Strikes (Minimum Service Levels) Bill

Lord Callanan Excerpts

Consideration of Commons amendments
Thursday 20th July 2023 Lords Chamber

Moved by

[Lord Callanan]

That this House do not insist on its Amendment 2D to which the Commons have disagreed for their Reason 2E.

2E: Because the Bill already contains adequate provision for consultation and parliamentary control of regulations made under it.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, the House will be pleased to know that I can again be brief, as we have debated this Bill and the remaining issue at length on a number of occasions. The other place has again considered the Bill, as requested by this House. The House will be unsurprised to hear that it has come to the same conclusion as previously, again with a significant majority. This is now the third time that the other place has made its will clear, and I therefore hope that noble Lords will take that into account today.

Noble Lords last sent the Bill back to the other place with the justification that the International Labour Organization had issued new information. As my colleague, the Minister for Enterprise, Markets and Small Business, noted in the debate there earlier this week, this is ground which has already been well covered by both Houses. I therefore hope that knowing that the other place has considered the issue again, and voted with that in mind, will give noble Lords the confidence that this issue has now been extensively scrutinised.

The Minister in the other place also explained that the Government will provide clarity in respect of the reasonable steps which a union must take to be compliant with the legislation. I know that this has been a concern for the noble Lord, Lord Collins, in our previous debates. I am therefore pleased to confirm that the Government will bring forward a statutory code of practice on the reasonable steps which a union must take. We will do that using existing powers under Section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992. That code will be subject to statutory consultation, including with ACAS, and will of course need to be approved by both Houses of Parliament. This consultation will provide an opportunity for trade unions, employers and any other interested parties to contribute to providing practical guidance on the steps that a union must take to make the code as practicable, durable and effective as possible.

I hope these steps go some way to reassuring the House that the Government’s plans for minimum service levels are within our international obligations and that we will provide clarity where that is required. I hope therefore that this House will now feel able to allow this legislation to pass to Royal Assent. I beg to move.

[Lord Hendy (Lab)]

My Lords, in form, this skeleton legislation with its Henry VIII powers defies every legislative principle, as the Delegated Powers and Regulatory Reform Committee, the Secondary Legislation Scrutiny Committee and the Select Committee on the Constitution have reported. As to content, the less said the better. Although the Government’s impact assessment was held by the Regulatory Policy Committee to be not fit for purpose, it contains the revealing analysis that, far from obviating the disruption that strikes inevitably cause, the Bill

“could mean a general increase in tension between unions and employers. This may result in more adverse impacts in the long term, such as an increased frequency of strikes for each dispute”.

No doubt that is part of the reason why employers, as well as trade unions, have opposed the Bill.

This House tried to redeem the Bill with amendments to protect workers from unfair dismissal and unions from damages and injunctions, as required by international law, but the Government’s majority in the other place rejected them. This House, in its latest modest amendment, sought to mitigate the Bill’s excesses by requiring consultation before regulations were made, but even this was rejected by the other place on Monday.

The fact is that the Bill abridges the right to strike, a right established by many international treaties to which the UK adheres. A letter written by the general secretary of the European Trade Union Confederation to the Secretary of State the day before yesterday sums it up. She said:

“It is clear that the Bill introduces provisions which weaken or reduce existing law in relation to the protection of the fundamental right to strike and which do not respect or implement ILO Convention 87”.


The Joint Committee on Human Rights said the same thing. The letter points out the specific respects in which the Bill fails to meet ILO conditions for permissible MSL legislation. Among its list of non-compliances, the letter points to the absence in the Bill of: any requirement for trade union and employer dialogue in the setting of MSLs; any obligation on the employer to negotiate an agreement with the trade union about service levels; and any independent adjudication mechanism in the event of a failure to agree.

Your Lordships’ amendment would have gone a long way to rectify these non-compliances without such remedial action. As ETUC points out, the UK will not only be in breach of ILO Convention 87 and paragraph 4 of Article 6 of the European Social Charter, but it will also violate Articles 387 and 399 of the trade and co-operation agreement. However, the Government have a problem with consultation with the social partners. Just a week ago, the High Court held that the purpose of the statutory obligation to consult before making regulations under the Employment Agencies Act was that:

“Parliament can then proceed on the basis that the case for the measure has been tested with interested parties in the sector and that their views and interests have been taken into consideration in fashioning the draft regulations which are laid before it”.


The Government’s failure to consult was, the court held,

“so unfair as to be unlawful and, indeed, irrational”.

Less than a month ago, the relevant ILO committee told

“the Government to provide information to and facilitate the dialogue between and with the social partners with a view to … improve consultation of the social partners on legislation of relevance to them”.

Of course I accept that the undertaking by the noble Lord to introduce a code of practice imports a duty to consult, but such consultation is apparently limited solely to the issue of reasonable steps. It does not require the social dialogue that compliance with international law does. In truth, as was said by Mick Whitley MP in the other place,

“no number of amendments could ever salvage this Bill”.—[Official Report, Commons, 17/7/23; col. 721.]

That is why the Labour Party is committed to repealing it.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, it is a great pleasure to follow the noble Lords, Lord Hendy and Lord Collins, and I completely associate myself with their critical process and legal analysis of this Bill. From the outset, this was a political Bill and I make no apology at the end of this process for making a political comment.

It may have escaped your Lordships’ notice, but there are three by-elections going on today across different parts of the country. In knocking on those doors, the number one or number two concern of the people in those houses in those communities is the delivery of the health service in this country. I refer to this Bill and the challenge that this Government have in dealing with the industrial disputes going on within the health service. It is quite clear that this Bill will do nothing to bring those disputes to an end and, if it is deployed, it would exacerbate them. Those people answering their doors and talking to politicians as they are being canvassed would love to have a minimum service level every day of the week. The Government need to solve this industrial issue as well as the service delivery within the health service, and this Bill when it becomes an Act will do nothing towards doing that.

[Lord Callanan (Con)]

My Lords, I thank all three noble Lords who have contributed to today’s debate. The Government always listen carefully to the views of this House.

In response to the noble Lord, Lord Hendy, I have seen the letter from the European TUC, which I read with interest. I am sure the noble Lord will accept that it is hardly an impartial referee on these matters. It is also fair to say that it had nothing new to say. We have been over all this ground many times before and have provided explanations of the type it has sought.

It is also fair to point out that, in our view, this legislation is compatible with the ILO convention, and I am sure the noble Lord will accept that there are many other ILO states that already have minimum service levels as part of their domestic legislation. We will, of course, ensure that any secondary legislation is also in compliance with all our international obligations.

I can also confirm in response to the noble Lord, Lord Collins, that the Government will launch a consultation on the draft code this summer, following consultation with ACAS. The code will be put to both Houses for approval in line with the procedure set out in Section 204 of the Trade Union and Labour Relations (Consolidation) Act, and we will consult for an appropriate period.

[Lord Collins of Highbury (Lab)]

Can the noble Lord be more explicit? We are just about to go into the Summer Recess. August is a month when many people take holidays. I hope that he will be able to confirm, as with the previous statutory codes, that the public consultation will start in September and run for 12 weeks at least.

[Lord Callanan (Con)]

I am afraid I cannot confirm that for the noble Lord. No final decisions have been taken yet, but it is our intention to get on with this as quickly as possible, so we will consult over the summer. We will leave an adequate period for responses to that consultation and then, as I said, the code will have to be approved by both Houses.

I understand the Opposition’s principled objection to this Bill. Taking on board the point made by the noble Lord, Lord Fox, I suppose all legislation is political. We are a political House at the end of the day. We are all party politicians, so it should not be a great surprise to find that legislation is also political.

We have thoroughly debated this matter now on many different occasions. The House has asked the Commons to think again on a number of occasions; they have done so and have responded. I appreciate that noble Lords opposite do not like the outcome, but it is what it is. In our view, this is a vital piece of legislation that will give the public confidence that, when workers strike—which they are fully entitled to do—lives and livelihoods are not put at undue risk.

I hope the House, despite the reservations of noble Lords opposite, will now let this legislation pass to Royal Assent.

Motion A agreed.

Oil and Gas Windfall Tax

Lord Callanan Excerpts

Wednesday 19th July 2023 Lords Chamber

[Lord Bruce of Bennachie]

To ask His Majesty’s Government what assessment they have made of the impact of the oil and gas windfall tax on investment and jobs, and the capacity of the energy sector and supply chain to deliver key components of the transition for achieving the United Kingdom’s net zero objectives.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, the Government introduced the energy profits levy to respond to exceptionally high prices that mean that oil and gas companies are benefiting from extraordinary profits. The Government have been clear that we want to see producers reinvest profits to support the economy, jobs and the UK’s energy security, which is why we have introduced generous investment allowances. Our North Sea transition deal reflects the key role of the sector in that energy transition.

[Lord Bruce of Bennachie (LD)]

I thank the Minister for that reply. As we increase our efforts to meet net zero, which we clearly must, does he agree that through all the projections to and through net zero, we will continue to use fossil fuel, albeit on a declining basis? Therefore, is it not essential, because Norway has said that it will produce every ounce of oil and gas that is commercial in its sector, that we do nothing to prevent the transition being led by the energy industry, which is increasing its investment in the necessary technology such as carbon capture and storage, hydrogen and green electricity, and that we need to ensure that it can continue to do that?

