Small Modular Nuclear Reactors
Lord Hunt of Kings Heath Excerpts(1 year ago)
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Lord Spellar
To ask His Majesty’s Government when they expect to announce the orders for the first small modular nuclear reactors.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, Great British Nuclear is pushing forward with the SMR competition and is negotiating with a four down-selected companies. Once negotiations have concluded, the companies will be invited to submit final tenders, which Great British Nuclear will then evaluate, with final decisions to be taken in the spring.
Lord Spellar (Lab)
I thank the Minister for that Answer. He will be aware that the Government’s response to the AI action plan this month refers to the opportunity
“to accelerate investment in … Small Modular Reactors”.
He will also be aware that Britain is at the forefront of developing this technology, which could make a significant contribution to our growth agenda right through the country. However, delays in decision-making by the last Government led to significant slippage in the programme. What is the Minister’s department doing? He gave the procedure that would be undertaken, but what is the department doing to get the SMR programme back on track?
Lord Hunt of Kings Heath (Lab)
My Lords, I understand my noble friend’s impatience. It is an impatience that I share, because we can all see the potential of small modular reactors in the UK and the export potential of UK companies that are involved in developing SMRs. With fairness to Great British Nuclear, it is going through a tough process. We will have assurance with regard to the technologies and value-for-money issues. Spring is not far away. I understand the haste with which my noble friend wishes us to act in this area.
Lord Deben (Con)
My Lords, the French Government have given this Government a great opportunity to stop any further growth of Sizewell C and use that money for small modular nuclear reactors. This is an out-of-date proposal. It will cost much more than we bargained for. It is a brave and sensible Government who would say, “We will stop that and move to new technology”.
Lord Hunt of Kings Heath (Lab)
My Lords, if a Government were suddenly to say to Sizewell C, “We’re not going ahead with it”, that would have a devastating impact on our nuclear industry. We are not going to do that. We are moving towards a final investment decision. I do not recognise some of the figures that have been quoted in the media recently. It is 80% replication of Hinkley Point C, but because of that, a lot of the risks have already been ironed out.
Lord Birt (CB)
My Lords, I am attracted in principle to the idea of small-scale nuclear reactors scattered across the country on small sites and not just in nuclear submarines. But I have attended a number of meetings with the industry and have no clarity on the economics of the technology and how they compare with alternative paths to net zero. Does the Minister think that the economics are clear yet? If not, will the Government set them out?
Lord Hunt of Kings Heath (Lab)
My Lords, there are two points to make. Our analysis is that, overall, a renewable-led system complemented by flexible technologies, alongside technologies such as nuclear, will form the cheapest foundation for our decarbonised power grid. The value for money for SMRs is a very good question. That is precisely why the work that Great British Nuclear is doing will be so important and why it then has to feed into more general discussions within government about the finance involved.
Earl Russell (LD)
My Lords, as the SMR contracts have been delayed, has the proposed twentyfold increase in AI been included in the clean power plan? What are the Government’s proposals to deliver the energy required and meet our energy net-zero targets if SMRs will not be ready before 2032?
Lord Hunt of Kings Heath (Lab)
My Lords, obviously, we are all very excited by the potential of AI. My understanding is that current electricity demand from, for example, data centre growth—which is part of the package that the noble Earl is referring to—would in 2022 account for 4.05% of UK electricity consumption. NESO’s analysis of future energy scenarios reckons that data centres could increase annual electricity demand by between 27 and 62 terawatt hours by 2050, with estimates of total annual electricity demand ranging from 533 to 700 terawatts hours. Obviously, we are giving this a great deal of consideration.
Lord Harris of Haringey (Lab)
My Lords, I refer to my interests in the register. Existing civil nuclear power stations are protected by the Civil Nuclear Constabulary, which is, of course, wholly armed. What consideration has been given to who will protect and police modular nuclear reactors? Will it be the Civil Nuclear Constabulary, which would mean covering far more sites than it currently does, or will it be the other police forces? What discussions has the Minister had with his colleagues at the Home Office?
Lord Hunt of Kings Heath (Lab)
My Lords, it is a little early to give a definitive view to my noble friend but clearly the role of the Civil Nuclear Constabulary is a very important one. I reassure him that in the 14-year gap since I was last responsible for that force, there have been huge improvements in the way in which the constabulary works. I keep this matter under very close oversight.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, it is welcome news that the Minister has indicated there will be a decision by Great British Nuclear on SMR technologies in the spring. However, we still await any guidance on advanced modular reactors, let alone details on how they can come to the market and generate much-needed clean energy here in the UK from the early 2030s. A number of privately funded developers—newcleo, X-energy, TerraPower and others—are ready to go and want GBN to have a parallel process alongside the SMR competition to help them realise their ambitions in the UK as soon as possible. Will the Minister please give a clear indication on when a plan for AMRs will be published? Will His Majesty’s Government support those that want to get on with things in the meantime, invest in the UK, boost economic growth, and create thousands of jobs through their supply chains?
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Baroness for her questions and we certainly take account of what she said. We all see the potential of AMRs. We have also seen that some of the major west coast companies in the US are interested in reaching agreements with project developers for AMRs to be sited near data centres in order to produce decarbonised energy. The noble Baroness’s Government produced an alternative routes to market consultation. We are currently considering the results of that and will make announcements in due course. I understand what she said about the role of GBN. These matters are all under earnest consideration at the moment.
Lord Tarassenko (CB)
My Lords, the noble Lord, Lord Spellar, mentioned the AI opportunities action plan, including the plan to build data centres—among them, the largest UK data centre so far. These data centres, which have been designated by the Government as sovereign data centres, will require SMRs to power them. Rolls-Royce, in which the Government hold a golden share, has produced and maintained the nuclear power systems for the UK’s submarine fleet using similar —not the same but similar—technology for SMRs for the last 60 years. Will the Minister ask the Science Secretary and the Energy Secretary, who together will chair the AI energy council, to designate the SMRs that will supply the sovereign data centres, also as sovereign assets, and run a much shorter bidding process open to UK companies only?
Lord Hunt of Kings Heath (Lab)
My Lords, I do not think I can give that commitment, although I recognise what the noble Lord says. I can certainly assure him that we are in close discussions across government departments about taking forward the implications of what was contained in the plan. I, of course, recognise the role that Rolls-Royce plays. I do not want to say anything further about that because it is currently in a competitive process in relation to SMRs that is being run by Great British Nuclear.
Baroness Winterton of Doncaster (Lab)
My Lords, is my noble friend the Minister aware that the proposal by a consortium of Sheffield industrialists for an SMR national manufacturing centre of excellence would create hundreds of highly skilled jobs in South Yorkshire and across the country, and would also open up the opportunity for British industry to compete internationally for the manufacture of SMRs with British components? Can he assure me that this is exactly the sort of proposal his department will consider supporting and is in line with the points made by my noble friend Lord Spellar?
Lord Hunt of Kings Heath (Lab)
My Lords, the noble Baroness may know that I met our former colleague Richard Caborn and colleagues from Sheffield to discuss this. We have now asked UK Research and Innovation to review the detail and advise us. We will then consider the next steps. Clearly, this is a very interesting concept.
Clean Heat Market Mechanism Regulations 2024
Lord Hunt of Kings Heath Excerpts(1 year ago)
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Lord Hunt of Kings Heath
That the Grand Committee do consider the Clean Heat Market Mechanism Regulations 2024.
Relevant document: 10th Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, I beg to move that these regulations, which were laid before the House on 21 November 2024, be approved. The instrument forms an important part of the Government’s commitment to make the UK a clean energy superpower and deliver warmer homes. It is the Government’s mission to make energy affordable and to strengthen the UK’s energy security. By supporting heat pump manufacturing and encouraging innovation, we are giving more consumers the choice to make the transition to low-carbon, high-efficiency heating.
With over 80% of homes using fossil fuel gas for heating, there is a huge opportunity to deliver affordable and efficient heating and protect consumers from the costly vagaries of international gas markets while reducing a major source of greenhouse gas emissions. Heat pumps, which are on average three times more efficient than a gas boiler, are suitable for the overwhelming majority of UK homes, and they have a role of paramount importance role to play in delivering this ambition. That is why in November last year the Government announced a range of first policy steps under our warm homes plan, alongside investment in training and British manufacturing capability, to make it easier and more affordable for consumers to make the switch to a heat pump.
The clean heat market mechanism will provide industry with the stability and confidence to scale up and invest in the heat pump supply chain. It will also ensure that British businesses can benefit from the transition to low-carbon heating as they create future-proofed skilled jobs. Importantly, the scheme protects consumer choice in when and how to upgrade to clean and efficient heating, while providing industry with the encouragement to develop a wider range of products and services for consumers to choose from as the transition gathers pace. Neither this scheme nor any other requires home owners to remove or replace their boiler against their will. For their part, we know that businesses are ready to drive innovation, build relationships with installers across the country and continue to make heat pumps more affordable and more accessible to home owners.
Today’s statutory instrument establishes the scheme from 1 April this year, setting its rules, parameters and timelines under enabling powers established in the Energy Act 2023. The scheme is designed to accelerate deployment of heat pumps, thereby driving down energy demand and greenhouse gas emissions from buildings. It complements, and is complemented by, a range of other policies, such as grant funding for heat pump installations through the boiler upgrade scheme and other schemes; investment in British manufacturing through the heat pump investment accelerator competition; and support for installer training through the heat training grant, to provide wraparound support for a transformation of the low-carbon heating market over time.
The scheme sets a requirement for heating appliance manufacturers to achieve the sale and installation of a proportion of heat pumps relative to their gas and oil boiler sales or to acquire equivalent credits from other heat pump manufacturers. For the first year of the scheme, starting this April, this is set at 6% of relevant boiler sales. The record number of heat pumps installed last year, a full 43% growth in certified installations in 2024 versus the previous year, would suggest that it is right to support the development of a thriving UK heat pump market and that the target of 6% is entirely achievable—and there is no reason to believe that there will be any undue costs faced by manufacturers.
The proposals for the scheme were subject to three rounds of public consultation—two under the last Government, in late 2021 and mid-2023, then a third in mid-2024. These consultations sought views on, among other things, scheme targets, technologies in scope, credit trading and scheme administration. A wide range of organisations, representative and trade bodies and industry professionals, as well as individual members of the public, responded on each occasion.
The Government are committed to working in partnership with industry on delivering the warm homes plan, and since coming into office have been engaging with market actors from across the supply chain to consider views on the right mix of policies and other enabling actions needed to support the expansion of the UK heat pump market that is needed. The Government have also taken steps to provide appliance manufacturers with more time and space to adapt to the introduction of this mechanism, scale up supply chains and expand heat pump operations. This includes a decision to reduce the payment in lieu for any missing heat pump credits to £500 for the first year, which is a change from the £3,000 previously proposed.
We will continue to engage closely with industry both on considerations related to the future evolution of the clean heat market mechanism and, more broadly, on the development and delivery of the warm homes plan so that we can put the UK’s world-leading businesses at the heart of leading the transformation of the heating market. The clean heat market mechanism is an important part of the framework that the Government are putting in place to support a much-needed acceleration in our transition to low-carbon heating, strengthening our energy independence and delivering warmer homes for all. I beg to move.
Lord Offord of Garvel (Con)
My Lords, the clean heat market mechanism represents a clumsy attempt by the Government to impose unrealistic and burdensome targets on the heating industry. While the overarching goal of reducing carbon emissions and decarbonising heating in the UK is commendable, the regulatory approach taken here is flawed.
The mechanism requires that major boiler manufacturers—those selling more than 20,000 gas boilers or 1,000 oil boilers annually—must ensure that at least 6% of their sales consist of heat pumps by 2025-26. Although heat pumps, which run on electricity rather than gas, are often hailed as a cleaner alternative, these regulations fail to consider the practical challenges faced by both manufacturers and consumers.
This mechanism promises market certainty, investment in low-carbon technologies and a reduction in heat pump costs through increased competition. However, these lofty claims are undermined by overly ambitious targets, coupled with the Government’s failure to address the considerable barriers faced by consumers. Far from facilitating a smooth transition, these regulations risk causing significant disruption to the industry.
Set to run from April 2025 to March 2029, the scheme faces growing doubts about its ability to meet its long-term target of 600,000 heat pumps sold annually by 2028. This concern is further exacerbated by the fact that heat pump sales remain alarmingly low, with both the National Audit Office and the House of Lords Environment and Climate Change Committee warning that current sales levels are far too low to meet the proposed targets.
Returning to the effects of this SI, this initiative imposes stringent sales targets on large boiler manufacturers, forcing them to meet heat pump quotas. If these quotas are not met, manufacturers will face damaging fines, in some cases of £3,000 for every heat pump missed. Although manufacturers can carry forward up to 35% of their annual target to the following year, this strain on the industry cannot be overstated. When the original plans for the CHMM were first announced in 2024, some manufacturers pre-emptively raised their prices to account for the anticipated fines, only to lower them after the previous Conservative Government pragmatically delayed the scheme in March to allow the industry more time to prepare. Will this Government consider doing the same?
Furthermore, it is not only the industry that will face a financial burden from these regulations; the most pressing concern is the significant impact on consumers. Although environmentally beneficial, heat pumps remain expensive for many households, with installation costs ranging from £6,500 to £11,500. This is not just a challenge; it is a significant obstacle. Many families are already struggling with the cost of living, and these regulations threaten to impose yet another financial burden. The Government cannot continue to ignore the stark reality that these high costs will place heat pumps well beyond the reach of many ordinary households unless substantial and sustained financial support is provided.
The burden of financing such an expensive transition should not fall squarely and only on consumers. Despite the grants available through the energy company obligation and the boiler upgrade scheme, which offer up to £7,500 in England and Wales, the high upfront cost of heat pumps remains a significant barrier. This policy risks making a greener future inaccessible to those who need it the most.
Moreover, it is essential to question whether the Government have adequately considered the industry’s capacity to meet these targets. The regulation requires major manufacturers to ensure that a specific proportion of their boiler sales, 6%, consist of heat pumps. However, given that the heat pump market is still in its early stages, with many manufacturers struggling to scale up production, where is the recognition of this challenge?
Lastly, the proposed scheme risks undermining the very people it aims to help. The Government’s approach, imposing fines on manufacturers that fail to meet the sales targets, could lead to price hikes for consumers. There is already evidence that some manufacturers have raised prices, as has been said before, and if that trend continues it will not be the manufacturers that bear the cost; it will simply be passed on to the consumer.
In conclusion, although the Government may be well meaning, the clean heat market mechanism, as it stands, is flawed and could have serious unintended consequences for consumers, manufacturers and the wider heating industry. It is vital that the Government reconsider this approach, provide proper financial support for consumers and work with the industry to ensure that the transition to low-carbon heating is both achievable and affordable.
Lord Hunt of Kings Heath (Lab)
My Lords, I am most grateful to all noble Lords who have taken part in this interesting debate. The noble Lord, Lord Offord, says that although he understands the intent behind the regulations, we are clumsy and have overambitious targets. He asks us to repeat his Government’s actions in delaying or not going ahead with implementation. We are not going to do that. We are confident that we have a scheme that is practical. As a new Government, we have engaged in extensive discussions with industry.
The noble Earl, Lord Russell, was critical of us for reducing the level of the fine. The fact that we have done so shows that we are concerned about ensuring that we introduce this in an evolutionary way, which is why we have started with the fines at the level we have set. We are confident that industry can rise to the challenge. The noble Lord, Lord Offord, said that sales of heat pumps were disappointing. I thought he might have said that in the last year, 2024, sales had an encouraging increase. We want to build on that with the incentivisation for householders plus the introduction of potential fines for manufacturers, although overall we think that manufacturers will be able to rise to that challenge.
On the issue of cost, which a number of noble Lords raised, of course heat pumps cost more money than gas boilers, but as when one introduces most new technologies, or extends them, the price will come down. We think it will fall significantly, making pumps a more attractive and affordable options for UK households. As noble Lords have referred to, at the moment we are funding installations to kick-start the market, for example through schemes such as the boiler upgrade scheme and the warm homes local grant.
The noble Lord, Lord Lilley, asked whether non-UK manufacturers of heat pumps could earn and sell credits under the scheme. The intention here is that any manufacturer of heat pumps sold on the UK market acquires credits and can make them available to other parties in the scheme. Of course, there is no obligation on manufacturers to acquire those credits; this is one of the various options available to them. In parallel, the Government are supporting the expansion of UK heat pump manufacturing through the heat pump investment accelerator competition. The noble Lord is absolutely right that further legislation would be required to revise targets for future years of the scheme.
The instrument today sets a target for the first year. This would roll over to year 2 if there were no amendment by further legislation. Here, the Government have committed to consult further this year, before setting targets for future years, and then returning to the House if we wanted to change the target. I hope this reassures noble Lords that we are fully engaged with industry. We will obviously discuss the implications carefully before we come back with any further proposals.
Lord Lilley (Con)
I am grateful to the Minister for letting me intervene and for answering a number of my questions. On his point about costs coming down, is he suggesting that they will come down in Britain because they are artificially high to start with, or because we will discover technological ways of producing it that have not been found in continental countries, where they already have large-volume manufacturing? That is one thing.
Could the Minister also respond to another point I made, admittedly in rather garbled form, so I can excuse him for not replying? The correct figures in his document are that the costs of this process are £195 million, while the benefits from reduced carbon emissions are £187 million—less than the costs—but, fortunately, that is supplemented by £34 million of benefits from cleaner air. The whole thing is pretty marginal. Could he comment on the marginality of the cost benefits of this extraordinary regulation?
Lord Hunt of Kings Heath (Lab)
My Lords, surely the point is this: we have to decarbonise our home stock. At the moment, 80% of homes use gas for heating so, as part of our plans towards decarbonisation and moving on to net zero, this is an essential mechanism that we need to take forward. As for the cost-benefit analysis, I do expect the cost of the heat pumps to come down in relative terms, in future. I am not prepared to engage with the noble Lord on the exact whys and wherefores of how that might happen. I just look in history—
Lord Hunt of Kings Heath (Lab)
No. The noble Lord referred earlier to mystical or quasi-religious belief. I regard myself as a high church Anglican atheist, and I do not bring a fervour to this from belief; I think that the rational response to what we are doing, and to the risk of climate change, is so huge that we have to use these kinds of mechanisms and do something about housing and the current use of gas. This is the way that we think we need to go forward, but we will keep it under review and look closely at costs, manufacturing capacity in this country and the public’s ability to ensure that they have good installations. Overall, I commend these regulations to the Committee.
