Energy Bill [HL] - Commons Amendments

Part of the debate – in the House of Lords at 6:15 pm on 12th April 2016.

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Photo of Lord Wallace of Tankerness Lord Wallace of Tankerness Liberal Democrat Leader in the House of Lords 6:15 pm, 12th April 2016

My Lords, the Minister has moved Amendment 6 and spoken to Amendment 7, and I want to speak principally to my amendments to Amendment 7. My noble friend Lady Featherstone may say something about the wider issue of the early closure of the renewables obligation in respect of onshore wind generating stations. The Minister has repeated the Conservative Party manifesto commitment that there will be no new subsidies for onshore wind, but I well recall the comment from the noble Baroness, Lady Worthington, that it is difficult to think that a new subsidy is actually the early closure of a long-existing subsidy. The Minister repeats that again and again, but no one is seeking to overturn the early closure. However, the grounds he has stated— that it is a manifesto commitment—are somewhat doubtful.

I have yet to find many people in the industry who think this is a very wise move at all. It is not simply about what is being done with onshore wind; as we have already heard in this debate, a large amount of the investment made in developments over a long period will be cut off at a fairly arbitrary date. The Government’s capriciously cutting off developments in the way proposed affects the confidence of those who want to invest not only in onshore wind renewables but in the entire renewables industry and, indeed, in other infrastructure developments.

Turning to the amendments, I begin by thanking the Minister for his willingness to engage through exchanges of letters and in meetings. One reason why we on these Benches were very happy to support the move to take out the principal clause in the original Bill was not that we did not expect the Government try to bring back the clause, but that we felt that it would give them an opportunity to reflect on and try to improve the grace periods. Although they were welcome as far as they went, they certainly fell far short of what many people in the industry—I would say almost universally—thought was required.

What has been disappointing, and perhaps not in keeping with the way this House operates when we ask the Government to think again, is that we have absolutely no sense that they are willing to compromise in any way whatever. They have said that there is no compromise, and that is why the amendments that I have tabled—particularly Amendment 7X—embody quite a number of the changes which the industry wants to see and on which we have had representations. I invite your Lordships to support that amendment. I hope that if that measure is brought back in—after all, the Bill has to go back to the Commons because the Government have brought forward amendments to their own amendments—there will be a further opportunity for the kind of engagement that is part and parcel of the way this House operates. Certainly, when I had the privilege of sitting on the Front Bench and dealing with amendments, I tried to find some means of compromise when there were Lords defeats.

Perhaps I may go through the amendments, although I do not want to rehearse at great length the arguments that have been made before. Amendment 7X relates to proposed new Section 32LJ in Commons Amendment 7 and concerns the consent condition. The purpose underlying proposed new paragraph (d) in my amendment is that we believe that there have been cases where the local planning authority has resolved to grant planning permission on or before 18 June 2015 further to a planning committee consent, but the formal rubber-stamping has not taken place until after 18 June 2015. In those circumstances, it seems that where a reasonable expectation of consent has been raised, it should be carried through.

I turn to proposed new paragraph (e) in the amendment. The Government have argued that if a local authority had taken the decision in time and it had been the right one, it would be unfair to the developer not to have an opportunity to have it backdated just because the matter was called in. However, our proposal would take account of circumstances in which developers had been working alongside the community, the 16 weeks had elapsed and they had not run to the Secretary of State or Scottish Ministers and said, “They haven’t given us a decision. We want you to call this in now for Ministers to make the decision”. In fact, in many respects that would run totally counter to what the Conservative Party has been preaching about local decision-making. That would be a decision taken centrally or nationally and not left to local determination.

Therefore, with this proposed new paragraph we seek to allow decisions where there has been local engagement and an extension of the period, and the discussions have continued—that is, engagement not just with the local planning authority but with local communities. We know of a number of cases where that has happened. In these circumstances, it seems only fair and reasonable to allow a decision to be made where the local community has been consulted and brought into the picture, and subsequent to 18 June a favourable planning decision has been made. When we debated this matter in Grand Committee, I gave details of the Binn Eco Park wind farm, which I think is in Perthshire—it is in Perth and Kinross Council. The application was made on 7 November 2014 and there had been considerable discussions since 1 May. Binn Eco had completed everything technically to meet the cut-off date and the matter was ready to be considered at a local planning committee meeting, but in fact the planning committee did not meet until 15 July—after 18 June. Therefore, in a development where every effort had been made to engage, the local community lost out because of the planning committee’s cycle of meetings. Again, that did not seem particularly fair.

Proposed new paragraph (f) concerns Scotland being in a different position from the rest of Great Britain. When this Parliament decided to raise the threshold of megawattage capacity for planning applications in England and Wales above 50 megawatts, which was the position in the Electricity Act 1989—this is not a consequence of devolution—it chose not to do so for Scotland. I am glad to say that when we debated this matter during the passage of the Scotland Bill, the Parliamentary Under-Secretary of State, the noble Lord, Lord Dunlop, said that the Government were prepared to look at this to see whether there should be proper further devolution.

