Amendments made: 48, page 2, line 39, at end insert—

“( ) Schedule 1 to the Oil Taxation Act 1975,”

This amendment adds functions under Schedule 1 to the Oil Taxation Act 1975 to the list of functions that can be transferred to the OGA under clause 2. It is likely to be used to transfer the function of determining oil fields under paragraph 1 of that Schedule.

Amendment 49, page 2, line 41, at end insert—

“( ) Chapter 9 of Part 8 of the Corporation Tax Act 2010,” —(Andrea Leadsom.)

This amendment adds functions under Chapter 9 of Part 8 of the Corporation Tax Act 2010 to the list of functions that can be transferred to the OGA under clause 2. It is likely to be used to transfer the function of determining cluster areas under section 356JD of that Act.

Title

Amendment made: 51, line 8 leave out from “power;” to “and” in line 10.—(Andrea Leadsom.)

This amendment is consequential on the removal of the provision about emission trading schemes from the Bill in Public Bill Committee.

Our consideration having been completed, I will now suspend the House for no more than five minutes in order to make a decision about certification. The Division bells will be rung two minutes before the House resumes. Following my certification, the Government will table the appropriate consent motion, copies of which will be made available in the Vote Office and distributed by the Doorkeepers.

Sitting suspended.

On resuming—

I can now inform the House that I have completed certification of the Bill, as required by the Standing Order. I have confirmed the view expressed in my provisional certificate issued on 9 March. Copies of my final certificate will be made available in the Vote Office and on the parliamentary website.

Under Standing Order No. 83M, a consent motion is therefore required for the Bill to proceed. Copies of the motion are available in the Vote Office and on the parliamentary website, and have been made available to Members in the Chamber. Does the Minister intend to move the consent motion?

indicated assent.

Under Standing Order 83M(4), the House must forthwith resolve itself into the Legislative Grand Committee (England and Wales).

The House forthwith resolved itself into the Legislative Grand Committee (England and Wales) (Standing Order No. 83M).

[Mrs Eleanor Laing in the Chair]

There will now be a debate on the consent motion for England and Wales. I remind hon. Members that all Members may speak in the debate but, if there are Divisions, only Members representing constituencies in England and Wales may vote on the consent motion. I call the Minister to move the consent motion for England and Wales.

I beg to move,

That the Committee consents to the following certified clause of the Energy Bill [Lords].

Clause certified under Standing Order No. 83L(2) as relating exclusively to England and Wales and being within devolved legislative competence.

Clause 78 of the Bill as amended in Committee (Bill 128).

The consent motion stands in the name of my right hon. Friend the Secretary of State for Energy and Climate Change, as set out in the written ministerial statement tabled on 10 March. Nothing has changed since the Bill was introduced. I urge hon. and right hon. Members to support the consent motion.

Question put and agreed to.

The occupant of the Chair left the Chair to report the decisions of the Committee (Standing Order No.83M(6)).

The Deputy Speaker resumed the Chair, decisions reported.

Third Reading

Queen’s and Prince of Wales’s consent signified.

I beg to move, That the Bill be now read the Third time.

This Government are focused on delivering measures that support our long-term plan for secure, clean and affordable energy supplies. This Bill puts in place key manifesto commitments to achieve those objectives—first, by meeting our commitment to support the development of oil and gas in the North sea. The Bill provides the Oil and Gas Authority with the direction and powers it needs to be an effective regulator and to maximise recovery of resources in the North sea to the benefit of Britain’s energy security. Secondly, the Bill meets our commitments to ending new public subsidies for onshore wind and giving local people the final say on wind farm applications. In doing so, the Bill will protect bill payers by helping to control the costs to the public of support for renewable energy.

Let me take those in turn, addressing the action we have taken since the Bill’s Second Reading in January, before touching on other measures in the Bill. As I set out on Second Reading, amendments made in the other place sought to expand considerably the objectives of the Oil and Gas Authority. Our view is that this would dilute the focus of the OGA at a crucial time for the oil and gas industry. This House has reinstated the OGA’s original principal objective for maximising economic recovery. Both the industry and the unions are agreed on that. The OGA must have clarity on its primary objective. The Bill as it now stands provides that.

