provisions in SI 2020 1008 to respect the rule of six in relation to taking bookings, admitting parties or allowing mingling are extended to cover further types of business. The scope of these rule of six provisions is extended in line with the Health Protection (Coronavirus, Collection of Contact Details etc and Related Requirements) Regulations 2020—the test and trace regulations for short. Enforcing officers have the ability to issue fixed penalty notices immediately upon the breach occurring but retain the right to their discretionary approach under existing enforcement principles. These will begin at £1,000, with a 50% reduction for early payment at that stage, and escalate to £4,000 for repeated offences without early payment reduction. SI 2020 1046 amended the available sanctions so that fixed penalty notices escalate to a maximum of £10,000 in the case of a fourth and any subsequent fixed penalty notices.
The Government and I wholly appreciate that these are new measures with a particular focus on certain businesses, yet this should not be construed as unfair or unjust. These measures will have a limited impact on the vast majority of responsible businesses, which are already compliant with the guidance. The regulations will help to secure compliance from those that have not and do not comply with the guidance. Moreover, these regulations can provide greater enforcement of safety measures in businesses, making sure they can continue to stay open and operate safely.
We must take action now to save lives. In doing so, we can keep people in work and keep our hospitality venues open. No one wishes to return to a second lockdown. These regulations can help us prevent such a step and will allow our country to keep our businesses moving forward while we work together to defeat the virus. I commend both sets of regulations to the House. I beg to move.
Amendment to the Motion
Lord Callanan (Con)
My Lords, I first thank all noble Lords for their contributions. As always, we had some very important and vital speeches. I have taken careful note of all the points made. I particularly enjoyed the proposal made by the noble Lord, Lord Singh, about the “rule of Sikhs”. Obviously this is a tragic situation, but it is important to retain our sense of humour at this time. The noble Lord also made some important points. I would say that many of our guides remind employers of their responsibilities under equalities law, in particular on protected characteristics. The noble Lord, Lord Stevenson, moved an amendment expressing regret, yet the need for approval during this pandemic is, in our view, vital. I will address the key points that were raised, both here and outside this forum.
As the Prime Minister said, these regulations were not rushed through quickly. They are not draconian measures. We are faced with an unprecedented pandemic. Were we to delay bringing these regulations into force, using normal procedures with a draft before each House, the virus could unleash its proven potential for exponential growth. Therefore, I believe that it is right that we act with due haste against it. As has been discussed, the test for the use of the emergency procedures under Section 45R of the enabling legislation—that is, the Public Health (Control of Disease) Act 1984—is that of urgency, and I can think of no greater issue of urgency than the health and lives of many people in this nation.
The nature of this virus means that incidence rates can change very quickly, which is why we have had to act—and with speed—to prevent further spread. We are, therefore, correct in moving these regulations forward and taking the actions that we have taken. As I said earlier, the spread of the virus over September is ample evidence of the need for these regulations. Clear rules increase compliance. They also make it easier for those rules to be enforced, and the police have been clear that simpler rules help them do their job more effectively.
A number of noble Lords rightly raised the important issue of the 10 pm closing time. My noble friends Lord Cormack, Lord Bourne and Lady Wheatcroft, the noble Baroness, Lady Benjamin, and the noble Lord, Lord Bilimoria, all highlighted this point. Early data suggests that a significant proportion of exposure to the virus is seen in the hospitality sector, and it is even more pronounced in younger age groups. We will continue to gather evidence and, of course, to monitor the data, but this is why we are putting in place these restrictions on operating hours. Alongside the other measures, this action will help to reduce the potential for unnecessarily close contact with people that you do not usually meet. We have seen how effective operating restrictions can be from the example of Belgium, where a marked decline in case numbers was seen after early closing measures were introduced. Other countries are taking similar steps: the Netherlands, Denmark and about half of Spain’s regions also have 10 pm closing areas.
My noble friend Lord Lilley made a very important point about the use of masks. I can tell him that all the measures we have introduced follow the science. Of course, we also recognise the pace of new developments; we must therefore act quickly to follow further evidence as it becomes available.
I reiterate that these measures are not intended to penalise our vital hospitality businesses through errant focus. Many—indeed, most—are complying with our Covid-secure measures. However, one or two have not and, in the future, may not. These regulations will give enforcement authorities the additional powers that they need to help address and deter breaches that could cause coronavirus to spread—and spread quickly.
I will now respond directly to the points made by the noble Lord, Lord Stevenson, about support for the hospitality industry. We do not act without sympathy for and understanding of those affected by the regulations. We recognise the impact that additional measures, as with past measures, place on affected businesses and their customers. Many noble Lords—my noble friend Lady Altmann, the noble Baronesses, Lady Uddin, Lady Benjamin, and Lady Ritchie, my noble friend Lord Moynihan and the noble Lord, Lord Rooker—asked about similar issues. We have put in place an unprecedented package to support impacted businesses, including over £11 billion which has already been paid out through the small business grants fund and the retail, hospitality and leisure business grants fund to over 897,000 businesses across the country, with a further £617 million available to councils to use at their discretion to support small businesses that are not eligible for the main grant system.
As well as the Eat Out to Help Out scheme earlier this year, we have put in place through our comprehensive plan for jobs a wider package of hospitality support that goes beyond the summer. We have also cut VAT to 5%, and we have been paying the wages of furloughed staff, as well as business rates relief and billions in tax deferrals and loans—all helping to protect nearly 2 million jobs in the hospitality and tourism industries. And, of course, noble Lords will be well aware that we will constantly keep this package of economic support under review and will not hesitate to take further action if that is required.