[Lord Callanan (Con)]

I am very happy to agree with the noble Lord. I am tempted to observe that he might want to talk to some of his colleagues on his Benches about that message. He is right that it makes much more sense as we go through the transition to obtain those resources from our own fields rather than import them at a much higher carbon content.

[Lord Leigh of Hurley (Con)]

My Lords, I refer to my interests in the register and to the previous questions I have raised on this matter in Treasury Questions. The point is that the EPL has had a dramatic effect on investment in North Sea oil. The question from the noble Lord, Lord Bruce, asks what assessment the Government have made of it. Would the Minister include in that assessment an analysis of the bids that have been made—for example, for Chevron oil in the Republic of Congo and in the Gulf of Mexico—by North Sea oil companies that are no longer investing in the North Sea?

[Lord Callanan (Con)]

My noble friend makes an important point. Taxation levels are obviously a matter for the Chancellor and the Treasury. However, there are a number of concerning stories from investors that they have pulled out of investments in the North Sea; in fact, one remarked that parts of Africa were a more stable tax environment.

[Lord West of Spithead (Lab)]

My Lords, I congratulate the Government on the £20 billion they put into the small modular reactor enterprise, and the work they have done for the STEP fission reactor. Does the Minister agree that the best net-zero way of ensuring that we have energy to provide the electrical baseload is to press ahead rapidly with Hinkley C and Sizewell because, if we do not get this nuclear power online, we are not going to make it?

[Lord Callanan (Con)]

I do agree with the noble Lord. Nuclear reactors, whether it be Sizewell or Hinkley, and small modular reactors will play an important part in the net-zero transition. Of course, we want a diverse supply mix; we want as much renewable energy as possible, but nuclear will play an important role.

[Lord Stern of Brentford (CB)]

My Lords, does the Minister recognise that the Paris Agreement implies the use of much less oil and gas in the 2030s than now? Therefore, issuing permits for exploration that usually requires at least seven years to generate flows makes little sense, particularly as the effect on prices and security would be negligible. Does he recognise that issuing such permits is essentially enabling and fostering bets on climate failure?

[Lord Callanan (Con)]

No, I would not agree with the noble Lord, I am afraid; he is absolutely dead wrong. Even with any new licences that might be issued in the UK, UK production will continue to decline at the rate of about 7% a year. It is estimated that global production decline needs to be about 3% to 4% in order to ensure the net-zero transition, so we will be declining at a faster rate than what is required globally.

[Lord Teverson (LD)]

My Lords, the windfall tax that the Minister mentions taxes profits but also gives a substantial kickback on investment. On renewables, the levy is against revenue and there is no such kickback. When will the Department for Energy Security and Net Zero stop discriminating against renewables?

[Lord Callanan (Con)]

My Lords, what the noble Lord refers to as a “kickback” is actually an investment allowance. If I am right, the same noble Lord was asking me about reducing flaring and about introducing electrification of fields. It is those investment allowances that pay for the very policies that he asked me to introduce.

[Lord Bellingham (Con)]

My Lords, in concurring with the noble Lord, Lord Bruce, in his statement that oil and gas are a vital part of transition to net zero, can I ask the Minister what the situation is with the Rosebank oil project, which is a world-class asset and one of the largest of its kind anywhere in the world?

[Lord Callanan (Con)]

I thank my noble friend for the kind invitation to respond to that. He will understand that I cannot comment on licensing decisions.

[Baroness Blake of Leeds (Lab)]

My Lords, analysis of the Office for Budget Responsibility data in May this year showed the extent to which oil and gas firms were able to reduce their energy profits levy while still making record profits. Between this loophole, the decision against a 78% rate and the decision not to backdate to catch all the surging profits, it is estimated that over £10 billion of potential tax will be missed between 2022-23 and 2023-24. I ask the Minister: have the Government given any consideration to fixing the levy to deliver the full benefits proposed since these figures came out?

[Lord Callanan (Con)]

I do not know where the noble Baroness gets her figures. I responded in my previous answer to the question about investment allowances—policies that the Opposition have called for. The energy profits levy is expected to raise about £26 billion and is set at a rate of 75%, which is one of the highest in the world. I realise that the Labour Party’s policy is to tax firms into extinction, but we need to leave them with some profits. Much of the profits of oil and gas companies goes towards pension funds and other shareholders which many pensioners and others rely on for their income.

[Baroness Sheehan (LD)]

My Lords, the IEA’s report World Energy Outlook 2022 is clear that the solution to the energy trilemma of economic, climate and security issues is to accelerate the move to greener energy. For us in the UK, among other things, that means urgently equipping our workforce with transferable skills for the energy transition. What are the Government doing to make sure that a single offshore energy skills passport that aligns training standards in all offshore energy sectors is introduced?

[Lord Callanan (Con)]

The noble Baroness is essentially right: of course we need to transition to renewable energy sources, and that is exactly what we are doing. The North Sea transition deal between the Government and North Sea companies is helping to move them, as far as the transition is going, to transfer their skills to many of the new industries. For example, many drilling companies operating in the North Sea also drill geothermal heat sources to use for renewable energy. The two things are not mutually incompatible.

[The Lord Bishop of Bristol]

My Lords, what assessment is the North Sea Transition Authority making of the alignment of company commitments, especially on net- zero targets covering scopes 1, 2 and 3, over the short, medium and long term as well as company alignment on capital expenditure towards those targets? Can the Minister assure us that, before licensing any expansion in North Sea exploration, the authority will factor this into consideration when judging projects under alignment with the UK’s net-zero legal commitment?

[Lord Callanan (Con)]

As I said in response to a previous question, I cannot comment on any licensing decisions—we will know about them before too long—but I can assure the right reverend Prelate that all the appropriate considerations are being taken into account by the Government and the North Sea Transition Authority on the issuing of those licences.

[Lord Rooker (Lab)]

I agree 100% with the Government’s nuclear policy but, bearing in mind that we want the success of renewables and the end of oil and gas, what assessment has been made of the fact that by 2050—which is not that far away—when the oil and gas is gone, we will be relying on nuclear for intermittency? That will leave the nuclear situation as a stranded asset, because it really does not work that way; it has got to be a formal baseload. Once the rest has gone and we are on renewables and left with nuclear, how can it be intermittent?

[Lord Callanan (Con)]

I totally understand the point the noble Lord is making. He is right that many renewables are very cheap but intermittent, and nuclear will contribute towards the baseload. He is asking for long-term energy storage; the answer is hydrogen. We can store large quantities of hydrogen—some really exciting projects are coming forward—and it can then be burned, with no emissions, in a power station to provide the supplies that we will need when the wind is not blowing and the sun is not shining.

Decarbonisation

Lord Callanan Excerpts

Thursday 13th July 2023 Lords Chamber

[Baroness Blackstone]

To ask His Majesty’s Government, further to their consultation on ‘Addressing carbon leakage risk to support decarbonisation’ published on 30 March, what assessment they have made of the case for extending green procurement targets beyond steel and cement to include other carbon-intensive sectors covered by the UK Emissions Trading Scheme, such as paper and power, and products made from materials covered by the UK ETS, such as vehicles.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, the Government are currently exploring options for utilising public procurement to create demand for green industrial products. We have sought views via consultation to help develop proposals for policy measures that support the growth of low-carbon industries. The Government’s Construction Playbook advises that projects should be accompanied by a whole-life carbon assessment and PPN 06/21 requires suppliers bidding for major government contracts to commit to net zero by 2050 and to publish a carbon reduction plan.

[Baroness Blackstone (Lab)]

My Lords, I am grateful to the Minister for his response, but I wonder whether I can press him a little further. In the Government’s consultation, they propose to use minimum product standards to protect just two or three sectors from unfair competition from overseas and not to bring in these measures until late in the 2020s. Should not the Government be setting minimum product standards across a wider range of sectors, and sooner, to protect domestic manufacturing from unfair competition, especially from China, where grid electricity has twice the carbon intensity and is half the price compared with the UK?

[Lord Callanan (Con)]

The consultation only closed at the end of last month, so the noble Baroness will need to give us a bit of time to analyse the hundreds of responses that we received. It is a complicated issue, and we of course understand the desire for quicker action, but there is a whole range of factors to be taken into account. We have to be very careful not to indulge in some form of green protectionism, where we incentivise lower-standard products against others that are better performing. Across a whole range of sectors and procurement areas, it is a complicated issue that deserves to be studied properly.

[Lord Hannan of Kingsclere (Con)]

My Lords, the essence of climate change is that it is global and does not recognise borders. It is very disappointing that we have so many calls for responses that are essentially protectionist, introverted and selfish. Will my noble friend confirm that, just because our allies in the United States—and indeed in the European Union—are going down the road towards protectionism, carbon adjustment taxes and so on, this country will not disadvantage itself or raise the price of the green technologies that we need to combat this global problem?

