Energy Bill [ Lords ] (Eighteenth sitting)

Alan Whitehead Excerpts

Committee stage
Thursday 29th June 2023 Public Bill Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The Minister said, “Watch this space”. It would be very helpful if he were to give us an outline of what the content of the space might actually look like.

[Andrew Bowie]

Far be it from me to spoil the enjoyment for hon. Members! I said this when we debated it last week, and I say it again: we continue to work on this. We continue to look at what more the Government can do to support community energy projects across the United Kingdom, and I will commit to provide an update on the next steps ahead of Report. I hope that is suitable for hon. Members. I do not believe that this new clause would add any value, so I encourage—indeed, I humbly beg—the hon. Member for Sheffield, Hallam to withdraw her new clause.

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Brought up, and read the First time.

[Dr Whitehead]

I beg to move, That the clause be read a Second time.

It is a pleasure to serve under you, Mr Sharma, and I hope we will complete this Committee stage under your chairmanship today. New clause 88 involves a little bit of Energy Bill archaeology. I will explain what I mean by holding up a copy of the Energy Bill as it first appeared. Archaeology is necessary because it first appeared on 6 July 2022—we have been working on the Bill for that long.

Among the 270-odd clauses in the original Bill, clause 161 sought to extend the domestic gas and electricity tariff cap. Under the Domestic Gas and Electricity (Tariff Cap) Act 2018, the tariff cap has a defined life, and the original Bill would have amended the arrangements. The Act also introduced a carefully calibrated procedure to determine how long a cap should last. Ofgem is required to produce an annual report on the tariff cap and, if during that time market conditions have become more straightforward, it can recommend its removal. The report goes to a Minister, who then decides what will happen. This approach started in 2020. If Ofgem reports that market conditions have not returned to normal, the same procedure is carried out again the following year.

That process was time-limited to 2023. Quite clearly, market conditions have not returned to normal, so it is important to extend the mechanism. Essentially, that was what clause 161 in the original Bill did: it extended the arrangements to 2024 and 2025. Again, that was time-limited, with a sunset of 2025. As I recall, that important provision assured the industry and various others that the cap was being actively looked at. That gave a little bit of certainty to the industry, and its reaction was informed by the understanding that a reasonably objective test would carried out for the continuation or otherwise of the price cap.

I will roll forward rapidly to the end of September 2022 and the propitious day on which the right hon. Member for North East Somerset (Sir Jacob Rees-Mogg) became the Secretary of State for Business, Energy and Industrial Strategy. He lost no time in seeking to vandalise this provision by opportunistically inserting a stand-alone schedule to the Energy Prices Act 2022—which it had become necessary to pass—which addressed the enormous rise in prices, what Government intervention might look like and how it could be regulated.

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[Katherine Fletcher (South Ribble) (Con)]

I appreciate that the hon. Gentleman is trying to bring some colour to his remarks, but does he agree that alluding to acts of physical violence in something so important is not a brilliant plan?

[Dr Whitehead]

I would agree if that were not my metaphorical way. Of course I do not believe that the former Secretary of State for Business, Energy and Industrial Strategy is going to take the Minister into a cupboard and do him over; it is a metaphor that I hoped might convey some of the possible lingering influence of the right hon. Member for North East Somerset on our present considerations. I am sure that the Minister will want to put that lingering influence out of his mind when considering what to do today.

After all the work that has been done on getting this clause back into the Bill, I confidently expect the Minister to greet it with acclamation. He does not have to do any work on it now, because it is ready to go. He can proceed with a Bill he can be proud of through its remaining stages in this House.

[Andrew Bowie]

For the record, let me make it absolutely clear that I have only the greatest respect for my right hon. Friend the Member for North East Somerset and that he has never expressed any desire to take me into a cupboard and, metaphorically or not, do me over. We enjoy a very good relationship. Although we disagree on some points of principle, we are broadly in agreement on the general direction of travel that is needed for the betterment of this country. I put on record my thanks for his service in supporting the Government in the various offices in which he served.