In direct response to the question asked of me by the noble Lord, Lord Stevenson, about the possibility of further measures, I will say that we are seeing coronavirus cases rise across the entire country. However, they are rising faster in my home region of the north-east, as well as in the north-west. We are keeping the data under close review and considering a range of further options to reduce the spread of the virus in order to protect communities and, ultimately, to save lives.
If time permits, I will deal directly with a number of the questions that I was asked. The noble Lord, Lord Loomba, and the noble Lord, Lord Blunkett, asked about the rule of six. We realise the impact that these regulations have on people. We aim to minimise the impact wherever possible, and where the science allows us to limit the risk of transmission. We are especially concerned with reducing the impact on children, while also limiting the number of innately social activities that take place in higher-risk settings.
The noble Baroness, Lady Benjamin, asked about hospitality venues. As the Secretary of State for Health and Social Care explained on 1 October, the measures have led us to understand that the virus spreads most outside households when other households meet together, including in hospitality venues. Pubs and restaurants without good management of social distancing and hygiene can be ripe areas for the virus to be transmitted among large groups of people, as someone highly infectious could easily spread Covid-19 to other people without knowing.
My noble friends Lord Cormack and Lord Robathan asked about the “rushing through”, as they put it, of these regulations. In the other place, my right honourable friend has made a commitment to greater parliamentary scrutiny and said that regulations such as these with a national impact would be brought before this Chamber, and the other place, before they are laid. I remind noble Lords that it is up to the usual channels to programme the business of the House, and the Joint Committee on Statutory Instruments reviews SIs such as this before they come to the House.
My noble friend Lady Warsi made some important points about vulnerable groups. Of course, we conducted an equalities impact assessment on all these measures and our guides highlight the importance of an employer’s duty in this respect. The noble Baroness, Lady Donaghy, and my noble friend Lady Wheatcroft raised points about the test and trace system. These measures are working. One in eight people in England have now been tested for coronavirus at least once since the service launched. As always, our top priority is making sure that tests are allocated where they are needed most to save lives, where they protect the most vulnerable and where they support critical health and care services. We have strengthened our support for regional contact tracing, with dedicated teams of contact tracers for local areas. Some 68 local authority contact tracing teams are now live across the country, with more due to come online over the coming weeks. Of course, we will also continue to review processes to make sure that we can match demand in the test and trace service.
The noble Baroness, Lady Warsi, and the noble Lord, Lord Blunkett, highlighted the vexed issue of dancing at weddings. I take on board and accept the points that they made but these are difficult circumstances. We try to be as accommodating as possible, which is why we have allowed the all-important first dance at weddings. As always, we keep these measures under constant review.
The noble Baroness, Lady Ritchie, talked about applying lessons learned in Northern Ireland to the rest of the UK. She will of course understand that public health is a devolved issue. However, we are working with all four nations of the UK to tackle this virus and will continue to do so as the fight progresses.
The enforcement of the regulations was raised by the noble Baroness, Lady Walmsley, the noble Lord, Lord Stevenson, and, most recently, by the noble Lord, Lord Greaves. The regulations will be enforced by authorised persons including officers of trading standards, environmental health, local authorities and ultimately the police. Enforcing officers will have the ability to issue fixed penalty notices immediately upon the breach occurring.
I am now being told that I have to wind up. I thank noble Lords for paying attention during the debate, I thank everyone for their contributions and I commend the regulations to the House.
Health Protection (Coronavirus, Restrictions) (Obligations of Undertakings) (England) (Amendment) Regulations 2020
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Callanan
That the Regulations laid before the House on 28 September be approved.
Relevant document: 29th Report from the Secondary Legislation Scrutiny Committee
Insolvency (Moratorium) (Special Administration for Energy Licensees) Regulations 2020
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Callanan
That the Regulations laid before the House on 4 September be approved.
Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
I hope that these regulations will be slightly less controversial than the previous ones. The noble Lord, Lord Paddick, looks sceptical.
In the summer, the Government moved quickly to introduce the Corporate Insolvency and Governance Act 2020—many Members here took part in those debates—which inserted new Part A1 into the Insolvency Act 1986, introducing a moratorium regime for companies in financial distress. The moratorium gives those financially distressed companies breathing space from their creditors to pursue a rescue or restructure. The company’s existing management remains in control during the moratorium period but a monitor is appointed to oversee the moratorium.
There was wide support in your Lordships’ House for the new moratorium provisions and the other measures in the Act to help financially distressed businesses, particularly at this time, and I thank noble Lords for that. The Government will be publishing statistics on the use of the new procedures of company moratoriums and restructuring plans later this month. The Corporate Insolvency and Governance Act also inserted Section A50 into the Insolvency Act 1986, which enables regulations to be made to modify the application of Part A1, the moratorium provisions, in relation to a company for which there is a special administration regime.
Similar to other sectors, there are special administration regimes in the energy sector. These cover companies that hold an electricity distribution or transmission licence or a gas transporter licence, a smart meter communication licensee and energy supply companies. The energy special administration powers exist to ensure that essential services, such as electricity and gas supply or the maintenance of distribution networks, continue and that customers continue to be served at the lowest reasonable cost. These powers can also be used to mitigate the risk of financial contagion and to maintain market stability and consumer confidence. This instrument will modify the application of Part A1, the moratorium provisions, in relation to these energy companies.
Therefore, if a relevant energy company enters or has applied to enter a moratorium, the Secretary of State and Ofgem will want to promptly consider whether there is any need to apply for a special administration order. Special administration has never been used in the energy sector and the Government’s assessment is that it remains unlikely, but as a prudent Government we must ensure that we have the powers and processes in place to act swiftly to protect consumers and other market participants should that become necessary.
