Energy Bill [HL] — Second Reading

Part of the debate – in the House of Lords at 2:07 pm on 22nd July 2015.

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Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (Energy and Climate Change) 2:07 pm, 22nd July 2015

My Lords, it is always a genuine pleasure to follow the noble Lord, Lord Foulkes, in this Chamber. I have learned to enjoy these opportunities to follow his contributions. He may be thrifty but he is also a crafty politician, able to secure east Ayrshire mining within the subject area of this debate, although I question his pouring a dram of hospitality in darkened rooms as he rambles from one to another, but that is a whole separate image of his thriftiness.

Part of this Bill is forward looking, provides for long-term planning, offers business certainty and encourages a stable investment environment. The other part of the Bill does the reverse. Most colleagues who have spoken in this debate so far have drawn the same broad conclusions that there are some elements that are to be wholly welcomed and other areas where we have cause for very considerable concern. I want to start by thanking the Minister for his courteousness in meeting colleagues to brief us on the Bill but I can only assume that the Government work so fast and efficiently that the announcement that I heard on the “Today” programme this morning was done overnight and he was not in a position to at least alert me to it. However, I respect his sincerity on climate change and it was interesting that he started his contribution on climate change and the ambition that the United Kingdom should have. I will return to that later.

With regard to the first part of the Bill on the Oil and Gas Authority, it is clear that the industry—predominantly based in north-east Scotland but having provided support across the United Kingdom for the past 40 years, explored for oil and gas for the past 50 years, and produced gas since the late 1960s— will be entering a considerable next phase. With decommissioning and the harder exploitation of the resource within the UK continental shelf, we require a different regulatory framework. That was set by the outstanding Wood review, whose conclusions the previous coalition Government accepted in their entirety. This Government are carrying on honouring the commitments provided by the previous one with genuine cross-party support, and that is to be warmly welcomed. When I spoke in the debate on the then Infrastructure Bill, the consensus was there in that legislation and it carries on. I therefore think that the Government will see that there is lots of constructive support for those clauses within the Bill.

I shall highlight some areas before moving on to the renewables sector. Clause 4 indicates the areas that the OGA must have regard to. However, since the predominance of Scotland within the oil and gas industry has been commented on so far in this debate, I wonder whether Clause 4, which says that the OGA must have regard to operating closely with the Government, should now say “all the Governments across the UK”. Of course I recognise that it is a UK authority and it will be under the auspices of this Parliament and this Government, but I think that its working effectively with the Scottish Government as well as with the UK Government would bode well for its efficient delivery of its own duties.

In addition, given that the principle behind the clause is to establish the independent operation of the Oil and Gas Authority, I highlight my observation that there is considerable scope in Clauses 5 and 6 for very wide ministerial direction. While the Bill says that ministerial direction will be given on public interest grounds only in exceptional circumstances, it would be helpful if the Minister could give us, if not today then with further briefing material, some further illustrations of what the public interest grounds may be, and some examples of what those exceptional circumstances might be that would bring the Government to direct the OGA.

Noble Lords have also mentioned the fee levels. Again, I think there should be some clarification of the ministerial powers within this area. Currently in the Bill, Ministers hold the powers to change fivefold the levels of fines that can be imposed by the OGA, except it is not clear whether this can be on an individual fine or whether they can simply increase the power of the OGA to do this. Again, clarification on that would be helpful.

I understand that further amendments are being considered for this element of the OGA. It would be helpful to know when the Minister expects the Government to bring those forward so that we will be able to see them. In the wider sense, the Bill further develops the consensus and the process that was started on the basis of the consensus in the previous Government, and with wide input from the sector. That is why I think these aspects of the Bill are to be welcomed.

I turn to the elements on renewable energy. I say “elements”, as today we are debating only partial government policy; we have not had sight of the criteria that were announced by press release through the BBC this morning. I was hoping that in the Minister’s opening remarks at the Dispatch Box he would outline clearly what would be the timetable for the legislative measures on solar that we heard about through the press release, and whether they would be part of this Bill or whether the Government intend separate legislative measures for that. It would be helpful if he did so in responding to this debate. The noble Lord, Lord Cameron of Dillington, and others made a persuasive case that much clearer information is not only necessary for industry but is of necessity for this Parliament.