A 65-megawatt development is proposed on the border between East Lothian and Scottish Borders. A year after the application was put in, a decision was taken by East Lothian Council and Scottish Borders Council to object. They did not have the statutory role—that was for Scottish Ministers—but the consequence of their objection was that the application then went to Scottish Ministers, who ordered an inquiry. The outcome of the inquiry is still awaited. We will probably have to wait until after the Scottish parliamentary elections before the decision can be announced, but quite clearly it will not be announced until well after 18 June. However, had that development been 50 miles further south in Northumbria, it would have been dealt with by Northumberland County Council. Having decided that they did not like the application, the councils, rather than just stating a statutory objection, would have been able to refuse the application in March last year. That would have been the subject of an appeal. If, following an inquiry, the appeal had been successful, the application would have qualified under the provisions here.

As I said, that is not a consequence of devolution; it is a consequence of different planning rules north and south of the border. What are otherwise identical developments do not get treated in the same way. This is not a hypothetical situation. It occurred to me that there might be an issue of hybridity here and today I wrote to the Clerk of Legislation. The Companion says that hybrid Bills are,

“public bills which are considered to affect specific private or local interests, in a manner different from the private or local interests of other persons or bodies of the same class, thus attracting the provisions of the Standing Orders applicable to private business”.

Clearly here we have the private interest of a developer in Scotland. There could be an equivalent developer in England in exactly the same position, but the one in Scotland is treated differently and does not get the same appeal rights or the same access to grace period rights as the one south of the border. I gave the clerk very little time in which to respond. He spoke to me this afternoon and said that he could understand why I had raised the point—so I was certainly in the ballpark—but he did not think that regional variations qualified. However, if it is not a legal hybrid, I think that there is a moral hybrid there. It is fundamentally unfair that after a substantial amount of money and effort has been put into this development it should fall foul in that way.

Proposed new paragraph (g) refers to an application for planning permission having been made before 18 June 2014, and its purpose is to show that these matters have a long lead time. A lot of money, time and energy is expended, yet if for some reason planning permission is not granted by 18 June all that effort can go to naught.

Proposed new paragraph (h) has already been referred to by the noble Lord, Lord Foulkes of Cumnock, and it is also the subject matter of the amendment in the name of the noble Lord, Lord Grantchester. It concerns a situation where for all intents and purposes a planning decision has been made and planning permission has been granted, but it has been subject in Scotland to a Section 75 agreement or in England and Wales a Section 106 agreement. The Government’s unwillingness to move on this has bewildered the industry. Many people in the renewables industry cannot recall a situation where such relevant agreements have not been forthcoming. As someone in the industry said to me, it is rather like passing all your exams but then being refused a graduation certificate.

In practice, the council and the applicant work together to ensure that the project report that goes to the council committee for a decision covers all the issues that may need bonding or other legally binding commitments so that the committee is minded to consent. The “minded to consent” notice is issued and has conditions attached to it. Those conditions are known to be deliverable, because any other practice would be a waste of everyone’s time. The industry has had over 15 years of refining the process along with local government. That process has now matured and is well understood. Examples of projects that have failed to be issued with a final consent after a committee has been minded to approve, subject to the signing of a Section 75 or Section 106 agreement, are rare, if they exist at all.

An interesting example of this is the Twentyshilling Hill wind farm in the constituency of the right honourable Secretary of State for Scotland. That planning application was made on 15 May 2013. Dumfries and Galloway Council’s planning committee approved the application, subject to Section 75 agreement, on 16 December 2014. Almost six months before the cut-off date the planning committee approved the application. It was not until four months later that Dumfries and Galloway Council appointed external lawyers to act for it on the matter of Section 75. I do not know why that four months elapsed, but it was a crucial four months and may well have had nothing to do with the power of the developers. The following month, a draft Section 75 agreement was circulated by solicitors and, on 17 June, the Section 75 agreement was agreed and circulated for signature. On 18 June, it was signed by the landowner and the developer and, also on 18 June, Dumfries and Galloway Council issued a letter of comfort to Element Power stating that a minuted decision of the council’s applications in committee appears on the council’s website, and that it is a public document and a clear statement of the committee’s decision on this planning application—an agreement signed on 19 June by Dumfries and Galloway Council. The planning notice was issued on 1 July.

Was there ever such an example of where the capricious date of 18 June has had such a fundamental impact, through no fault of the developers? Of all the amendments, this is probably the one that the industry would set most store by. I can see no good reason why the Government have been unable to show any willingness at all to agree to that.

New Section 32LJ(5) relates to the grid connection. I am led to believe that what we propose—the noble Lord, Lord Foulkes of Cumnock, spoke to this very clearly—reflects the reality of what the industry experience is as regards grid connections and is an improvement on what the Government are proposing. I am interested to hear the Minister’s response to the point raised by the noble and learned Lord, Lord Hardie.