This instrument will ensure that the Secretary of State and Ofgem will be promptly notified of any moratorium or proposed moratorium for a relevant energy company so that an application for a special administration order can be considered. This will avoid any delay in making that decision and therefore reduce uncertainty for consumers and market participants.
This instrument does one other thing. A relevant energy company in a moratorium will continue to trade and operate as an entity licensed and regulated by Ofgem. Therefore this instrument will ensure that during the moratorium Ofgem can continue to engage in legal processes in relation to relevant energy companies, including to enforce licence obligations and revoke licences without first having to seek the court’s permission, as it would have to where a company was not in a moratorium. This will avoid any delay in Ofgem acting to protect the interests of consumers.
These regulations build on the moratorium provisions in the 2020 Act to ensure that those provisions work effectively alongside the special administration powers for energy supply, energy networks and smart metering, and that the Government and the regulator, Ofgem, are able to take all necessary action to protect the interests of consumers. The regulations, unlike the previous ones, are a short, simple and proportionate step to align the moratorium provision with the need to protect the interests of energy consumers and other market participants. I beg to move.
Lord Callanan (Con)
I thank both noble Lords for their contributions to this debate. The moratorium provisions in the Corporate Insolvency and Governance Act will help businesses in financial distress, giving them the appropriate breathing space from their creditors to pursue a rescue or restructure. This SI builds on that, ensuring that the Government and Ofgem can act swiftly in response to events. It will ensure that consumers will be protected if and when an energy company enters a moratorium.
However, the energy sector is fundamentally robust, even in the face of events such as Covid-19. For instance, in the supply market, there are around 57 energy suppliers that serve households, which is up from 12 in 2010. In the business energy market, there are around 80 licensed electricity and gas suppliers. New-entrant suppliers now serve more than 40% of the household gas and electricity markets, which is up from around 1% in 2010. The Government welcome this increasingly competitive and innovative market, and we continue to promote competition as the best driver of value and service for customers.
However, as in any competitive market, it is normal for energy suppliers to fail from time to time. Ofgem and the Government are focused on ensuring that exits are orderly and that, during the process, customers are protected. When an energy supplier fails, the supplier of last resort process is triggered. Ofgem revokes the supplier’s licence and appoints another supplier to take over its customers. The process allows for a quick transfer of customers. In the first instance, Ofgem invites suppliers to bid to take on the customers and chooses the supplier that will offer the best value for consumers. Ofgem has successfully used this process for multiple supplier insolvencies and is confident that the process remains robust.
In the event that the use of the supplier of last resort would not be practicable, there is a special administration regime. This has never been used in the energy sector, and the Government’s assessment is that it remains unlikely. However, of course, as a prudent Government, we have to ensure that we have the powers and processes in place to act swiftly to protect consumers and other market participants should it become necessary.
I will now deal with a number of the questions that were asked by both noble Lords. The noble Lord, Lord Paddick, asked why the changes were not included on the face of the Corporate Insolvency and Governance Act. It was important to move quickly to bring forward this Act in order to help businesses in financial distress at the time. This meant that we had to prioritise the content of the Bill and deliver some provisions, such as this one, in following secondary legislation.
The noble Lords, Lord Paddick and Lord Stevenson, asked about the moratorium and whether it would increase costs for energy consumers. The answer is no. The purpose of the moratorium is to provide the time and space to pursue a rescue or restructuring of the company, which would avoid the company failing. It is normally in the interests of creditors, including customers, to avoid the failure of an energy company. However, if one does fail, domestic customers have the credit balances on their accounts protected.
The noble Lord, Lord Paddick, also asked about the number of energy companies that we expect to access a moratorium. As I said, the sector is fundamentally robust, but it is normal in a competitive market for some businesses to fail. However, the market is strong, with around 60 suppliers. Ultimately, of course, a decision to enter a moratorium is one for the company’s directors, working alongside the monitor, so he will understand that I cannot speculate on numbers.
The noble Lords, Lord Paddick and Lord Stevenson, asked about the payment of levies. We are working with Ofgem on potential reforms to reduce the likelihood that suppliers fail to meet their payment obligations and to mitigate the impact in the event of non-payment. Ofgem has already made licence modifications aimed at increasing the robustness of suppliers’ financial practices and is consulting on further changes.
Again, the noble Lords, Lord Paddick and Lord Stevenson, asked me about the number of energy companies that we anticipate may become insolvent. Again, I am sure that both noble Lords will understand that I cannot speculate on numbers, but we think that the market is fundamentally robust. The noble Lord, Lord Stevenson, asked how likely it was that a company would go insolvent. I say again that the market is robust, and, occasionally, companies will fail, but we do not expect very many to do so. I think that deals with all the questions from both noble Lords.
These regulations align the operation of the corporate moratorium regime that we introduced in the summer with the existing powers to protect the interests of energy consumers and other market participants when energy companies are in financial distress. I commend these regulations to the House.
COP 26: Sponsors
Lord Callanan Excerpts(3 years, 7 months ago)
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Baroness Boycott
To ask Her Majesty’s Government what progress they have made towards identifying sponsors for COP 26; and what criteria are used in the appointment of any such sponsors.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the Government have set strict sponsorship criteria for COP 26 to partner with companies committed to fighting climate change and running their businesses in a sustainable manner. The Government have published an online form for companies to register their interest in sponsorship and are already in discussion with a number of companies. We are looking for companies committed to reaching net zero by 2050 with a credible short-term action plan to achieve this.