[Lord Callanan (Con)]

My noble friend has been steadfast for many years in his support for free trade—a cause that I manifestly agree with. But it is a complicated issue. It looks as though the EU and US are going down the road of carbon adjustment mechanism taxes, but, as I said in my Answer to the noble Baroness, Lady Blackstone, it is a complicated issue. For instance, do we want to incentivise the installation of poorer-quality solar panels that may be constructed with lower carbon intensity, or better-quality solar panels? That is one example of millions that I could give.

[Lord Jones (Lab)]

My Lords, does the Minister acknowledge that, while we need green policies, there is a major problem concerning the British steel industry? Successive Governments have imposed what have been, in effect, green taxes on a great foundation industry. Now, very little of the steel industry remains. For example, does he realise that the great integrated steelworks—the only remaining integrated steelworks in Britain—is hanging on by its fingertips? The ailing steel company Tata calls for more investment. How can he see his Government urgently giving more investment to save Britain’s steel industry? If Britain is to remain a great nation, as she must, she needs the foundation industry of steel. If ever there shall be war, you need steel.

[Lord Callanan (Con)]

I totally understand the point that the noble Lord is making. He highlights the dilemma of carbon-reduction policies in these areas, where we impose carbon taxes and emissions trading systems and schemes, and of course that has an effect on domestic industries that emit a lot of carbon—the so-called carbon leakage problem. We are working closely with the steel industry to try to help it adjust to greener manufacturing methods, and of course it receives free emissions permits.

[Baroness Sheehan (LD)]

My Lords, recent reports that the Government are considering rowing back on their flagship climate finance commitment of £11.6 billion to assist lower-income countries to reduce their emissions, adapt to climate change and protect the natural environment are to be deplored. Those global benefits affect us all and would be lost to us all. Does the Minister agree that using a proportion of the funds raised through CBAM, the carbon border adjustment mechanism, to support low-carbon transition in least-developed and climate-vulnerable countries would be enlightened self-interest?

[Lord Callanan (Con)]

The noble Baroness is asking me to comment on tax policies and hypothecation of taxes, which are matters in the purview of the Chancellor of the Exchequer. I shall make sure her views are communicated to him.

[Lord Lennie (Lab)]

My Lords, the Government’s IDDI consultation, which the noble Baroness, Lady Blackstone, referred to, sets out four levels that are being considered. The Government make a firm statement about their policies achieving levels 1 and 2. With level 3, the Government say that they are minded to achieve it. As for level 4, which is about achieving the UK’s decarbonisation objectives, the Government say that they may commit to it. When can we expect decisive leadership so that we commit to achieving all four of these IDDI objectives?

[Lord Callanan (Con)]

My Lords, I am slightly disappointed by the tone of the question. We are already showing decisive leadership: we are one of the only countries in the world to already have green procurement strategies for major public procurement. This is a complicated area, as has been illustrated by the questions from the noble Lord’s own Benches. We need to make sure that we get it right and do not disadvantage British industries or drive up the cost for consumers.

[Lord Kamall (Con)]

My Lords, while one of the advantages of carbon border adjustment measures and other green taxes is that they tax negative externalities, hopefully to encourage better green policies, one of the downsides is obviously that that might then feed into the cost of production and that cost is then passed on to consumers. One concern for many people about green policies, even though they support them, is that when we introduce green taxes, they are often not fiscally neutral, so people end up paying more. Have the Government looked at how they can balance these challenges to make sure that, when a green tax is introduced, tax is removed elsewhere to encourage better behaviour and have a positive outcome for green policies?

--- Later in debate ---

[Lord Callanan (Con)]

My noble friend makes an important point. On all these policies, we have to make sure that we get the balance right between fulfilling our legally binding commitments and making sure we do not disadvantage consumers and drive up costs for ordinary men and women.

[Lord Inglewood (Non-Afl)]

My Lords, does the Minister agree that emissions trading schemes offer a very valuable opportunity for regions of both this country and elsewhere that are essentially rural and agricultural, away from centres of population and wealth at present, to generate an income that they desperately need to level up the living standards of people in these places to some kind of equivalence with the richer parts of the country?

[Lord Callanan (Con)]

I understand the point that my noble friend is making. A happy by-product for the Treasury of the emissions trading scheme is the considerable revenue that it generates, and I am sure that it is spending all this money very wisely.

[Lord Teverson (LD)]

My Lords, the EU-UK Trade and Cooperation Agreement, which the Government negotiated, had a clause that said that the two sides should talk further about the EU and UK emissions trading systems, and that they should be connected and start to work together. That has been strongly endorsed by most sectors of British industry. Have those negotiations started? If so, great; if not, why not?

[Lord Callanan (Con)]

My Lords, I appreciate the desire of the Liberal Democrats to get us into the EU regulatory orbit as quickly as possible. As with many things, there are arguments for and against the linking of the two ETS systems. They are equivalent—in fact, ours is probably slightly more ambitious than that of the EU. We will continue to explore this policy with the Commission.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. Does the Minister agree that, far from investment in and nurturing of green initiatives and technologies being detrimental to this country—as the noble Lord, Lord Hannan, said—investing in green technology for things such as steel and cement production not only helps those industries in this country but helps our economy and international competitiveness?

[Lord Callanan (Con)]

I do not want to put words into my noble friend’s mouth, but I do not think that he was attempting to argue that we should not invest in green products and services. He was merely pointing out the difficulties in international trade where, for some countries, there will be a temptation to use green excuses to introduce protectionist policies. Free trade has been an immense benefit to all of us in the developed and developing world, and we should be very careful to make sure that we maintain those benefits.

Cement Industry: Carbon Dioxide

Lord Callanan Excerpts

Wednesday 12th July 2023 Lords Chamber

[Lord Lucas]

To ask His Majesty’s Government what proposals they have to support lower volumes of carbon dioxide production, as well as increased carbon capture and storage, in the cement industry.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, the Government are committed to working with the cement sector to explore decarbonisation options and are pursuing several strategic funding and policy initiatives. This includes developing options for access to CCUS. In March this year, as part of the CCUS cluster sequencing process, the Government published the Track-1 project negotiation list, which included the Hanson Padeswood cement works project. That was one of five projects to proceed to negotiations for support through the relevant business model.

[Lord Lucas (Con)]

I thank my noble friend for that encouraging Answer. As cement accounts for about 8% of our carbon dioxide output, this is a crucial area for us to pay attention to. May I draw my noble friend’s attention to the importance of standards in this area? So many specify which materials should be used, rather than what performance should be achieved. If the Government could help the transformation of that, there would be much more ability to use bath furnace slag and more modern additives such as graphene.

[Lord Callanan (Con)]

The figures I have are slightly different; my figures say that the sector accounts for 1.5% of the UK’s total greenhouse gas emissions. The sector has made strong progress in reducing its emissions. Of course, we stand by to help it further. It is a particularly difficult sector to decarbonise, given that 70% of its emissions are process-related.

[Lord Teverson (LD)]

My Lords, I have to admit that I agree with the Minister; I think the figure is 1.5%. We have an important cement industry in this country on which many other sectors are dependent. However, five out of 10 plants are not in one of the industrial areas in which we are going to have a concentration of carbon capture and storage—there are five others outside those areas. In the past, the Government have suggested that there would be a lifeline for enabling carbon capture and storage for those other five. Where are we on that? Are the Government still positive about aiding the whole sector to decarbonise?

[Lord Callanan (Con)]

I thank the Liberal Democrats for agreeing with something I have said, for a change; that is a welcome departure from normal practice. I agree with the noble Lord, and as I said, this is a difficult sector to decarbonise. We are working with it and having regular meetings. There are 10 cement plants in the UK, only one of which is situated in an existing cluster. Of course, we are considering expressions of interest from additional clusters at the moment. I would not want to predict that process. Whatever happens, CCUS will clearly be a key technology for many cement plants. We have funded a number of feasibility projects with existing suppliers and will continue to work with them.

[Lord Berkeley (Lab)]

My Lords, what are the Government doing to encourage alternative building methods that do not need cement, or need much smaller volumes of cement? That would help with the carbon issue quite dramatically.

[Lord Callanan (Con)]

The noble Lord makes a good point. We are exploring the role that demand-side policies could play in creating demand for low-carbon cement, or indeed less demand for cement. We recently concluded a consultation which sought feedback on proposals for low-carbon standards, and we will continue to pursue that.

[Lord Ravensdale (CB)]

My Lords, as well as CO₂ being produced as a by-product of the chemical reaction in cement production, the other main source of emissions is the high heat required: around 1,400 degrees centigrade or more. What work are the Government doing to support a road map for the development of electric kilns?

[Lord Callanan (Con)]

That is one of technologies we are looking at. We also gave £3.2 million to the Mineral Products Association to develop a low-carbon fuel mix for cement. It held a trial at Hanson’s Ribblesdale plant and Tarmac’s Tunstead plant using a mix of 100% net-zero fuels, including hydrogen.