Amendment 7AF picks up the point that the noble Lord, Lord Hain, spoke to with great power on variations. I too have received representation, including from the developers of a project similar to the one that he referred to. Again, substantial amounts of money are involved and no confidence or clarity has been found in what has been said so far by the Government that any variation will in fact allow them to qualify. I raised this point with the noble Lord the Minister and he replied by letter earlier this month. Obviously, he has made statements, his honourable friend Andrea Leadsom has made statements, and there is something in the Ofgem consultation document. But in his letter the noble Lord said:

“I hope that the following information will help to clarify your concerns, as I am aware that the legislative regime underpinning the different consents is complex. As you are aware, the Bill provisions define ‘planning permission’ to include: planning permission under the Town and Country Planning Act 1990”.

There is a line missing from the copy I have with me, but he also referred to the Scottish legislation of 1997, and continued:

“Each of these statutory regimes provides an existing consent to be varied, via the following routes: an existing (England and Wales) 1990 Act permission can be varied under section 73 (variations to conditions), 96A (non-material changes), 97 (modification and revocations) and 68 (modification and revocation by the Secretary of State) of the 1990 Act”.

He goes on to say that there are similar arrangements with regard to 1997 Scottish Act permissions, consents under Section 36 of the Electricity Act 1989, and development consents under the Planning Act 2008, and that:

“For the purposes of the ‘approved development condition’, a developer needs to demonstrate that the generating station which it is seeking to accredit had planning permission in place (for that station) on or before 18 June 2015. We understand that varying an existing planning consent under any of these routes set out above generally results in a determination by the relevant decision-maker that makes clear reference to the original consent. Should the developer/project wish to make a change to their planning consent to such an extent that a new planning consent is issued—with no reference to the original consent—and that consent is granted after 18 June 2015—this would no longer meet the grace period criteria”.

I have shared that letter with those in the industry, and they think that it is better than anything that has yet been said on the record. It would be very helpful if, first, the Minister was to respond positively to the points made by the noble Lord, Lord Hain, and, secondly, if he could place on record from the Dispatch Box what he said to me in his letter of last week on variations. In fairness, those in the industry have found it a more helpful and clearer exposition of what the position is as regards variations than anything that they had heard beforehand.

I turn now to the question of the investment freeze. There is a lot in this and a lot of people have made representations, so it is only fair that they get the chance to have their argument made. It would be far easier if the Government had conceded on a lot of these things, but I intend to persevere with this because these are important points—I am not going to be bullied. The investment freezing condition is one which, rightly, the Government have responded to. But as the Minister well knows, we do not feel that it has gone far enough and important bodies have been left out, including Triodos, a body regulated by the Financial Conduct Authority and the Prudential Regulation Authority, with more than 25 years’ experience of financing renewable energy; Temporis Capital, which is currently supporting a development with funds provided by the Green Investment Bank; and Abundance. These bodies have track records in supporting developments and we have heard no good reason from the Minister or the Government other than that he is concerned about gaming. However, these are reputable institutions and there is no suggestion that any of them is gaming.

Finally, I turn to my other amendments, Amendments 7AA and 7AM. These have been drawn to the attention of myself and the noble Earl, Lord Lindsay, by 3R Energy Solutions Ltd in respect of a development at Douglas West and Dalquhandy in South Lanarkshire—again, I think, in the constituency of the Secretary of State for Scotland. They relate to a 45-megawatt development which, crucially, has been promoted by a community group. Community groups have considerable disadvantages compared to larger developers. The pre-start funding process can take considerable time before they can even start the planning process. This particular development is located on an ex-opencast coal mine in an area with a legacy of deprivation and unemployment due to lack of jobs and poor housing. That is a legacy of the closure of the mining industry, but here is an opportunity to replace an old energy industry with a new energy industry. It is true that the planning application did not go in until after 18 June. However, in February last year the requirement to carry out pre-application consultation did start, and that is an important step on the way.

The Minister will readily recognise that community groups take longer to raise funds and that they have to go through all these other things. This group has proceeded in a way that has engaged its community and needed the time required to consult with others. The project enjoys local support and, indeed, 100% of the stakeholders in the Dalquhandy renewable energy project have their personal residence within 10 miles of the location. It seems very unfair to a community group that has put so much effort into a project that will generate jobs and income for a depressed and deprived community that it should fall foul of what was a somewhat arbitrary date. Perhaps the noble Earl, Lord Lindsay, will say more about that. However, the group made a very compelling case that it set in motion the formal statutory procedures some four or five months before 18 June and therefore should not be prejudiced in this regard.

I conclude by reminding the Minister of what he said when he moved the statutory instrument with regard to the early closure of the renewable obligation for solar below 5 megawatts:

“One of the grace periods was designed to protect developers who could show that a significant financial commitment had been made on or before the date on which the proposals were announced. This required evidence that a planning application had been made, among other things, as a proxy for the financial commitment”.—[Official Report, 16/3/16; col. 1916.]

That was a significant commitment, and one which was right. He justified it on the grounds that it was also done for those above 5 megawatts. It has now been done for two early closures and it should be done for this one as well, recognising the significant financial commitments made by communities and developers. We have heard nothing so far but I hope that tonight we will hear some encouragement from the Minister. I also hope that the Official Opposition will be prepared to back us in trying to get some movement from the Government on this important issue.