Many noble Lords have raised issues relating to planning. I think that I heard the Minister say that communities would have a final say on planning—I think he said it twice. He has been asked to clarify that point. I echo those requests; it would be helpful to know how many schemes he anticipates this would cover. Also, given that he said that communities would have the final say, I was interested to read the Peers’ briefing that was given to Peers on 16 July, which says about planning:

“We want to see local communities having a greater say on the development of onshore wind in their area”.

It markedly does not say “final say”. I was interested to see that in another place Kit Malthouse MP asked the Secretary of State, with regard to whether communities would indeed have the final say:

“Can she reassure those worried communities that that means that they cannot now be overruled by the Planning Inspectorate?”.

Ms Rudd responded:

“Yes, I can”.—[Hansard, Commons, 22/6/15; col. 627.]

That led to him tweeting:

“I asked a question today about planning permission for wind farms and got the perfect answer”,

but a spokesman for the Department for Communities and Local Government said that developers would still be able to appeal to the Planning Inspectorate. Could the Minister confirm whether Ms Rudd or Mr Malthouse was correct? Could he confirm exactly what that situation is?

The Bill seems to suggest that the competence of the grace periods will be determined by regulations. I am unclear what additional provisions the Government might make relating to the closure via regulation, subject to the affirmative procedure, which I understand is in the Bill, especially as DECC officials have been clear in a number of public forums in saying that the grace periods are to be introduced in primary legislation. That confusion is further compounded by the announcement this morning with regard to solar. Not only would it be helpful for the Minister to clarify this; it is absolutely necessary for him to do so.

The Government have said that they were going to consult colleagues in the Scottish Government—we have heard from the noble Lord, Lord Foulkes, and others about the predominance of this relating to Scotland —but they published a policy paper that said:

“We will not be holding a formal consultation on our proposals because they will be subject to full Parliamentary scrutiny”.

How can that be when we do not have the measures in front of us at the beginning of the Bill? How can we properly scrutinise the proposals when we have only partial proposals there? We will not be able to scrutinise views submitted by people to the Government’s process on the grace periods, to allow us to inform our views and scrutiny of the Government. Surely that cannot be the correct way of going about our business, especially in the context that it is the grace periods that are absolutely fundamental to the business opportunities.

I do not think that the Government have a mandate to bring forward the shortening of the support for industry. The Government’s tools for doing so are becoming quite clear: they are using uncertainty and disruption for the investor community to end a practice, and they are seeking not to be clear on bringing that forward in Parliament. These are not trifling sums: £1.3 billion of capital expenditure, with £350 million of sunk costs, is at stake. I had to chuckle slightly this morning when I saw that the press release was concerned about “supporting hard-working businesses with their energy costs”. These are hard-working businesses that have put £350 million of investment into schemes that may not come to fruition.

On top of that, there is now much greater uncertainty for the investor community. Let us remind ourselves what the investor community is: it primarily consists of United Kingdom pension schemes that are looking for long-term ethically secure investment opportunities to support British industry and British energy. That should be exactly the kind of investment environment that we wish to see, not harm.

Yesterday in another place, Amber Rudd, the Secretary of State, responded to this question:

“Scottish Renewables say that this decision, the early closure of the renewables obligation, risks £3 billion of investment and compromises two gigawatts of projects. Is that correct?”,

by saying:

“It may be correct”.

She was then asked:

“So you would not anticipate onshore wind being part of the next CfD?”.

She replied:

“I would not, no”.

I do not think that Parliament yet has sufficient information to fully scrutinise these aspects of the Bill. As the noble Lord, Lord Oxburgh, and my noble friends Lady Maddock and Lord Teverson have said compellingly, not only are we undermining the cheapest source of renewable energy, the cheapest source of growth in renewable energy and the cheapest way of gaining electricity growth as part of the whole energy mix but we are also undermining the crucial consensus which has been developed over the last few years and which has not set one energy technology against another. An overall consensus has been built. Nor do I believe that the Bill is part of the wider consideration of climate change that the Minister referred to in his opening remarks. This would be a climate change Bill and an energy Bill true to its name if it included measures for reducing consumption, improving energy efficiency and maintaining zero-carbon homes, as my noble friend indicated. The consensus has been broken and uncertainty has been put into our manufacturing industry, and that cannot be good for the British economy.