I also thank the hon. Member for Southampton, Test for tabling new clause 88. I note that it reflects the clauses that were in this Bill when it was first published in July last year, as he has pointed out. However, I am sure that it will not have escaped his notice that a great deal has happened to energy prices since then. Last September, the Government announced a massive package of support for consumers. As part of the work to deliver that package, the Domestic Gas and Electricity (Tariff Cap) Act 2018 was modified by the Energy Prices Act 2022, which received Royal Assent on 25 October.

Those modifications were made so that the tariff cap could function both as a cap to ensure that prices are efficient and as the reference price for the subsidy payments to households under the energy price guarantee. Although energy prices have now fallen below the level at which energy price guarantee payments are being made, it will remain in force until the end of March 2024 to protect households from price spikes. To ensure that the support rates under the energy price guarantee could be set and delivered effectively and quickly, the Energy Prices Act removed the requirement on Ofgem to carry out a review and to produce a report and recommendation to inform annual decisions by the Secretary of State on whether to extend the cap. As a result, there is now no automatic end date for the cap and the Secretary of State will give notice of when the tariff cap will end, but that does not change the fact that the tariff cap was always intended to be a temporary measure. It remains so, for now; as stated in the Government’s energy security plan, we intend to consult later this summer on the future of the price cap. In the light of my remarks, I hope that the hon. Member for Southampton, Test will feel that he can withdraw the new clause.

[Dr Whitehead]

I thank the Minister for his remarks. Water has indeed flowed under the bridge since the original intentions of the Bill were set out, but I think he has rather missed the point that I was trying to make. We are not saying that there should not be a price cap or that there should be no protection against price spikes and so on, which is what the price cap does at the moment. Nor are we saying that the market has returned to normal. What we are saying is that there was a perfectly good procedure in place, which could work perfectly well under the present circumstances, to give confidence to industry and various others that the price cap would be considered fairly carefully during its progress. That has been replaced by an occult process whereby the Secretary of State just has an idea or does not have an idea.

The whole framework of proper discussion, proper argument, proper reporting and proper consideration has been knocked away. The Minister says that there will be consultation on the future of the price cap at some stage, but I think he will agree that that is not a proper substitute for the clear arrangements that were originally in place under the 2018 Act and that were supposed to be in place under the Bill.

That is the point that we are trying to make: not that under the present circumstances the price cap has somewhat changed its function in terms of being a back-up to other measures that are in place for pricing, but that the long-term issue of the price cap itself was previously under careful consideration and now is not. That is the fundamental difference between the legislation as it was and the legislation as it is now, on a half-baked, un-thought-out basis, in the medium term.

I am both encouraged and disappointed by what the Minister has had to say. We want it on the record that we would like the proper procedures for price cap management to be reinstated. We have produced a method that can and will work, which I think hon. Members will agree is probably superior to a half-promise that something might happen at some stage, with some consideration being given to consultation. On that basis, we would like to press new clause 88 to a vote, so that at the very least we can place it on the record that we think it important and that we are disappointed that the Government do not appear to have taken our argument on board.

Question put, That the clause be read a Second time.

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Brought up, and read the First time.

[Dr Whitehead]

I beg to move, That the clause be read a Second time.

The Committee will be delighted to know that I do not intend to detain it for any length of time on the new clause, which follows on from our earlier debate about the setting up of the independent system operator.

We think something is missing from the otherwise pretty comprehensive and good arrangement for the setting up, organisation and running of the independent system operator, which we completely support; although we would like to see the independent system operator playing more of a system architect role than is presently envisaged, in general we are absolutely for setting up the ISOP in the way that has been described. What ought to follow is at least a consideration of whether the arrangements between the ISOP and the distributed network operators, on which we tabled some amendments at the time, are sufficiently robust to enable a system operator function to operate at all levels of grid delivery. As I said a little while ago, there are decreasing distinctions between the lower-level grid operated by the DNOs and the high-level grid, which is the function of the National Grid ESO at the moment.