Electricity Capacity Mechanism (Amendment) Regulations 2024
Lord Hunt of Kings Heath Excerpts(1 year ago)
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Lord Hunt of Kings Heath
That the Grand Committee do consider the Electricity Capacity Mechanism (Amendment) Regulations 2024.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, this instrument was laid before the House on 18 November 2024. It seeks to revoke and alter several provisions in assimilated Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity, relating to the capacity market. For ease, I will refer to this as the assimilated electricity regulation. The instrument makes targeted, technical amendments which are intended to support the continued operation of the capacity market, Great Britain’s main mechanism for ensuring security of electricity supply. It does not introduce any practical changes to the operation of the capacity market.
Before outlining the specific provisions of this draft instrument, I will briefly provide some context. Great Britain’s electricity capacity market was introduced in 2014 and is designed to ensure that sufficient electrical capacity is operational and on the system to meet future predicted demand, thereby maintaining security of supply. The capacity market scheme provides all forms of existing and new-build capacity with the right incentives to be on the system to deliver when needed. It covers different types of electrical capacity, including generation, storage, consumer-led flexibility and interconnection capacity.
Through capacity market auctions held annually one year and four years ahead of delivery, the aim is to secure the capacity needed to meet future peak demand under a range of scenarios. This is based on advice from the capacity market delivery body—the National Energy System Operator. Capacity providers which are successful in the auctions are awarded capacity agreements, which range in duration from one to 15 years.
The capacity market was introduced in 2014. Since then, it has contributed to investment in just under 19 gigawatts of new, flexible capacity needed to replace older, less efficient plant as we transition to a net-zero economy. The capacity market was originally approved under European Union state aid rules for a period of 10 years. Following the United Kingdom’s withdrawal from the European Union, a requirement in EU law for approval of up to 10 years was brought into domestic law as part of the assimilated electricity regulation. To date, the capacity market has been successful in ensuring that Great Britain has sufficient electrical capacity to meet demand and continues to be required to maintain security of supply and provide confidence to investors.
On the detail of the instrument, it revokes and alters a number of provisions relating to capacity mechanisms in the assimilated electricity regulation, including Article 21.8, which requires that
“Capacity mechanisms shall be temporary”
and
“shall be approved … for no longer than 10 years”,
and other references to such mechanisms being temporary. The instrument also revokes provisions that either are no longer considered to be necessary or require minor correction following the UK’s withdrawal from the European Union. We are seeking to make these changes so that our post-EU exit legal framework reflects the continuation of current arrangements for maintaining a secure electricity supply, since there remains an ongoing need for the capacity market to ensure sufficient investment in reliable electricity capacity.
Furthermore, following the UK’s withdrawal from the European Union, the domestic subsidy control regime was introduced. The subsidy control regime does not require subsidy schemes to be granted an approval or limited for a specified period. Therefore, the approval requirement in the assimilated electricity regulation does not reflect our post-EU exit arrangements. Of course, it is important that we keep the capacity market under review and there are multiple controls set out in domestic legislation, all of which will be retained. This includes a statutory requirement for my department to review the capacity market regulations every five years, which provides an opportunity to review the need for the scheme. Ofgem also undertakes an independent five-yearly review of the capacity market rules. Furthermore, the Secretary of State can decide not to hold a capacity market auction. These embedded controls all remain as part of the wider domestic capacity market legislative framework.
In conclusion, this draft instrument revokes and alters certain provisions related to the capacity mechanism in the assimilated electricity regulation. This includes a requirement for an approval lasting no more than 10 years, as well as references to capacity mechanisms being of a temporary nature. These changes are being made to ensure that our domestic legislative arrangements reflect the continuation of the capacity market, which is Great Britain’s main mechanism for ensuring electricity security of supply. I beg to move.
Lord Lilley (Con)
My Lords, I want to use this as an opportunity simply to ask a question of the Minister. Why do we not take the advice of Professor Dieter Helm, in his review of energy policy, which was that instead of us providing the capacity mechanism centrally, we require anyone providing electricity into the system—wind generator, solar generator or whatever—from an intermittent source to provide firm power, in other words to pay for some capacity for the times when the wind is not blowing? If that were done, this whole arrangement would be unnecessary. We would have a much clearer idea of the total cost of intermittent energy if the supplier were also paying for some of the back-up capacity that is necessary to meet the occasions when intermittency prevents delivery of the power.
The only argument I have heard against this is that, if you do it wind farm by wind farm, the aggregate amount of capacity would be statistically greater than is necessary to meet the fact that some wind farms will be producing when others are not, but that surely can be overcome by saying that a certain statistical proportion of the necessary capacity should attach to any intermittent generator. Then we would have a more rational, more credible and more manageable system than the one that we have under these regulations.
Lord Hunt of Kings Heath (Lab)
My Lords, I am most grateful to noble Lords who have taken part in this short but none the less interesting debate. As we move to a clean power system and closer to achieving net zero, it will be critical to ensure we have adequate flexible electricity capacity that can be ramped up quickly when renewable generation is low, such as on dark, still days.
We believe the capacity market remains an effective insurance mechanism for security of electricity supply, providing revenue certainty to market participants and a secure and affordable electricity supply that families and businesses can rely on. I am grateful to the noble Lord, Lord Offord, for his general support for the regulations. I certainly acknowledge that a lot of the groundwork was undertaken by the previous Government, as he suggested. I can also assure him that we as a department will continue to provide oversight of the way the arrangements will operate.
As for the point raised by the noble Lord, Lord Lilley, the noble Lord, Lord Offord, referred to the REMA consultation, which we have debated as well. I think that Professor Helm’s proposals were considered by the previous Government, who decided not to take them forward. My understanding is that there was thought to be insufficient evidence that putting responsibility for procuring flexibility on generators, which would mean decisions being taken at a project rather than a system level, would lead to a low-cost capacity mix. Many respondents also expressed concern that this option would increase risks on renewable generators, leading to higher strike prices and overall system cost without the compensating benefits of efficiency or security of supply. We remain of the view that the current system is probably the best way to manage the issues that I have referred to.
I thank the noble Earl, Lord Russell, for his support. The question of reviews was also implicit in the question from the noble Lord, Lord Offord, and alongside the five-year reviews, each year an assessment is made of the required capacity to meet the expected level of peak demand in four years’ time. The majority of the predicted capacity required is secured well in advance. A proportion of capacity requirement is secured one year in advance, based on latest demand forecasts, so it is a continuous process, if you like.
We keep the capacity market mechanism itself under constant review and consult regularly on amendments and incremental reforms. In late 2024 we consulted on a number of changes to the capacity market to ensure security of supply and enable flexible capacity to decarbonise. We hope this will ensure that supply can meet demand as we transition to net zero.
As for the comment about the mix of technologies going forward, the report by NESO and my department’s clean power action plan set out our view of the technologies by around 2030. We will rely on unabated gas as the main mature, reliable technology capable of filling that role at the moment. We expect that the amount of unabated gas we need will reduce as we deploy more low-carbon technologies. Our aim is to move gas into a reserve role, used primarily to ensure security of supply.
The noble Earl also mentioned tidal and other technologies, and we remain open to those possibilities. He may know that I am meeting the noble Lord, Lord Alton—tomorrow, I think—to discuss tidal, so we are not ruling out the use of those technologies. I am grateful to noble Lords.
Great British Energy Bill
Lord Hunt of Kings Heath ExcerptsWednesday 15th January 2025
(1 year, 1 month ago)
Grand CommitteeRead Full debate Great British Energy Act 2025 View all Great British Energy Act 2025 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 43-IV Fourth marshalled list for Committee - (14 Jan 2025)
Viscount Trenchard (Con)
At the point when the Committee decided to adjourn its deliberations on Monday, I was about to make a brief intervention in support of my noble friend Lady Noakes and the noble Lord, Lord Vaux. As my noble friend Lady Noakes explained, GBE will be a private company, which would normally allow it nine months in which to file its accounts. As my noble friend explained on Monday, Amendment 88 changes that to six months, in line with the requirement for public companies. GBE may not be a public company technically, but it certainly is a company of huge interest to the public. It is therefore obviously right that the company should be required to prepare its accounts in accord with the rules applicable to public companies, rather than taking advantage of the more lenient requirement applicable to private companies.
In his remarks in the House yesterday, the Minister said that he recognised that it was the role of the Opposition to scrutinise legislation. But I ask the noble Lord: is it not actually the role of the whole House to scrutinise legislation, including the Government’s own Back-Benchers? He probably did not mean it when he said that it was the role of the Opposition.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
The point was that I was responding to a comment made by the Opposition Chief Whip about scrutiny. But of course I very much take the point that this is a matter for the whole House. The very fact that my noble friend Lady Young spoke to this group shows how effective that scrutiny can be.
Viscount Trenchard (Con)
I thank the Minister for his kind explanation, which certainly clarifies that. As far as my interventions on Monday are concerned— I spoke at length and several times—I take issue with and very much resent being accused of having filibustered. If the noble Lord looks at my contributions, he will find that they were all different.
I suggest that one reason why there have been so many amendments to the Bill is that so little was included in it. It is very thin Bill, but it has £8 billion of public money. Many of us are puzzled that GBE is being established effectively with £8 billion of public money, whereas Great British Nuclear, which has no public money to speak of, continues to operate in a kind of silo. I recognise that the noble Lord attempted to reassure the Committee about how GBN and GBE will work together, but I do not think that they can be described as comparable organisations.
I had intended to support my noble friend Lady Noakes and the noble Lord, Lord Vaux, on Amendment 88, and I added my name to it. I think that it is necessary because although GBE is intended to be structured as a public company, it will have only one shareholder, the Secretary of State. As my noble friend explained on Monday—she is well known as an expert in these matters—we must be sure that GBE will be managed according to the standards that would be expected by shareholders in public companies. That is why changing the nine-month provision for filing accounts to six months is so necessary.
I have also added my name to Amendment 89, in the names of the noble Lords, Lord Vaux and Lord Cameron, and my noble friend Lady Noakes. It is particularly important that the accounts must comply with the stipulation in proposed subsection (d), to provide
“an assessment of the extent to which”
any investments made or partnerships entered into
“have encouraged additional investment by the private sector”.
It is clear that the very long incubation period for nuclear projects places them outside the criteria for many private sector investors, but some public investment can be effective in unlocking private investment through match funding, as the Rolls-Royce SMR programme has already shown.
I also support Amendment 92, in the name of my noble friend Lady Noakes and that of the noble Lord, Lord Vaux, which would ensure that the Comptroller and Auditor-General must audit GBE’s accounts.
Lord Offord of Garvel (Con)
My Lords, I speak in support of Amendments 88, 89 and 92, which stand in the names of my noble friends Lady Noakes and Lord Trenchard and other distinguished colleagues, including the noble Lords, Lord Vaux of Harrowden and Lord Cameron of Dillington. These amendments, although technical in nature, are vital to ensure that Great British Energy operates with the highest standards of transparency, accountability and good governance. This is not simply a matter of administrative precision; it is the fundamental issue of public trust.
Amendment 88 ensures that GBE files its reporting accounts within the same timeframe required of public companies under Section 442 of the Companies Act 2006. This alignment with established statutory requirements is essential. It demonstrates that GBE, although a public body, will not be afforded preferential treatment or lesser obligations than private enterprises. The public expect and deserve this parity, especially given GBE’s role as a steward of taxpayers’ funds.
Amendment 89 introduces additional requirements for GBE’s annual reporting accounts. Crucially, it provides the Treasury with the flexibility to define additional reporting requirements over time. This ensures that GBE can adapt to evolving priorities and maintain accountability as it grows. It is worth emphasising that comprehensive and transparent reporting is not an administrative burden; it is a cornerstone of effective governance. This amendment guarantees that GBE will meet not only the letter of the law but the spirit of public accountability. By ensuring this level of scrutiny, we are demonstrating a commitment to good governance that transcends political or ideological divides but sends a clear message that public funds and the public interest will always be protected.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to noble Lords who spoke in this debate, both today and in our deliberations on Monday. It seems quite a long time ago since then, and I am looking forward to a very constructive engagement today and welcome the contributions that all noble Lords are going to make.
Let me say at once that I very much understand the importance of information being provided in order to judge the performance of GBE and of it being held to effective account. There is no disagreement at all between me and other noble Lords on this. Noble Lords will know, as the noble Baroness, Lady Noakes, explained very clearly in her remarks on Monday, that her Amendment 88 requires GBE to file its annual reports and accounts within six months from the end of its accounting reference period. As she said then, and as noble Lords have repeated, this aligns with the Companies Act 2006 for public companies whose shares are publicly traded. Of course I agree that a six-month filing period is appropriate for public companies. Financial markets need up-to-date and timely information on the performance of a company, as do its range of stakeholders and shareholders, to help them make informed decisions when companies are seeking to raise capital.
I also understand why noble Lords wish this discipline to be applied to GBE, but it is a private limited company owned wholly by the Crown. It is not unreasonable for the Government to say that, on that basis, we should be in line with the Companies Acts requirements, which set a nine-month filing period for private limited companies. I should also say that this is an arrangement applied to most government-owned companies: for example, the National Wealth Fund, the National Energy System Operator and the Low Carbon Contracts Company. I know that the noble Baroness, Lady Noakes, was concerned about the filing deadline, but it is also the case that the vast majority of these organisations, government-owned companies, file their accounts well in advance of the statutory requirement.
I understand the point that the noble Viscount, Lord Trenchard, made about public interest in Great British Energy, and I welcome that. Indeed, I want GBE to be well-known and seen as spearheading the drive we wish to see in relation to Clause 3 and the statement of priorities in Clause 5. We wish GBE to be as successful as possible.
My point is that, in a sense, what is in statute in relation to the Companies Act is a minimum requirement because, as GBE is owned by the Secretary of State, it will be subject to the usual mechanisms that apply in the public sector. They are put in place to ensure that the public interest is discharged and proper public accountabilities are in place.
On Monday, the noble Lord, Lord Teverson, made an interesting point: one of the concerns some people have is that, because of GBE’s structure and because it is publicly accountable, it will be subject to a considerable number of the controls put in place for bodies that fall within public accountability. The key question is: can we ensure that GBE has sufficient operational independence to perform effectively in its work? There are a number of issues here around the way it will work in future.
I should also say that the annual report and accounts are not the only means of scrutinising the funding allocated to GBE. All funding to GBE must be voted on by Parliament; because of that, it will be scrutinised through the supply and appropriations debates in the other place.
Amendment 89 in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Noakes, proposes specific topics to be included in the annual reports and accounts of Great British Energy, as well as the granting of an additional power to His Majesty’s Treasury to require further information. I can confirm that much of the proposed content will already be included and publicly available in the annual report and accounts, as required by Clause 7, and will be laid before Parliament. As an example, the financial assistance details under new paragraph (a), proposed by this amendment, will be included in the accounts of GBE. Details are likely to include issued share capital and items on the balance sheet of the company, such as borrowing from government if that method has been utilised.
The noble Lord, Lord Vaux, and my noble friend Lady Young of Old Scone were concerned that Great British Energy would need only to follow the provisions of the Companies Act in preparing its annual report and accounts. However, I can assure them that that is not the case. GBE will adhere to the additional reporting requirements for government-owned companies over and above the reporting requirements under the Companies Act. These include the obligation to follow the Treasury’s directions on accounts through the powers extended in the Government Resources and Accounts Act 2000, laid out in the government financial reporting manual and related “Dear Accounting Officer” letters. The most recent of these account direction letters requires bodies to give a true and fair view of the state of affairs, including net resource outturn, the application of resources, changes in taxpayers’ equity and cash flows for the financial year.
Furthermore, GBE will be required to report on its governance around exposure to and risk of climate-related scenarios in its operations, as set out by the Task Force on Climate-Related Financial Disclosures. Finally, any future funding of GBE will be subject to agreement through a government spending review, or another mechanism, as the Government see fit.
Amendment 92 in the name of the noble Baroness, Lady Noakes, proposes to require the Comptroller and Auditor-General to be the external auditor of Great British Energy; I think she said on Monday that it is a probing amendment. I am very happy to reassure noble Lords in this case. It is already the case that the Comptroller and Auditor-General will be the external auditor of Great British Energy. The company will also need to comply with the provisions set out in the Treasury’s Managing Public Money document, which requires the Comptroller and Auditor-General to be the external auditor for non-departmental public bodies such as Great British Energy. The requirement will also be set out in the framework document for Great British Energy, which we will debate shortly.
Amendment 90A, in the name of my noble friend Lady Young, seeks to require additional reporting from Great British Energy. Again, I assure her that much of the information that she seeks will be provided in GBE’s annual report and accounts, as a matter of course. The annual report and accounts will include key achievements and milestones, general business information relating to its strategic direction, a review of the company’s performance, challenges and future outlook, as well as financial statements and resourcing levels. It will also include reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures.
GBE may also make more information available through reporting, such as when projects or investments are announced. We want to set this company up to be transparent and accountable, with a reporting regime appropriate to its company basis and status. The accountability of Ministers to Parliament for its performance will also be in place.
We very much take the point about the need for this organisation to be transparent and accountable. In the light of this debate, I will set out how this all comes together in detail and send a note to noble Lords. I hope that provides some greater reassurance.
Lord Vaux of Harrowden (CB)
I realise that Monday is quite a long time ago now and that the noble Lord has probably forgotten this, but I asked a specific question then. The impact assessment for the Bill says that, because the Bill does nothing but create the company, “no quantification of benefits” and costs
“has been provided at this stage”,
and that those benefits and costs
“will be subject to future spending reviews and business cases”.
I asked whether those future spending reviews and business cases would be made public.
Lord Hunt of Kings Heath (Lab)
I am not sure that I can answer that point in detail. The impact assessment is built around the legislation, rather than the future activities of GBE. May I take that specific question away? Clearly, the funding that the Government provide Great British Energy will have to be in the public domain and part of the normal process of dealing with a spending review and the financial consequences and flows of money that follow it. I am happy to look into that in more detail, if the noble Lord would like.