I set out our intention on Second Reading to re-introduce clauses on onshore wind that were removed in the other place. This was a clear Government commitment, and I am pleased to see those provisions put back. Let me be explicit: this Bill enacts a manifesto commitment. Clause 79 helps to implement that commitment to end new public subsidies for onshore wind. Onshore wind has deployed successfully to date, but without control there is a risk of over-deployment beyond the range we have set for 2020—the range that we consider affordable. Over-deployment could add extra costs to consumer bills or reduce the amount of support available to less mature technologies such as offshore wind that need help to bring their costs down, just as public subsidies have brought down the costs of onshore wind. To protect investor confidence, we have inserted clause 80, which sets out in legislation the grace period for those projects meeting certain conditions as of 18 June last year. That allows such projects to continue to seek accreditation under the renewables obligation after the early closure date.

I have also introduced a clause relevant to Northern Ireland. It remains my position that consumers in Great Britain should not bear the cost of Northern Ireland providing additional support to onshore wind. We have been clear about that throughout the process. The intention of the backstop power is to ensure that, should Northern Ireland chose to provide additional support for onshore wind, consumers in Northern Ireland, not Great Britain, will bear the cost.

The Government are committed to the Climate Change Act 2008 and our target to reduce emissions by 80% by 2050. We will meet our obligations and responsibilities by setting the fifth carbon budget by the end of June this year, covering the period 2028 to 2032. As the Committee on Climate Change has said, while we are on course to meet the second and third carbon budgets, the fourth carbon budget will be tough to achieve. We will set out our proposals for meeting our targets in our new emissions reduction plan. Our working assumption is that this will be published at the end of the year. Work on the fifth carbon budget is well under way across Government and has been progressing for over a year.

I understand the intentions of those who have sought to amend the Bill to change the way we count carbon for the purposes of the fifth carbon budget, and of course it is right that we keep our accounting practices under review, but I am afraid that accepting such an amendment to the Bill this far into the fifth carbon budget process would have risked serious delay, at a time when the UK should be showing clear, decisive leadership in the aftermath of the Paris climate change conference.

Before I conclude, I wish to express my thanks to those who have supported the proper scrutiny of the Bill. First, I give thanks to my team on the Front Bench: the Minister of State, who has expertly steered the Bill through the House, and Lord Bourne for his management of the Bill in the other place. I would like to thank my hon. Friends the Members for Skipton and Ripon (Julian Smith), for Blackpool North and Cleveleys (Paul Maynard) and for South East Cornwall (Mrs Murray) for their excellent contributions and support. We are very grateful.

Let me also express my gratitude to Opposition Members for their measured approach to the scrutiny of the Bill. It is fair to say that there have been moments of disagreement, but we have also agreed on many issues, including the need swiftly to complete the work started in the previous Parliament to implement fully the recommendations of the Wood review. I therefore thank the hon. Members for Wigan (Lisa Nandy), for Southampton, Test (Dr Whitehead), for Norwich South (Clive Lewis), for Aberdeen South (Callum McCaig), and for Coatbridge, Chryston and Bellshill (Philip Boswell) for their considered scrutiny. I am also extremely grateful to my hon. Friends for their participation in our proceedings and in discussions both in and outside the Chamber, which has been very helpful.

During the passage of the Bill, my colleagues and I have listened carefully, and, where appropriate, have made amendments or added details to provisions. However, when it comes to the fundamental purpose of the Bill, we have stood firm on our commitments, and we intend to continue to do so.

With the important exception of its provisions relating to the North sea industries, the Bill has absolutely nothing to say about the major energy challenges that we face. It constitutes a missed opportunity to mend our broken energy market, and to make good the promise that the Prime Minister delivered four years ago when he told the House that he would legislate to put every household in Britain on to the cheapest energy tariff. It is extraordinary that, during the Bill’s passage, we have learnt that that broken promise has cost Britain’s households an extra £1.7 billion every year, and that, once again, an Energy Bill led by this Government has let the energy companies off the hook.

Despite our best efforts, the Bill is also silent on the growing risk of power shortages. That is astonishing, given that official figures from National Grid show that next winter Britain could be forced to rely on back-up measures and imports from abroad just to keep the lights on. We sought to address that in Committee, especially in view of the doubt that has been cast over Hinkley Point C, the failure of which would blow a major hole in the Government’s energy policy. Where is the plan B? It is not in this Bill.

