Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

On the Government side of the Committee there is probably a hackneyed new clause 4 quip, but I will not make it. The clause makes provision for the Secretary of State to make regulations under the negative procedure, which will set out who can apply for a licence, requirements that must be satisfied by or in relation to the licence applicant, how the application for a licence must be made and the information that an application must contain any accompanying documents. Additionally the regulations under the clause may require the payment of an application fee, which will be assessed in line with the Treasury’s fees and charges guidance. That is in line with our other licensing regimes such as for oil and gas licensing under the Petroleum Act 1998.

Charles Hendry (Shadow Minister, Business, Enterprise and Regulatory Reform; Wealden, Conservative)

It is a pleasure to serve under your chairmanship this afternoon, Mr. Amess. The Minister will be delighted to know that new clause 4 is in my name, but he will have to wait a little longer for the chance to discuss that. I imagine that it will cause the Labour party as much consternation and debate as the original clause 4.

The clause that we are discussing seems very straightforward. It sets out who may apply for a licence, what requirements must be met in relation to that, the  manner in which the application should be made, the information that should accompany it, and the fee. I wonder, however, whether the Minister has also considered whether it should contain a reference to the appropriate time for which a licence should last. I imagine that there have been discussions about that in his Department. One would clearly expect licences to last for a period of years, but does he have it in mind that they should last for five, 10 or 20 years? Some guidance on that would be helpful.

Also, what about making stipulations with regard to who is responsible for the maintenance of the facility? This would seem to be a good point in the Bill at which to set those out. I should be grateful if the Minister would respond to those two points.

Martin Horwood (Shadow Minister (Environment), Environment, Food & Rural Affairs; Cheltenham, Liberal Democrat)

It is very good to be serving under your chairmanship once again, Mr. Amess, at this clause 4 moment. Perhaps you will permit me to rephrase a question that I asked a little earlier, which is also directly relevant to the clause that we are now considering, about a risk identified in the impact assessment. That is the possibility that the time scale for introduction of the licensing regime might act, in the words of the risk assessment, as a disincentive to developers in the short term. The impact assessment also raises again the possibility that the narrowness of the licences will discourage innovation in storage technology.

Perhaps, bearing those two matters in mind, the Minister will suggest the time scale on which the licensing regime is expected to come into force, and reassure us that there will not be a slow grinding of the wheels of Government, to the point at which the industry becomes disenchanted and frustrated with the current, less adequate regime.

Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

The hon. Member for Wealden raised the question of an appropriate duration for the licence. I imagine that that could vary to an extent, but I am advised that we are talking about quite a long time scale. Licences might possibly typically last for 40 years, or something of that kind. There will be different issues perhaps for carbon capture and storage, which we shall come to. I am hoping to give the hon. Member for Cheltenham some advice on the question that he raised this morning.

I was asked who would monitor the regime, and the answer is that it would be one of our departmental inspectors.

Hugo Swire (East Devon, Conservative)

The Minister has just informed the Committee that licences may be granted for up to 40 years. Presumably the value of that licence will depend largely on what is being licensed. For that period it might vary enormously, in terms of supply, and so forth. What mechanism has been built into the licensing, or indeed the Bill, that would allow the value of the licence to be readdressed at any point while it was in force?

Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

I think that on that one I may need to come back to the hon. Gentleman. There may be an opportunity later to consider that matter.

Our general approach is that once a licence is granted, although certain things may change, we do not want to change existing licences retrospectively. I have heard the question about the possibility that values may change, and I will try to find an opportunity to return to the matter for the hon. Gentleman. I think that I had also better find another opportunity to return to the matter raised by my Liberal Democrat colleague.

Charles Hendry (Shadow Minister, Business, Enterprise and Regulatory Reform; Wealden, Conservative)

I wonder if the Minister will also provide greater clarity on another matter. Is it his expectation that the licences will be tradeable? If, for example, Exxon decides to apply for a licence to store gas in one of these facilities, and then wishes to sell it on to Conoco, could that happen in a straightforward way or would the licence have to be returned to the Government and a new licence issued?

Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

Yes, they will be tradeable in that sense. From my experience of this, through the pilot partnership with the industry, we can see that some of the bigger players are phasing down their operation in the North sea and some of the smaller more enterprising companies are taking over the licences. The hon. Gentleman raises an important point about the regulatory regime that we need to put in place in practice as well as in principle. There is the idea of “use it or lose it”. We need gas storage and it is important that these facilities stay in operation.

Hugo Swire (East Devon, Conservative)

The Minister has gone some way towards answering my original question. By definition, if these licences are tradeable, we will need to establish a value at the time of trade. Will that be up to the free market, or do the Government see themselves as having a role at that time?

Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

It has to be up to the market within the regulatory framework. If the hon. Gentleman is asking whether we would put forward certain ideas about costs and prices, I would say that those are not things for us to decide. Such things are always best left to the market.

The hon. Member for Cheltenham asked what the risks and disincentives were in delaying the legislation. We expect the first application for licences to take place in January. We understand that on the back of our proposals, potential developers are already preparing their applications. I hope that those words reassure the Liberal Democrats that we intend to move very quickly.