Lord Vaux of Harrowden (CB)
That would be very kind. The issue is that, if the Bill had been done in the normal way and included the detail of what GBE was going to do, the impact assessment would have covered those activities. However, those things are not included in the Bill so are not covered by the impact assessment. When the statement of strategic priorities and the detail of what the company will do are published, there will be no impact assessment on them, other than the spending reviews and business cases. It is important that they are made public, as if they had been part of the impact assessment that would have happened if this had been done in the usual way.
Lord Hunt of Kings Heath (Lab)
My Lords, as I said, I think we have acted properly with the impact assessment, which is based on the Bill. GBE has yet to commence its work. I have said that I will write to noble Lords detailing how we see GBE being held to account, in terms of its reporting and accountability, and I will add some more information about how that relates to the statement of strategic priorities in Clause 5.
Baroness Young of Old Scone (Lab)
I hope that in writing this note, which I welcome, the Minister will give us an account of how GBE will report on the strategic priorities set by the Government, and that they will include not just climate but environmental and biodiversity targets. They are the twin crises that GBE is helping to solve.
Lord Roborough (Con)
The noble Lord mentioned that the minimum requirement was the nine-month reporting window under the Companies Act. Could he give us an idea now of what he sees as a desirable reporting timeframe? If he would like to reflect, perhaps he could include those thoughts in his letter.
Lord Hunt of Kings Heath (Lab)
I do not think so. Clearly, there is a statutory requirement. All I was saying is that our experience in my department is that the bodies that have a similar discipline have generally reported well within that figure. I am certainly happy to say that one would always hope that an organisation such as this would report in a timely fashion, but I cannot go any further than that.
Lord Vaux of Harrowden (CB)
My Lords, the noble Baroness, Lady Noakes, regrets that she is not able to be here today, because this was scheduled after she already had other commitments, so, with the leave of the Committee, I will channel the noble Baroness to wrap up. I thank all noble Lords who have taken part in this constructive debate and the Minister for his constructive response.
Common themes are emerging throughout our discussions on the Bill, and the subject of transparency and accountability is probably the major one. I know that the noble Baroness will be disappointed by the response to shortening the reporting deadline to six months, which does not seem overly onerous. I was encouraged, I think, by what the Minister said about the reporting requirements and I look forward to receiving the letter he has spoken about. However, he did not refer in his answer to a couple of things that were in the amendment and are really important.
First, it is important that GBE reports on the investments it has made, and I do not think he mentioned that. Secondly, as a number of noble Lords mentioned, the key issue is that of additionality—in other words, what impact GBE is having on crowding-in private investment alongside the public investment. As I said on Monday, anyone can spend money. If this is to be in any way positive, it needs to attract private investment that would not otherwise have happened. It is really important that that is measured in the same way as it has to be by the National Wealth Fund. I think it is true to say that the National Wealth Fund, because it has the obligation to report on additionality, is actually performing rather well on additionality.
Lord Hunt of Kings Heath (Lab)
My Lords, I think I said by implication that I consider those matters that I would expect the company to report on.
Lord Vaux of Harrowden (CB)
I am reassured to hear that and I look forward to receiving the letter. We may need to come back to this, and I hope the noble Lord will be willing to sit down, discuss the overall questions around accountability and transparency and, I hope, put something forward himself that will strengthen what is, if I am honest, a somewhat thin Bill. With that, I beg leave to withdraw the amendment.
Lord Offord of Garvel (Con)
My Lords, I thank my noble friend Lady Noakes, in her absence, for her amendments in this group. In fact, this amendment, Amendment 93, ties closely with Amendment 125 in my name, which would ensure that this Bill does not come into force until a financial framework document has been published. Together, these amendments address an essential issue in the governance of GBE: the need for proper financial oversight and clear frameworks that ensure that this body is held accountable. That is the reason why I support Amendment 93 and why it is so critical to the Bill—because it would require the Secretary of State to prepare a framework document that sets out not just the operating principles but the financial principles through which GBE will pursue its strategic objectives.
Without this clear framework, GBE would operate without the financial clarity and accountability required to protect public funds and to ensure that GBE’s financial practices align with the UK’s broader energy strategy. A financial framework is not just a bureaucratic detail; it is fundamental because the energy sector is complex and fast-moving. GB Energy will be responsible for substantial public investment. Without this financial framework, there is a risk of financial mismanagement and inefficiency or lack of transparency. The framework simply provides clear guidelines on budgeting, expenditure, revenue generation and risk management; it also ensures that GBE’s financial decisions align with the Government’s energy and climate goals, such as achieving net-zero emissions and maintaining energy security.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Baroness, Lady Noakes, and the noble Lord, Lord Vaux, who spoke in her absence. As the noble Baroness raised earlier on in our debates, her amendment inserts an additional clause requiring the Secretary of State to prepare and publish a framework document setting out the principles underpinning the relationship between the Secretary of State, my department and other relevant public bodies and also requires financial and operating principles to be included in that document.
Lord Vaux of Harrowden (CB)
In effect, under the Bill GB Energy will take a chunk of the activity of the National Wealth Fund—approximately a third of the total value, in fact—and put it into another entity. As I said, the National Wealth Fund’s framework document includes quite a lot of information around requirements to make financial returns and, in particular, the additionality principle. Therefore, because we are, in effect, moving a chunk of the National Wealth Fund’s activities into a different entity, it would presumably be appropriate that that remains subject to fairly similar levels of governance and control. Could the Minister perhaps say a little about the expectation on financial returns and additionality, which he has not mentioned in his response so far?
Lord Hunt of Kings Heath (Lab)
My Lords, by implication, we would expect the organisation to be as transparent as possible and to cover the sort of areas that the noble Lord mentioned. It is also fair to say that, given the comparisons being drawn between Great British Energy and the UK Infrastructure Bank, in the case of the UKIB, the framework document was published before Royal Assent. The point is that the organisation was operational before Royal Assent, but this Bill is being brought to Parliament before we have operationalised the company, so there is a distinction. As I said, noble Lords can be reassured that there will be a stringent framework document to ensure proper accountability. I am searching to find something else to say to give comfort, but I have to say that this is as far as we can go. Having said this from the Dispatch Box, it has to happen.
Returning to the part of the amendment that would require the relationship between GB Energy and other relevant public bodies to be included in the framework agreement, noble Lords will know that that is not typically part of a framework document, but GB Energy’s relationship with relevant public sector bodies will of course be part of delivering its objectives. Again, the partnerships will be undertaken in accordance with GB Energy’s operating principles and, where appropriate, we will provide definition to those relationships in the upcoming statement of strategic priorities. As part of its annual reports and accounts, we will of course expect GB Energy to report on activities undertaken as part of its public sector partnerships. We expect it to enter into a number of partnerships or relationships with other public bodies, but that is not appropriate for the framework document.
The other point to make here is that GBE will be accountable to Parliament, with a statement of strategic priorities laid before Parliament, and the accounting officer of Great British Energy, and Ministers, will be accountable to Parliament for the work and performance of the company. Members of your Lordships’ House will be able to ask questions and debate, and I have no doubt that Select Committees will wish to examine the chair and chief executive of the organisation from time to time, which seems wholly appropriate and will provide the public accountability that needs to go alongside the normal accountability that a private company would expect to operate, within the legislation that it will be covered by. We need to remember that it is also publicly accountable alongside the accountability that it needs to discharge as a private company.
The issue I come back to is that we have to ensure that it has enough operational independence. A push-back from noble Lords might be to ask: will it be overly constrained? We have to get the balance right between proper accountability and reporting and—dare I say it —what I hope will be an entrepreneurial approach to the formidable task it is being given. That is why the appointment of the incoming chair has been so important —to give us that expertise and experience.
As noble Lords will see, it is very difficult for us to agree to Amendment 121A, which would defer commencement of most of the provisions in the Bill until a framework document had been laid before Parliament. We do not think it possible to produce a framework document without the active involvement of the company itself. That is probably as far as I can go on this interesting area, but I can assure noble Lords that there will be a fully fledged framework document, which I think will cover all the issues that noble Lords are concerned about.
Lord Vaux of Harrowden (CB)
My Lords, I thank all noble Lords who have taken part in this short debate, and the Minister for his response, which is helpful and encouraging—I understand his point. However, I think he put his finger on the fundamental problem with the Bill, which is precisely what he said: the company is being established before we really know what it is going to do and before it starts to operate. Therefore, there is no scrutiny of those things at the moment. When he says that there is accountability through, for example, the statement of strategic priorities, it is not strictly true. It gets laid before Parliament, but there is no debate, approval or anything. The framework document will not even be laid before Parliament.
Lord Hunt of Kings Heath (Lab)
My Lords, of course, that is a fair point but, equally, I would say, as a Minister accountable to Parliament, that the opportunity for noble Lords to ask questions and take part in debates is considerable. I would expect that GBE and any statement of priorities will be fully part of the rough and tumble of life in Parliament. Anyone who has been involved in a company organisation such as that will know that parliamentary accountability really does bite and is effective.
Lord Vaux of Harrowden (CB)
The Minister is right on that—I cannot disagree—except, again, that accountability is only as good as the information on which one bases it. If there is no information, or if it is really thin, it is hard—
Lord Hunt of Kings Heath (Lab)
My Lords, I do not want to intervene constantly, but I think noble Lords will be awash with information about GBE, its performance and activities.
Lord Vaux of Harrowden (CB)
I am very encouraged to hear that but there is nothing in the Bill that says that. If one is honest, what tends to happen is that if something is really successful, we will be awash with information telling us how successful it has been. If it is less than successful, I wonder how much information we will see. Fair enough, but there is a wider discussion to be had between now and Report on transparency and accountability, and I hope the Minister will be open to that. With that, I beg leave to withdraw Amendment 93.
Earl Russell (LD)
I thank the noble Lord. I would be keen to hear what the Minister has to say in response to that amendment.
Lord Hunt of Kings Heath (Lab)
My Lords, this has been a very interesting debate and I am grateful to noble Lords for what they have said. I will start with Amendment 102, tabled by the noble Earl, Lord Russell, and supported by the noble Viscount, Lord Trenchard. As he said, the amendment focuses on Great British Energy’s relationships with its key stakeholders and would require the company to publish a report every two years detailing its relationship with a number of named public bodies.
As I have already said, we of course expect and want Great British Energy to enter into a number of partnerships or relationships with other public bodies. This will include public bodies beyond those highlighted by the noble Earl, including, for example, those operating in the devolved Administrations—although I agree with him very much about the importance of the relationship with the Crown Estate.
I think it was implied in what I said earlier that we are absolutely certain, as part of the rigorous reporting requirements that the organisation will need to take part in through its annual reports and accounts, that it will report on activities undertaken as part of these partnerships. That seems to me a perfectly sensible request, which I can affirm readily. In view of that, I am not sure that you need a separate report, but we can make it very clear to GBE that we expect it to report on this regularly. We have already publicly committed to setting out how Great British Energy and the National Wealth Fund will collaborate and complement each other. I can assure noble Lords that we have made the same commitment on Great British Energy’s relationship with Great British Nuclear.
In terms of Great British Energy’s relationship with Ofgem and the National Energy System Operator, again, we would expect GBE to be subject to the same legal and regulatory frameworks as other entities. Clearly, when it comes to the Crown Estate, I readily say that, of course, GBE will report on its relationship, just as the noble Earl said. The Crown Estate will be doing similar, and we hope that there will be a consistency of approach in their reports. I am sure that there will be.
Turning to Amendments 94 and 103, which would require independent reviews of Great British Energy’s effectiveness, I thank the noble Lords, Lord Offord, Lord Vaux and Lord Cameron, and the noble Baroness, Lady Noakes, for putting their names to them. We all agree that Great British Energy needs to be accountable, transparent and clear about how it is delivering against its objectives and the statement of strategic priorities. The Bill already ensures that GBE will provide regular updates through its annual reports and accounts. These documents will be laid before Parliament, ensuring public accountability. Clause 5 provides that GBE must “act in accordance” with the priorities set out by the Secretary of State. To ensure this, Great British Energy must publish a strategic plan on how it will deliver those priorities, and it will update this plan regularly.
On the question, generally, of a review, I certainly understand the point that noble Lords have made and agree that reviews are important. I am prepared to consider the principle of a review between Committee and Report. I would not want to get into a debate about how regular those reviews should be. It is important that GBE has a good run before it is subject to such a review. Equally, I do not think you want a review happening on a regular annual basis because that would detract from its ability to perform effectively, but I understand the principle of a review. I will take this away without commitment at this stage, but I am happy to talk to noble Lords between now and Report about it.
Coming back to additionality, we obviously agree that it is an important principle, and we would expect Great British Energy to learn from the UKIB/National Wealth Fund approach. Of course, GBE has rather a wider role than the National Wealth Fund, particularly in that it is not just an investor but a developer, and it has an important future role to play in trying to get rid of some of the barriers to investment that we have seen in the energy sector.
Having said that, I think additionality will be covered. Equally, we accept that undertaking reviews from time to time is important. But they should not be done so frequently that they lose impact in what they are there to do. I hope noble Lords will accept that I have tried to be constructive in my response to these amendments.
Lord Offord of Garvel (Con)
I thank noble Lords for their contributions to the debate on this group, and I thank the Minister for listening to these concerns, which, as always, are to do just with the review and governance of GB Energy for it to be held to rigorous and proper account. I thank the Minister for considering how he deals with this. In the meantime, therefore, I beg leave to withdraw the amendment.
Earl Russell (LD)
I thought the noble Lord had moved on; I apologise for interrupting.
Earl Russell (LD)
I thank all noble Lords who have taken part in the discussion on this group of amendments, and I thank the Minister for responding to me; I apologise for interrupting him. I appreciate everything he said, and I appreciate that there will be reports on GB Energy and that there are lots of opportunities for parliamentary scrutiny. It is appropriate that we ask these questions. The amendments in this group and others look to go a bit further to ensure that certain things will be reported on.
In response to the discussion on the previous group, the noble Lord, Lord Hunt of Kings Heath, asked me whether we were looking for a separate report. In my mind, this is about making sure that GB Energy produces a really good-quality annual report that covers a broad range of areas and is open and transparent about its activities.
Lord Hunt of Kings Heath (Lab)
Perhaps I may intervene. In the discussion on the first group of amendments, I promised to write a letter to noble Lords focused on financial information. It might reassure noble Lords if I pick up that challenge and say that we should perhaps also try to encompass the annual report arrangements. If that would be a sensible way forward, the letter will set this out very clearly in writing so that noble Lords can see it after Committee but before Report.
Earl Russell (LD)
That would be greatly appreciated and would really reassure us. That was the point that these amendments were trying to get to, so I thank the Minister.
Lord Vaux of Harrowden (CB)
My Lords, I was not going to speak on this, but I just point out very quickly that the other Act that has a clause that is not quite the same but similar to Amendment 99 is the UK Infrastructure Bank Act. As I have already pointed out, that is the really analogous organisation to Great British Energy, so it must be appropriate, I think.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Lord, Lord Frost, for initiating the debate on his Amendment 98, where he proposes to place a number of requirements on the role of the chair of the board of Great British Energy. I agree that the chair, the board and the chief executive officer have major responsibilities. I must say to him though that I do not recognise GBE as being an executive arm of my department. It is very interesting that he said that, because the noble Lord, Lord Teverson, made the interesting remark on Monday that there is a risk in having too many controls and reporting arrangements in relation to GBE, detracting from what we need it to do. We do want it to have operational independence, albeit working within the context of Clauses 3 and 5 of the Bill, the requirements under the Companies Act and the accountability arrangements I have already referred to. We need very highly skilled people at the top of GBE to find their way through this in order to ensure that it actually delivers on the things we want it to deliver on.
At the risk of inviting the noble Lord, Lord Hamilton, to intervene, I take his point about winners and Governments: this is the whole point of having an organisation that is not part of government—but, of course, it is owned by government—and being able to really get on with the job that needs to be done.
I will address pre-appointment scrutiny of the chair in relation to Amendment 101 soon. Amendment 98 requires the chair to be a full-time position based at the headquarters of Great British Energy in Aberdeen. I must say that it would be highly unusual to specify that a company’s non-executive chair should be full time or based formally at an organisation’s headquarters. Looking at the Grand Committee, almost all noble Lords here have taken roles as chairs or non-executive directors of organisations that can be based very far from where they are resident. Frankly, if we were to adopt this principle, we might inhibit the appointment of high-calibre people, notwithstanding that Aberdeen is a very fine place to live and work, as I know from the experience of having a family member working in the offshore oil and gas industry from there.
I do not think that a full-time chair is appropriate; I think it is perfectly appropriate to have a part-time, non-executive chair in that role, as the noble Lord, Lord Frost, has already remarked. Having an interim chair does not preclude having a very lively presence—and a jolly good thing too. I do not think we should insist that that should be a full-time role.
My main board experience is in the public sector, in the National Health Service, and I have been around in the NHS for long enough to know the problem of chairs who come in on a daily basis and inhibit the proper role of the chief executive. I would be wary of encouraging that development in GBE; I am sure that it will not happen.
Again, in relation to the annual review of the chair’s performance by external auditors, which is to be laid before Parliament, first, we will of course ensure that there are annual performance reviews for Great British Energy’s chair. This aligns with best practice followed by other public bodies, and my department is well used to doing this in relation to a number of the bodies it oversees. The review will typically be performed by a senior official in the sponsoring department, supported by the senior independent director on the board, who will have deep insight into the chair’s performance over the year.
Of course, there will also be regular meetings between the responsible Minister and GBE, as there is in my department between Ministers and other organisations, as would be expected. In a sense, these are also part of the accountability mechanism. However, I acknowledge the expectation of the noble Lord, Lord Frost, that Parliament will have a strong interest in the chair’s performance. I fully anticipate that the relevant Select Committees will call on them on a regular basis to provide evidence and, of course, I fully expect the chair of GBE to accept those committee’s invitations.
Amendment 99, also in the name of the noble Lord, Lord Frost, would place certain requirements on the composition of Great British Energy’s board. As noble Lords have said, it largely replicates provisions in the UK Infrastructure Bank Act. We made clear in our founding statement that GBE will be an operationally independent company, overseen by an independent board. We do not think that it is necessary to legislate these provisions, since established governance documents, such as the UK Corporate Governance Code and the Governance Code on Public Appointments, already apply.