Baroness Boycott (CB) [V]
I thank the Minister for his reply. I am very glad to hear that we are setting standards; I have indeed read the form. However, I want to press a little further. I understand that conversations have taken place between some leading oil companies and the team funding COP 26. Governments around the world are, as we know, still subsidising the fossil fuel industry, and even if many of them are developing alternative energy streams, these are still an actual fraction of their output. While this remains a fact, allowing any fossil fuel company to sponsor the climate talks seems to me not dissimilar to allowing a tobacco company that produced vaping products to sponsor something like the Olympics. Can the Government guarantee to the House that the process of sponsorship of this critical meeting will not allow any greenwashing on behalf of any company? Will the Government further agree that all the sponsorships will be very clear and transparent, and if not open to full public scrutiny, open to scrutiny by the House?
Lord Callanan (Con)
We will be working most closely with organisations that are committed to taking real, positive action and have strong climate credentials; for example, companies which have committed to achieving net zero and have published a credible plan of action on how they will achieve this.
Baroness Blackstone (Ind Lab)
My Lords, what exactly will sponsors receive, apart from exhibiting space, in return for their money? Will the Minister confirm that no sponsor will be allowed to sit in on any part of the negotiations?
Lord Callanan (Con)
We are looking for both monetary and value-in-kind sponsorship. Value in kind refers to goods and services that are acquired, or highly desirable, in exchange for branding, etcetera. There is of course no question of companies taking part in negotiations.
Lord Oates (LD)
My Lords, in his reply to the noble Baroness, Lady Boycott, the Minister said that sponsorship would be restricted to companies committed to net zero by 2050, with credible and short-term action plans to achieve it. In the light of that criteria, does he not think it time that the Government themselves had a credible short-term action plan?
Lord Suri (Con) [V]
My Lords, what do the Government believe these companies can offer compared to companies that are already focused on green energy? Have the Government taken the stance that large global corporations may be of no use?
Lord Callanan (Con)
I did not quite catch all that the noble Lord said but I can confirm that we are looking for both monetary and value-in-kind sponsorships from companies that, as I said, have a credible short-term action plan and are committed to net zero.
Lord St John of Bletso (CB)
My Lords, I apologise for having asked a question earlier on. Ahead of COP 26 next year and given concerns about greenwashing, and with the positive move of UK businesses pledging to environmental targets of net-zero carbon by 2050, what are Her Majesty’s Government doing to make sure that these companies deliver on these targets? With a gap of over 1 million people in the green economy, how are the Government promoting the upskilling of workers in this sector of the economy?
Lord Callanan (Con)
We will be closely studying and monitoring companies that come forward for these sponsorship opportunities, which will favour taxpayers’ money—that is the ultimate objective. We will study their plans carefully and monitor them as they progress.
Lord Grantchester (Lab)
According to overnight reports, the Government are planning for all 30 million homes in the UK to be powered by gusts of wind from offshore wind installations. The Government have always maintained that they stay technology-neutral in their encouragement of renewable energy sources. Yet the Conservative Party has advised that the sun does not always shine brightly, nor the wind blow consistently. Can the Minister confirm whether the Government are now picking winners and losers among green technologies and whether this will be reflected at COP 26 in its sponsors?
Lord Callanan (Con)
No, we are not picking winners. We always examine a range of different technologies and we are backing a range of different technologies. The contract for difference auctions will not discriminate between different technologies and we will keep them all under constant review.
The Lord Bishop of Rochester
My Lords, while I understand that the focus of formal sponsorship is on businesses, is the Minister able to confirm that Her Majesty’s Government are also keen to engage in similarly deliberate ways with other bodies, including faith communities? These communities are highly motivated—indeed mandated—to care for God’s creation, locally and globally, and many, including the Church of England’s General Synod, have already committed to challenging targets for carbon reduction.
Lord Callanan (Con)
We are always willing to consider sponsorship opportunities if the right reverend Prelate wishes to offer them. To be serious, we will of course be engaging with both NGOs and faith communities in this endeavour as well.
Lord Randall of Uxbridge (Con) [V]
Can my noble friend confirm that before appointing any sponsors for the COP, Her Majesty’s Government will undertake due diligence in the supply chains of any companies under consideration with regard to negative environmental impact?
Lord Callanan (Con)
My noble friend makes a very good point. We will be carrying out due diligence on all potential sponsors. As I said, we are looking for companies that are running their businesses in a sustainable manner and working to reduce their environmental impact through net-zero targets; that will include studying their supply chains as well.
Viscount Waverley (CB) [V]
My Lords, a leader article yesterday stated bluntly that:
“The global climate crisis is the emergency of our times.”
How many heavy hitters are being targeted that meet the committed criteria outlined by the Minister? Can he give any indication of examples? In addition, and underlining other contributions this afternoon, will the Government agree that COP 26 sponsor selection must focus unreservedly on those fully committed to the cause, and not on those only paying lip service out of self-serving expediency?
Lord Callanan (Con)
I can certainly agree with the latter part of the noble Lord’s questions. We need to pick companies that are walking the walk as well as talking the talk. We hope to announce some names shortly.
Baroness Goudie (Lab) [V]
My Lords, while they are doing their due diligence, will the Government look carefully at the way pension funds that decide to become a sponsor are investing, and at how all supply chains, of British and global companies, are working? Further, given that companies are pushing to have 30% women on their boards, will the Government look at ensuring that we have at least 30% women on our COP delegations—unlike the present COP delegation to the UN which has no women at all?
Lord Callanan (Con)
We will of course conduct due diligence on all potential sponsors and will ensure compliance with rigorous government standards on all matters.
