Andrea Leadsom
Main Page: Andrea Leadsom (Conservative - South Northamptonshire)
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
I beg to move, That this House agrees with Lords amendment 7A.
Mr Speaker
With this we will consider the following:
Lords amendments 7B to 7S.
Lords amendment 7T, and Government motion to disagree.
Lords amendments 7U to 7W, 6A and 6B, 8A to 8C and Lords amendment 2A.
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendment 2A. If the House agrees it, I will cause an appropriate entry to be made in the Journal.
Andrea Leadsom
To deliver on our manifesto commitment, the Government remain determined to bring forward the closure of the renewables obligation to new onshore wind in Great Britain. This commitment is based on plans that were signalled well before the general election last year, and that should not have come as a surprise to hon. Members or to industry.
Back in March 2015, my right hon. Friend the Member for West Suffolk (Matthew Hancock), then Minister for Energy and Climate Change, stated in this House:
“We have made it absolutely clear that we will remove onshore wind subsidies in the future”.—[Official Report, 6 March 2015; Vol. 293, c. 1227-28.]
Prior to that, in December 2014, the Prime Minister, speaking of wind farms, stated in the House of Commons Liaison Committee:
“we don’t need to have more of these subsidised onshore. So let’s get rid of the subsidy”.
We have been absolutely clear all along. The Government’s policy is to bring forward the closure of the renewables obligation to new onshore wind.
To protect investor confidence, the Government have proposed a grace period for those projects meeting certain conditions as at 18 June last year, as outlined in the statement by my right hon. Friend the Secretary of State for Energy and Climate Change on that date. The grace period provisions are intended to protect those projects that, at 18 June last year, already had relevant planning consents; a grid connection offer and acceptance of that offer, or confirmation that no grid connection was required; and access to land rights.
Simon Hoare (North Dorset) (Con)
As my hon. Friend said before setting out that list of warnings, and as we discussed in Committee, the proposals were in our manifesto, which commanded the support of the British people. Does she agree that we are again on thin ice, with the other place trying to interfere with the Government’s agenda, which has already been voted on by the British people?
Andrea Leadsom
Yes, my hon. Friend is exactly right. This is a manifesto commitment. Peers should listen to the manifesto commitment of this Government and respect it; that is normal practice, as I understand it.
The Government have taken action on a key concern raised by industry about an investment freeze. The clauses are therefore intended to ensure that projects that meet the core grace period criteria, and which were intended to be able to access the grace period as proposed, are not frozen out of the process. Since proposing this measure, the Government have continued to receive representations from industry suggesting that it supports and welcomes the proposals to address the investment freeze. The Government have also put in place a provision to ensure that an existing grace period for delays caused by grid or radar works will continue to apply.
We now need to get on and complete this Bill. As the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) said in Committee, speaking for the Scottish National party:
“We agree that swift passage of the Bill with clear and consistent RO grace period provisions is needed in order to provide certainty to investors in the onshore wind sector as quickly as possible. The renewables industry fears that the longer legislative uncertainty over RO closure persists, the greater the risk of otherwise eligible projects running out of time to deliver under the proposed grace periods.”––[Official Report, Energy Public Bill Committee, 2 February 2016; c. 217.]
He is right.
In addition, these clauses give the Secretary of State a power to make regulations that would prevent electricity suppliers in Great Britain from using Northern Ireland renewables obligation certificates relating to electricity generated by new onshore wind stations and any additional capacity added to existing wind stations after the onshore wind closure date. This is a backstop power that would be used only if Northern Ireland did not close its RO to new onshore wind on equivalent terms to Great Britain.
Since our last debate on this issue, I am pleased to say that the RO in Northern Ireland has closed to large-scale new onshore wind stations with a capacity above 5 MW with effect from 1 April 2016. The Northern Ireland Executive are currently consulting on closing to stations at 5 MW and below.
Lady Hermon (North Down) (Ind)
On the response of the Northern Ireland Executive, we are going into Assembly elections in Northern Ireland, so will the Minister confirm that this is almost too late for the present Northern Ireland Executive? She wants the Bill to be rushed through and completed, but we will not have a running Executive in Northern Ireland until at least a fortnight after the Northern Ireland Assembly elections.
Andrea Leadsom
I do not agree that we are rushing the Bill through; there has been an enormous amount of time for consultation and discussion. As I said, the Northern Ireland Executive are consulting on closing the RO to stations at 5 MW and below. I can assure all hon. Members that the Government continue to engage with Northern Ireland with a view to effecting closure on equivalent terms to Great Britain.
Since our last debate on this policy in this House, the Government have introduced two further small changes to the Bill. These will provide for the provisions on the early closure of the RO to new onshore wind in Great Britain, the related grace period provisions, and the backstop power relating to the RO in Northern Ireland to come into force on the date that the Bill receives Royal Assent. Amendments 6A to 6B, 7A to 7S, 7U to 7W and 8A to 8C adjust the early closure date, previously 31 March 2016, to the date of Royal Assent. These changes are made in various places throughout clauses 79, 80 and 81, and to both the grid or radar condition and the investment freeze condition.