[Lord Lennie (Lab)]

My Lords, I too agree with the Minister that the concrete industry accounts for approximately 1.5% of emissions in this country. Globally, the figure rises to 8%, as the noble Lord, Lord Lucas, said. Last year, a report from the Low Carbon Concrete Group suggested that the UK concrete industry could become a carbon sink by the 2040s. Welcome though this prediction is, we must recognise that this is a global problem. What steps are the Government taking to encourage other countries to set out and achieve similarly ambitious goals?

[Lord Callanan (Con)]

Both the Liberal Democrats and Labour agreeing with me is destroying my credibility on this side of the House. I agree with the noble Lord; we are seeking to work with other countries as well. One of the issues in the sector, as we look to reform the ETS, is carbon leakage. We must make sure we do all we can to avoid it.

[Lord Wallace of Saltaire (LD)]

My Lords, if we are to reduce the use of cement, the move from demolishing buildings and rebuilding them—particularly in the commercial sector—to adaptation is an important part of that. As I walk down Victoria Street every morning, I see buildings being demolished and buildings replacing others which are only 40 years old. That is clearly crazy, and adaptation is a way for us to build a more sustainable economy. What are the Government doing to improve incentives and regulations to make the adaptation of established buildings, rather than their replacement, a priority?

[Lord Callanan (Con)]

The noble Lord makes a good point. We should, of course, always look at adaptation. As for his particular example, I can think of one building on Victoria Street, occupied by my department, which definitely should be demolished as soon as possible—

[Noble Lords]

Oh!

[Lord Callanan (Con)]

There is too much agreement in the House today with the Liberal Democrats. Setting aside personal views, his overall point is right: of course we should look at adaptation and reuse if possible.

[Baroness Jones of Moulsecoomb (GP)]

What are the Government doing about adaptation—not just looking at it; are they doing anything?

[Lord Callanan (Con)]

This is one of a number of different policies that we need to look at. Does the noble Baroness mean adaptation to climate change, or does she mean adaptation of existing buildings? Of course we are looking at both.

Geothermal Heat and Power

Lord Callanan Excerpts

Thursday 6th July 2023 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, first, I join noble Lords in thanking the noble Lord, Lord Cameron, for securing this debate on a fascinating and exciting topic. I do not think there is any difference between us. I think we all share a passion for renewable energy and for the green transition. That undoubtedly includes geothermal energy which is, as noble Lords have pointed out, a significant store of energy beneath our feet.

Before I get on to the topic of the debate, as always, I greatly enjoyed the contribution from the noble Baroness, Lady Jones. It was typically entertaining; it was of course total nonsense but very entertaining none the less. I have a couple of facts for the noble Baroness. We have not scrapped our contribution to international climate funds, and we do not give tax breaks, as she described it, to fossil fuel producers. In fact, the opposite is the case: they pay increased levels of taxation compared with other businesses. I am very proud of our decarbonisation record, which is in fact the best of all the G7 countries. Of course, the noble Baroness is perfectly entitled to push us to go further and faster, but let us not pretend that we are not doing anything. We have the best record in the G7, and it is much better than in some of the countries where the Greens are in government—I could point out Germany as an example.

However, back to the subject of the debate, the Government recognise the massive potential of geothermal energy in many parts of the UK. It has the potential to deliver low-carbon heat and power, as well as many critical minerals such as lithium. In the British Energy Security Strategy, the Government set out that they would explore renewable energy opportunities afforded by our geography and geology, including geothermal. I reassure the noble Lord, Lord Cameron, that geothermal technologies that generate power are in fact eligible for contracts for difference awards, which is the Government’s main mechanism for supporting low-carbon electricity generation.

I can also inform my noble friend Lord Moynihan that evidence from my department suggests that geothermal is one of the cheaper emerging technologies that are eligible for the contracts for difference scheme. That builds on the point from my noble friend Lord Lucas that we are also exploring a range of other support mechanisms to de-risk and bring down the high capital cost of drilling down—there is a lot of risk there for private investors.

The UK’s first geothermal plant that will generate electricity, located at the United Downs site in Cornwall, is set to start generating next year. It is expected to deliver a baseload capacity of 12 megawatts, roughly the equivalent of 12 onshore wind turbines, which will rise to 25 megawatts by 2028—a project supported by the Government.

The most significant potential for geothermal energy within the UK lies in extracting geothermal heat for use with heat pumps in district heating or heat networks, as a number of noble Lords mentioned. This resource is more widespread, closer to the surface and more economic to extract. Accessing geothermal heat at scale will rely on the existence of heat networks to distribute the heat—the noble Baroness, Lady Walmsley, was right about that.

I did not quite understand the point the noble Baroness made about heat network zoning; she suggested that we should spread it to the whole of the country but of course we are extending it to all the country. I apologise if that was the noble Baroness, Lady Sheehan. The noble Baroness often calls on us to work with local authorities; the Energy Bill will give local authorities the power to designate heat network zones throughout the whole of England in particular—obviously it is devolved in the devolved nations—but it will be up to local authorities to decide whether they wish to designate heat network zones in their areas. We will of course support them in central government, and we are in talks and discussions with a number of local authorities —dozens of them—that are interested in doing exactly that.

I am also grateful to the noble Lord, Lord Cameron, and the noble Baroness, Lady Sheehan, for highlighting the importance of heat networks and zoning. As I said, the Energy Bill will enable all of local government to designate heat network zones.

I am also grateful for the support, on this occasion, from the noble Baroness, Lady Jones, for community heating and enabling towns to bring this forward. That is indeed why the Government have provided funding to many local authorities through the Heat Networks Delivery Unit to support them to develop heat networks in their own towns. These heat networks will of course also need to correspond to the suitable geological conditions; I can confirm to my noble friend Lord Moynihan that we have in fact supported the north-east LEP to commission research into the potential contribution that deep geothermal technologies could make in the United Kingdom.

The British Geological Survey has been a lead author of that study, which is due to be published later this month—I am sure that the noble Lord will be interested to read it. It has considered many of the options for supporting the industry that the noble Lord, Lord Cameron, summarised in his excellent opening speech. The Government will use it to consider the next steps to support what at the moment is a nascent industry. That includes the provision of easy access to geological data. It will contribute to our understanding of the possible benefits and the options for achieving them, and it will inform future policy development.

We are actively supporting and encouraging the development of geothermal heating projects through the current Green Heat Network Fund, which supports the development of low-carbon heat networks. The noble Lord, Lord Berkeley, correctly referred to the tremendous potential of Cornwall. Through the fund that I have mentioned, the Government have announced £22 million of funding to Cornwall Council to develop the Langarth Deep Geothermal Heat Network, connecting to the United Downs deep geothermal site. This will be the UK’s first heating system to use deep geothermal energy and it will heat nearly 4,000 local homes and public facilities.

I am pleased to tell my noble friend Lord Lucas that the Government support his view that this opportunity can deliver benefits for communities across the country. The Government have previously awarded funds of £5.9 million and £4.3 million through the Heat Networks Investment Project to shallow geothermal schemes in Gateshead and Seaham, respectively. The noble Lord, Lord Lennie, referred to the opportunities in our home region, in the north-east of England. On his way home to Tynemouth, he could stop off in Gateshead and look at one of the government-funded schemes that is delivering excellent heat network funding for a mine water recovery project. In fact, if he looks over to his right when he crosses the Tyne Bridge, he will almost be able to see the project from the train—another government-supported project that is delivering precisely the benefits that he suggested.

I am also happy to confirm to the noble Baroness, Lady Sheehan, that there is value in supporting new renewable heat sources to come forward. One of the major benefits of the Heat Networks Investment Project has been the range of networks that have been supported through its funding.

My noble friend Lord Moynihan asked me about the economics of deep geothermal. He is right: at present, the cost of extracting the heat is uncertain, due to the uncertainties associated with the geology until it is tested. Uncertainty in capital costs, operational costs and revenues means that very few projects have been shown to be financially viable without government support. The potential for costs to reduce with scale is also uncertain and it depends on what we will learn from some of the early projects that I have mentioned that we are already supporting with considerable government funding.

My noble friend also made a very good point about the potential for battery-grade lithium extraction from the waters pumped by geothermal plants. That shows great promise. Some predict that geothermal lithium extraction could account for up to a quarter of domestic demand and help drive transport decarbonisation—another happy benefit of some of the geothermal schemes. Geothermal Engineering in Cornwall has been successful in securing £12 million from the Government’s Automotive Transformation Fund for precisely that purpose.

I thank again the noble Lord, Lord Cameron, for securing this debate today as well as all other noble Lords for their insightful contributions. As I set out today, the Government recognise the tremendous potential of geothermal energy in many parts of the UK and we remain committed, as set out in the British energy security strategy, to explore the renewable energy opportunities afforded by our geography and geology, including geothermal. Despite the challenges currently experienced by the sector, we believe that there is an opportunity for geothermal energy to be one of the wide range of technologies that we can deploy to help us to meet our climate change targets and provide energy security—and, you never know, in the meantime, we might even keep the noble Baroness, Lady Jones, happy.