Baroness Jones of Moulsecoomb (GP)
My Lords, the noble Viscount, Lord Waverley, made an interesting point that companies ought to be truly climate credible. Which climate-credible people in the Government will make the decision on which companies are climate credible?
Lord Callanan (Con)
As in all these matters, the ultimate decisions will rest with Ministers. We will judge companies closely against the criteria that we have already published, and I am sure that the noble Baroness will want to hold me to account for those decisions.
The Lord Speaker (Lord Fowler)
My Lords, all supplementary questions have been asked, and indeed all Questions on the Order Paper answered.
Post Office: Horizon Accounting System
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Arbuthnot of Edrom (Con) [V]
[Inaudible.]—the largest number of referrals by the Criminal Cases Review Commission in history. Yet the Government are expressly excluding from the scope of their inquiry the Post Office Ltd prosecution function, the Horizon group damages settlement and the conduct of current or future litigation. Given that the sub-postmasters who sued remain impoverished and, in many cases, bankrupted by the Government, why have the Government excluded these most important things? Why are they punishing those brave people who brought this essential litigation?
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
The noble Lord was getting a bit ahead of himself in asking his supplementary question before he asked his main Question, so I will answer that main one first and then come on to the second one.
The answer to the Question that he originally posed to me as a Private Notice Question is that, on 2 October, the Post Office announced that it would not oppose 44 of the 47 cases referred to the Court of Appeal by the Criminal Cases Review Commission. This is an important milestone for the postmasters appealing their convictions. It is now for the courts to decide whether their convictions should be overturned, and it would not be appropriate for the Government to comment on these cases until that process is complete.
I will now move to the question which the noble Lord just asked. The settlement was agreed in December and was full and final; for this reason, it has been excluded from the scope of the inquiry.
On the question of its prosecution function, the chief executive of the Post Office, Nick Read, has assured the Government and confirmed publicly that the Post Office is not currently conducting any private prosecutions and has no plans to do so.
As regards current and future litigation, of course only the courts can decide on criminal matters, such as whether to overturn the postmasters’ convictions, so it would not be appropriate for the inquiry to look at these questions, especially when the court process is still ongoing.
The Lord Speaker (Lord Fowler)
My Lords, I think we have dealt with both questions there.
Lord Harris of Haringey (Lab) [V]
My Lords, we are all very grateful to the noble Lord, Lord Arbuthnot, for continuing to press this issue doggedly over the last decade. Under the framework document, the Post Office business plan must address
“the state of the relationship … with the community of postmasters.”
The sole shareholder—the Government—is required to meet the CEO
“at least twice a year”.
Ministers have known all about this grotesque scandal. It is not good enough to hide behind the pretence that these matters were merely operational. At how many of those biannual meetings did the Minister pursue this? If he did not, surely that is negligence? If he did, why has it taken so long?
Lord Callanan (Con)
I am not the Minister directly responsible for the Post Office; Paul Scully is the Minister who is directly responsible. He has regular meetings with the Post Office chief executive, and, indeed, I have also met him to discuss this matter. This scandal has been going on for the best part of a decade now, through successive Governments and Ministers. We are not trying to hide behind anything. That is why we have announced this inquiry with a High Court judge to try to get the bottom of these matters. It has been extensively looked at and the High Court opined on it, but we think that more can be done, and I assure the noble Lord that we want to see these matters properly examined and the appropriate blame apportioned.
Lord Dholakia (LD)
My Lords, the Criminal Cases Review Commission refers cases of miscarriage of justice to the Court of Appeal. In this case, we understand that it will not receive a challenge from the Post Office on this matter. When the matters have been dealt with, would the Minister promise that the matter will be referred to the Crown Prosecution Service and the police to see what further action could be taken in relation to this matter?
Lord Callanan (Con)
The CPS is already examining the conduct of Fujitsu in this case, but the noble Lord will understand that it would not be appropriate for me to comment on those proceedings.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, in earlier responses to questions on this issue, the Minister has confirmed that, although the review is not a statutory inquiry under the Act, the reviewer—we now know his name—will get full access to the Post Office’s and Fujitsu’s papers and personnel. Can the Minister confirm that the reviewer will have similar rights of access to Ministers and civil servants involved in this case?
Baroness Ludford (LD) [V]
My Lords, I too pay tribute to the noble Lord, Lord Arbuthnot, for bringing a measure of justice to this case. In a debate in February, he said:
“It is hard to find words strong enough to condemn the people in charge of this catastrophic fiasco. What have the people in charge suffered as a result? One of them, Paula Vennells, has been given a CBE and now sits on government-sponsored boards. None of the rest, as far as I can see, have suffered at all.”—[Official Report, 25/2/20; col. GC 87.]
When the Minister, the noble Lord, Lord Callanan, answered a question from the noble Lord, Lord Arbuthnot, in March, he said:
“There is no question but that the Post Office management at the time behaved disgracefully but none of them is now in post.”—[Official Report, 5/3/20; col. 719.]
None the less, what are the Government doing to hold these people to account, at least by reviewing honours and public sector appointments awarded?
Lord Callanan (Con)
The noble Baroness makes a very good point. I made my views clear on this matter earlier in the year, and I have written to the Department of Health and Social Care—the letter is now public—expressing my views on this. Of course, there are appropriate procedures that need to be followed in appointments and in honours, but personally I would have no problem with those matters being looked at.
Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, as this is a reserved matter, has the Minister and the Minister for the Post Office had initial discussions with the Northern Ireland Executive to ensure that the inquiry by Sir Wyn Williams will be all-encompassing and cover all the issues that emerged in the Horizon programme in Northern Ireland post offices, with assurances that such actions will never happen again and that those people will never suffer such undue burdens?