The UK Corporate Governance Code, published by the Financial Reporting Council, sets out best practice in relation to corporate governance. Although it applies formally to listed companies only, it is standard practice for government companies to comply with it or, where they do not, explain why. The Governance Code on Public Appointments provides clear guidance for ministerial appointments, which are regulated by the Commissioner for Public Appointments and should be followed even where roles are not formally within the scope of the commissioner. I can give an assurance from the Dispatch Box that Great British Energy will comply with these codes, ensuring best practice in corporate governance.
GBE will also be required to follow corporate governance best practice to help guide the composition of its board. This will have an impact on the number of directors required at each stage of GBE’s development and operation. We think that, having given those assurances, there needs to be a degree of flexibility at this stage about how GBE goes forward in relation to the composition of its board. The noble Lord’s amendment would also place standard requirements on when an individual should cease to be a director. I can assure him that such provisions already exist, including in the Companies Act 2006, and that they will, as is common practice, be replicated in GBE’s articles of association.
Amendment 101 in the name of the noble Earl, Lord Russell, proposes to require all appointments by GBE to be scrutinised by the Energy Security and Net Zero Committee in the other place before they come into effect. This is similar to new subsection (1), proposed by Amendment 98. Noble Lords will know that Cabinet Office guidance on pre-appointment scrutiny by House of Commons Select Committees provides clear guidance on the criteria and process to be used in these circumstances. It sets out that decisions on the scrutiny of individual posts should be made between the Secretary of State, the chair of the relevant committee and the Cabinet Office. It is not common practice for this to be set in primary legislation.
The guidance gives the criteria of the types of roles which may be in scope. Importantly, it sets out the principle that the posts which require pre-appointment scrutiny are, most typically, the chair or equivalent of the organisations. None of the roles identified in the guidance as requiring pre-appointment scrutiny are in government-owned companies of the kind that GBE will be. No public body currently appears to have its full board subject to pre-appointment scrutiny. Where individual roles are scrutinised, it is done following agreement between the Secretary of State and the committee chair.
From our point of view, the calibre of Great British Energy’s director appointments will be of great importance. We want GBE to succeed, so we want the highest calibre of people to be appointed as chair, to non-executive positions and to the chief executive officer role. We anticipate that recruitment for the substantive board will begin over the course of this year, and we will ensure that recruitment is undertaken in a manner which aligns with best practice. I can assure the noble Earl, Lord Russell, and the noble Lord, Lord Frost, that in line with Cabinet Office guidance, any relevant public appointments to Great British Energy will be discussed with the appropriate Select Committee chair. I hope that I have been reassuring regarding this.
Lord Frost (Con)
My Lords, I thank the Minister for his comprehensive and understanding response, and I thank other noble Lords who spoke in support of these amendments. I have two very quick points in response.
First, I note what the Minister says about the likely degree of independence of Great British Energy. We will have to see how that turns out, but I make the point, which was not really dealt with in his response, that there will always be an area where the company thinks that something is operational, but the Government believe it is political. That is where it is important to have clarity on relationships and how accountability works, so I am not entirely persuaded that the Bill gets this right at the moment, but I hear what he says.
Lord Hunt of Kings Heath (Lab)
I am not sure that you can legislate for this. I understand what he says, because as Ministers, we have relationships with a number of key bodies at the moment. We have formal relationships, there are accountabilities, reports and meetings, but we also build up trust, understanding and working closely together. It is difficult to legislate for that. In saying that we want GBE to work, it has to feel operationally independent, or it is not going to work. We cannot micromanage it, but on the other hand, we are setting the tramlines in the context in which it operates. It is hard to go much further than that, in reality.
Lord Frost
Obviously, there is a degree of judgment and practice in how these things are done. There is also a degree of judgment on the extent to which it is desirable to fix the framework within which these judgments and relationships operate, which is probably the area of disagreement.
On the question of where the chair is based, the amendment may not be perfectly drafted. I think there is a difference between “based at” and “resident at”. The point of this amendment is to make sure that the business of the company, when transacted by the chair, is very firmly in Aberdeen, the HQ of the company, and not dragged elsewhere by the fact that the chair may not be resident there. This may not perfectly deal with that point, but it is an important point all the same, so I welcome the Minister’s comments on it. I will reflect on whether any of this is necessary at Report, because it is part of a wider discussion, but for the time being, I beg leave to withdraw the amendment.
Earl Russell (LD)
I apologise; I thought that it was acceptable. The noble Lord should have intervened earlier if it was not. I would not have done it if I had known that it was not acceptable, so I apologise to the Committee.
Lord Hunt of Kings Heath (Lab)
We certainly got the noble Lord’s point.
This has been an interesting debate with which to finish today’s proceedings. I start with Amendments 106, 107 and 115. The debate between the noble Lords, Lord Teverson and Lord Hamilton, on the benefits of oil rigs and other structures for fish populations allows me to say that other energy infrastructure can also have a positive impact on nature. We know, for instance, that wind farms can coexist with farmland easily. We have examples of solar meadows, which is a practice of growing wildflower meadows on solar farms. I have heard talk of green corridors, where beautiful new pylons are built to extend the grid. I am not being facetious here, as we need to look at ways in which energy can contribute to nature recovery. It is an important point to make.
I agree on the importance of our coastal communities and commercial fishing, as reflected in Amendments 106 and 107. Amendment 115 would require GBE to consult annually with the commercial shipping sector and fishing industry. I would expect GBE to provide regular updates on its work on such issues through its annual reports and accounts. We know that the projects that Great British Energy is likely to be involved in will all be subject to relevant regulations, including environmental impact assessments. There will be statutory stakeholder engagement to understand the potential impact of development. In line with other energy developers, GBE will consider the impact and risk of its activity on the commercial shipping sector and fishing industry, as it will other affected stakeholders. I will draw these remarks to the attention of the chair of GBE, so he can understand the importance of the issue that the noble Lord, Lord Offord, has raised.
In relation to coastal communities, there will be many opportunities in the energy sector in the future. We talked about the challenge of the North Sea transition. We obviously hope that, as jobs reduce in the oil and gas sector, the people involved can take up other jobs, some of which I hope will be in the wider energy sector. But overall, GBE has an important contribution to make in this area.
On Amendment 114, the noble Lord, Lord Teverson, raised an important point on the Ministry of Defence and security agencies. Clearly, to ensure resilience, GBE will have to consider the impact and risk of its activity on offshore installation, including its pipeline and cable connections, within the context of relevant security regulations and hostile state action. It is a very important and serious matter. All nationally significant infrastructure projects, which include projects in the energy sector over 50 megawatts, undergo rigorous scrutiny to monitor and mitigate security risks. In the end, these decisions fall to Ministers to make in relation to development consent orders.
There was an interesting debate on air defence issues between the noble Lords, Lord Teverson and Lord Hamilton. I have to say that my department is working very closely with the Ministry of Defence on these issues. We are talking closely and working to ensure that our own offshore wind ambitions can coexist alongside air defence. MoD programme NJORD will deliver an enduring radar mitigation solution, which will prevent turbines from interfering with MoD radar systems. In the context of our more general working relationship with the Ministry of Defence, it will be a responsibility of GBE to consider and consult relevant stakeholders. My department will of course ensure that that happens appropriately.
Amendment 118, tabled by the noble Baroness, Lady Bloomfield, would place a nature recovery duty on Great British Energy. Let me say at once that we are absolutely committed to restoring and protecting nature and meeting our Environment Act targets. We want GBE to focus on its core mission to drive clean energy deployment, but I assure the noble Baroness that the projects that GBE invests in and encourages will be subject to all environmental and climate regulations, in the same way that every other company is.
I draw her attention to our recently published Clean Power 2030 Action Plan, which dedicates an entire section to
“Integrating clean power and the natural environment”.
I was going to quote from it, but I do not think I need to do now. We are launching an engagement exercise in 2025 to invite communities, civil society and wider stakeholders to submit their ideas on how we can best encourage nature-positive best practice into energy infrastructure and development. Feedback from this exercise will allow the Government to better understand how we can integrate nature restoration through the clean power 2030 mission. We very much agree with the substance of what the noble Baroness said.
Lord Teverson (LD)
As the Minister will know, terrestrially, there is now biodiversity net gain, which came through the Environment Act and is applied to terrestrial developments. I do not think this is for the largest of them yet, but that is due to happen. I understand it is the Government’s intention to introduce marine biodiversity net gain regulations. I presume GBE will be subject to those.
Lord Hunt of Kings Heath (Lab)
My Lords, I am going to have to take advice on that as I do not have the information. However, if there are regulations which apply to companies, GBE will be expected to comply, and to act consistently with general government policy towards biodiversity. I will write to him about that in some detail.
On community benefits, I take the point of the noble Earl, Lord Russell, and other noble Lords. In our manifesto, we committed to ensuring that communities which live near new clean energy infrastructure projects can directly benefit from them. We are considering at the moment how to effectively deliver community benefits for those who live near new energy infrastructure, which includes new energy generation and transmission technology. We are developing guidance on community benefits for electricity transmission network infrastructure and onshore wind, which we will be publishing in due course. We are also reviewing our overall approach to community benefits, both to ensure consistency and quality and to ensure that communities are properly recognised and are able to come with us on our net zero and clean power journey. This includes looking to existing examples in Europe and further afield to see what has worked elsewhere. I look forward to updating the House on our approach to community benefits shortly.
The role of Great British Energy has been set out in its founding statement, and our commitment to putting local communities at the heart of the energy transition is a very strong component of what we are doing. The local power plan will support local communities to take a stake in the shift to net zero, as owners and partners in clean energy projects. They are important in themselves, as there is a huge appetite in many localities for community power, engagement and involvement. I agree that seeing a tangible benefit for local communities is important in itself, but it is also growing general support for the move to clean power and net zero, which is very important indeed.
We take the noble Lord’s point. It is clearly important, we are working on the details and will be publishing further information in due course. In my first week as a Minister in the department, I visited Biggleswade onshore windfarm, a small windfarm with 12 turbines. The company there is voluntary and there is a good practice trade guideline of paying £40,000 a year to the local community for such things as the local parish church, the community hall and other things. It was really good to see and is an example of what can happen.
Lord Offord of Garvel (Con)
I rise to close this group and indeed this sitting of the Committee today. It is worth saying that the chairman of Great British Energy, Jürgen Maier, has acknowledged the importance of communities. He used the words that GBE should be considered “a three-party partnership”, involving the private sector, the public sector and the community. If we also take account of the Labour assurances that have been given to communities along the way, I see no reason why we cannot consider these amendments further at the next stage, but for now, I beg leave to withdraw the amendment.
Gas Storage Levels
Lord Hunt of Kings Heath Excerpts(1 year, 1 month ago)
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The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, I am grateful to the noble Lord for his question. First, I must remind the House that, on Friday, National Gas confirmed that:
“The overall picture across Great Britain’s eight main gas storage sites remains healthy”.
The diversity of Great Britain’s sources of gas supply means that we are less reliant on natural gas storage than our European counterparts. This includes, as the noble Lord suggests, supplies from the UK continental shelf; our long-term energy partner, Norway; international markets via liquefied natural gas; and interconnectors to the European continent.
I understand and fully accept what the noble Lord says about the North Sea and the contribution of the oil and gas sector, which we have debated, but it is essential that we move as quickly as possible to clean power. Clearly, by 2030, that will give us a great advantage in energy security. We will look for low-carbon, flexible technologies to ensure that we have the proper balance when we get to clean power. We want to see a successful transition in the North Sea, recognising the contribution that it makes and will continue to make.
Earl Russell (LD)
My Lords, does the Minister agree, first, that this is a fabricated scare story? There are no issues with our gas. It is not running out and it can be quickly resupplied via pipelines and LNG. Secondly, does he agree that the best resolution is the rapid end to the Conservative’s legacy of overdependence on very expensive imported foreign energy? To that end, the Conservatives would be well advised to stop filibustering on the Great British Energy Bill, which will greatly improve our energy security, decrease our overdependence on expensive imported foreign gas from tyrants such as Putin, bring down energy bills and costs for bill payers, and help us to meet our energy and climate targets.
Lord Hunt of Kings Heath (Lab)
My Lords, I am glad that I was not alone in thinking that we enjoyed a filibuster last night. What is tragic is that the Conservative Party is clearly retreating from net zero and clean power and has become obsessed with gas. This is not the way that we need to go. The noble Earl is quite right. Centrica chose to put out what I can only describe as an alarmist statement. NESO and British Gas are quite clear that we did not face a crisis and that we have adequate supplies. I hope that those who were involved in making those claims last week will reflect on the concern that they caused.
Lord Reid of Cardowan (Lab)
My Lords, I welcome the Minister’s Statement. For the clarity of the house, can he confirm that the statement put out last week by NESO was a completely normal, conventional, operational statement which is made regularly to ensure that we have one of the safest and most reliable systems in the world?
Lord Hunt of Kings Heath (Lab)
That is right. NESO manages this with an operating margin, made up of the operating reserve—1,400 megawatts, which it always keeps in reserve. There is a contingency reserve of an additional 800 megawatts on top of that operating reserve. That contingency reserve was tight last week and so an electricity margin notice was issued, as my noble friend suggested. This is a perfectly normal market response to a tightening of the situation, which was resolved immediately.
Baroness Hayman (CB)
My Lords, I declare my interest as chair of Peers for the Planet. The Minister’s Statement and his reply to the noble Lord just now are reassuring, as was all the independent analysis of what happened last week. We were not in a crisis. Nevertheless, it is important that, as we move towards more dependence on renewables, we look at the issues of long-duration energy storage and energy efficiency. We do not have a long time until 2030. Can the Minister tell us when we will be able to put some real targets on the amount of long-duration energy storage, which the Science and Technology Committee of this House says that we need urgently?
Lord Hunt of Kings Heath (Lab)
My Lords, I was present during the debate on Thursday on the Select Committee’s excellent report on this very subject. I refer my friend the noble Baroness to the action plan that my department issued only a few weeks ago, estimating that between 40 gigawatts and 50 gigawatts of dispatchable and long-duration flexible capacity could be needed by 2030. We are going to take a number of interventions to ensure that this happens. We have already announced a ground-breaking deal with Net Zero Teesside, our first power CCUS project. We are developing a hydrogen-to-power business model to derisk investment in that area. Ofgem will be introducing the cap and floor scheme to support investment in long-term duration electricity storage. We aim to open the scheme to applications in quarter 2 of 2025. We fully take on board the point that the noble Baroness makes and the Select Committee report.
Lord Lennie (Lab)
My Lords, what was the level of storage at the Rough facility when Labour last left office in 2010 and what happened to that storage facility after the Tories took power?
Lord Hunt of Kings Heath (Lab)
My Lords, Rough was closed in 2017. At that time, when the party opposite was in government, I do not think that it raised any concerns at all. Indeed, the then Energy Minister, the noble Lord, Lord Harrington, said that the closure of Rough would not cause a problem with security. In 2022, Centrica decided to re-open the site. This was a commercial decision by the company. It now seeks government support. One needs to draw a line between the announcement that it made last week and its request for government support.
Baroness Hoey (Non-Afl)
My Lords, many people in the public will still not understand the logic of why we spend some £14 billion buying gas from Norway from the same North Sea that we ourselves could be taking it from. Does the noble Lord think that Norway cares any less about the environment and net zero than we do?
Lord Hunt of Kings Heath (Lab)
For a very long time, we have taken supplies from Norway. It is surely a great advantage of our system that we can look to a diversity of supply. The North Sea supply has been declining over many years now; if it were not in that situation we could, where we needed gas in the future, just look there, but that is not the position. That is why we are trying to manage a transition which recognises that the North Sea still has a contribution to make. The essential point here is that we move as quickly as possible to clean power. That is the best way to get to homegrown energy, which I think the noble Baroness is really pointing to.
Baroness Sheehan (LD)
I wonder if I can move on to the need for warm homes. Heat pumps are very efficient in heating homes—every kilowatt of electricity generates three to four kilowatts of heat—yet cheaper electricity from renewables ends up being a more expensive option to heat homes than gas because the price of electricity is tied to the high price of gas. Does the Minister agree that this situation is nonsensical and that electricity prices must be decoupled from the price of gas?
Lord Hunt of Kings Heath (Lab)
That is a very wide question, and it is of course a matter that we should always keep under review. It is a situation that has existed for some time and which we inherited from the previous Government. On the substantive point, the noble Baroness is right about heat pumps and home insulation. We clearly need to make great progress on that.
Great British Energy Bill
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Lord Hunt of Kings Heath
That the Bill be reported from the Committee of the Whole House in respect of proceedings up to and including 13 January; and that the order of commitment of 18 November 2024 be discharged and the remainder of the Bill be committed to a Grand Committee.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, I think it would be helpful to the House if I explain this Motion and, for those noble Lords who were not in your Lordships’ House at 10 pm last night, the circumstances that give rise to it.
The Great British Energy Bill is an eight-clause Bill that provides a statutory basis for Great British Energy as a publicly owned company to become operationally independent and start delivering benefits for the UK. This includes driving clean energy deployment and boosting energy independence so we can enjoy the benefits of clean, secure, homegrown energy. It was in the Government’s manifesto, it was one of the first Bills to be introduced following the general election and it has been through all its Commons stages.
The Bill was initially scheduled for two days of Committee of the whole House. Progress in Committee has been, shall we say, somewhat slow. In total, 153 amendments have been tabled, which is around 19 amendments for every clause of the Bill. Last night, it was the Government’s intent to finish Committee, but at five minutes past 10 the Opposition Chief Whip moved the adjournment of the House, which was successful.
Report has been agreed for 11 February. Noble Lords will have noted that, over the next two weeks, the House will be heavily engaged in this Chamber with the Mental Health Bill and Martyn’s law. So, noting the request from the Official Opposition for more time to scrutinise the Bill, my noble friend the Chief Whip has kindly arranged for it to be considered in Grand Committee on Wednesday 15 January and 22 January if required, and noble Lords will be able to table further amendments today. If the Motion is agreed to, the groupings will be circulated to those who have tabled amendments as soon as possible, with a deadline for changes at 8 pm. I hope this will allow further debate on the Bill, which indeed is what the Official Opposition requested, and I very much hope that the whole House will support the Motion. I beg to move.