The possibility arises that it will be possible—more than possible—to establish regional independent system operators to perform, in conjunction with the ISOP, the same sort of function that is presently envisaged for the ISOP itself. That would be a slightly different function, inasmuch as the regional system operators could be responsible for what is increasingly likely to happen with regional balancing, ancillary services and other such things that are part of the emerging structure of the grid as a whole, as we move from a centralised to a much more decentralised grid arrangement.

RISOs, as I call them, would be able to play a substantial role in that. All new clause 88 suggests is that the Secretary of State produce a report on the advisability of establishing regional independent system operators. I called them RISOs a moment ago, but RISOs are actually duplicating machines favoured by those with left-wing tendencies producing leaflets; these would be RISOPs, which could be established to provide that important link arrangement between the high-level grid and the low-level grid for the future.

That is all, really, as far as the new clause is concerned. It does not require anything earth-moving to take place in the immediate future—just consideration of this arrangement. It may well be that just by raising the matter I will have put the thought in the Secretary of State’s mind that maybe we should consider going in that direction; it is certainly a direction the Opposition would consider going in if our roles on these Benches were reversed. My purpose in tabling new clause 89 was to raise the issue and see what the Minister has to say about it; I certainly do not intend to press it to a vote.

[Andrew Bowie]

For the record, may I point out that it is not just leaflet publishers of left-wing tendencies who are au fait with risograph printers? I have spent many hours standing by a RISO producing leaflets for those of centre-right tendencies.

I may be wrong but, according to my notes, this is the last new clause or amendment the hon. Member for Southampton, Test will speak to, so I thank him and the shadow team for the very collegiate way in which they have proceeded through Committee stage. I look forward to engaging with the hon. Gentleman again on Report and Third Reading, and indeed in the interim, when I am sure we will be corresponding. I thank all hon. Members for their contributions thus far.

New clause 89 speaks to the creation of a new set of bodies to deliver regional system operation and planning, and in many ways repeats the intentions of amendment 97, which the hon. Member for Southampton, Test tabled. As with that amendment, the new clause creates powers relating to the operation of distribution systems.

Ofgem has recently consulted on the future of local energy institutions and governance, with a focus on the creation of regional system planners specifically. That consultation closed on 10 May, and I suggest that this new clause prejudges the outcome of that work.

Alongside Ofgem, the Government will carefully consider the proposals we are consulting on. If we then proposed legislative or licence changes that affected the relationship between the ISOP and distribution networks, any additional functions accruing to the ISOP would be covered by the wording in clause 119(2)(b) and clause 134(3)(a). That is because those clauses allow for other functions to be conferred on the ISOP under, or by virtue of, legislation other than part 4.

I hope that puts the mind of the hon. Member for Southampton, Test at ease and that he feels able to withdraw his new clause.

[Dr Whitehead]

I have no further comments to make, other than to thank the Minister for his comments. There are indeed consultations under way through Ofgem, and I look forward to seeing what those have to say. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 90

Objections by planning authorities to applications for consent under section 36 or 37 of the Electricity Act 1989

“(1) Schedule 8 to the Electricity Act 1989 is amended as follows.

(2) Omit paragraph 2.

(3) In the cross-heading before paragraph 3, omit ‘by other persons’.

(4) In paragraph 3, omit sub-sub-paragraph (2)(a).”—(Alan Brown.)

This new clause would remove the ability of a local planning authority automatically to cause a public inquiry to be held by objecting to an application to the Secretary of State for consent under section 36 or 37 of the Electricity Act 1989, instead leaving Ministers to decide whether a public inquiry should be held.

Brought up, and read the First time.

[Alan Brown]

I beg to move, That the clause be read a Second time.

