Queen’s Speech — Debate (4th Day)

Part of the debate – in the House of Lords at 3:44 pm on 14th May 2013.

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Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative 3:44 pm, 14th May 2013

My Lords, my noble friend Lord Freud indicated that one of the subjects for debate this afternoon is energy. Her Majesty’s Speech said that the Government will continue with legislation to update energy infrastructure. That is a short description of what will be a pretty long Bill when we receive it from the other place. I will come to that in a moment.

Before I refer to the Energy Bill, I want to say how much I admired the speech made on Thursday by my noble friend Lord Fowler. It was superb and I agreed with every word of it. It was of course about the implementation of the Leveson report. Like my noble friend, I hope that the Government will stand firm with their royal charter on press regulation, which was agreed at the end of the previous Session by the leaders of the three main parties represented in Parliament. At the moment we are witnessing some newspaper groups seeking to substitute their own, much weaker charter. That is no less than a very blatant attempt by those newspapers and their proprietors to keep their status in society as over-mighty subjects. Previous Governments have had to deal with over-mighty subjects. They had to face the Whig aristocracy in the 18th century, the Tory mill and factory owners in the 19th century and the trade unions in the 20th century. The Leveson report exposed the press as the over-mighty subjects of the 21st century, believing, like their predecessors, that they were above the law and outwith the surveillance of Parliament. That can be acceptable to no democratic Government. Some newspapers may dislike intensely the prospect of tougher regulation but the way that they are fighting their case is not a pretty sight. I condemn them and hope that the Government will stand firm on that.

Turning to energy, I want to raise three issues. First, I express dismay at the long delay in the negotiations between EDF and the Government on the terms of the proposed contract for difference and strike price. This was supposed to have been announced before Christmas and here we are, half way through May, and as yet nothing. This is the first test of the Government’s proposals for electricity market reform. It is being watched very carefully by not only the participants in the industry but a number of other countries that are interested in the model that the Government put forward. A failure to agree would be a severe blow to investor confidence and create a real risk of undermining the central objectives of the Energy Bill. It would also strike a serious blow to the Government’s desire to stimulate growth in the economy and create more jobs through a major infrastructure project. I cannot stress too highly the need for an agreement to be reached and announced very soon, the consequences of which would be wholly beneficial.

Secondly, I was dismayed, as many noble Lords were, when in January Cumbria County Council refused to allow the negotiations with local authorities to host a geological disposal facility for nuclear waste to proceed to the next stage. The two district councils, Copeland and Allerdale, agreed to do that but the county council—far away in Carlisle—refused and the Secretary of State, my right honourable friend Ed Davey, said that that ended the negotiations.

Yesterday, DECC announced a new open consultation and has called for evidence on the whole siting process. I welcome that, because what it was doing before has clearly gone seriously wrong. In my view, the main reason for the failure of the negotiations in Cumbria was that nobody—not DECC, not Defra, not the Nuclear Decommissioning Agency, not the Sellafield authorities—seemed to have any duty to counteract the wave of malicious anti-nuclear propaganda that swamped the county in the three months before the decision to withdraw was made. I cannot believe that that is the right way to approach such major infrastructure problems. There needs to be a system of instant rebuttal for every erroneous statement made. Otherwise, the people who come to make the decisions are left with only half the information that they need. It is very sad that it was no one’s job to do that.

My third point is that on 18 February, the regulator, Ofgem, sent a very long letter to all the parties interested in the electricity market—the system operators, the transmission system owners, the generators, the suppliers, the traders and representatives of customers—proposing a new process to review what it described as future trading arrangements, or FTAs. At the end of the letter, it posed three questions: do you agree that Ofgem should launch a project to create a high-level design for the future electricity trading arrangements; what key issues should be examined as part of the work stream in that arrangement; and what form should the process take?

I see that opening up the prospect of a much more effective competition regime in an industry that has become a bit sclerotic and, in some respects, monopolistic in its habits. I am told that the indications are that the big six generators and distributors, who totally dominate the market, oppose that proposal. They fear that it will lead to tougher competition for generating capacity and access to the consumer markets. The new players, whom the Government are anxious to attract into the industry—I have met some of them—are likely to support it, as it could lead to opening up markets to them that have hitherto been the almost exclusive preserve of the big six.

My question to the Government is simple: they have a stated aim of increasing competition in the electricity generation and distribution market. If the big six are opposing a new structure and the new players are supporting it, where do the Government stand? What is the DECC attitude to that? I have heard nothing about that. I cannot reasonably expect answers from my noble friend Lord Howe at the end of the debate, but I hope that what I have said might be studied. I am grateful to see my noble friend Lady Verma on the Front Bench. I hope that it may be drawn to the attention of those concerned with those issues.