Lord Callanan (Con)
It is for Sir Wyn to decide how the inquiry gathers the necessary evidence, but I imagine it will want to gather evidence from all affected postmasters, including those in Northern Ireland. The noble Baroness makes a good point and I will ask my officials to speak with the Northern Ireland Executive on this matter.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, will the Minister tell the House how many lawyers were engaged opposing the sub-postmasters’ appeals? How much taxpayers’ money has been spent on it? How much of that money was spent since it was realised it was the Horizon scheme to blame, not the sub-postmasters?
Lord Callanan (Con)
I am afraid I cannot give the noble Lord a direct answer. I do not know how many lawyers were engaged. I will try to find out and will write to him on this. I should imagine a lot. But I do not know the number because the matter was one for the Post Office. We have announced the inquiry. These are matters that the inquiry will want to go into. I am sure Sir Wyn will want to pursue this. I hope he will produce the appropriate conclusions and will attach the blame—if there is any—to those who are responsible.
The Lord Speaker (Lord Fowler)
My Lords, all supplementary questions have been asked.
Energy White Paper
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Howell of Guildford (Con) [V]
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare my interests as in the register.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
The energy White Paper is a priority and will be published this autumn. This means that it will play a vital role in building back better and driving greener, clean economic recovery, delivering both jobs and skills.
Lord Howell of Guildford (Con) [V]
My Lords, I thank my noble friend for that Answer. Does he agree that when it comes to the future reliability of energy supplies, the public badly need some reassurance? Our main new nuclear project is well over budget and over time. The rest of our nuclear programme is full of uncertainties. The national grid warns of future power cuts unless it can invest fully in new systems, and household energy bills are still sky high. Can the Minister assure us that the long-overdue White Paper will restore some coherence to our medium and long-term needs for low-carbon, affordable and reliable electric power from all sources?
Lord Callanan (Con)
I agree with my noble friend; I know that he speaks with great authority on this subject as a former Energy Minister. The White Paper will consider the overall energy system, including how demand for low-carbon electricity will increase in buildings and transport, and the role of technologies such as hydrogen and nuclear in supporting that transition.
Viscount Hanworth (Lab)
One requirement in decarbonising the economy will be the replacement of current aviation fuels with hydrogen-based synthetic fuels, which will be produced by an energy-intensive process. Aero engines will also need to be adapted to consume such fuels. Small modular nuclear reactors, which Rolls-Royce is developing, would be a means of supplying the necessary energy. The company is also at the forefront of the aero engine industry. Do the Government recognise the unique opportunity that exists in sponsoring Rolls-Royce to pursue developments on both these fronts?
Lord Callanan (Con)
We are always willing to work with innovative British companies. I agree with the noble Viscount’s points about hydrogen and advanced nuclear technologies, which we are providing considerable support for.
Lord Fox (LD)
As the Minister knows, the current target for offshore wind generation is 30 gigawatts by 2030. During the election campaign, Boris Johnson said that if the Tories won, that target would go up to 40 gigawatts. Which number will be included in the energy White Paper? Whichever one is used, do the Government recognise that not just Ofgem but the Government must make sure that this electricity can be distributed around the country?
Lord Callanan (Con)
The noble Lord makes an important point about the distribution and alterations of the grid that will be required, but I am afraid that I must ask him to curb his impatience and wait for the White Paper with regard to numbers.
Baroness Redfern (Con) [V]
My Lords, the Humber energy estuary is the UK’s most carbon-intensive industrial region and hosts some of the largest offshore wind farms to capture and store power. What are the Government’s next steps for those carbon sequestration sites under the North Sea, which ultimately would have the potential to lead in securing a net-zero industrial cluster for the Humber?
Lord Callanan (Con)
The noble Baroness makes a very good point. As I am sure she is aware, we have created a carbon capture and storage infrastructure fund of at least £800 million to establish at least two UK sites—one by the mid-2020s and the other by 2030—and £500 million to help energy-intensive industries to move to low-carbon techniques and decarbonise carbon-intensive regions such as Humberside.
Lord Ravensdale (CB)
My Lords, I declare my interests as in the register. Given that we are unlikely to achieve net zero without nuclear power, which is critical to the security of thousands of jobs across the regions, I am concerned that the White Paper will contain only a broad outline of the strategy for new nuclear. Will it set out in detail clear guidance on financing, for example a commitment to a RAB model, to give the sector the clarity it needs to progress?
Lord Callanan (Con)
The White Paper will look at the whole system of energy within the UK as part of our commitment to net-zero carbon emissions by 2050. I reaffirm the key role that nuclear will play as part of that future energy mix. I can tell the noble Lord that we will respond to the RAB consultation in due course.
Lord Grantchester (Lab) [V]
With this long-overdue White Paper, the Government have said that they will
“publish decarbonisation plans for key sectors such as agriculture and industry as part of its green agenda in the run up to COP26.”
Can the Minister confirm that a greater number of these plans will be published on the same day as the energy White Paper to demonstrate the Government’s joined-up approach, so needed to tackle the climate emergency?
Lord Callanan (Con)
The noble Lord is right to point out that intensive work is going on in all those areas. I cannot confirm that those documents will be published at exactly the same time.
Baroness Bowles of Berkhamsted (LD) [V]
With the continuing pull-out from nuclear new builds, do the Government consider it strategically important to invest in the pre-commercial development of the marine energy sector, which is also well aligned with areas where development is needed?