Electricity Capacity (Amendment) Regulations 2023

Lord Callanan Excerpts

Wednesday 5th July 2023 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Electricity Capacity (Amendment) Regulations 2023.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, these regulations were laid before the House on 12 June 2023. Before I outline the provisions made by this draft instrument, I will provide some context. The capacity market is at the heart of the Government’s strategy for maintaining the security of electricity supply in Great Britain. Through capacity auctions, we secure the capacity needed to meet future peak demand under a range of scenarios, based on advice from the capacity market delivery body, the National Grid Electricity System Operator.

Existing and new-build capacity compete in technology- neutral auctions, held one year and four years ahead of delivery, to obtain agreements. Those which win capacity agreements, known as capacity providers, commit to making their capacity available when needed in return for guaranteed payments. This supports the necessary investment in new and existing capacity to ensure security of electricity supply. The most recent capacity auctions, held in February 2023, secured the electricity capacity that Britain needs to cope with peaks in winter demand for 2023-24. Capacity providers that fail to deliver against their obligations are subject to financial penalties. Capacity payments are funded by electricity suppliers, which recover this cost from electricity consumers.

Since its introduction in 2014, the capacity market has contributed to investment in just under 17.5 gigawatts of new, flexible capacity to replace older, less efficient plant as we transition to a net-zero economy. To ensure that the capacity market continues to function effectively, we regularly make adjustments to the implementing legislation based on our day-to-day experiences of operating the scheme. Although the future geopolitical context is, of course, still uncertain, we recognise that the world is likely to face continued challenges next winter around the security of energy supply, considering Russia’s illegal invasion of Ukraine. The Government continue to work closely with Ofgem, the gas and electricity system operators, and all relevant stakeholders to build on the measures we put in place for winter 2022-23 and ensure we have the appropriate tools available to secure our energy supply for winter 2023-24.

The changes we are making to the capacity market this year, through both this draft instrument and changes to the capacity market rules, focus on longer-term changes that will impact capacity auctions held from February 2024 onwards, for delivery from winter 2024-25. In this context, this draft instrument makes changes to three electricity capacity regulations to deliver technical improvements that support the functioning of the capacity market, which have been identified and explored over the past year through consultation.

--- Later in debate ---

[Lord Lennie (Lab)]

My Lords, I thank the Minister for setting out the instrument and giving us advance warning that more is to come shortly. The capacity market is at the heart of maintaining a secure and reliable electricity system. It provides all forms of electricity capacity on a system during periods of electricity shortage and stress, such as when it is extremely cold or when the wind is low while demand is high. As the Minister said, the capacity market works by allowing eligible bidders to compete in T-1 or T-4 auctions on a one-year or four-year basis ahead of when they must deliver capacity. A successful bidder is awarded a capacity agreement which requires delivery during times of stress.

As the Minister said, this instrument makes changes to three areas of regulation. First, Regulation 10 of the 2014 regulations obliges the Secretary of State to set out whether capacity auctions are to be held. The change will require the Secretary of State to publish a decision only if the Government determine that an auction will not be held, helping to improve administrative efficiency. Does this effectively enrol a current capacity provider into the scheme automatically?

Secondly, Regulation 34 of the 2014 regulations allows capacity providers to seek termination of their capacity agreement with a view to becoming eligible to participate in the contracts for difference scheme. I think the Minister said that they are mutually exclusive as things stand. Currently, the LCCC, as the counterparty, has to give notice of such an intention. However, it cannot know in advance if the CMU will be successful in its bid for a contract for difference.

This instrument means that notice comes from a capacity provider seeking termination of their capacity agreement in order to become eligible to apply in a contract for difference allocation round. How many capacity providers have thus far been unable to use the process set out in Regulation 34? The Minister may say all of them, but how many would have wanted to use the termination process? Have the Government made any assessment of the impact of this, and will this change be kept under review?

Thirdly, I turn to Regulation 41 of the 2014 regulations. Capacity providers can be financially penalised, as the Minister said, if they fail to provide capacity in times of stress. Currently, the settlement body has 21 days to calculate the relevant penalty and to invoice capacity providers which must pay such penalties. This instrument increases the timeframe to 35 days. Does that mean that penalties that should have been paid were previously missed because they were not calculated in time? If so, could the Minister indicate the value of those? By contrast, is this change expected to increase the number and value of penalties that are enforced? I look forward to the Minister’s response.

[Lord Callanan (Con)]

First, I thank the noble Lords, Lord Naseby and Lord Lennie, and the noble Baroness, Lady Walmsley, for their valuable contributions on an important subject for the nation’s electricity supplies.

As I mentioned in my introduction, the capacity market is our main mechanism for ensuring the security of electricity supply. To address the point made by the noble Lord, Lord Naseby, I say that it has already secured the majority of Great Britain’s capacity needs right out to 2026-27, because the Government take no chances with the security of supply. We continue to believe that the capacity market is an effective insurance mechanism, providing secure and affordable electricity that families and businesses can rely on.

The capacity market is, indeed, tried and tested. The fact that it has supported investment in just under 17.5 gigawatts of new-build, flexible capacity since its introduction demonstrates that it can bring forward the capacity needed to meet future peak demand and replace older capacity as it retires and as we transition to a net-zero economy.

Furthermore, we continue to take steps to ensure its ongoing, efficient and effective operation. The Government are committed to ensuring that the right policy tools are in place for delivering a secure and affordable electricity system as we transition to net zero. That includes regularly assessing the performance of the capacity market and, as we are debating today, exploring improvements to the scheme.

As we noted in our 2023 government response to the capacity market consultation, we have set out a two-phased approach for reforms in the capacity market. This instrument seeks to implement purely technical amendments under the first phase to improve the administrative arrangements. In the next phase of reforms to the capacity market, the Government intend to undertake further analysis and development on the remaining proposals prior to taking a final decision on implementation. This includes proposals to align the capacity market with net zero, such as reducing the emission intensity limits for new-build plants and enabling low-carbon capacity with low capital expenditure to access multi-year agreements.

We will also look ahead to the future as part of the review of electricity market arrangements programme. REMA is exploring options to create an electricity market design that will enable us to transition efficiently from fossil fuels to renewables and other forms of low-carbon generation, which I hope will make us more resilient to overseas energy shocks and ensure energy security.

Road Fuel Prices

Lord Callanan Excerpts

Tuesday 4th July 2023 Lords Chamber

[Baroness Kramer (LD)]

My Lords, the Government have stood for this gouging behaviour by the supermarkets over the past year. In rural areas such as Somerton and Frome, and Mid Bedfordshire, people find themselves facing the highest prices and the least competition, and will benefit the least from the comparison scheme. I have two questions for the Minister. Is it fair that supermarket bosses will get bonuses based on gouged profits, and will the Minister review the rural fuel duty relief scheme, which gives a 5p-per-litre reduction, to see whether it can be extended to rural areas not presently covered?

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, let me thank both noble Baronesses for their support for the report and the Government’s action. First, in response to the noble Baroness, Lady Blake, putting the open data scheme and monitoring function on a statutory footing will require parliamentary time, but the Government will work as quickly as possible to do so. I note that she welcomed the fact that in the meantime we have asked the CMA to create an interim voluntary scheme encouraging fuel retailers to share accurate, up-to-date prices. Of course, we expect all fuel retailers to co-operate with the CMA by providing that information fully and promptly. We will legislate as soon as parliamentary time allows, but we need the primary legislation to be passed by both Houses first. We will consult on the secondary legislation in advance of primary legislation being approved in the digital services Bill. The noble Baroness will know that taxation and fuel duty are matters for the Treasury and the Chancellor, and I would not want to predict what he might do on that.

[Baroness Quin (Lab)]

My Lords, I want to follow up on a question asked in the other place yesterday. It follows a visit I made recently to Northern Ireland, where I was struck by how much lower fuel prices were. I understand that is largely because of the fuel price checker. The Minister in the other place was asked yesterday why the Government had taken so long to introduce something similar in the rest of the UK; can the Minister here today answer that point?

--- Later in debate ---

[Lord Callanan (Con)]

As I just said to the noble Baroness, Lady Blake, we will legislate as soon as we can. We will consult on the secondary regulations in the autumn, but we cannot implement them until we have the primary legislation through. There are of course a number of existing fuel price checkers, but the problem is that they are not updated frequently enough and are not compulsory, so not all retailers have to take part in them. When we have the powers, there will be a compulsory scheme and all retailers will be expected to comply.

[Baroness McIntosh of Pickering (Con)]

Does my noble friend agree that the excessive prices that have been charged have had a disproportionate impact on rural motorists and have added to the cost of deliveries of foodstuffs and other items? Is that something that the Government will keep a watchful eye on?

[Lord Callanan (Con)]

My noble friend makes a good point. For many rural areas, where filling stations perhaps do not get the throughput of customers, prices tend to be higher anyway. It is certainly something we want to keep an eye on to make sure that rural customers are not disadvantaged.

[Lord Vaux of Harrowden (CB)]

My Lords, the supermarket premium is apparently about 6p per litre, but that is nothing compared to the prices charged in motorway service stations, where it is often a further 18p to 20p above that. The noble Baroness, Lady Kramer, referred to the 6p as gouging. If that is gouging, what is the situation with motorway service stations and what are the Government going to do to fix it?