Baroness Williams of Trafford (Con)
My Lords, last night this House voted to adjourn the House at a conventional time of 10 pm to stop the Government rushing through the Great British Energy Bill—on which the Government intend to spend £8.3 billion of taxpayers’ money. Today, after two and a half days of scrutiny in this Chamber, the Government are seeking to finish the Bill away from the Floor of your Lordships’ House in Grand Committee. As far as I recall, where the Official Opposition object, this is quite an unprecedented move. Before we adjourned last night, we completed nine groups and started a 10th. In all the years that I was a Minister, I would have been delighted to have completed and made so much progress on a Bill in a day. Ten groups is not a filibuster; it is reasonable progress in anybody’s books.
I note the Government’s new habit of labelling groups “degrouped” despite us providing reasoned titles for them. So, for the benefit of the House, I will very briefly run through the groups that we debated yesterday, and then perhaps the Minister, if he wishes, can tell us which of these did not deserve to be debated: directions to GB Energy on consumer energy bills, new jobs, developing supply chains, the cost of fulfilling strategic priorities, national grid infrastructure, carbon emissions, imported energy, UK manufacturers and financial returns; the impact of GB Energy investments on electricity prices, returns, employment and the environment; consultation and oversight; the inappropriate use of prime agricultural land; a large miscellaneous group—actually intended to be helpful to the Government—which included mandatory reinvestment of profits, exclusion of investments to projects with government subsidies, independent evaluation of investments, limitation of investments to UK-registered companies, limitations on money spent on travel to conferences, and support for companies and universities; nuclear energy; curtailment of renewable energy; energy storage; renewable energy generation; and reporting, accounts and auditing.
Which of those topics did not deserve fair and proper scrutiny? Energy security, energy storage and the environment? Just this weekend, we have read reports of the Chancellor of the Exchequer negotiating closer ties with China and of fuel reserves reaching critical lows in the very cold spell. It is very important and topical business. If there is a group of amendments that did not deserve to be debated, I should be very grateful to be enlightened.
Every noble Lord in this House has a right to be heard, and yesterday we heard from Members with widespread experience and expertise. I challenge any noble Lord to read back through Hansard and find me one speech that they consider inappropriate. All of them were informed and insightful, and within the advisory speaking times set out in the Companion.
The job of the Opposition is to scrutinise the work of the Government and hold the Government to account. This is nothing personal; it is simply the proper functioning of our Parliament. When the tables were turned and it was the Labour Party occupying these Benches, we had 13 Bills which took more than 10 days in Committee. The Parliamentary Voting System and Constituencies Act 2011 and the Welfare Reform Act 2012 took 17 days, and the Health and Social Care Act 2012 and the Levelling-up and Regeneration Act 2023 each took 15 days. We debated thousands upon thousands of amendments. I was often the Minister on those Bills. Since 2015, the most amendments tabled to a Bill has been 1,249, but there have been 51 Bills which had more than 200 amendments tabled to them, 23 Bills that had more than 400 and 16 that had more than 500.
We will not be voting against this Motion today. We made our point last night, and I had hoped that the Government might listen. I reiterate that we simply seek to subject legislation to the fullest and most appropriate scrutiny, as is our responsibly.
Lord Hunt of Kings Heath (Lab)
My Lords, I am most grateful to the noble Baroness for not opposing the Motion that I intend to press in a moment. Of course I recognise that it is the role of the Opposition to scrutinise legislation. I would say that Grand Committee offers an opportunity for effective scrutiny, and I have no doubt that, in the two days reserved, we will see many more contributions from noble Lords—no doubt repeating the points that they have made time and time again on this Bill.
I just say to the noble Baroness that, in relation to the groups of amendments that we debated last night on directions, it is interesting that when, at the beginning of Committee and at Second Reading, noble Lords opposite seemed to accuse the Government of wishing to use the Clause 6 directions to micromanage the company, we made it abundantly clear that it is a backstop reserve which we hope will never have to be used. Noble Lords opposite then simply used the direction clause to act to come forward with a series of amendments. Many of the issues had already been debated in the first five clauses, and there was a vigorous degrouping to ensure that we had many repetitive contributions. I have been a Member of your Lordships’ House for 27 years. I recognise a filibuster when I see it. Last night was a filibuster.
Great British Energy Bill
Lord Hunt of Kings Heath ExcerptsMonday 13th January 2025
(1 year, 1 month ago)
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Earl Russell (LD)
My Lords, I will speak very briefly. If I may, I will call out the elephant in the room on this Bill. We have had 10 groups of amendments turned into 18 groups on this final day in Committee—over half of the groups that we are discussing today are the result of one party degrouping amendments. We have spent over two hours speaking to the first group of amendments, and we have 18 groups to speak to today. I have heard a lot of speeches, but in the case of many, I could not tell which amendment they were even speaking to.
I will say just this: we support the Government and the Bill. This is an extremely important Bill. I am pleased to see action taken on these measures after the Conservative Party failed to do anything about it, left bill payers vulnerable to the increase in bills as a result of the war in Ukraine and ended up spending £40 billion of taxpayers’ money subsidising bill payers for no long-term benefits. In this group, we are generally supportive of Amendments 61, 65, 69, 70 and 74. For groups that we feel were unnecessarily degrouped, we will probably not make comments.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, I am very grateful to the noble Earl, Lord Russell, because it seems to me that we have “enjoyed” what essentially has been a rerun of previous debates, with Second Reading-type speeches, when the key concern, as the noble Baroness, Lady Noakes, suggests, is Clause 6 and the power of direction.
So I do want to come back to the intent of Clause 6. First, we want GBE to be operationally independent. A founding principle of GBE is that it should be independent as far as possible in executing its functions. The Bill is focused on making the minimum necessary provisions to establish the company. At Second Reading, some noble Lords opposite accused the Government of drafting the Bill in a way that meant we would use Clause 6 to micromanage GBE. We have always maintained, as the noble Baroness, Lady Noakes, rightly pointed out, that this is a backstop provision, yet now noble Lords opposite seek to micromanage both the Government and GBE by these various amendments, most of the issues in which we have already debated.
Secondly, we have set up GBE as a company for long-term success and as an enduring institution. Some of the amendments, which include short-term targets, would be wholly inappropriate in legislation. Indeed, it would be more appropriate for the Secretary of State to set priorities via the statement of strategic priorities in Clause 5, of course within the framework of Clause 3.
My third point is the intended use of the power in Clause 6. Let me make it absolutely clear, as I have done in the past, that the power to give directions to GBE is intended only for urgent or unforeseen circumstances. These amendments would widen the intention unnecessarily. The noble Baroness, Lady Noakes, is right about the relationship between government and such organisations. She and I have both had experience in relation to the NHS; it is a slightly different set-up, but we are talking about the relationship between a government department, the Secretary of State and public bodies. She will know that there the Secretary of State has always had a power of direction, but I think it has had to be used only a handful of times. The reason of course is that chief execs of NHS bodies understand that the Secretary of State is able to set the overall direction of the National Health Service without having to call on what is essentially a backstop power.
My fourth point on a number of the amendments is that the existing reporting requirements are set out in the Bill, which makes provision for GBE to produce and publish an annual report and accounts. They will undergo external audit; they will contain information on the activity of the company over the year; and they will also include reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures. GBE may also make information available through reporting, such as when projects or investments are announced. We think that that is sufficient accountability.
On some points raised by noble Lords on Amendment 59, we believe that in an unstable world, the only way to guarantee our energy security and protect bill payers permanently is to speed up the transition from fossil fuels to home-grown clean energy. This is consistent with advice from the Climate Change Committee and it is why we have set an ambitious target to reach clean power by 2030, which the independent NESO considers achievable. We believe that the key role of BGE is focused on driving forward deployment.
I say to the noble Viscount, Lord Trenchard, and the noble Lord, Lord Howell, that I agree with them on the importance of nuclear power. But I say to the noble Lord, Lord Howell, that this is the second time he has tried to divert the Government from supporting Sizewell C. I say to him that this is a massive development and we are moving to final investment decisions over the next few months. It will produce 3.2 gigawatts, it is a replica of Hinkley Point C, 80% above ground, and we have the regulated asset-based approach which will bring in private sector expertise and disciplines. So, in agreeing with him on the importance of small modular reactors and advanced nuclear reactors, we should not underestimate the potential of Sizewell C—and indeed Hinkley Point C when it comes on line, I hope at the end of this decade.
Of course I take the points that data centres will need a lot of electricity, that grid capacity issues are vital and that we need more investment in the grid. I also take the point made by the noble Lord, Lord Berkeley of Knighton, about the beauty, or not, of pylons. I of course accept the point he makes, but we are going to have to have more pylons. None the less, they will have to go through vigorous planning and meet environmental protection requirements.
On jobs and Amendment 60, GBE aims to revitalise the UK’s industrial areas and we think that, by situating its headquarters in Aberdeenshire—which I am sure the noble Lord, Lord Bruce, will welcome—it will be able to leverage the skilled workforce available there and throughout Scotland. More broadly, we have set up the Office for Clean Energy Jobs to promote clean energy employment and focus on skills development and training in the core energy and net-zero sectors.
Amendments 61 and 76 concern supply chains, which are of course very important indeed. GBE’s founding statement has already made it clear that my department expects the company to prioritise the development of supply chains and to report to government on progress. To come to the noble Lord, Lord Alton, of course we have debated these matters over the years and I absolutely understand where he is coming from. But it will be for GBE as an operationally independent company to determine the projects and technologies it chooses to invest in, in accordance with its objectives. It will be expected to respect human rights under the Human Rights Act 1998 and it will be subject to the provisions on forced labour and supply chains, both under the Modern Slavery Act 2015 and the Procurement Act 2023.
We recently set out our Clean Power 2030 Action Plan, which requires significant deployment of solar electricity—noble Lords are right on that. Developing sustainable, diverse and resilient solar supply chains, free from forced labour, is important for the Government. As the noble Lord, Lord Alton, knows, we also have the Solar Taskforce, which will be looking at these matters.
On Amendment 63 on the cost of fulfilling the company’s strategic objectives, I can assure the noble Lord, Lord Petitgas, that the Secretary of State will set ambitious but achievable objectives for Great British Energy that can be achieved through the funding envelope. GBE will be backed, as noble Lords will know, by a capitalisation of £8.3 billion over this Parliament, and its objective is to crowd in additional private sector investment. However, it will be subject to HM Treasury’s value-for-money guidelines and, like existing publicly financed institutions, its investments will be subject to safeguards and risk assessments.
On Amendments 69, 70 and 85A, on the impact on carbon emissions of GBE’s investments, the company is committed to advancing the deployment of clean energy to aid the Government’s goal of decarbonising our electricity system by 2030. The amendments would require a report to be produced for every investment made by Great British Energy, which seems neither proportionate nor effective. On importing energy into the UK, we acknowledge that reliance on imported fossil fuels presents economic and security risks, as evidenced by the situation following the Russian invasion of Ukraine. The best response is to increase domestic power generation through renewable energy sources and nuclear power, while simultaneously transitioning to more sustainable methods for heating homes, fuelling vehicles and powering industry. These can substantially mitigate our exposure to volatile international markets and energy price fluctuations. We see GBE as being at the heart of those efforts.
Lord Hamilton of Epsom (Con)
Does the Minister accept, however, that converting oilseed rape into aviation fuel does not produce clean energy?
Lord Hunt of Kings Heath (Lab)
My Lords, we rely on agreed definitions as to whether an energy is clean. The noble Lord mentioned biomass and Drax. He will know that the Government’s view, which his party also took when in government, is that the carbon absorbed by the forestry that replaces what has been transported to Drax more than covers the carbon expended in the process of bringing it to Drax, including the use of shipping. For 14 years, the party opposite accepted that this was an appropriate definition.
I turn to my noble friend Lord Berkeley’s amendment, on the risk to off-grid households and the value of renewable liquid fuels to these households. The noble Lord, Lord Bruce, also covered that point, and I listened with great care to what both had to say. Clearly, we want fuel-poor and off-gas-grid homes to benefit from the transition to net zero. The current energy company obligation includes incentives to deliver measures such as low-carbon heating to off-gas-grid rural homes in Scotland and Wales. Phase 2 of the home upgrade grant provides energy efficiency upgrades and low-carbon heating measures to low-income households living in the worst performing off-gas-grid homes in England in order to tackle fuel poverty.
We recognise that renewable liquid fuels could play a role in decarbonising heat off the gas grid. We therefore expect to prioritise the use of renewable liquid fuels for the small number of homes that are not readily suitable for electrification, as these have the fewest options to decarbonise through alternative low-carbon technologies. My noble friend Lord Berkeley suggested a meeting on this; I am very happy to engage with him and, indeed, with the noble Lord, Lord Bruce.
Amendment 76, tabled by the noble Lord, Lord Offord, and Amendment 77, tabled by the noble Baroness, Lady Bloomfield, relate to sourcing materials for GBE projects from the domestic supply chain. Adding the proposed detail to the Bill would too narrowly restrict the company in carrying out its activities, halting the potential feasibility of projects where UK sourcing is not currently possible.
On jobs, I take the point made by the noble Lord, Lord Bruce, concerning the importance of the UK continental shelf and the need for an orderly transition. My daughter supported her career as a wireline engineer in the oil and gas industry working out of Aberdeen, and I am well aware of the importance of the sector, what it has contributed to the UK economy and the skills and dedication of the people working there. As we have described, we want an orderly and just transition.
GB Energy will be committed to helping drive the growth of supply chains in the UK to accelerate the deployment of key UK energy projects. It is important, however, that we comply with the international trading rules that the UK is bound by, such as prohibitions on requiring local content contained under various agreements under the WTO.
Amendment 80, in the name of the noble Lord, Lord Petitgas, requires the Secretary
Lord Alton of Liverpool (CB)
I am sorry to interrupt the noble Lord, but I wonder if I can press him further on the issue of jobs and the impact on our own economy when countries run, in their own jurisdictions, the kind of slave labour arrangements that I and others referred to earlier. He will have seen the information about the loss of electric vehicle-related jobs because of the flooding of the market—we do not have any tariffs on those vehicles, whereas every other G7 country does. He will know that, in the last quarter, the trade deficit with China was some £32 billion but at no time since 1995 has there ever been surplus on our side of the equation. How can we justify, therefore, pouring more money into the economy of a country that relies on slave labour? It cannot just be left to companies, even Great British Energy, to identify whether a country is using slave labour or not; surely that is a matter for the Government, too.
Lord Hunt of Kings Heath (Lab)
The noble Lord raises matters of great geopolitical importance and importance to the UK’s economy. He will have seen that my right honourable friend the Chancellor has been in China in the last few days, seeking to engage that country in relation to economic co-operation and development, within appropriate security safeguards. We want to see jobs in the energy sector developed as much as possible in the United Kingdom, but equally, we are operating in a global economy. For very good reasons, we are concerned about the introduction of tariffs which may inhibit international trade, and we must also be mindful of the economic value-for-money issues that clearly have to come into play in this area.
Let me return to the Bill and what is appropriate for us to include in it. We believe that this issue is a matter for GBE, working within the constraints set through the statement of priorities and through Clause 3, and also in relation to the further work we are going to do. We have mentioned solar, and noble Lords are right that much of the raw material for solar panels comes from China, although it is British companies working in the United Kingdom that benefit more from the value of the work on solar installations.
Turning to the amendment of the noble Lord, Lord Petitgas, as a publicly owned company, GBE will be held accountable through regular reporting to my department. It will be subject to HM Treasury’s value-for-money guidelines, its investments will be subject to safeguards and risk assessments, and it will invest in the private sector to share risk and reward.
On green taxonomy, a decision about how a potential UK green taxonomy could be used or applied has not yet been finalised. The Government have launched a consultation to gather views on the value of the case for a UK green taxonomy, and it will close on 6 February.
We need to come back to what Clause 6 is for as a whole. It is a backstop which one hopes would never have to be used; it is not a way to encourage the Secretary of State to micromanage a company that we very much want to be operationally independent.
Lord Petitgas (Con)
I want to go back to the point about the company acting independently. There is little bit of confusion about this company being an energy company, as opposed to an investment company. There will be myriad small investments. If it acts independently, which is fine, it needs an investment committee, and I have not read anywhere that there will be one. The chairman-elect is Jürgen Maier. He may know the sector but he is not an investor. So, effectively, taxpayers will be limited partners in an investment company without an investment committee and with a chair who is not an investor, so it is not unreasonable to ask for information about rates of return and to understand exactly how it will be done. If the answer is, “Don’t worry, it’s an independent company but value for money will be done by the Treasury with DESNZ”, that is a different governance process, but the governance of investment and selection to me remains relatively obscure.
Lord Hunt of Kings Heath (Lab)
My Lords, I do not really think I can go any further than the remarks I have made this afternoon. It will ultimately be for GBE’s board to decide how it will arrange its board committees. I have noted what the noble Lord said about an investment committee. I will certainly draw his remarks to the attention of Jürgen Maier, who may not be an investment expert, as the noble Lord suggests, but my goodness me he has a lot of experience in this sector.
Lord Offord of Garvel (Con)
My Lords, in bringing the debate on these amendments to a close, I can deal head-on with the Minister’s comments and those of the noble Earl, Lord Russell, about the time given to the Bill. We have so far had one and a half days in Committee and we have one further day allocated, which will be only two and a half days on a Bill that spends £8.3 billion of taxpayers’ money, has no detail on how that money will be spent and gives endless power to the Secretary of State for Energy. It is entirely reasonable that we scrutinise it. The weekend’s press was full of the energy crisis that we face, with the shortage, storage and national grid issues.
Lord Hunt of Kings Heath (Lab)
My Lords, with the greatest respect, there is no energy crisis.
Lord Offord of Garvel (Con)
As I said, the point of government is to ensure that there is no energy crisis and at the weekend we had reports of there being gas supplies for less than one week, which is concerning to the public. Therefore, it is only fair and reasonable that Parliament debates that in some detail.
Lord Hunt of Kings Heath (Lab)
My Lords, what we had was one company looking for government subsidies using the opportunity to make alarmist headlines.
Lord Offord of Garvel (Con)
The point is that this is a topical debate that the whole of the public are interested in. They understand energy prices like nothing else now. They understand that, in terms of their household budgets, this is a major part of their cost of living and it is only reasonable that we get to debate this.