Lord Callanan (Con)
I agree with the noble Baroness. The Government have a long history of supporting the development and deployment of wave and tidal stream technologies in the UK. To date, we have provided sustained and targeted support enabling the wave and tidal stream sectors to move from initial concept to prototypes and now on to the first arrays in practice.
Lord Wigley (PC) [V]
My Lords, can we assume that the White Paper will give a definitive indication of the Government’s intention for the Wylfa site following Hitachi’s pulling out? Can the Minister tell the House whether both SMRs and fusion reactors are being actively considered for Wylfa and when the generic design assessments for these two technologies will be started?
Lord Callanan (Con)
I understand the concern in north Wales about this issue but Hitachi made it clear that withdrawing from the Wylfa project is a commercial decision that it has taken for its own domestic and business reasons. We understand that it is disappointing. We remain willing to discuss any new nuclear projects with any viable companies and investors wishing to develop sites in the UK, including that at Wylfa.
Viscount Trenchard (Con) [V]
My Lords, following on from the question asked by the noble Lord, Lord Wigley, repeated delays in the publication of the energy White Paper and the failure to publish a response to the consultation on a regulated asset base model for nuclear that closed nearly a year ago have contributed to the doubt and uncertainty surrounding the Government’s future commitment to new nuclear projects, such as that at Wylfa. Does the Minister agree that it is now crucial that the Government send an urgent message to the Japanese Government saying that they are committed to working with them to develop a framework under which the project that was supposed to provide 7% of our electricity by the mid-2020s can be revived as a UK-Japan joint project?
Lord Callanan (Con)
As I just said, the decision taken by Hitachi was a commercial one. We totally agree that nuclear power will play a key role in the UK’s future energy mix as we transition to a low-carbon economy, and we already support investments in small and advanced modular reactors.
Lord Craig of Radley (CB) [V]
My Lords, what progress have the Government made on resolving the issue of the safe and ecological disposal of nuclear waste with a long half-life? Will the future energy policy address this vital matter?
Lord Callanan (Con)
In December 2018, the Government launched a new siting progress to identify a suitable location in which to construct a geological disposal facility. This is of course a consent-based process that is looking to identify both a willing host community as well as a location with the suitable geology in which to construct such a geological disposal facility.
Lord West of Spithead (Lab)
My Lords, the Minister is well aware of my passion for ships and the need for the Royal Navy to have more, and also my huge support for a sensible nuclear power industry. But I am also delighted that it appears that hydrogen is being considered for future power. Will the Minister confirm that, in the energy White Paper, hydrogen is being addressed and that the supply and demand sides of the hydrogen economy will also be addressed—for example, a push towards hydrogen vehicles?
Lord Callanan (Con)
I was wondering how the noble Lord would get warships into this Question, but he has of course managed it. The White Paper will set out the proposals for the use of hydrogen and carbon capture and storage. They are key to our planning as we seek to decarbonise gas by 2050 for net zero, because of the potential they have to allow us to decarbonise both nationally and regionally while creating new, high-value jobs. Hydrogen will be a key part of the energy mix in the future. We are looking very closely at investing in it and we will be setting out a further strategy on that.
The Deputy Speaker (Lord Lexden) (Con)
My Lords, all supplementary questions have been asked and we now move to the next Question.
Oil and Gas Industry
Lord Callanan Excerpts(3 years, 7 months ago)
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Lord Bruce of Bennachie
To ask Her Majesty’s Government what steps they will take to ensure the recovery and diversification of the United Kingdom oil and gas industry supply chain.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con) [V]
My Lords, I recognise the impact that the coronavirus pandemic and the lower oil price have had on the oil and gas supply chain. We are working closely with the sector to agree a transformational North Sea transition deal, which we have committed to delivering in this Parliament. The focus of this deal will be on ensuring that the sector can support the energy transition and on anchoring the supply chain here in the United Kingdom.
Lord Bruce of Bennachie (LD) [V]
My Lords, I thank the Minister for that reply. Does he agree with me that, as we transition to net-zero carbon, we will continue to require fossil fuels and that it is better to use our own, which meet high international standards, and to sustain a quarter of a million UK jobs? Will the Government work closely with the industry, the Scottish Government and local councils to help accelerate diversification into carbon capture and storage and renewable energy, and exploit the huge potential from hydrogen, using the capital and world-class expertise that exists in our industry, so that these high-quality jobs can be diversified into new, low-carbon-sector jobs, rather than be lost?
Lord Callanan (Con) [V]
I agree with the points made by the noble Lord. I congratulate the sector on its response to the twin crises of the pandemic and the lower oil price. The Government launched an unprecedented Covid-19 financial package because we want to support the sector, which sustains more than 270,000 jobs in the UK. As I said earlier, we are committed to a proper North Sea transition deal.
Lord Moynihan (Con)
My Lords, I declare my interests as set out in the register. As oil and gas supply and service companies move increasingly to offshore or renewable business, will the Minister confirm that the energy White Paper will cover the error whereby the energy transition discussions on renewable costs almost always completely ignore the system costs of coping with periods of intermittently zero or limited electron production?
Lord Callanan (Con) [V]
My noble friend makes a good point, as always. The White Paper will indeed address the characteristics of the electricity system as we prepare for a net-zero future, balancing the increased deployment of renewables with more flexibility and low-carbon sources of electricity that are available when the wind does not blow or the sun does not shine. Indeed, our system has already demonstrated that it can operate with a high percentage of renewable generation: 47% of electricity in the first quarter of this year was renewable, and, adding in nuclear, we had more than 60% from low-carbon generation.