[Lord Callanan (Con)]

The noble Lord makes a very good point. Those of us who use motorway service stations are often baffled as to why fuel is so expensive in them. This is something that we will want to keep a close eye on; again, price transparency—that is, motorists having the ability to check what fuel might be available just by taking an exit and going to a service station that is relatively close to a motorway—would be much more beneficial.

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

My Lords, Ministers, particularly the Prime Minister, do not seem to understand the problems of ordinary people. As far as fuel is concerned, whenever fuel costs go up for industry, prices go shooting up. When fuel costs go down, prices are very slow to come down. Now, we have the banks putting up interest rates for borrowers but not offering high-interest returns for savers. There are so many examples of where ordinary people are suffering. The regulators seem to do nothing about it; they seem more interested in the interests of the industries than in those of consumers. Is it not about time that we had some kind of directive for the regulators to look after consumers’ interests?

[Lord Callanan (Con)]

I understand the point that the noble Lord makes, but I think that he is being a little unfair. The CMA is a regulator, of course; this particular regulator very much had the interests of the consumer at its heart when it produced this report, which has widespread support and backing from all parts of the House. The Government will act on its recommendations, so that is a case of a regulator acting in consumers’ interests. The CMA is designed to produce competition, which is the best thing that can operate for the consumer.

The other example mentioned by the noble Lord is slightly off topic, but much more attractive interest rates are offered by a number of smaller financial institutions. It really is a question of the consumer shopping around, but plenty of information and online resources are available for someone to find the best return on their money. No doubt the noble Lord has lots that he wants to invest; if he looks at the various websites, he will be able to invest it well. Obviously, he is a well-known Scottish Member so is bound to have plenty of funds to invest.

[Baroness Kramer (LD)]

My Lords, picking up the point made by the noble Lord, Lord Vaux, about motorway services, a number of continental countries have signs along the motorway telling drivers what the price of petrol will be at the first, second, third and fourth service stations along their route. That provides a competitive element and is supposed to have been very successful in managing prices. Are the UK Government looking at such a scheme?

[Lord Callanan (Con)]

The noble Baroness makes a good suggestion. I am not aware of that being contemplated or what powers we would need to implement it, but I will certainly ask officials to have a look at it.

Strikes (Minimum Service Levels) Bill

Lord Callanan Excerpts

Consideration of Commons amendments
Tuesday 4th July 2023 Lords Chamber

Moved by

[Lord Callanan]

That this House do not insist on its Amendment 2B to which the Commons have disagreed for their Reason 2C.

2C: Because the Bill already contains adequate provision for consultation and parliamentary control of regulations made under it.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, in moving Motion A, with the leave of the House, I will speak also to Motions B and C.

The Bill returns to us once again from the other place. That House has been consistently very clear, for the second time now, that it is firm in its position on the remaining three amendments. When we were last here, this House asked the Commons to reconsider its position and, unsurprisingly, it has reached exactly the same conclusion as it did previously. Indeed, it has done so by greater majorities than before and, in some cases, by the greatest majority that we have so far seen on the Bill. Therefore, I propose Motions to accept the Commons position on the Bill and give way to the elected House.

We have discussed these amendments in detail throughout the Bill’s passage. The Government’s position remains that they cannot accept amendments which would delay the implementation of this much-needed legislation or, indeed, render it entirely inoperable. The Government have been clear in both Houses that they are willing to consider providing clarity on the nature of the “reasonable steps” which unions are expected to take to fulfil their obligations under the Bill. This is a significant issue, which I know a number of Members of this House have raised throughout the Bill’s passage. However, as yet, we have not had any indication that this would be widely supported.

Amendment 2D significantly expands on previous versions of Lords Amendment 2 in a way that will not, I believe, add to the effectiveness of the regulations. The Government have already undertaken public consultations on their intentions to bring forward minimum service levels for passenger rail services, ambulance services and fire and rescue services. We will bring forward regulations for approval in Parliament in due course. This is an entirely reasonable legislative approach enabling the Government to consider all relevant factors, including our international obligations, while at the same time ensuring that minimum service levels are introduced in good time.

I remind the House that, as the Government have made clear through the passage of the Bill, employees will lose their automatic unfair dismissal protection for going on strike in contravention of a work notice only if they receive notification from the employer that they are required to work under a work notice and notification of the work that they must carry out. Finally, impact assessments will be published alongside the final regulations.

I am sure that the noble Lord, Lord Collins, will acknowledge that the effect of his amendment would be to delay significantly the implementation of minimum service levels, given the additional and lengthy consultation and parliamentary requirements; I heavily suspect that that is probably its purpose. On behalf of the Government, I must therefore resist it today. I hope that the noble Lord will not feel the need to put it to a vote.

This amendment remains unnecessary and would delay the implementation of this vital legislation, which is designed to protect the public from the disproportionate impacts of the ongoing strike action. I therefore ask noble Lords to support the Government’s Motions on the Order Paper today. I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by

--- Later in debate ---

[Lord Fox (LD)]

My Lords, it is a pleasure to support the amendment, as set out so thoroughly and excellently by the noble Lord, Lord Collins. I have very little to say; I will make just three points.

First, noble Lords who have been observing will remember that on a number of occasions I have proposed amendments that try to give Parliament more say on what is going on. Having got to where we are, I am happy to subsume that objective within the amendment that the noble Lord, Lord Collins, has set forward, but it remains an important and missing element in the Bill. We should not forget that.

The noble Lord also set a lot of store by the recent ILO announcement. He is right to do so, but this amendment is necessary with or without it. The announcement makes it clear to us on these Benches that the Commons should be given another chance to reassess the Bill in the light of the details coming in from the ILO.

Finally, the Minister talks about delay. The first iteration of this Bill was drafted and laid before Parliament about a year ago. If the Government really are that breathless about getting this on the statute book, they could have moved a little quicker. This is about politics, not actually doing anything real out there. The noble Lord, Lord Balfe, is right in that concern. Because of that, we will certainly support the noble Lord, Lord Collins, if he chooses to put this to a vote.

[Lord Callanan (Con)]

My Lords, as I said in my opening remarks, we have had a very similar debate a number of times, so I can keep my response brief. I have responded to these points previously, but I will make one point on the ILO report in response to the noble Lords, Lord Collins, Lord Pannick and Lord Fox.

The ILO did not say that this legislation did not comply with the convention; it simply said that it should and that we should ensure that it does. In my view it does, as our response to the Parliamentary Question rightly said. I have made the point many times in this House that the ILO has been clear over many years that minimum service levels can be appropriate in public services of fundamental public importance. That is why many other countries in Europe and around the world that are signatories to the ILO have had minimum service levels in place for many years. The Liberal Democrats and the noble Lord, Lord Fox, normally urge us to go the way of Europe and follow what EU countries are doing. In this case, we are doing precisely that.

I therefore hope, although without a great deal of optimism, that noble Lords will cede to the wishes of the elected House and agree to the Government’s Motions, which would then bring this Bill’s passage to a close.

[Lord Collins of Highbury (Lab)]

My Lords, I will take the unusual but reasonable step of pressing this, for one good reason. The Minister talks about the ILO not saying that the Bill is non-compliant. Part of the problem is that no one knows what this law means. Trade unions do not know what reasonable steps they need to take to protect the right to strike. We heard the Minister confirm that workers who receive a work notice will lose protection from dismissal.

The Minister talks about the ILO and minimum service levels in Europe. Nobody is against minimum service levels. They are essential, but in every European country they work because they are agreed by voluntary agreement and because people consent. As soon as you remove that consent, you are in trouble. That is why employers are so against what the Government are arguing.

I know that it might feel a bit repetitive, but the ILO report is new and the Commons needs to consider it. I plead with all noble Lords: please support my Motion. I wish to test the opinion of the House.

--- Later in debate ---

Moved by

[Lord Callanan]

That this House do not insist on its Amendment 4B to which the Commons have disagreed for their Reason 4C.

4C: Because in order for the legislation to be effective, it is necessary for there to be consequences for an employee who fails to comply with a work notice.

Moved by

[Lord Callanan]

That this House do not insist on its Amendments 5B, 5C and 5D to which the Commons have disagreed for their Reason 5E.

5E: Because amendment 5B would remove the requirement for a union to take reasonable steps to ensure that members comply with a work notice in order for strike action to be protected, and this would reduce the impact of the legislation, and amendments 5C and 5D are consequential on amendment 5B.

Drax Biomass Power Station

Lord Callanan Excerpts

Monday 3rd July 2023 Lords Chamber

[Baroness Jones of Whitchurch]

To ask His Majesty’s Government what assessment they have made of the extent to which Drax biomass power station has complied with sustainability requirements; and whether they are reviewing subsidies to it.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, this is a matter for Ofgem. The regulator is the administrator for monitoring compliance with the sustainability criteria within the renewables obligation scheme. It has opened an investigation into whether Drax Power Ltd is in breach of its annual profiling reporting requirements related to the renewables obligations scheme.