Against a background of failure—the failure to get new power stations built—it is a great shame that Ministers rejected our attempts to amend the Bill in order to correct that failure and provide incentives for the building of a number of new gas plants by changing the design of the failing and expensive capacity market scheme. Our proposals would also have had the benefit of ending the absurd practice of increasing household energy bills to provide generous handouts for dirty diesel generators. Now, however, there is nothing in the Bill that will help to address the power crunch and secure the investment in the new power stations that we so urgently need.

Will the hon. Lady remind us why, when Labour was in office for all those years, it made no decisions to put in new capacity?

The right hon. Gentleman is wrong. As a matter of fact, he is wrong about a number of other things, but I will stick to the point that he has just raised. It was a Labour Government who initiated the new nuclear process for Hinkley Point C, but, six years after Mr Cameron became Prime Minister we have seen no further progress. In fact, the only new gas station that has appeared under the present Government was initiated and commissioned by the last Labour Government.

Remarkably, the Bill will actually make our energy security position worse. It seeks to shut down, a year early, a major energy investment scheme that has been helping to ensure that wind farms are built. Wind farms already provide a substantial amount of electricity—enough power for more than 8 million homes every year—but, because of their ideological crusade against green energy, the Government do not want to increase their number even if that means that they are sending our power supply into the red. [Interruption.] Ministers can protest, but the reality is in front of us. It is there for us all to see—not just Labour Members, but Ministers’ constituents, who will pay the price for it. The Government will pursue their proposal even if it means retrospectively blocking projects whose development is well advanced and even if it means ruling out one of the cheapest energy options that are available to us, thus breaking their manifesto promise to cut emissions as cheaply as possible.

The aim of every one of our amendments has been to attract new investment in new energy projects, to create jobs and to improve our energy security, but the Government have rejected all of them. Energy UK, the trade body that represents businesses across the sector, recently called for more clarity from the Government about what was expected from companies on reducing carbon pollution. It stated:

“It is essential the industry gets a clear signal of the focus, direction and speed of travel to 2030 and beyond.”

It is hardly surprising that Energy UK wants more clarity, because while Ministers talk about their action on climate change, they are simultaneously dismantling the clean energy schemes that could help to address the problem. We proposed to amend the Bill, in response to calls from business leaders, by requiring the Secretary of State to offer clarity on the direction and speed of emissions reduction to 2030, but the Government rejected our proposals. Together with other parties from across the House, we tried to close a loophole that will enable Ministers to square this circle through carbon accounting tricks, but that move was also rejected. This all means more uncertainty for investors, rather than less.

I welcome the fact that the Government have accepted the principle, put forward by my right hon. Friend Edward Miliband, that we must ultimately build a carbon-neutral economy. I welcome the spirit in which they accepted that principle and the basis on which they accepted it, which was that we need to develop a strategy that will give a clear signal to the top businesses that are supporting my right hon. Friend’s campaign as well as to the leading environmental campaigners who have shown that energy policy need not be contentious.

The truth is that few people in this country beyond those on the Conservative Back Benches doubt the need to act on emissions. Only today, NASA reported shocking levels of global warming, and one top scientist said this morning that we are in a “climate emergency now”. Despite the Energy Secretary’s words today, however, people will be left scratching their heads over what exactly the Government’s plan is to make good on their new commitment and on the promises that the Prime Minister made at the historic Paris summit in December.

Let us take carbon capture and storage as an example. The Government’s own advisers say that without this cutting-edge technology the cost of achieving emissions reduction in Britain could double. Some experts say that, without it, making good on the Paris agreement might even be impossible. As my hon. Friend Alex Cunningham pointed out, however, the Chancellor has shamefully pulled the rug away from businesses that were on the cusp of pioneering CCS projects in Yorkshire and Scotland. Investment and jobs have gone, and the possibility of a new maritime industry in our North sea has been put on hold. We proposed that a comprehensive new CCS strategy should be adopted within a year to undo the damage caused by that decision but, despite strong cross-party support, our reasonable proposal was rejected.