The amendments in this group are straightforward and simple. They are nothing to do with micromanagement; they are only to do with the accountability and transparency of this new company, which, as my noble friend Lord Petitgas pointed out, is not an operating company. The public think this is a company that makes cheap energy. It is an investment company sitting on one floor of a building in Aberdeen making investment decisions, and we have no idea how it will do that.
At the last election, the Government made promises to working people on this topic: to reduce energy costs, create jobs and drive forward our energy transition. Therefore, taking my noble friend Lady Noakes’s constructive point, we can argue about how we deliver the substance of these amendments, but we should not ignore the substance. Is it not fair and reasonable that we have in the Bill some consideration of government promises made to the public about the cost of energy—£300 in savings, which, incidentally, is £8 billion, the same amount as is being invested in 28 million households at £300—or the fact that 650,000 jobs are to be created? Is it not reasonable that the Bill somewhere talks about the fact that we want a strategic priority for the UK to develop its own energy supply chain? Is it not unreasonable that we have amendments that deal with how we make sure that the supply chain is fair? We have talked about a fair transition: well, where is the fair transition, to pick up what the noble Lords, Lord Bruce and Lord Alton, said, when we destroy our own highly skilled jobs in the north-east or end up using products made under dubious circumstances in overseas territories?
I would argue that all these amendments need to be considered. There is consensus in this House that we need energy security and that we need to get to 2050. The question is: why is this being speeded up artificially when we and the technology are not ready? Why are we doing this artificially?
My final point has been mentioned by many noble Lords so far: none of this works without the plumbing working. The national grid needs a serious upgrade and comprehensive investment to deliver this. If in these straitened times—we are continually reminded by the Government Benches that there is no money—there is a spare £8 billion, should it not be better used by being put into the national grid once and for all? In the meantime, given that we are where we are in Committee, I beg leave to withdraw the amendment.
Lord Teverson (LD)
My Lords, can I make a comment on that? I am a trustee of the green share in the Green Investment Bank, which was privatised by the Tories after it was set up by the coalition Government. It was a very profitable operation, although it was fully publicly owned. The issue was that it was almost too conservative in terms of making money under Treasury rules, so it did not make as much of a difference—it did make a difference—as it should have done. One of the risks is that GB Energy could be too conservative because the Treasury is too close to it and will not let it do the innovation that needs to happen for decarbonisation to take place by 2030.
Lord Hunt of Kings Heath (Lab)
My Lords, I want to make just two points. The noble Lord, Lord Teverson, made a very interesting and wise contribution. I say to the noble Lord, Lord Hamilton, that of course I have heard the expression that Governments are not very good at picking winners. That is why we have set up GBE. We will have a company with people with expertise to enable investments to take place within the context we set under Clause 3 and Clause 5 as strategic priorities. None the less, it will have operational independence.
The noble Lord, Lord Teverson, is right; noble Lords in their various amendments are seeking to pin down GBE through excessive reporting requirements. The risk is that GBE, far from being allowed to flourish and develop, will be inhibited and micromanaged. That is why these amendments are wholly inappropriate in relation to Clause 6. The power of direction is not to be used in the way that noble Lords are suggesting; it is a backstop power. What is the point of setting up GBE if we are to undermine its independence in the way these amendments suggest?
Lord Offord of Garvel (Con)
My Lords, as in the previous group, these amendments are not designed in any way to micromanage. There is very little in the Bill that gives us any indication of how this company will operate. As indicated by my noble friend Lord Petitgas, it is an investment company without an investment committee or any investment directors. All that is being sought by these amendments is some level of accountability and scrutiny.
Once again, I say that when promises are made to the public that the Bill will address their concerns, it is not unreasonable that we ask for amendments to be made accordingly. For example, looking at employment in Amendment 68, we are simply asking for a report—as the noble Lord, Lord Bruce, said—on the impact these investments make on employment and bills. Why is that an unreasonable thing to say? We have 200,000 people in highly skilled jobs in the North Sea. They are worried that they are about to be phased out unilaterally and prematurely. Why is it unreasonable to have somewhere in the Bill a requirement that GBE comes to Parliament and explains what it is doing in relation to employment in this key sector?
As we have said before, the Bill has failed to substantiate the promises made. The job of the Opposition is to highlight that and to make it clear that this needs to be debated and scrutinised. That is what we will continue to do. In light of that, for now I will withdraw the amendment.
Lord Hunt of Kings Heath (Lab)
My Lords, I welcome the contribution of the noble Lord, Lord Fuller, on his first set of amendments. Of course, he is right that our food security is very important indeed to this country, just as moving as quickly as we can towards clean power is also very important, and I certainly accept that of course there is a balance to be drawn. Certainly, the importance of maintaining our natural resources to support UK agriculture, and supporting local stakeholder consultation in affairs that affect their surroundings and the quality of the environment, are values that I share with noble Lords who have spoken in the debate tonight. But I must come back to the fact that we are talking about Clause 6 and the issue of whether we should seek to amend Clause 6 in the directions that the Secretary of State can give to GBE.
I repeat what I said in the first two groups: these directions are a backstop where an intervention is needed, not a way in which to develop policy in relation to land use. In response to my noble friend Lady Young and other noble Lords, my understanding is that the Government plan to publish a 12-week consultation on land use early in this year. The consultation will inform the publication of a land use framework in England, to be published later on in this year.
I have also noted constructive comments about the need for us to develop—indeed, some noble Lords wish us to mandate—the use of solar in warehouses and in industrial and domestic properties, and these matters are under very urgent consideration at the moment. But we will always need ground-based solar, as well as onshore wind, as the noble Lord, Lord Teverson, suggested, which of course is why we got rid of what was in effect a ban that the last Government so grievously introduced in relation to that development.
The projects that GBE will be concerned with, that it will invest in and that it will give guidance and encouragement to—because of course that is an important part of its role, too—will be mandated. Inevitably, its job will be to consider government guidance on the most suitable land for renewable energy projects, and any project that it is involved in will be subject to the same rigorous planning processes that currently exist to protect agricultural land, minimise the impact on food security and provide ample consideration for local community interests.
The environmental impact assessment regulations of 2017 require that certain types of projects, including large-scale renewable energy developments, undergo an environmental impact assessment to assess their potential impact on the environment. Developers must also ensure that their projects comply with environmental regulations, which can include mitigating impacts on local wildlife, water resources and soil quality.
Further, the National Planning Policy Framework includes the preservation of agricultural land for food production as a key consideration in its legal framework governing renewable energy projects. It emphasises the need to protect the best and most versatile agricultural land, namely grades 1, 2 and 3a, from development that could compromise its productivity. Developers must consider the classification of the land involved in renewable energy projects and ensure that developments do not conflict with planning policies aimed at safeguarding agricultural land.
On the noble Lord’s suggestion that there is a dash for renewables, yes, there is a dash for renewables—I do not deny it. We have to have a dash for renewables. But that does not mean that existing protections are being overridden. Of course we recognise that poorly sited onshore projects can have impacts on the local area, which is why we will retain important checks and balances to protect the environment.
But, in the end, we come back to why we have Clause 6. It is a backstop power which we hope will never have to be used; it is not a way of seeking to change policy in relation to land use.
Lord Fuller (Con)
My Lords, we have had a good debate that has explored the tensions between food and energy security in the context of the national interest. It has recognised the tensions between the establishment of a private company, GB Energy, acting as it is required to do in its own narrow self-interest, and its responsibilities as a public body with a duty to set the right example.
I have taken from some of the comments that, “Lord Fuller has perhaps played the right notes but in the wrong order”. I am not Morecambe and Wise to my noble friend Lord Roborough, but I would just like to refer to some of the points that have come along.
I am grateful to the noble Lord, Lord Cameron of Dillington, for his comments on the balance of land use and the importance of the “tilted balance”. Please do not misunderstand: my amendments are not saying that there should be no solar or renewables, or that we should have only food production. It is about where we put this thing in the tilted balance.
I am grateful to my noble friend Lord Roborough for shining a light on the fact that, notwithstanding that the Minister said, “Well, there are rules to be followed”, the rules are not being followed. That is why it is important that these amendments are made to the Bill, because we cannot really give the benefit of the doubt: if hitherto they have not been followed, why will they be followed now?
I am grateful to the noble Baroness, Lady Young of Old Scone, but even more grateful to the noble Earl, Lord Caithness, for being gentle with her so I did not have to be.
The noble Viscount, Lord Goschen, talked about the broad picture, and I am grateful to the noble Lord, Lord Bellingham, for his point about tenants, because that has been lost as part of the social fabric in this.
I will be brief. This is such an important issue that I do not feel we can just leave it on trust that the Minister for Energy Security will necessarily dovetail in with the Minister for Food Production to get that tilted balance right. The nation cannot risk GB Energy going rogue, and there has to be a better way with that. It is hard. Energy security and food security can be bedfellows: we are not being fundamentalist about this. At heart, my amendments are about putting food production on the best land, and solar and other renewables on other land.
We have we have fleshed out quite a few details and I know we are in Committee. I hope the Minister will meet with me and colleagues before Report, so that important safeguards can be taken into account in the Bill, if not in Clause 6 then perhaps somewhere else—who knows? I also hope that we may even have the heralded land use framework which the noble Baroness, Lady Hayman, promised before Christmas—but there we are.
On the basis that the Minister will meet me, I am prepared to withdraw these amendments, but in so doing I signal my intention to re-present them on Report, having taken soundings from colleagues that, if we cannot make satisfactory progress towards getting an acceptable way forward, we may need to test the opinion of the House. Meanwhile, I beg leave to withdraw my amendment.
Lord Hunt of Kings Heath (Lab)
My Lords, it is always good to have a discussion about nuclear energy. The noble Viscount, Lord Trenchard, is ever consistent in putting forward his views. I assure him and the Committee that the Government see nuclear power as having a vital and important part in our energy mix.
I say to the noble Lord, Lord Hamilton, that the fact is that no technology is mentioned in the Bill, and that is quite deliberate—so the absence of nuclear in the Bill should not be taken as an indication that we do not think that it has an important role to play. I say to the noble Lord, Lord Offord, on Labour’s record on nuclear, it was in fact a Labour Government, in 2008, who took the decision that we would go back to new nuclear. Shortly afterwards, I was appointed a Minister of State at the Department for Energy and Climate Change, and I took part in many discussions at that point about how we got the sites, developed the supply chain and attracted investment. The fact is that we were succeeded by a coalition Government, followed by a Conservative Government, and it was not until, I think, 2017 that a final investment decision was made in relation to Hinkley Point C.
I am very proud of the nuclear sector. For all the challenges that Hinkley Point C has had, the fact is that a UK supply chain has been developed. The point about replication at Sizewell C is that that supply chain can then continue to service Sizewell C. We then want to see small modular reactors and AMRs developed, because we see them as having great potential. I say to the noble Viscount, Lord Trenchard, that he has not responded to the points raised by his colleague, the noble Lord, Lord Howell, in relation to Sizewell C. I am sure he will agree with me that, if we were to pull the plug on Sizewell C at this point, it would have a devastating impact on the confidence of the nuclear sector, in this country and globally. Actually—although he is not here—the point about replication is about the derisking of Sizewell C, building on what happened at Hinkley Point C, including the design changes and all the other issues, such as the time it took to develop the supply chain and the productivity issues. The case for Sizewell C is very strong indeed, and we look forward to moving towards a final investment decision over the next few months.
On the relationship between GBN and GBE, we have decided that GBN will remain a separate legal entity. That is important, because it makes sure that we have a body that can focus completely on nuclear energy, but working very strongly together with Great British Energy. The two chairs have met and have, I believe, built a very strong relationship already. I expect them to be able to work in strong partnership in future. I do not think it is necessary to put onerous requirements in the Bill. Certainly, Clause 6 is not the way in which to do it.
The noble Viscount, Lord Trenchard, is concerned about the approach that GBN is taking to the SMR technology selection process. It was instituted by his own party in government, and I think he was critical of his own Government. Well, I am not. I think the SMR technology assessment was absolutely the right thing to do. In September 2024 it concluded the initial tender phase of the process and downselected four companies. We hope for further progress over the next few months.
I recognise the huge potential that AMRs bring, and we will respond to the alternative routes to market consultation. We are obviously very keen to do what we can to attract nuclear company developers in this country.
On the impact of competitiveness, I really do not think the Bill is an appropriate vehicle for those considerations, and nor do I see that being part of Great British Energy’s role. But of course I want there to be a thriving nuclear industry in this country. I want to see us build on the supply chain that has been built around Hinkley Point C and then on to Sizewell C, as I have said.
In conclusion, I hope the noble Viscount will recognise that while he may disagree with elements of the Government’s policy on nuclear, he should be under no misapprehension: we believe that nuclear provides an essential baseload. We will continue to support the industry in the future.
Viscount Trenchard (Con)
My Lords, I thank the Minister very much for his reply, and I thank my noble friend for his intervention. To some extent I am heartened by the Minister’s words, although I remain a little unconvinced by his assertion that he sees nuclear as being so important. There is a fundamental difference between GBE and GBN, in that GBE has £8.2 billion of capital and GBN has only a few hundred million. The two vehicles are completely different, so I would be rather more relieved if the Minister had explained that the capital made available to GBE would equally be available to nuclear projects that GBN might recommend for investment.
Lord Hunt of Kings Heath (Lab)
Can I just respond? Nothing precludes GBE from investing in a nuclear development.
Viscount Trenchard (Con)
I thank the Minister again for his reply. Nevertheless, GBN does not have any money for investment, so GBN is by definition a very different kind of vehicle compared with GBE. In light of the Minister’s reply, I would like to withdraw my amendment for now.
Lord Offord of Garvel (Con)
My Lords, as we have heard throughout the debate on this Bill, as well as in the other debates in this House on the future of our energy, we know that renewable energy by its nature will always be unreliable. It is, by its nature, intermittent. Many of us have expressed concern that this undeniable fact will result in shortages. As has been mentioned by my noble friend Lord Murray, last year Europe in fact experienced several episodes of Dunkelflaute. On the other hand, as has been highlighted by my noble friend Lord Ashcombe, what happens to energy supply in periods of persistent sunshine and wind?
Unfortunately, we find ourselves in a position in which the national grid is unable to cope with excess renewable energy supply. Grid capacity is a particular challenge for the offshore wind sector, because those sites are necessarily located far from sources of demand. Currently, the national grid pays renewable energy generators billions to reduce supply when there is more renewable electricity than the grid can manage. This problem will only be compounded by the Government’s ambition to build renewables faster than we can develop and connect them to the grid.
With that in mind, we should address the fact that the timeframe for obtaining grid connections for a new energy project can reach 10 years. Not only this, but a project without a grid connection today may not come online until well after the Government’s target of grid decarbonisation by 2030. There is no doubt that the renewable energy projects that will supposedly be supported by the establishment of Great British Energy will face the same connectivity difficulties.
As my noble friend Lord Ashcombe highlighted, over £1 billion was coughed up by bill payers last year to pay renewable energy generators to curtail excess supply, including £20 million in one day alone. This will only worsen under the Government’s agenda, and it will be consumers who will bear the cost via their energy bills. If renewable generation is scaled up so rapidly without the grid capacity to transmit it to the areas of high demand, those curtailment payments will only increase. We know that excessive curtailment fees are already being paid to wind farm operators who are generating more power than can be used. This is paid to get operators to switch off their wind farms and avoid overloading the grid. How ridiculous is that? We expect these curtailment costs only to rise under the new Government’s regime, and by 2030 it is possible that there will be a staggering £20 billion a year in subsidies and in maintaining back-up grid capacity. That equates to roughly £700 per household each year.
I turn to the amendments in this group in the name of my noble friend Lord Murray of Blidworth, which I support in their entirety. Amendment 85E requires Great British Energy to
“report annually on the impact of each investment it makes on the levels of curtailed renewable energy in the UK”.
Amendment 85D requires Great British Energy to
“invest in additional energy storage infrastructure to store excess renewable energy”,
and thereby minimise the cost of curtailing excess supply. In tabling these amendments, my noble friend has addressed many of the issues that I have discussed.
It is essential that the establishment of Great British Energy does not cost the taxpayer more than the already allocated £8.3 billion, and that it assesses the impact of its investments on the cost of wasting excess supply and prioritises the means of storing renewable energy. I hope that the Minister will agree.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Lord, Lord Murray, for Amendments 85D and 85E, which are focused on the issue of renewable energy curtailment. I must repeat, as I said earlier, that this debate is, in essence, about technologies, rather than the appropriate use of the directions in Clause 6. However, I assure the noble Lord that we are determined to increase significantly the deployment of short-term and long-term duration electricity storage to reduce curtailment.
I, too, was present in the debate on energy storage last Thursday, which was very interesting. My noble friend Lady Gustafsson recognised then that a variety of energy storage technologies would be needed to achieve net zero. That includes technologies such as lithium batteries and pumped hydropower storage—which can deploy at different scales and provide output over different lengths of time—and it can include emerging technologies, such as liquid air energy storage and flow batteries. Low-carbon hydrogen, too, can act as a low-carbon flexible generating technology and provide very long duration energy storage.
Today, around 7 gigawatts’ worth of grid-scale electricity storage is operational in Great Britain. This is made up of 2.8 gigawatts of pumped hydrogen and 4.3 gigawatts of grid-scale lithium battery storage. I add that we have announced a long-duration energy support scheme. We will publish a technical document in February. Applications will open in the second quarter, and we hope that the first agreements under the cap and floor system will take place in early 2026. It will be technology neutral, and it will be for projects that could not be built without the cap and floor system.
There are some developments in train: SSE, for instance, is doing exploratory tunnelling in the north of Scotland for pumped-storage hydro. Highview Power has reached FID in terms of liquid air energy storage near Carrington. Points on curtailment costs are well made; we see it as a key priority to accelerate network infrastructure to increase capacity on network and reduce constraints.
I do not think there is a lacuna; the Bill is constructed in the way it is. We have Clause 3 and the strategic statement of priorities in Clause 5. I hope I have reassured the noble Lord that the substantive point he raises is important and accepted by the Government.
Lord Murray of Blidworth (Con)
My Lords, I thank the Minister for his reply and am provided with some reassurance that the Government take storage seriously. However, for the reasons given by my noble friend Lord Ashcombe, the cost of curtailing output is presently substantial, as the Minister conceded. As my noble friends Lord Hamilton and Lord Offord pointed out, the difficulty with the current structure of the Bill is that we are not moving fast enough to secure sufficient storage capacity such that we do not need to make such large curtailment payments.