Viscount Waverley (CB) [V]
My Lords, the key issue of training can be expressed in two ways. What support is to be provided to ensure that, as the industry migrates across to new, sustainable energy markets, UK jobs are retained by reskilling and retraining this highly skilled workforce? Coupled to that, what support is to be provided to UK companies helping developing economies in their continuing efforts to prioritise local content initiatives for sustainable economic development?
Lord Callanan (Con) [V]
My noble friend makes a very good point. It will be key to the sector deal to make sure that we can utilise the tremendous expertise across the oil and gas sector both for our own low-carbon transition and to help other countries with theirs.
Lord West of Spithead (Lab)
My Lords, the Oil and Gas Authority is only just beginning to take account of the UK’s statutory target for net-zero emissions of greenhouse gases by 2050. Official projections from the Department for Business, Energy and Industrial Strategy take no account of that requirement. Our nation is sleepwalking into an energy crisis of major proportions. National daytime electricity demand is forecast to double from 40 to 80 gigawatts by 2050, when we should have net-zero emissions. Oil and gas will have to be phased out, yet the Government’s industrial strategy does not mention the need to retrain and redeploy oil and gas workers. Although renewables can achieve much, there will always be days when wind and sun cannot meet our demands. Nuclear power provides the green option, yet we are discovering daily that the plan for nuclear power is in growing disarray. How do the Government intend to resolve this imminent crisis of secure nuclear power provision?
Lord Callanan (Con) [V]
I do not accept that we are sleepwalking into a crisis. We are devoting huge expertise and energy to planning for the transition. Renewables and nuclear have an important role to play in the transition, as do oil and gas. However, the noble Lord will have to be patient and wait for the energy White Paper, when all these matters will become clear.
Lord Oates (LD)
My Lords, what discussions have the Government had with the oil and gas industry about utilising its expertise as we establish the UK’s green hydrogen production? What assessment have the Government made of the potential for the hydrogen industry to provide replacement high-skilled jobs for those lost in oil and gas as we decarbonise the economy?
Lord Callanan (Con) [V]
The noble Lord is consistent in advocating for the hydrogen sector, and it is true that the oil and gas sector has an important contribution to make to the UK’s energy transition. Its world-class supply chain has many of the essential skills and capabilities to support emerging technologies such as hydrogen and carbon capture and storage. The noble Lord will be aware that we launched the Hydrogen Advisory Council on 20 July to help inform the development of a UK hydrogen strategy, which we intend to publish early next year.
Lord Grantchester (Lab)
The Energy Minister in the other place has said that an oil and gas sector deal will be critically important for the sector as it seeks to recover from the current crisis. There is some confusion over this, as we still know so very little. Can the Minister confirm that any oil and gas sector deal will comply with the UK’s domestic and international climate change commitments and include fully funded programmes to transfer skills into clean industries? Is this sector deal transforming into the North Sea transition deal?
Lord Callanan (Con) [V]
We are currently awaiting proposals from the industry and we are committed to working closely with it; it has a key role to play. We will, of course, be consistent with our international obligations.
Baroness McIntosh of Pickering (Con)
What is the current state of interconnectors to the energy market? What new interconnectors is my noble friend expecting to come on stream and when might that be?
Lord Callanan (Con) [V]
My noble friend is right that interconnectors have a key role to play. There are a number of existing electricity and gas interconnectors, which will play a key role in the transition. They also provide security of supply to both imports and exports of energy. We will be supporting them.
Lord Truscott (Ind Lab)
My Lords, I refer the House to my relevant interests in the register. BP has forecast that peak oil will come about in the early 2020s—much earlier than previously predicted. What plans do Her Majesty’s Government have to deal with this? Are they ready for it?
Lord Callanan (Con) [V]
As we have said, oil and gas have a key role to play in the transition and that is reflected by the independent Committee on Climate Change. Many of these things are, of course, a matter for the market. We have historically low oil prices at the moment, and the Government are well aware of it. We need to transition away from fossil fuel. BP, which the noble Lord mentioned, is doing a tremendous job in supporting, for example, the Net Zero Teesside scheme.
Lord Goddard of Stockport (LD) [V]
Will Her Majesty’s Government support carbon capture and storage technology on a regional basis across the UK, including the north-west, to meet our net-zero commitment while securing the future energy needs of our manufacturing plants, without which we will come to rely even more on imports from other countries? Without such a commitment, we will undermine our contribution to tackling climate change while putting in doubt thousands of jobs in this sector at the worst possible time.
Lord Callanan (Con) [V]
The noble Lord is right. Carbon capture and storage will be a key part of our future energy requirements. The Chancellor announced the new carbon capture and storage infrastructure fund of at least £800 million. We are committed to deploying carbon capture and storage in at least two industrial clusters over the next decade.
Baroness Jones of Moulsecoomb (GP)
My Lords, parts of our world are burning; parts of it are melting. We are already committed to a one degree rise in temperature globally. The Government are not feeling the urgency of this. We have to stop fossil fuel burning now. It is no good talking about transitioning and having little dribs and drabs of plans. The Government need a vision. If I can help with that, I would be delighted.
Lord Callanan (Con) [V]
I thank the noble Baroness; I admire her commitment to these causes. In essence, we agree, albeit probably not on the scale she requires. The UK was the first major world economy to legislate for net zero. We were one of the first countries to commit to ending unabated coal generation and we intend to do that by 2024. I hope that the noble Baroness will also recognise that the oil and gas sector has a key role to play in supporting the transition through its skills, infrastructure and investment. As we move to a low-carbon economy, oil and gas will play an increasingly small role, but we need to utilise the skills that exist in the industry.
The Senior Deputy Speaker (Lord McFall of Alcluith)
My Lords, the time allowed for this Question has elapsed.