When the Bill arrived here from the other House, it was in a much better state than we now find it in. That makes it difficult for us to support it this evening, but the low oil price means that our North sea industries need and deserve our support. We have all benefited from the revenues produced by North sea oil in better times, and we owe it to those industries to support them now that times are hard. The Bill contains important measures that act on the recommendations of the Wood review which can support workers in this crucial sector of our economy.

Yesterday, with my support, colleagues in Scottish Labour rightly called for the government to go further and to invest directly in strategically important offshore assets in the North sea. I hope that the Energy Secretary will support that call. The fact is that substantial reserves remain unexploited and it is essential that we work on a cross-party basis to support investment in those untapped opportunities. For that reason alone, we will not oppose the Bill tonight.

However, I say to the Energy Secretary that the poverty of ambition encapsulated in the Bill is increasingly clear, and that it is increasingly untenable to dismantle plan A without putting a plan B in its place, to duck the challenges of the coming century and to set Britain’s face against the opportunities that that century presents. I should like to thank my hon. Friends the Members for Southampton, Test (Dr Whitehead), for Norwich South (Clive Lewis) and for Brent North (Barry Gardiner). Together, we will look to Ministers to do much better than this in future.

I welcome the Bill because it attempts to deal with some of the damage that has accumulated in recent years as a result of the policies of the Labour Government, who neglected the need for more energy and security of supply, and some of the European Union’s interventions.

I welcome the cross-party attempts to breathe some life into the North sea industry, which has been crucial over many years. As many have pointed out, it is going through a troubled time and anything that can be done by the Oil and Gas Authority or directly by the Government is to be welcomed. For example, now is a good time to remove the petroleum revenue tax, which is a rather silly, unpleasant tax introduced by the Labour party for internal political reasons near the beginning of activities in the North sea. It yields no revenue at the moment, so it would be a good time to get rid of it to show that we want normal profit and revenue taxes, not super-taxes, on North sea activities when the good times return. I hope that the Chancellor will bear in mind the needs of the industry in his forthcoming Budget, because things could be done on tax to promote more investment against the background of a weak oil price, which is no great incentive for making new things happen.

I hope that the Bill will contribute towards taking security of supply seriously. The Government regularly tell us that they want our country to be secure—an aim that I hope is shared across the Chamber. An important way for a country to become more secure is through controlling its own energy resources. The United Kingdom is a relatively privileged country geographically, because it has substantial reserves of oil, gas and coal. We have recently discovered the likelihood of new gas reserves onshore, which should be available to exploit sensibly. We also have plenty of water around that allows us to have hydro-type renewables, which are genuinely renewable and continuously available, unlike the unreliable wind, about which we had a good debate earlier. As the Government go about implementing the Bill, I trust that they will have security of supply at the forefront of their mind.

Where does the security of supply lie in the Prime Minister flying to Paris to ask the French President to fund a nuclear power station that will supply 7% of our electricity, when France clearly will not do so?

That must be worked out between the contracting parties. I have not been urging them to do that, but I wish them well in whatever negotiations are under way. I accept that if they can find a way of producing relatively sensibly priced power on a continuous basis from a nuclear power station, that has all sorts of advantages for the security of supply. I assume that they will ensure that all the technology and the ability to control, repair and maintain the station will rest in the United Kingdom, because we can have true security only if we control the technology and have the industrial resources to be able to build and mend the facility being created. We must also bear that in mind for weapons procurement. If we want a secure country, we need an industry that can support it and is capable in adversity of seeing us through. We cannot rely on imports for everything, and we are already relying too much on imports in the crucial area of energy, so I hope the Bill will help us to stop thinking that we can automatically rely on French electricity and Russian gas indirectly through the European system.

On that point, after France, the Chancellor of the Exchequer seems bent on handing over the entire British nuclear industry to China.

I trust not. I have not seen all the documents, but I am sure that we will see more of the detail in due course as and when more decisions are taken. If my right hon. Friend the Chancellor is negotiating such a deal, I urge him to ensure that we have control of and an understanding of the technology. I see from the nods from my Front-Bench team that that is exactly what they have in mind. A country does not have secure power if it is dependent on those abroad to maintain a power station and does not understand how to mend it, improve it or make it function at a crucial moment. Of course we need to probe to make sure that the Government are doing the right thing, but we get that security only if we control the technology.