I urge the Minister to consider inserting in the Bill, at the very least, some form of requirement for reporting in relation to curtailment payments, which would encourage the market in storage capacity. With that, I am content to withdraw my amendment.
Lord Hunt of Kings Heath (Lab)
My Lords, first, I welcome so many Members of the Opposition to our debate and I look forward to their continuing interest in our deliberations going on this evening. I must confess to being somewhat at a loss, because all the points raised in this debate have been raised tonight in other amendments. What we are seeing is clearly a filibuster, and the degrouping of so many of these amendments on Clause 6 is the visible evidence of this. We have already had a debate on energy storage, which the noble Lord, Lord Murray, moved. We have already debated power lines and planning environmental protections, and we have discussed nuclear power, SMRs and AMRs. I simply do not understand. What is the point of having yet another debate on these issues, which amount to Second Reading discussions about the Government’s energy policy? We are debating Clause 6 directions. This is a backstop provision, normal in Bills of this sort in relation to the bodies that we are talking about, and it is quite inappropriate for us to seek to micromanage GB Energy in the way noble Lords have suggested.
Lord Lilley (Con)
My Lords, I am grateful to the Minister for his non-reply to the debate. The answer to his point about whether it is necessary is that it is impossible to overstate the importance of cheap and reliable energy to the economic growth of this country. If the only way we can have reliable energy is by having hugely costly energy, either because, as the noble Lord, Lord Reay, said, to ward off delays as we saw in recent days costs eight or 10 times what it normally costs or because to prevent that sort of risk involves spending hundreds of billions of pounds, that is hugely important. I am very sorry that the Minister, whom I normally praise for his replies, which are usually fulsome and effective and substantive, has avoided addressing those points, because they are crucially important and they have many aspects and it is important that those many aspects be investigated in the course of these debates in Committee. Obviously, I shall withdraw my amendment, but I hope that none the less that we will force the Government to think seriously about these issues before carrying us further down a route which could make our already very expensive energy even more expensive.
Energy Costs for Businesses
Lord Hunt of Kings Heath Excerpts(1 year, 2 months ago)
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Lord Evans of Rainow
To ask His Majesty’s Government what plans they have to reduce the cost of energy for businesses in the United Kingdom.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, the Government believe that the only way to protect bill payers permanently, including businesses and non-domestic organisations, is to speed up the transition away from fossil fuels and towards homegrown, clean energy.
Lord Evans of Rainow (Con)
I thank the Minister for that Answer, but Britain’s energy cost for business is the highest in the G20, with Russia, China and the United States having the cheapest. Gary Smith, general secretary of the GMB union, says that Labour’s green strategy is “naive”, displays a
“lack of intellectual rigour and thinking”
and will lead to job losses. Does the Minister agree with Gary Smith? If not, why not?
Lord Hunt of Kings Heath (Lab)
My Lords, that is not how I recognise our energy policy. The noble Lord will have seen our action plan towards clean power, published at the end of last week, which sets out how we intend comprehensively to move towards clean power by 2030. I just say to the noble Lord that the highest price that businesses paid for electricity was in 2023, under the Government in which he was a member. What that shows is that, if we remain dependent on the volatility of international fossil-fuel prices, we will always be vulnerable to the kinds of spikes we have seen. That is why we need clean power and homegrown energy.
Baroness Winterton of Doncaster (Lab)
My Lords, the Clean Power 2030 Action Plan is clear, on page 81, that nuclear power has a role to play in achieving clean power by 2030. Will my noble friend the Minister give a little more detail on what the Government are doing to support the development of the technology around small modular reactors, so that they can eventually be built in this country, support British jobs and reduce costs for businesses?
Lord Hunt of Kings Heath (Lab)
My Lords, my noble friend is right to explore the contribution that nuclear will play in the lead up to 2030, but of course beyond, which is why we have the building of Hinkley Point C, then Sizewell C when we get to a financial investment decision next year, then the SMR programme and then the AMR programme. As far as small modular reactors are concerned, Great British Nuclear is conducting a technology exercise at the moment; it is in financial discussions with four of the companies concerned. We will come to the issue of spend and public support in the multiyear spending review that is taking place over the next few months.
Earl Russell (LD)
My Lords, I am sure the Minister will agree about the importance of making sure that we continue to make efforts to reduce the costs of energy for industry. Some 56% of UK businesses would like to increase their on-site power generation, so what are the Government doing to help industries undertake such actions to help with their renewable energy?
Lord Hunt of Kings Heath (Lab)
My Lords, first, of course I very much agree with the noble Earl in wishing to see a reduction in the cost of energy, particularly electricity, for our businesses. We believe that in the long term—and in the medium term, to 2030—clean power is the way to do it. He raises a very important point: one of the responses, as he will have seen in the US, is the linking of heavy energy users, which can be companies such as Amazon, with their data centres, to nuclear power generation through advanced modular reactors. Of course, the other very important issue is getting connections to the grid, which is why the clean power action plan is so important in relation to speeding up those connections.
Lord Alton of Liverpool (CB)
My Lords, following the very helpful reply which the Minister gave during the earlier stages of the Great British Energy Bill on the subject of slave labour, can he say what further consideration he has given to the dilemma of purchasing solar panels that have been made in a state accused by the House of Commons of committing genocide and using slave labour in the Muslim areas of Xinjiang?
Lord Hunt of Kings Heath (Lab)
My Lords, as ever, I am very grateful to the noble Lord for raising these very serious matters and particularly the plight of the Uighurs in Xinjiang province, which we have debated. He knows from my response in the Great British Energy Bill that we are looking at this very carefully. He is right that there is a tension, and clearly many of our solar panels come from China with all the attendant issues that this involves. But we have established the Solar Taskforce to look into the issue of supply chain, and we will be taking very seriously the points that the noble Lord has raised.
Lord Geddes (Con)
My Lords, I have berated my own party over many years on this subject; I shall now enjoy doing so to the noble Lord’s opposite. What is the Government’s attitude to tidal power, which is indefinite, utterly predictable and costs nothing once installed?
Lord Hunt of Kings Heath (Lab)
My Lords, I always enjoy the noble Lord’s interventions. I recognise that there is a potential in tidal power, and the noble Lord, Lord Alton, is—can I say—badgering me on this and has had a debate already in the Great British Energy Bill about its potential. At this stage, we remain open to discussions about how that can be taken forward.
Lord Rooker (Lab)
Could I ask my noble friend: is fusion energy still 20 years away, as it was 20 years ago?
Lord Hunt of Kings Heath (Lab)
My Lords, we are putting some resources into the fusion programme. The years that I have in mind are the 2040s, which are a little less than 20 years away. This reflects our belief that there is very much potential now, and that the UK is in a very strong leadership position on it.
Lord Teverson (LD)
My Lords, one of the ways that large businesses reduce their energy costs is by signing up to power purchase agreements, or PPAs. That is only possible for large businesses. Is there a way that Government could make sure that those benefits of more competitive pricing could come down to medium or small businesses, maybe by clustering or some other method, so they can get the advantage as well?
Lord Hunt of Kings Heath (Lab)
My Lords, I am very happy to give that consideration. The noble Lord will have noted that we are looking at whether we should introduce a regulatory regime for the third-party intermediaries, because some businesses are affected both by mis-selling and other problems with the current system. The other point I would make is that the Energy Ombudsman’s remit is being extended to small businesses within the next few days, and I hope that will also be of advantage to those companies that he mentioned.
The Earl of Effingham (Con)
My Lords, the UK is importing record amounts of electricity from Europe. We understand that the EU is to propose limiting access to its electricity markets. How can the Minister ensure that businesses can transition to net zero over time without facing prohibitive energy costs during this process? Surely if supply goes down, costs will go up.
Lord Hunt of Kings Heath (Lab)
My Lords, we should not speculate about this until we see actual evidence that it may come to pass. The real way to ensure continuity of supply is to do what we are doing, which is to move as quickly as possible to ensuring that we have homegrown, clean energy. This is what we are seeking to do.
Lord Watts (Lab)
My Lords, are we not in a time warp? The problems we now face were created 14 years ago by not having a Government that invested in clean power. Is it not time for them to take responsibility for the mess that they have left for Labour to clear up again?
Lord Hunt of Kings Heath (Lab)
My Lords, I think there is rather something in what my noble friend says. We inherited a parlous situation in relation to the public finances and a failure to invest in essential infrastructure. One example was their dithering about nuclear power. Not one nuclear power station came close to being opened in 14 years under the last Administration.
Baroness Finlay of Llandaff (CB)
My Lords, following the discussions about tidal power, what discussions have been had with the Welsh Government about using the very high tides in the Severn estuary? Linked to that, what discussions have been had with the Scottish Government about the potential for hydro-electric power?
Lord Hunt of Kings Heath (Lab)
My Lords, right at the start of our new Government’s Administration, my right honourable friend the Prime Minister signalled that we wanted to reset relationships with the devolved Governments. That is happening. We are in regular discussion with the devolved Governments on energy policies. In the Great British Energy Bill, the consultation requirements are set out in relation to those countries.
Great British Energy Bill
Lord Hunt of Kings Heath ExcerptsTuesday 17th December 2024
(1 year, 2 months ago)
Lords ChamberRead Full debate Great British Energy Act 2025 View all Great British Energy Act 2025 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 43-II(a) Amendments for Committee (Supplementary to the Second Marshalled List) - (16 Dec 2024)
Baroness Young of Old Scone (Lab)
My Lords, if one were of a nervous disposition, one would be alarmed at the clearing of the Chamber that the simple act of standing up to move an amendment can provoke in this House.
I will speak to Amendment 46 in my name and those of the noble Baronesses, Lady Hayman—who, alas, cannot be with us today due to family illness—and Lady Boycott. It deals with the priorities that the Government will set for Great British Energy, and returns to the issue of community energy, which was given an airing by the noble Earl, Lord Russell, in the previous Committee session.
Amendment 46 inserts into Clause 5 a specific requirement that the strategic objectives of GB Energy should include delivering reductions in emissions, improvements in energy efficiency, security of energy supplies and a more diverse range of ownership of energy facilities—especially community energy schemes—whether connected to the grid or providing energy solely for local communities.
The mention of community energy in the debate about Clause 3 was very much about the objects of GB Energy. The amendments in this group are more about framing the articles of association of the company, in line with the strategic priorities that the Government impose on GB Energy. Clause 5 is more specifically about what the Government will determine on the strategic priorities and plans for GB Energy. I believe that the Bill should specify that the key issues outlined in this amendment be included in the objectives and plans. Clause 3 is about what GB Energy could do; Clause 5 is about what it will do. It is important that these priorities are on the face of the Bill.
In the case of community energy schemes, your Lordships will be glad to hear that I do not intend to repeat the excellent case made by the noble Earl, Lord Russell, in speaking to his amendment to Clause 3.
The grouping of amendments in Committee on this Bill has been interesting—I think that is the word—but it has had one silver lining in that it has given us opportunity to debate energy community for a second time. One can never have too many debates about community energy.
Much of the promotional material around Great British Energy has been clear that it will play a role in supporting community energy. Community energy schemes are important if we are to persuade local communities that the disruption and downsides of renewables development and rewiring the grid have something for them by way of cheaper, greener, more secure energy in which they have a stake.
Local power plans, including community energy schemes, are one of the five priorities for Great British Energy that were put forward in the founding statement. If all these assurances and promises represent genuine commitment, why not put this in the Bill, as my amendment proposes, as indeed does Amendment 50 in the name of the noble Earl, Lord Russell, which I also support?
During the debate on his amendment in the previous Committee session, the noble Earl, Lord Russell, indicated praise for Jürgen Maier, who is on record supporting a role for GB Energy in community energy. But Mr Maier is also on record as saying at a parliamentary hearing that he did not believe that community energy had the potential to generate gigawatts. This does not gel with the assurances that we have been given by the Government both in their manifesto and during the passage of this Bill in the other place.
I very much welcome the fact that my noble friend the Minister undertook to give greater consideration to community energy schemes and their place in the Bill between Committee and Report. I hope he will reach a conclusion on the basis of that consideration, which would result in the role of Great British Energy in community energy appearing in the Bill to ensure, above all, that confidence is not lost by communities or investors alike.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
I thank my noble friend for giving way. She has asked me a question so I might as well answer it. What that means is that the Government have not committed ourselves to a position, but we are looking seriously at the arguments that we received when we debated this issue last time.
Baroness Young of Old Scone (Lab)
I thank the Minister for that intervention. It reveals the importance of having more than one debate about community energy that he has now said that twice. I beg to move.
Lord Hunt of Kings Heath (Lab)
My Lords, this is a very interesting set of amendments, and I am grateful to all noble Lords who tabled amendments and have spoken in this debate. Clearly, as we said before, the overarching aim for the statement of strategic priorities is to ensure that Great British Energy operates in line with, and delivers on, the priorities set out by the Government. That is proper for the Government to do.
It is clearly important that we have a means through which to influence the strategic plans of Great British Energy. Equally, we want Great British Energy to have as much operational independence as possible within the parameters of Clauses 3 and 5. Inevitably, that makes me cautious about a number of the amendments proposed during this debate, which one way or another seek either to constrain the powers of GBE or to direct where it ought to focus its priorities and energies.
Amendment 46 tabled by my noble friend Lady Young proposes an addition to Clause 5 to ensure that Great British Energy will reduce greenhouse gas emissions, improve energy efficiency, ensure security of supply and include community ownership. As she said, we debated some of those matters on our first day in Committee. I agree with her about the vagaries of groupings, which after 27 years of membership of your Lordships’ House remain an eternal mystery to me, as we are enabled to repeat many of the debates already held. Indeed, the noble Earl, Lord Russell, has promised to come back to the very issue of community energy when we meet again on some distant future date in mid-January.
The Bill clearly provides a statutory basis for facilitating and encouraging the reduction of greenhouse gas emissions, improving energy efficiency and ensuring the security of supply of energy under the objects set out in Clause 3. Clearly the statement of strategic priorities must be consistent with these objects. I understand the point that the noble Lord, Lord Hamilton, made about prices; there was an Oral Question today on the impact these are having on UK businesses. He will know that, as I said then, the highest price for energy was achieved under his Government’s watch.
The noble Lord, Lord Offord, also spoke on that topic, and talked about security of supply. I think he very much reinforced what the noble Lord, Lord Hamilton, said when the latter raised the issue of the sun not shining and the wind not blowing, and the resulting reliance on gas. In our aim to move towards clean power by 2030 we envisage using renewables much more than currently. However, we also need nuclear as an essential baseload for our energy generation, and gas as the flexible energy generation which you can turn on and off. Currently gas is unabated, but with CCUS it will largely become abated. That is the way we see ourselves going forward, along with having long-term energy storage as set out in our clean power action plan.
On North Sea oil and gas—again, the noble Lord, Lord Offord, has raised this with me a number of times—I repeat that we are committed to a just transition, working with industry and the workers involved themselves to recognise the importance of the sector, which will operate for decades to come. We remain in close engagement with the industry on these matters. Like the noble Earl, Lord Russell, my essential response to these issues about energy price reductions and the need for long-term price stability is that reliance on international fossil fuels, and the markets that operate in the way they do, is simply not the way to solve them.
I turn to the specifics in Amendments 47 to 50 and 51A, tabled by the noble Lord, Lord Offord, my noble friend Lord Whitty, and the noble Earl, Lord Russell, and supported by the noble Baroness, Lady Bennett, and the noble Viscount, Lord Trenchard, although he did not speak to them. These amendments would require the statement of strategic priorities to include targets relating to consumer bills, jobs and supply chains, and to include reference to community energy schemes.
On the general principle, we want Great British Energy to operate independently. The Bill is focused on making the minimum necessary provisions to support establishing the company—that is why the Bill is constructed in the way it is. Normally, Governments are accused of trying to micromanage the institutions they are responsible for, but here the Government are saying that GBE needs to have as much operational independence as it can within the constraints of Clauses 3 and 5. However, some noble Lords wish to constrain, in one way or another, what Great British Energy should do. We are resistant to that as a general matter of principle.
Lord Vaux of Harrowden (CB)
I am rather baffled by the Minister’s argument. The Government are going to publish a statement of strategic priorities, but if Great British Energy is going to be independent why does it need such a thing? Presumably the statement of strategic priorities will point the company in the right direction, but the implication of the Minister’s argument is that it is going to be incredibly thin. Is that correct?
Lord Hunt of Kings Heath (Lab)
I do not really know why the noble Lord is baffled by what I said. I thought I clearly said that we wish Great British Energy to have as much operational independence as possible, within the constraints of Clauses 3 and 5. At this stage, I cannot tell him what will be in the statement of strategic priorities, because it is being worked on, but it will have sufficient detail to make absolutely clear the Government’s priorities within the constraints I have suggested, while allowing Great British Energy the breadth and room to move in the way it thinks best.
On the issue of jobs, which my noble friend Lord Whitty was absolutely right to raise, all the organisations he mentioned have a role to play to ensure not just that we create the required jobs but that we can fill them. The issue is not so much lacking jobs for the future but enabling enough people to come forward to be given the right training and skills to fill them as effectively as possible. There is a clear message in the action plan we published last week:
“The wider transition to net zero is expected to support hundreds of thousands of jobs, with Clean Power 2030 playing a key part in stimulating a wealth of new jobs and economic opportunities across the country. These jobs will cross a range of skill levels and occupations, including technical engineers at levels 4-7 … along with electrical, welding, and mechanical trades at levels 2-7, and managerial roles including project and delivery managers at levels 4-7. Many of these occupations are already in high demand across other sectors”.
We have within the department the Office for Clean Energy Jobs, whose role is to co-ordinate action to develop a skilled workforce to support and develop our clean power mission.
I should mention the nuclear industry. I am at risk of repeating myself, but other noble Lords have enjoyed doing that during our deliberation. The Nuclear Skills Taskforce calculated that we need 40,000 extra people working in the nuclear sector—civil and defence— by 2030. That is in five years’ time. That goes up into the 2040s. There is a huge job to be done, and I believe it is my department’s role to work with industry and all the other organisations to spearhead that.