I was very clear in our last debate on this issue, as was the Under-Secretary of State for Energy and Climate Change in the other place, Lord Bourne. The Government do not intend to backdate these provisions.
Before I speak to Lords amendment 7T and the Government’s motion to disagree, let me again say that the Government remain committed to delivering our manifesto pledge to end new subsidies for onshore wind. The final policy, which was agreed at our last debate in this House, strikes the right balance between protecting consumer bills and addressing the concerns of the industry.
The Government do not agree that it is appropriate to include the provision in Lords amendment 7T. The Government want this part of the Bill returned to the state in which it left this House last month. The amendment inserted into the Bill in the other place would allow projects that did not have formal planning consent as of 18 June last year into the RO beyond the early closure date. That would include projects that had an indication from a local planning authority that they would receive planning consent, subject to a section 106 or section 75 agreement being entered into. It would also include projects where the local planning committee was minded to approve the planning application before 18 June 2015, but planning permission was not issued until after that date. To be clear, those projects did not have planning permission as at 18 June last year, so they do not meet the grace period criteria proposed by the Government.
Andrea Leadsom
The hon. Gentleman will be aware that the amendment is likely to reduce the predicted savings from early closure by something in the region of £10 million per annum, which is a significant figure, given that early closure of the RO is expected to save around £20 million a year in a central scenario, and as much as £270 million a year in the high scenario.
John Redwood (Wokingham) (Con)
Does the Minister agree that this was one of the most popular policies in the pretty popular manifesto we put to the electorate? We therefore need to get on with implementing it, and the other place should recognise that this issue arose out of the election.
Andrea Leadsom
My right hon. Friend is exactly right: this is a key, popular manifesto commitment, and we are determined to implement it, as we promised the voters of this country we would last May.
Let me turn briefly to amendment 2A, which was agreed in the other place. The amendment simply seeks to ensure that the function of determining whether an oil field project is materially complete can be transferred to the Oil and Gas Authority. That function sits outside chapter 9 of the Corporation Tax Act 2010 but elsewhere within part 8, so it does not fall within the definition of “relevant function” under clause 2(6) of the Bill. It therefore cannot be transferred from the Secretary of State to the OGA by regulations made under clause 2(2). The amendment simply removes the reference to “Chapter 9 of” from the reference to part 8 of the 2010 Act in clause 2(6), ensuring that this important function can be transferred to the OGA. The amendment is purely technical, and seeks to put beyond doubt that all key oil and gas taxation functions can be transferred to the OGA once it becomes a Government company, as we have always intended.
Dr Alan Whitehead (Southampton, Test) (Lab)
The amendments we have received from the other place make a number of changes to the Bill. In most instances, as the Minister mentioned, those relate to the commencement of the closure of the RO. That is essentially because of the Bill’s progress through Parliament and the potential charge of retrospectivity against the Bill. It is good that the issue has been rectified, and that the Government have confirmed that they do not intend to backdate the closure of the RO.
However, those changes point to the issue raised in amendment 7T, with which the Government have a motion to disagree. We need to be clear that the amendment is not saying that changing the closure date for the RO for onshore wind is wrong, although I continue to contend that it is. Contrary to the impression the Minister has given this afternoon, developers of projects did not realise that the closure date would be earlier than previously thought. Indeed, the so-called warnings before the general election, which she mentioned, were not about the early closure of the RO, but about future funding for onshore wind in general. Developers of projects knew that the RO would come to an end in March 2017, and many had spent several years—a long period—in the development process before the warnings were issued, and before the policy was put forward in the manifesto and, subsequently, the Bill. Having planned on the basis of the notion that the RO would come to an end, they found out very late in the day that the goalposts had been arbitrarily moved, and that their investment was lost overnight as a result.
Nor is the amendment in any way contrary to manifesto commitments; it is not about the principle of the early closure of the RO, but about the grace periods that follow from that closure process. It is not saying that there should not be grace period exceptions for schemes that, for various reasons, might fall foul of the new, arbitrary cut-off date. By highlighting a small number of projects that have fallen foul of the cut-off date for very specific reasons, it is saying that grace-period schemes should be built on a reasonable level of equity and fairness, and should work within an understanding of proper reasons for exemption; they should not simply impose a few extended, but nevertheless still arbitrary, cut-off dates for projects.
Lords amendment 7T highlights a particularly egregious inequity in the grace-period scheme. This involves schemes that have, even according to the new guidelines laid down in the Bill process, done the right thing throughout by seeking and securing local support. As the Government said earlier in the passage of the Bill, it was to be the sine qua non of permission for the development of any onshore wind in the future that local communities should have the final say in decisions; schemes, it was said, should obtain support, perhaps through local planning approval, and should not, for example, seek to win an appeal on the basis of national determination, having been turned down at local level.