Let me return to the point about security vis-à-vis imports and our own capability. We are becoming too dependent on imported power, and we have to remember that if our imports are to come from the European continent, that area is short of energy in general, and it has a policy to make energy scarce and very expensive. The west of the continent does not get on well with Mr Putin, yet indirectly it relies on his gas, and that is not a strong strategic position to be in. I want our country not to be in any way beholden indirectly to Putin’s gas or to the general network on the continent, which is clearly weakened by the necessity to have Russian supplies in the eastern part of the system. The UK, as an island nation, with access to such riches both onshore and offshore, and with the ability to generate more genuine renewables that are continuously available, should be able to have a secure supply and sufficient capacity in reserve when need arises.

We wish to be a greater industrial power than we are. We are the fifth largest economy in the world but we are very dependent on a very big service sector and our industrial sector has, under Governments of all persuasions in the past 30 years, shrunk as a proportion of it. We still have some great companies and some great technology but we need more of them and we need to broaden the industrial base. In order to have that capability in Britain, so that we can make our own power stations, generators and engines, we need to make sure that we have sufficient and cheap energy to fuel those factories, forges, facilities and blast furnaces.

We meet tonight against the backdrop of our steel industry gravely at risk. One of the main contributory factors to the risk to our steel industry is scarce and dear energy; there are also chronic problems with steel prices and Chinese competition now, but this began with an energy problem. We cannot hope to be one of the big world forces in energy-intensive industries if we do not have more plentiful energy at cheaper prices.

I wish the Bill and the Secretary of State well. The Government must have as their fundamental aim security of supply, because without secure energy a country is very limited in its foreign policy options and has to tailor its diplomacy accordingly. I see us becoming too dependent. We wish to correct our balance of payments, and getting into energy surplus would not only be a very good contribution to that aim, but would strengthen our diplomatic and political security. As we wish to reindustrialise, we need more and cheaper energy. We are not going to get that on a diet of wind farms and speculative renewable technologies that are not yet available, and are very expensive and difficult to scale up. We can get that affordable energy if we extract the oil, gas and coal, and process it in an environmentally friendly way to the extent that can be achieved, if we have more gas turbine power stations and more reliable baseload power stations. We are going to leave ourselves vulnerable and insecure if we depend on a combination of European imports and too many wind farms. I therefore say: may the OGA do well, may it find ways of bringing on stream the new reserves we are just discovering and may it find ways of extending the lives of the existing fields and of the pools of talent and expertise we have, particularly in Scotland, where we need them still.

I have learned a lot from this process, and I thank my hon. Friend Philip Boswell for helping me to work things out as we have gone along. This has been an interesting process, but I am happy that I will not have to go through it for the first time again.

Throughout the process, as is natural in a political environment, we have focused on that which divides us, and there have been significant and, in some cases, profound divisions on aspects of this Bill. I do not wish to go back over that at this stage, because the discussions we have had repeatedly about onshore wind are a matter of record. I am aware that the Bill will go back to the House of Lords, so I make a final plea to the Secretary of State to look once again at grace periods. We accept that the Government have a mandate to do this, but we disagree with how it is being done and we ask that it be done in the best way possible. If there are concessions to be made in the Lords, please make them and take the possible benefits into account.

We have had some good suggestions and individual contributions from Members from all parts of the House. The Government have said that they are prepared to listen to a number of those suggestions. In fact, generally speaking, there has been a spirit of open-mindedness. The view was expressed that now is not the time for some measures to be put into practice, but the time will come soon, so I hope that we will continue to see that open-mindedness to suggestions, particularly to those from my party about making the most of the opportunities arising from decommissioning. We need to create a stable and sensible platform to ensure that the United Kingdom can develop a carbon capture and storage industry.

I wish to focus on one part of the debate that has received little attention, but which, to my mind, is the most important, and that is the creation of the Oil and Gas Authority. Broadly speaking, there has been unanimous support for that across the House, which is impressive in and of itself, but what is perhaps more impressive is the fact that in Aberdeen and in the north-east of Scotland—and probably the oil and gas industry the length and breadth of the United Kingdom—the Oil and Gas Authority is seen as the correct body with the correct tools at its disposal. That will be even more so once this Bill has completed its passage, as the authority will be properly equipped.

