Energy Bill

Part of the debate – in the House of Lords at 8:45 pm on 22nd October 2008.

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Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 8:45 pm, 22nd October 2008

My Lords, I am grateful to the noble Lord for the way in which he has moved his amendment, and I will fulfil the promise I made before the dinner break to be somewhat more constructive with regard to this amendment than I was with regard to the previous one.

The noble Lord was kind enough to indicate that we had consulted over the guidance to be issued in relation to Clause 51 and the powers therein. He also fairly expressed the fact that some in the industry are concerned that if there is scope for Ministers to redefine the concept of prudent provision over the long term, we will be likely to see the ratcheting up of the requirements in the interests of protecting the taxpayer. They argue that that in turn runs the risk that the existing approach in the Bill would create uncertainty in respect of the long-term planning that is clearly needed to operate a power station. The noble Lord emphasised that in regard to his previous amendment and I fully recognise that we are talking about long-term issues. I also agree that we should seek to avoid uncertainty about the concept of prudent provision.

There is no doubt that the amendment achieves greater clarity for the industry and I accept the basis on which he has moved it. However, we are not too sure about it and perhaps I may explain our anxieties. We are not sure that it is entirely appropriate because it is not for the Secretary of State to set out how we will interpret the meaning of the term in statute. Interpreting terms in statute is the role of the courts and it is not for Ministers to second-guess or usurp the role of the courts in that regard. The guidance sets out to give as much clarity as possible on the meaning of the term, given that it sets out the factors that the Secretary of State may take into account when exercising these powers. They necessarily include the crucial concept of prudent provision.

I accept that the industry wants greater clarity, and that is what the noble Lord seeks in his amendment. However, it would constrain the important flexibilities afforded to the operators and to the Secretary of State which exist under the clauses as they stand. I recognise that the concept of prudent provision, and the assessment of it, is a critical element in the approval and modification process. For the reasons I have indicated, we cannot accept that "prudent provision" should be in the Bill. However, the noble Lord rightly emphasises the importance of striking the right balance between certainty for the operator and the necessary flexibility for the Secretary of State and the operator to fulfil their duties under the Bill. We will therefore look further at the principle behind the amendment, and at the noble Lord's argument, and we will search for greater clarity. That is also his objective. I promise to bring back a government amendment on Third reading which I hope will meet those objectives. On that basis, I hope that the noble Lord will feel able to withdraw his amendment.