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[Dr Whitehead]

I also have a 3,000-word speech, but I will not give it today. The Government amendments and clauses are wholly unexceptional, and are essential for the speed of the Bill. I have nothing further to add to what the Minister said.

[Alan Brown]

I will be brief. Amendment 114 is about getting the consent of Scottish Ministers before the passing of regulations. I could have tabled it to any number of previous clauses, but this is the most appropriate clause for it to relate to, because it relates to the regulations made under the whole Bill.

There has been talk of collegiate working—the two Governments working together—and the Minister said that he wants to find a different process, but there remain concerns that unless there is a firmed-up process, there is a risk that, somewhere down the line, policies and regulations will be proposed against the consent of Scottish Ministers.

The Scottish Government support the Bill; we are working together in these policy areas. It is not about trying to give the Scottish Government some sort of veto but about working together and ensuring that processes are in place that allow for not just consultation but taking the advice and wishes of the Scottish Government on board.

I know that the word “consent” always makes the Westminster Government very nervous, because they think it gives too much power to the Scottish Parliament, but it is not about that. It is not about political fights; it is about working together and ensuring that the wishes of the Scottish Government in respect of energy matters and considerations are taken on board.

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[Andrew Bowie]

Thank you, Mr Sharma, for your excellent chairing of the Committee this morning, and thank you to Mr Gray, Dr Huq and Ms Nokes for their equally excellent chairmanship over the course of the Committee.

I pay special tribute to the Clerks and to my officials for their tireless work on what is quite a hefty piece of legislation. I also thank Members on both sides of the Committee for the constructive, thoughtful and insightful debate on this landmark Bill. I have already thanked the shadow Minister, the hon. Member for Southampton, Test, for his overall support, and for our way of working in Committee, which has been collegiate and good mannered—well, not good mannered. [Interruption.] Bad mannered! [Laughter.] Although we have not agreed on every detail, I thank him for his knowledgeable contributions.

The Energy Bill will provide a clear, more affordable and more secure energy system. It will liberate private investment, including in technologies, reform our energy system so that it is fit for purpose, and ensure its safety, security and resilience. I look forward to working with everyone present to take the Bill through Report stage and on to Royal Assent.

[Dr Whitehead]

I associate myself with the Minister’s remarks concerning your excellent chairing, Mr Sharma, and that of your colleagues the hon. Member for North Wiltshire (James Gray), my hon. Friend the Member for Ealing Central and Acton (Dr Huq) and my constituency neighbour the right hon. Member for Romsey and Southampton North (Caroline Nokes). I hope that you can convey to them the thanks of all Committee members for their excellent work in bringing the Committee to its conclusion.

I also thank, beyond the normal level of thanks, the Committee Clerks, who have been of tremendous assistance to me in bringing forward the sinews for debate by way of the amendments and new clauses, all in perfect order and debated accordingly. In my relatively long experience of taking Bills through the House, their work has been way beyond the call of duty, for which I am very grateful to them.

I believe the Minister is the record holder of fastest House of Commons runner in the London marathon ever.

[Andrew Bowie]

No—just in one year, I am afraid.

[Dr Whitehead]

I think it was ever, but perhaps we should have a rerun. It is rather appropriate that we have got through this marathon Bill in good order and in good time. The Minister is very substantially responsible, not least with his speed-reading skills, for managing us through that lengthy process, and I thank him for that. I also thank him for his good humour, collegiality and careful consideration of the points that we have put forward.

We of course do not agree with everything that has come out of the Committee, and we will pursue some of those things during the Bill’s later stages, but I hope that I can say on behalf of the whole Committee that, overall, we have between us delivered a Bill that fundamentally we pretty much agree on through to its next stages in relatively good order. That is not always the case in this place, and it is something we can all be quite proud of. That is the end of my thanks. I hope that everyone will be happy with having the afternoon off, now that we can move forward to Report stage.

[The Chair]

Not yet—in a few minutes. I call Alan Brown.