[Baroness Jones of Whitchurch (Lab)]

I thank the Minister for that reply. It is estimated that we will have given Drax some £11 billion in subsidies over the different renewable energy schemes. Is the Minister concerned that Drax’s claim to be using sustainably sourced wood from Canadian forests currently lacks any detailed full-cycle carbon accounting and the audit trail that we have the right to expect for that level of subsidy? Why did Ofgem commission the technical consultancy Black & Veatch to advise on this even though the company is already working for Drax? Finally, does the Minister accept that, in order to get to the truth, independent advisers and scientists should go to Canada to check that 70% of the wood biomass being imported is actually sustainable offcuts, as our rule requires, and not from virgin forests?

[Lord Callanan (Con)]

A couple of points for the noble Baroness. First, the renewables obligation legislation was originally introduced by the last Labour Government. Secondly, Ofgem is investigating these matters. The noble Baroness is jumping to a lot of conclusions there. If it is proved that Drax is not in compliance, of course some of the value of the certificates that it has received will be withdrawn.

[Lord Birt (CB)]

Speaking of proof, has the Minister had a chance to view the devastating “Panorama” on Drax? Drax’s claims have been fatally undermined. Ancient forests have been cut down and indiscriminately turned into pellets, transported 12,000 miles by ship and incinerated in Yorkshire, emitting more CO₂ than coal did before and at gigantic cost to the taxpayer. This is not the route to net zero.

[Lord Callanan (Con)]

The noble Lord should be careful of jumping to conclusions. I have not seen the programme, but my officials have. They have engaged extensively with forestry experts and Canadian officials following the programme, and the officials’ conclusion is that the “Panorama” programme provided an inaccurate representation of practices by the forestry and biomass sector on the ground.

[Baroness McIntosh of Pickering (Con)]

My Lords, looking at renewables more broadly, does my noble friend have a view on the efficacy and morality of taking electricity that has been generated offshore in the Yorkshire and Humber region and transporting it all the way down to the West Midlands, when we could actually use that electricity locally, particularly to power up electric cars, for which there are so few charging points in rural areas?

[Lord Callanan (Con)]

I have to say that I am really not sure what the noble Baroness is talking about. There is a national grid. Electricity is transported from all parts of the country to other parts, as demand varies. That is the whole principle of a grid.

[Baroness Bakewell of Hardington Mandeville (LD)]

The emissions that occur as a result of Drax burning mature trees are not counted as CO₂ emissions; only emissions from transporting trees from forests to furnaces count. When are the Government going to wake up to this ridiculous accounting fraud and stop giving Drax green subsidies?

[Lord Callanan (Con)]

Again, the noble Baroness is jumping to conclusions before the investigation has proceeded. Based on the evidence reviewed to date, Ofgem has not established any non-compliance with the scheme. But the investigation is continuing and I would caution noble Lords to wait for the outcome from the independent regulator.

[Lord Berkeley (Lab)]

My Lords, transporting this woodchip from a forest somewhere in North America by truck or train, loading it on to a container ship, taking it to the Mersey, taking it across the Pennines in another train and then discharging it into Drax—how can that possibly be green?

[Lord Callanan (Con)]

It is because the sustainability criteria say that the biomass has to come from sustainable sources. Most of it is by-product from normal sustainable commercial forests.

[Baroness Boycott (CB)]

My Lords, a few years ago when this Question came up in the House, the noble Lord assured the noble Earl, Lord Caithness, that if Ofgem found Drax not to be meeting its sustainability criteria, the subsidies would be immediately removed. Since then, we have had the “Panorama” review and, while I accept the noble Lord’s point that the jury is still out, I would like to know whether he is still prepared to make the same commitment to the House today.

[Lord Callanan (Con)]

Yes.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, you have to admit that the “Panorama” programme had some interesting facts. In fact, a lot of that information comes from Canadian environmentalists who are on the spot and see the ancient forests being destroyed for those wood pellets. So why on earth does the Minister still persist in saying that we are jumping to conclusions when he is just burying his head in the sand?

[Lord Callanan (Con)]

As somebody famous once remarked, recollection of facts may vary. Forgive me if I do not necessarily take as absolute fact the statements of some Canadian environmentalists. Officials have looked into it. Ofgem is investigating whether the biomass is sustainable or not. Let us wait for the outcome of that investigation.

[Lord McLoughlin (Con)]

My Lords, my noble friend said in his original Answer that it was matter for the regulator. Are the Government wholly satisfied with the way regulation is working at the moment, with questions around the regulator Ofgem? Who regulates the regulators?

[Lord Callanan (Con)]

The noble Lord was probably in the other place when the regulations and laws for Ofgem were passed. It is an independent regulator; that is the whole principle of it. Until I see any evidence that it is not carrying out its job satisfactorily, I will continue to have confidence in it.

[Baroness Blake of Leeds (Lab)]

My Lords, when Ofgem opened its investigation into Drax’s biomass sustainability reporting a month ago, it made clear it would act if it found breaches of the rules—the right approach, surely, to a single case. However, what assessment have the Government made of wider compliance with reporting requirements and what steps are they taking to improve monitoring, particularly with regard to the origin of fuel sources?

[Lord Callanan (Con)]

I refer the noble Baroness to the answers I have given to previous questions. There are other biomass operations that fulfil the sustainability criteria. If any evidence is produced and if the noble Baroness has any evidence, I would be delighted to pass it on, but until then we should trust what they say.

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

My Lords, in answer to the excellent question from the noble Lord, Lord McLoughlin, the Minister said that officials had looked into this and that Ofgem was satisfied. But, as far as this House is concerned, it is the Minister who is responsible. What has he personally done to look into this since the programme aired so that he could have answered the Question from the noble Baroness, Lady Jones, properly?

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[Lord Callanan (Con)]

My Lords, I have answered the Question properly. Ofgem is an independent regulator and takes these matters extremely seriously. I have spoken to the chief executive of Ofgem about it and I have spoken to officials who have investigated it, so I feel that I have discharged my duties on this one.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. The Minister was very dismissive to the noble Baroness, Lady McIntosh of Pickering, on the issues around the national grid and the use of sustainable energy. We had long debates about this, and about community energy, in the Energy Bill. Does he not accept that there is a possibility, with some of the large onshore wind turbines we now have, that we could almost avoid grid connection and go to direct supply for developments that are important?

[Lord Callanan (Con)]

That was not the question I was asked, but let me tackle the question from the noble Baroness. Of course, it is perfectly within anybody’s rights to set up a private wire supply and their own community generation if they wish, but I think the noble Baroness will find that the vast majority of those schemes also want to be connected to the national grid for cases where it does not work.

Retained EU Law (Revocation and Reform) Bill

Lord Callanan Excerpts

Consideration of Commons amendments
Monday 26th June 2023 Lords Chamber

Moved by

[Lord Callanan]

That this House do not insist on its Amendment 15D, to which the Commons have disagreed for their Reason 15E.

15E: Because the Commons do not consider the Lords Amendment necessary in order to maintain environmental protection.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, with the leave of the House, I will also speak to Motion B. The House will be pleased to know that I can be brief again today. We have extensively debated these issues on a number of occasions.

The reality is that the House of Commons has considered this Bill once more and has come to the same conclusions as previously, again with significant majorities. This is now the third time that it has made its will clear. It is the elected House and has been firm in its position. We have to take that into account, along with its democratic legitimacy.

I welcome that the noble and learned Lord, Lord Hope, recognises our constitutional position. I hope that the noble Lord, Lord Krebs, will be able to do the same. The other place would find it extremely difficult to understand if, on the amendment of the noble Lord, this unelected House sent a Bill back to it yet again.

Noble Lords have seen that the Government have moved on a number of issues during the passage of the Bill, both on Report and subsequently. Crucially, we have provided transparency on our plans on what retained EU law we intend to revoke this year—I remind the House that this was a key demand from this House during the Bill’s passage—by publishing a schedule of retained EU law that is to be removed from our statute book by the end of 2023. This addressed the concerns raised by many noble Lords and, of course, provided greater legal certainty.

We have been clear throughout the passage of the Bill that the Government will not row back on our world-leading environmental protections. In reviewing our retained EU law, we want environmental law to be fit for purpose for the UK’s unique environment and able to drive improved environmental outcomes, as we have set out in our Environment Act targets, while ensuring that regulators can act efficiently. Any changes to environmental regulations across government will be driven with those goals in mind.

In addition, I emphasise that it is standard practice to consult on major policy changes for the environment. It is right that Secretaries of State may exercise discretion when it comes to consultation. Any such discretion must be exercised in accordance with the law and guided by the consultation principles published by the Government. Those principles ensure an efficient and proportionate burden on government, while facilitating meaningful consultation.

Furthermore, it is worth noting the new legal framework created by the Environment Act 2021, our ambitious environmental plans created under it and the legally binding targets set under Sections 1 to 3 of that Act. This is the context in which the REUL Bill and its regulation-making powers will operate.

Moreover, from 1 November there will also be a legal duty on Ministers to have due regard to the environmental principles policy statement when making policies using the Bill’s powers. This Government use expert advice, including that of many independent experts, when making provisions that relate to the environment.