There is also tremendous support for Andy Samuel and his team in the work that they are doing, and I wish to pay tribute to him and all his staff in their endeavours. The OGA was envisaged in very different times. The role that Andy Samuel and his team have taken on was not what they expected, and they have taken to it impressively with sheer determination. They have taken the industry with them on a journey that none of them was expecting. The work that they have done, which was not really in their remit, has fostered the collaborative spirit that the industry needs if it is to ride out this time, and that is to be commended. In large part, this industry will survive if those in it work constructively together and stop some of the needless competition that adds unnecessarily to cost merely for the sake of differentiating themselves from their competitors.

The industry was rife with daft practices, by which I mean unnecessary duplication. By bringing people together and facilitating the exchange of ideas in a constructive way, the OGA has a major part to play. It is interesting that it has such support in the House, but it also has the support of the trade unions and the large and small players in the industry, and that is something that needs to continue. I wish the OGA well in its efforts.

We must recognise that the OGA was formed as part of the Wood review, which has also had cross-party support, but both come from different times. The Wood review was commissioned and completed at a time when oil was trading at above $100 a barrel. We cannot expect the creation and the formalisation of the OGA’s powers to be enough to solve the difficulties of the oil and gas industry at this moment in time.

I welcome the comments from John Redwood about the need for fiscal concessions. [Interruption.] I see that Peter Aldous, chair of the all-party group on offshore oil and gas, is seeking to intervene on that point, and I would expect nothing less from him than to be pushing for that too. This is critical. The Oil and Gas Authority will do what it can. Industry is doing what it can. A 40% reduction in costs has been achieved, which is impressive. More needs to be done, but the one thing that has not moved on since last May are the changes to taxation. The suggestion was welcome then, but we must recognise that that was a different time. Oil was selling at about $60 a barrel then as opposed to $40 a barrel now. These are changing times. The oil price has been lower and lower for longer and longer than anyone expected, and to expect the taxation regime from the time of super-profits to work for this basin at this time would be naive at best.

In the Budget on Wednesday the Chancellor will have the opportunity to provide the oil and gas industry with the shot in the arm that it requires. That opportunity cannot be missed.

As we have heard, this Bill is predominantly about setting up the Oil and Gas Authority. We need to complete this task as a matter of urgency. The North sea oil and gas industry is facing significant challenges. There have been 75,000 job losses in the past 15 months and there is a risk that whole communities along the North sea coast could be very badly affected.

The United Kingdom continental shelf is now a mature basin, but the remaining reserves are significant and they are vital to the UK in many different respects. These resources are best managed through a new tripartite approach, with the Oil and Gas Authority, industry and the Treasury working together—the Oil and Gas Authority promoting the maximisation of economic recovery, industry working to deliver efficiencies, building on the good work that it has carried out since 2014, securing a 40% fall in operating costs, and the Treasury. This is a last minute plea to provide the low tax regime that will attract footloose global investment.

The UKCS has so much to offer in terms of promoting energy security in an uncertain world, facilitating the transition to a low-carbon economy and continuing to be the cornerstone of British industry. Perhaps we could have done this better over the past 50 years. To do so now it is essential that the OGA continuously promotes collaboration. That must be ingrained in its DNA. What is needed is not just collaboration between the OGA, industry and the Treasury; it is collaboration between operators, as evidenced by the partnership of Faroe, Petrofac and Eni working together, collaboration between operators and their service providers, building long-term partnerships and learning lessons from other sectors, such as aviation and the car industry, and collaboration with other sectors, in particular offshore wind. I urge the Chancellor to consider introducing measures on Wednesday that encourage such collaboration.

The North sea oil and gas industry has been the leading actor in the country’s post-war economy. In the past we have perhaps taken it for granted and perhaps at times not managed it prudently. If we had our time again, perhaps we would do it differently. It now needs us to act and work for it to ensure that it can move forward. We must not let it wither on the vine. We must grasp the opportunity tonight and the Chancellor must do so on Wednesday to give the industry every opportunity to survive and then thrive. We owe it to those working in the industry and the communities in which they live.

The final chapter of oil and gas exploration on the UKCS must not be a harsh, bleak winter. It must be an Indian summer. Let us pass this Bill tonight and get on with the task of securing that Indian summer.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.