Lord Hamilton of Epsom (Con)
Does the noble Lord share my concern that the nuclear power station being built in Somerset is costing four times as much as an identical one in South Korea? Does he have any plans to bring the price down for future nuclear power stations?
Lord Hunt of Kings Heath (Lab)
That question really should be addressed to the noble Lord’s own Front Bench and their stewardship. I want to be fair to EDF: a lot of the reasons for the high cost related to starting afresh with new nuclear in this country and issues with designs, because the UK regulator wanted thousands of design changes. Covid did not help. Developing a supply chain and the skills also contributed. EDF has made considerable progress recently. It is sticking to its commitment that the first unit will start operating between 2029 and 2031.
Of course the noble Lord is right to raise the issue of cost. He will probably know that we will move to a final investment decision on Sizewell C over the next few months, but because it is an 80% above ground replication of Hinkley Point C, a lot of the things EDF learned from the whole process of construction will be transferred to Sizewell C. We are trying to bring in private sector investors to bring in commercial discipline, which, if we can get to FID, should ensure that Sizewell C will basically proceed on time and on budget, while learning all the lessons from Hinkley Point C.
Baroness McIntosh of Pickering (Con)
May I have a reply, if possible, on having joined-up planning applications for offshore oilfields and substations or pylons, so there is one planning application for the whole project?
Lord Hunt of Kings Heath (Lab)
I am sorry, I should have responded. Clearly, the noble Baroness will know from the Clean Power 2030 Action Plan the Government’s intent with regard to planning generally. She will have seen what we said in it about seeking to reform the whole planning process. I will ensure that the point she makes is embraced within that. I see the force of her arguments.
Baroness Young of Old Scone (Lab)
I thank noble Lords who took part in this debate, including the noble Baroness, Lady Boycott, the noble Earl, Lord Russell, and my noble friend Lord Grantchester. The noble Baroness, Lady Hayman, is no doubt watching Parliamentlive.tv and cheering us on as we speak. I also thank the noble Lord, Lord Offord, for his party’s support for community energy and for the remarks about land use, which we will come to in Amendments 67, 73, 104 and 105. It highlights the need for a land use framework for England. I was kind of hoping that we would get it for Christmas, but it looks like it might be slightly later. We were supposed to get it last Christmas, as well.
I was delighted to hear that the Minister welcomes the further amendments on community energy, tabled by the noble Earl, Lord Russell, that will come up in our next session. It will be the third opportunity for the Minister to tell us that he is pondering. Perhaps I should change my wish for a land use framework this Christmas to a wish for some new arguments in favour of community energy before our next debate, because it is becoming slightly repetitive. On the other hand, a good case can bear repetition.
The Minister clearly understands the importance of community energy. I am not sure he quite understands the distinction I was making between the objectives of GBE—which are about what it can and, by implication, cannot do—and strategic priorities and plans, which are what, in the Government’s view, it must do and do now. That is a material difference. In order to inform these reflections between Committee and Report, and in view of the wide support around the Chamber for community energy issues being addressed in the Bill, will the Minister meet with some of us who have indicated that very wide support?
Baroness Young of Old Scone (Lab)
I thank the Minister for that. In the meantime, I will withdraw the amendment, though perhaps not before dwelling briefly on the statement from the noble Baroness, Lady Boycott. She talked about looking out your window and seeing the local wind turbine in which you would have some skin in the game as a result of a community energy scheme, and so think kindly on it rather than it being the enemy. That reminded me of how the Labour Party used to feel about Arthur Scargill: “He may be a bastard, but he’s our bastard”. There may well be hope for this policy.
In begging leave to withdraw the amendment, I reserve the privilege to decide, when the noble Baroness, Lady Hayman, is back in harness, whether this should return on Report. That will very much depend on what the Minister tells us about the outcome of his reflection between Committee and Report. I wish him a happy Christmas while he does that.
Lord Offord of Garvel (Con)
My Lords, I thank noble Lords who have contributed: the noble Lord, Lord Vaux, for opening this group, the noble Earl, Lord Russell, and my noble friends Lord Hamilton, Lord Effingham, Lord Howell, Lord Trenchard and Lady McIntosh. I particularly thank my noble friend Lady Noakes for her detailed scrutiny of the Bill and her expertise.
The debate has raised crucial issues regarding how our energy future is shaped, particularly community energy, transparency and the governance of strategic priorities. It is evident that we in this House today share many of the same concerns about the absence of a statement of strategic priorities and plans. I reiterate that this is in the context of the Bill being responsible for £8.3 billion of taxpayers’ money, with no detail as to GBE’s plans, priorities, objectives and purpose. As the noble Lord, Lord Vaux, said, the Bill is merely a skeleton, providing unabridged powers to the Secretary of State without clarity on how they can be used.
With that in mind, I welcome Amendment 119, tabled by my noble friend Lady Noakes, which would delay the commencement of other provisions in the Bill until a statement of strategic priorities has been laid before Parliament. This is a sensible and necessary step to ensure that Parliament and the public have sight of the plans that will guide the operation of this great new company, GBE. Furthermore, Amendment 58 would ensure that Parliament is made aware of Great British Energy’s strategic priorities, and Amendment 52 would give Parliament the power to reject a statement of strategic priorities once received. We cannot, in good conscience, simply allow this Bill to proceed without the opportunity to scrutinise these priorities, which will guide £8.3 billion of taxpayers’ investment.
Amendment 51 would introduce a clear time limit for the Secretary of State to publish the statement, while Amendment 54 would ensure that a motion for resolution is tabled in both Houses of Parliament. These amendments provide the necessary transparency and accountability to ensure that Parliament can scrutinise and approve those priorities before any further steps are taken. The Bill cannot and should not proceed until we have seen the strategic priorities.
This brings me to the question of whether Clause 5 should stand part of the Bill. In its report, the Constitution Committee expressed concern that Clauses 5 and 6 amount to disguised legislation and that Clause 5 does not offer an adequate degree of parliamentary oversight. This is a serious constitutional issue, and I hope that the Minister takes the committee’s concerns seriously as we continue our debate.
Amendment 53, tabled by my noble friend Lady McIntosh of Pickering, seeks to insert a provision into Clause 5 requiring the Secretary of State to produce a statement to the chairs of the relevant Select Committees in both Houses of Parliament. This amendment is fundamentally about transparency, and its purpose is simple: to ensure that Parliament can properly scrutinise the actions of the Secretary of State and guarantee that public money is being used efficiently and in the public interest. This is why we propose that a copy of a strategic statement be sent to the relevant Select Committees for their review and input.
As discussed earlier on Amendment 57, tabled by my noble friend Lord Effingham, transparency is not a luxury; it is a necessity. Transparency ensures that decisions are made openly and subject to public and parliamentary scrutiny. He brought to our attention consideration of the requirement that GBE deal with the devolved Administrations throughout the UK.
Finally, Amendment 90 seeks to insert at the end of Clause 7 the provision that the Secretary of State must
“arrange for a statement to be made in each House”.
The intent behind this amendment is to ensure that the actions of the Government in relation to Great British Energy are made public and accountable. For such a significant and impactful initiative, there must be a mechanism for direct communication with Parliament. This would allow both Houses to question, debate and hold the Government to account on any developments or changes in the direction of the company.
A comparison has already been drawn by the noble Lord, Lord Vaux, with the National Wealth Fund, previously the UK Infrastructure Bank. That organisation experienced thorough scrutiny and testing before its establishment. Why should we treat GBE any differently? If we expect such rigorous assessment for the UK Infrastructure Bank, it stands to reason that a similar level of transparency and parliamentary scrutiny should apply to Great British Energy. I urge noble Lords to support this amendment, as it reinforces the principles of accountability that should be at the heart of this Bill.
In conclusion, I welcome the amendments and the ongoing discussions regarding the strategic priorities and transparency of Great British Energy. The strategic priorities are critical to the success of the Bill, and I am grateful to all noble Lords who have expressed similar concerns. I reiterate my support for my noble friend Lady Noakes and all other noble Lords who have raised similar issues.
Lord Hunt of Kings Heath (Lab)
My Lords, I am most grateful again to noble Lords who have raised a number of very interesting points in relation to Clause 5 and the statement of strategic priorities. I remind the Committee that the founding statement set out GBE’s purpose, priorities and objectives, including its mission statements and its five functions. The first statement of strategic priorities is intended to ensure that Great British Energy will be focused on driving clean energy deployment, boosting energy independence, creating jobs and ensuring that UK taxpayers, bill payers and communities reap the benefits of clean, secure, home-grown energy.
Clearly, Clause 5 is important in that respect. The noble Lord, Lord Offord, will not be surprised that I will resist his opposition to it standing part of the Bill. He made another point in relation to the investment bank legislation. I understand the point; he knows that we have looked at this legislation and taken parts from it, but we have also looked at Great British Nuclear, which his Government put through in the last Energy Act. In some cases, we think that that is appropriate to look at in relation to the way this legislation has been framed.
Amendments 51, 52, 53, 54, 57, 58, 90, 119 and 128 all refer to the statement of strategic priorities, with some amendments seeking to defer commencement of the Bill in relation to the statement. The noble Lord, Lord Howell, always speaks with great experience on energy, and he is threatening us with many more amendments the next time we meet. We believe that the best way to get stability on prices and security of energy, and to deal with climate change, is to move in the way that we have set out. Numerous organisations have looked at it and say that, in the context of value for money, investment decisions and cost to government, this will be the cheapest way forward in the end, and that staying reliant on fossil fuels, with the unreliability of the international market, would not be a productive use of our resources and would do nothing for climate change. That is why we are going down this path.
I come to the amendment of the noble Lord, Lord Vaux, and his opening remarks on this group. We do not wish to escape parliamentary scrutiny. I say to the noble Baroness, Lady Noakes, that we do not want to weaken accountability processes. I assure her that there is no way we will use the power of direction in the way that she suggested might happen. She referred to the power of direction and from what she said I took it that she thought it could be used in a way which would simply direct GBE, instead of the statement of priorities, but perhaps I have confused that.
Baroness Noakes (Con)
The noble Lord might like to read Hansard. I did not say that, but I do not think that need hold us up. We are not talking about the power of direction in this set of amendments.
Lord Hunt of Kings Heath (Lab)
I know we are coming to that in later amendments, so I will certainly do that.
I understand the points that noble Lords are making about parliamentary involvement in the statement of strategic priorities. I have read the report of the House of Lords Constitution Committee. The Government have no interest whatever in delaying the statement of strategic priorities in order to escape parliamentary scrutiny. I would have thought that the publication of our clean power action plan, and the work of the National Energy System Operator in its advice to the Government of a few weeks ago, would suggest that getting to 2030 in the way we wish to do will be very challenging. We believe we can do it, but we cannot mess around.
The statement of strategic priorities is certainly an important element in allowing Great British Energy to move forward, but we have to work through a number of important issues. We have to consult the devolved Governments. I take the point made by the noble Earl, Lord Effingham, about the need for that to be a thorough process, and that will take time. Time is imperative. There are issues about the delay that would be built into this, if we were to accept some of the amendments being proposed.
I hesitate to bite on the comments of the noble Lord, Lord Teverson, about the effectiveness of secondary legislation. I suppose the real response to him is that, in 1911, there was very little secondary legislation, and therefore the Parliament Act 1911 did not encompass it, the result being that your Lordships’ House has an absolute veto on secondary legislation, which it has been loath to use for very understandable reasons.
Amendment 53, from the noble Baroness, Lady McIntosh of Pickering, would require all versions of the statement of strategic priorities to be put before the chair of the relevant Select Committees. Clause 5 already requires the statement to be laid before Parliament, and the chairs of any relevant Select Committee could access the statement and any revised or replacement statements. I assure the noble Baroness that it is the normal practice of my department to provide such information on a regular basis to the chair of the energy Select Committee in the other place. Moreover, where Select Committees in your Lordships’ House have produced reports that are relevant to any announcement being made, it is normal practice to send a copy to the chairs of those Select Committees. I accept absolutely the principle of what she is proposing.
Let me be clear that the process of developing, agreeing and publishing the statement of strategic priorities is intended to enable the Secretary of State to provide strategic steers to Great British Energy within the framework of its objects, as set out in Clause 3. The statement of strategic priorities cannot overrule the objects clause in Great British Energy’s articles of association. Those objects set the overarching framework for Great British Energy. We believe it is right that the framework provided for in legislation is scrutinised by Parliament, through Clause 3, as we have already done in the previous day in Committee.
Lord Vaux of Harrowden (CB)
There was one other question I asked the Minister which he has not answered, which is whether the strategic priorities document will be accompanied by an impact assessment. The impact assessment we have with this Bill basically says that there are no benefits or costs because all it does is create the company, so we are effectively going to go through this process of creating something that can spend £8.3 billion with no impact assessment if that does not happen. Will there perhaps be an impact assessment that accompanies it?
Lord Hunt of Kings Heath (Lab)
My Lords, at this stage, I cannot answer that because it is still to be decided as part of the work that we are taking forward in relation to drafting the statement.
Lord Vaux of Harrowden (CB)
My Lords, I thank all noble Lords who have taken part in this debate. Before I sum up, I say to the noble Lord, Lord Howell, that I am not against this Bill. The problem we have here is the lack of any detail in it and the lack of any scrutiny once we have that detail, which is what the Constitution Committee pointed out. As the noble Earl, Lord Russell, pointed out, there is a high degree of unanimity around the House that the current situation set out in the Bill in that respect is really not adequate and that we need a greater level of parliamentary involvement in what will be the core element of this Bill: what GBE is going to do.
I take on board the points that the noble Lord, Lord Teverson, made about secondary legislation. I agree, but it is what we have at the moment, so we have little choice but to work with it. I would love to see a change to the way secondary legislation is debated, and it should be amendable, but we have a way to go before we come there.
There were plenty of ideas in this group as to how we might improve the scrutiny. I do not think any of us are wedded to any one of them. I am encouraged by what the Minister says about listening to the Constitution Committee and his belief in parliamentary scrutiny. I therefore hope that we can have some useful and constructive discussions between now and Report on this subject and come up with something that we can all agree on as an appropriate level of parliamentary scrutiny on this most critical aspect of the Bill. If we do not, I am absolutely confident that we will come back to this on Report. For now, I beg leave to withdraw Amendment 51.
Lord Hunt of Kings Heath (Lab)
My Lords, let me begin with Amendment 56 tabled by the noble Baroness, Lady Hayman, and spoken to today by the noble Lord, Lord Ravensdale, and Amendment 56A tabled by the noble Viscount, Lord Trenchard. These amendments propose an addition to Clause 5, which would require the Secretary of State to consult the Climate Change Committee, the National Energy System Operator, Natural England, the Environment Agency, Great British Nuclear, the National Wealth Fund and other relevant people before publishing a statement of strategic priorities.
I pay tribute to the noble Baroness, Lady Hayman, for all the work that she has done and all she has contributed to legislation in the last few years. I also thank the noble Lord, Lord Hamilton, for his rather barbed support in relation to the Government’s response to these amendments. It was not a complete surprise that he does not entirely welcome the Bill, although there will be unalloyed pleasure for my colleagues in Defra at the support that he is giving to our planning reforms, which actually do relate as well to the energy infrastructure and the investment that we wish to see.
The noble Viscount, Lord Trenchard, is particularly focused on nuclear energy and its potential, which I always welcome. Great British Energy and Great British Nuclear are already talking very closely together, and he can be assured that this will continue. In response to the noble Lord, Lord Howell, I say that electricity demand in the future is clearly going to go up hugely over the next 20 to 30 years. If he looks at the clean power action plan, he will see that we really recognise the need to speed up planning consent and connections to the grid. This is fully understood, which is why it is a such an important component. In a sense, this is for the Government to take forward: GBE will have to work within those policies that we are taking forward. It is for the Government to do this, and that is why it is not really reflected in the provisions of the Bill.
Lord Bourne of Aberystwyth (Con)
The same could have been said of Introductions. As I said, it did not intend to go into pig breeding when it set the company up.
Lord Hunt of Kings Heath (Lab)
We will reflect very keenly on that between Committee and Report.
There is no doubt about the argument. We are facing a twin climate and nature crisis. They are inextricably linked. Not only are the Government committed to reaching net zero by 2050 and clean power by 2030, we are also committed to restoring nature—for example, with the Environment Act targets in England to halt the decline in species abundance by 2030—and to effectively protect our marine protected areas as part of our global 30-by-30 commitment.
We know that the UK is one of the most nature-depleted countries in the world, so it is not enough for us to protect or conserve. This is why the Government are committed to restoring nature through such targets, and our related international commitments. The real opportunity available to the UK is to deliver clean power by 2030 in a way that does not simply avoid or compensate for damage to nature, but is constantly innovating to deliver the target in a nature-positive way, such as rewetting lowland peat soils at the same time as constructing new solar farms or creating new wildlife corridors alongside or underneath linear energy infrastructure. The noble Lord, Lord Teverson, referred to that potential earlier in our previous debate.
It is not so much about balancing energy and infrastructure needs but about trying to integrate them, rebuilding our natural infrastructure at the same time as building the new energy infrastructure we need in the 21st century. It is significant that in the Clean Power 2030 Action Plan, the Government have said that we
“will launch an engagement exercise in early 2025 to invite communities, civil society and wider stakeholders to submit their ideas on how government can best encourage nature-positive best practice into energy infrastructure planning and development. Feedback from this exercise will allow government to better understand how we can integrate nature restoration through Clean Power 2030”.
We want Great British Energy to focus on its mission of driving clean energy deployment, but I have listened very carefully to what noble Lords have said today and I understand the point that noble Lords are making about the Crown Estate Bill. I assure noble Lords that we are going to reflect on this between Committee and Report.
Viscount Trenchard (Con)
My Lords, I thank my noble friend Lord Howell for his support for my amendment and all other noble Lords who referred to my amendment in the debate. I appreciated the whole debate, and I am grateful to the Minister for his thoughtful reply. There will be another opportunity to discuss the same kind of thing in a future group, of which he is aware, so I will have an opportunity to return to that. I beg leave to withdraw my amendment.
Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024
Lord Hunt of Kings Heath Excerpts(1 year, 2 months ago)
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Lord Hunt of Kings Heath
That the draft Order and Regulations laid before the House on 21 and 28 October be approved. Considered in Grand Committee on 2 December.