The schemes covered by the amendment fit exactly that description. They have determinedly gone through the local process and engaged with it, rather than standing back and waiting to progress through an appeal. They have won local community support, in each instance through the granting of a planning decision by the local authority. The only issue is that, having gone through that often lengthy process of local consultation, they find that the successful, locally supported outcome has, at the stroke of a pen, effectively been turned into refusal. That has happened because the final planning certificate has not arrived by the cut-off date because of issues relating not to the permission, but to details of section 106 agreements on community benefit or similar issues, or to section 75 agreements in Scotland—that is, issues that arise not as part of the agreement process, but because the agreement has been reached. As these schemes could not produce a final, formal planning certificate by the arbitrary date of 18 June, the scheme as a whole was lost.
Here is the timetable of one such scheme, the Twentyshilling Hill wind farm in Dumfriesshire. The planning application was initially made on 15 March 2013 —a long time ago. It was approved by a planning committee, subject to a section 75 agreement, on 16 December 2014. It was not the fault of the wind farm applicant that the council took a few months to settle the section 75 application. Even so, the application was agreed on 17 June—again, before the cut-off date. However, despite the agreement being public and on the council website, the final certificate did not arrive until 1 July, making it null and void in the Government’s eyes, as the Minister has stated.
In retrospect, it might have been wiser for those and other developers not to take too much time on, or give too much attention to, local agreement, but to instead precipitate an appeal that they might have won. Indeed, when developers have done just that and the appeal decision has arrived after the cut-off date of 18 June 2015—we heard of such instances during the passage of the Bill—it has been accepted because of a provision relating to the grace period. The projects are deemed to have been okay all along and are allowed to proceed. That is frankly perverse, and it falls seriously short of the test of reasonableness and equity that ought to inform any grace period arrangement.
Lords amendment 7T relates to a small number of cases and seeks to restore a semblance of equity to the process. It is based on the principle that the Government themselves promoted as the basis for decisions on onshore wind applications. It is a principle for the future that, incidentally, Labour supports.
I shall explain the equity. If a local planning committee found in favour of a planning decision before 18 June, and the decision was arrived at via a process of consultation and community acceptance of the application, it should be covered by the grace period provisions. This small amendment would affect only about half a dozen schemes. In the overall scheme of things, it would make an insignificant inroad into levy control framework financial provisions, as far as the RO is concerned. It would, however, place a much-needed patch of equity on the grace period structure, and perhaps point the way to addressing seriously a future issue. That issue is this: are the Government intent on ensuring that onshore wind will be built in the future—it is, after all, the cheapest and most cost-effective renewable available—if local communities support the proposals, or do they intend to use national clout to override local wishes in pursuit of an overall closure of onshore wind, at least in England?
Accepting the amendment and finalising the Bill in this way would go a long way to restoring a principle that was supposedly central to the process for the future, and it would demonstrate to local communities that they really will be able to decide and not have their local wishes snuffed out by a fiat from the centre.
Andrea Leadsom
With the leave of the House, I shall respond to the debate. The Energy Bill will enact our manifesto commitments in two key ways. It will create the Oil and Gas Authority, which provides part of our continued support for North sea oil and gas. It will also implement the recommendations of the review by Sir Ian Wood, and we are doing everything we can to ensure the long-term survival and thriving state of this critical UK industry.
The North sea oil and gas industry has been the UK’s largest industrial investor for many decades and has paid billions of pounds in corporation tax on production. However, as the basin matures, oil and gas become more difficult to access. We cannot and must not accept any delay in completing the Bill, because we need to give the Oil and Gas Authority the powers it needs to maximise the economic recovery of the UK’s remaining oil and gas reserves. Industry and Government share the same ambitions and are working very closely together to manage the remaining resources effectively and efficiently.
I find it very disappointing that Opposition Members, who should know better, have suggested that by adding a mere £10 million extra per year to consumer bills, we can somehow achieve our aim of setting up the Oil and Gas Authority early. They should be ashamed of themselves. They should be supporting the Bill’s speedy conclusion to Royal Assent for the sake of the oil and gas industry they all profess to support so enormously.
On the delivery of the Government’s manifesto commitments on onshore wind, we promised to end new subsidies for onshore wind and to ensure that local people have the final say on where onshore wind is built. Opposition Members suggest that just because there is local agreement, it is fine to add to the bills of all consumers across Great Britain, but that is simply not the case. It is our duty as consumer champions—at least on the Government Benches—to keep down the cost to consumers, and that is what we will do.
Onshore wind has deployed successfully to date and is projected to meet our planned range of 11 to 13 GW by 2020, but we do not want to continue to provide subsidies where they are no longer necessary and where they are simply adding to the costs for energy consumers. We must seek the right balance between each of our three competing priorities: to keep the lights on; to keep bills down; and to decarbonise at the lowest possible price. Above all else, we want Members right across the Chamber to support these amendments so that we can get the OGA—