The UK continues to play a leading role on the international stage, driving increased ambition in environmental international law. Most recently, at the 15th meeting of the Conference of the Parties to the Convention on Biological Diversity, UK leadership was instrumental in securing global agreement to stretching targets to halt and reverse biodiversity loss. We will remain a world leader on the environment. Nothing in this Bill alters that fact.

Let me now turn to Amendment 42F. I thank the noble and learned Lord, Lord Hope, and the noble Lord, Lord Anderson, for their dedication on this amendment. I am sure I speak for us all in this House when I say that parliamentary scrutiny is, and always will be, the pivotal foundation of our democracy. Their commitment and expertise on this matter is, of course, admirable. As I have said throughout the passage of the Bill, the Government recognise the significant role that Parliament has played in scrutinising instruments, including throughout the EU exit process. I firmly believe that UK citizens voted to leave the EU to re-establish the sovereignty of our UK Parliament. At its heart, the Bill seeks to do exactly that. It is for this reason that we have included the process of sifting committees for the powers to revoke or replace, among others in the Bill.

To further reassure the House, let me put it beyond any doubt. On each and every occasion to date, we have always followed the sifting committee’s recommendations. We will continue to adopt the same practice of following the recommendations that the sifting committee makes to upgrade the scrutiny procedure attached to instruments made under the powers in this Bill. Where the committee considers that a statutory instrument should be subject to the affirmative procedure, we will ensure that it is laid in draft before Parliament so that it can be debated in both Houses. This will ensure that Members are able to debate all reforms which the committee considers merit the highest level of scrutiny, to ensure that Members have the opportunity to properly scrutinise those reforms and that Ministers are aware of their arguments, ideas and recommendations. It will of course be at the Minister’s discretion, but where significant reforms are planned on which there is particular interest from the House, Ministers will be able to publish draft instruments, alongside any relevant statements and consultation responses, ahead of laying those statutory instruments.

In addition, I can commit today that, where the Government are making significant reforms to retain EU law, using the replace limbs of the powers in Clause 14, we will follow the usual protocols on public consultation. These will be run in the usual way, as is already a ministerial duty. I reassure the House that the results of such consultation will be made available to Members of both Houses in the established manner.

Finally, as noble Lords will know, we have committed in this Bill to publish a report on retained EU law reform and the use of the powers to Parliament every six months. In this report we will provide Parliament with a six-month forward-look at major reforms which will utilise the powers under Clause 14. This will provide Parliament ample time to ask the Government questions on these reforms through the normal procedures of Parliamentary Questions and correspondence. It will also provide the relevant Select Committees with the time to initiate inquiries on reforms where they deem it necessary and to provide the Government with recommendations, which as usual we will respond to.

Taken together, these measures will allow parliamentarians, both in this House and the other place, an additional opportunity to review our reform plans ahead of any debates. They will provide an opportunity and time for this House, as well as the general public and UK businesses, to let their views on reforms be known. After all, this is the fundamental benefit of Brexit: we will ensure that our statute book reflects the best interests of the UK, rather than some of the compromises of all EU member states. This will allow our citizens, our businesses and, importantly, our parliamentarians to make their voices heard in this important reform process.

I hope that I have sufficiently reassured the House of the Government’s intentions, and that both noble Lords now feel able not to press their Motions and to allow this Bill to progress to Royal Assent. This is an important piece of legislation. Let me repeat once again that the Government have already made significant amendments in the light of many of your Lordships’ concerns. Frankly, it is now time that the Bill reached the statute book. I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by

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[Baroness Chapman of Darlington (Lab)]

My Lords, we agree with Amendments 15F and 42F from the noble Lord, Lord Krebs, and the noble and learned Lord, Lord Hope. We are sorry that the Government take the attitude they do to the involvement of Parliament in the scrutiny of retained law, especially as this House has been proved right on these issues. This House has given the Government good advice that they have largely ended up taking.

The amendment in lieu in the name of the noble and learned Lord, Lord Hope, simply asks that the Minister considers how regulations might best be dealt with. We note the assurances from the Minister; they have been, as the noble Lord, Lord Fox, rightly pointed out, hard-won. We thank the noble and learned Lord, Lord Hope, and the noble Lord, Lord Anderson, in particular for the sterling work they have done over many months to get as far as we have.

The amendment in the name of the noble Lord, Lord Krebs, would protect law on environmental standards. We think there are clear and obvious reasons to want to do this, not least because we want to see the environment protected. It is worth adding that the Government’s failure to support this point as fully as they could have done still leaves further uncertainty for business and potential investors about the exact nature of the framework that they would have to comply with. We are sorry about the approach the Government have taken.

We are very grateful to our Cross-Bench colleagues in particular for the work that they have put in. The Bill is in a much better place now than it was when we first encountered it—noble Lords will remember the sunset clause and the lengthy arguments we had over that. The Government did listen in the end, though initially with some reluctance. I hope that in time Ministers will see that that was the right decision. We have got to a better place this afternoon.

[Lord Callanan (Con)]

My Lords, I thank everyone who contributed to today’s debate. I will respond to some of the points that have been made. First, we take Dispatch Box commitments extremely seriously. I reiterate that this Government will not row back on our world-leading environmental protections, as I mentioned in my opening remarks.

To respond directly to the point made by the noble Lords, Lord Krebs and Lord Fox, and the noble Baroness, Lady Bennett, on this issue of non-regression, the fundamental problem is that nobody know what non-regression actually means. We all think we do, but putting it in primary legislation invites every change to environmental regulations to be challenged, as they inevitably would be, in the courts. The courts would then be asked to take a view on whether a particular change was regression or not. In effect, we would be transferring the legislative process from Parliament to the courts, on every individual regulation. Although we are content to say that we will not row back on environmental protections, that is the reason we are unwilling to see such a phrase placed in primary legislation. I am sure some of the environmental lobbyists and their lawyers would be very happy about all the work it would generate for them if we were to do so, but this is not the way to make legislation. We have to be clear about what we mean in Parliament. As I have said before, any regulation would have to be approved by this House and the other place, which is the appropriate place for these things to be decided. Great though the courts in this country are, it is not their job to legislate.

On the question raised by the noble and learned Lord, Lord Hope, paragraph (6)(12) of Schedule 5 to the Bill clarifies that the provisions of paragraph (6), which sets out processes relating to an instrument proposed as a negative instrument and subject to sifting, would not prevent a Minister deciding that another scrutiny procedure should apply to a particular instrument any time before that instrument is made. In deciding which other procedure should apply, the provisions of the Bill give a Minister a choice between the negative and the draft affirmative procedure, and in practice would give a Minister the ability to upgrade the scrutiny procedure from the negative to the draft affirmative procedure. The sifting committees already have the ability to recommend that regulations which the Government are proposing to make via the negative procedure are of such importance in their content that they should be upgraded to the affirmative procedure, which would then allow them to be debated as normal in both Houses. As I have set out today, and I am happy to repeat it again, on each and every occasion to date we have followed the sifting committee’s recommendations, and we will continue to do so if utilising the powers under this Bill.

We have debated these matters long and hard on many different occasions, as the noble Baroness, Lady Chapman, acknowledged. We have listened to the House; we have amended the Bill quite considerably in response to some of the concerns raised by noble Lords. This House has done its job in scrutinising the Bill. This House has asked the House of Commons to think again on a number of different occasions. It has thought again and it has responded. It is now time to let this Bill pass to Royal Assent.

[Lord Krebs (CB)]

My Lords, I thank all noble Lords who have taken part in this short debate today, and also on the previous occasions when we have debated these two amendments. I do not want to highlight any particular contribution, although I thank the noble Lord, Lord Fox, for introducing cricket last week and canaries this week; sport and birds are two of my favourite occupations, so I thank him very much for that. I thank the Minister for his patience throughout the many hours of debate, with its recursive nature that meant we kept coming back to the same arguments.

I do not totally buy what the Minister has just said about non-regression handing this over to the courts, and that the environmental groups would have a field day. Such groups could equally have a field day over the words that the Minister himself used about maintaining our high environmental standards. Surely the Bill could have defined what non-regression means in this context.

I do not buy the argument and I remain disappointed. Luckily for me, when I became head of an Oxford college 15 or so years ago, somebody bought me a book on how to deal with disappointment; that has come in very handy this afternoon so I am not going to throw a wobbly. In accepting the Government’s response, I think they will be aware, of course, that it is not just Members of your Lordships’ House who will be watching carefully to ensure that environmental standards are upheld; it is the wider public. We have only to look at the number of people who belong to organisations with an environmental interest, such as the National Trust and the Royal Society for the Protection of Birds, to realise that a very powerful force is out there.

There will be scrutiny of what the Government do. They will be held to account on “non-regression” or “maintaining high environmental standards”. I am sure that Ministers in this Administration and any future Administration will be fully aware of the public concern about the state of our environment, which was so eloquently illustrated by the noble Baroness, Lady Bennett of Manor Castle, a few minutes ago. Nevertheless, at this point, I beg leave to withdraw Motion A1.

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Moved by

[Lord Callanan]

That this House do not insist on its Amendment 42D, to which the Commons have disagreed for their Reason 42E.

42E: Because the Commons consider the scrutiny procedure imposed by the Lords Amendment to be inappropriate.