Lord Petitgas:

Moved by Lord Petitgas

15: Clause 4, page 2, line 37, at end insert—“(2A) The maximum amount of financial assistance provided by the Secretary of State must not exceed £8.3 billion.”

My Lords, in moving Amendment 15 I will also speak to Amendment 16 in my name. I will start with Amendment 16, which seeks to establish baseline investment governance for GBE. Remarkably, the Bill as drafted provides no clear framework for GBE’s investment decision-making process, leaving critical questions of accountability unanswered. This amendment is a necessary safeguard for three reasons.

First, it addresses the glaring governance gap that I just spoke about. The Bill delegates ultimate authority to the Secretary of State but offers no clarity on how GBE itself will assess value for money or who, within GBE, will be accountable for such decisions. Without defined governance structures, we risk approving an open-ended cash flow without proper oversight. This is simply not acceptable when billions of taxpayer pounds are at stake.

Secondly, it highlights the need for financial expertise and accountability. At Second Reading the Minister suggested giving GBE free rein to pursue opportunities with an entrepreneurial spirit—I think he mentioned independence today. While I sympathise with this ambition, GBE is neither a venture capital fund with a proven investment committee nor a publicly traded company like Ørsted in Denmark, subject to rigorous market scrutiny. In the absence of such mechanisms, it is imperative that His Majesty’s Treasury provides oversight. We need experienced financial professionals—dare I say grown-ups in the room?—to ensure value for money, while balancing financial returns with broader strategic goals.

Thirdly and lastly, Amendment 16 is designed to ensure public trust and confidence. Some may argue that setting governance requirements could stifle innovation. On the contrary, clear accountability and oversight would enhance GBE’s credibility and reassure taxpayers that their money is being managed responsibly. Without these safeguards, we risk undermining trust in this ambitious initiative.

This amendment does not constrain GBE’s mission; it strengthens it by ensuring robust governance and responsible stewardship of public funds. In summary, we are asking for clarification from the Minister of how GBE’s spending will be monitored and how the Government will ensure value for money.

Amendment 15 seeks to establish a cap on the level of funding for GBE. While the Government have allocated £8.3 billion for this initiative, the Bill lacks clarity on whether additional funding may be sought without parliamentary oversight. This amendment is prudent and necessary, again for three reasons.

First, it ensures fiscal discipline and taxpayer protection. GBE’s mission is to attract private investment into renewables but, as we have said several times, there is absolutely no shortage of private capital in this sector. Companies such as Iberdrola, SSE and National Grid have already committed billions to clean energy projects, so there is a clear risk that GBE’s funds will be directed towards high-risk or less attractive ventures like a magnet. As the noble Lord, Lord Mandelson, once said, when politicians try to pick winners, losers invariably find the politicians. A funding limit would safeguard taxpayers, while allowing GBE to prove its effectiveness and build a track record.

Secondly, Amendment 15 aligns with precedents and market practice. Other government initiatives aimed at crowding in private investment have operated within defined financial limits. Moreover, to me, GBE’s structure resembles that of a venture capital fund holding minority stakes in multiple projects. It would be unheard of for such a fund to operate with open-ended financial commitments. That would undermine investor confidence and fiscal accountability.

Thirdly and lastly, a cap signals discipline, not doubt. Some may argue that limiting funding could project a lack of ambition. On the contrary, in an era of fiscal scarcity, such a measure would demonstrate resolve and responsible stewardship of public resources. It would also encourage efficiency in achieving GBE’s objectives while maintaining credibility with Parliament and the public.

This amendment would not hinder GBE’s goals. It strengthens them by ensuring accountability and the prudent use of public funds. I am minded to test the opinion of the House on Amendment 15.

My Lords, I rise from these Benches to speak against Amendment 15 in the name of the noble Lord, Lord Petitgas. His amendment seeks to add a limit on the maximum amount of money that the Secretary of State can provide to GBE —anything above and beyond the £8.3 billion that the Government have committed to. We strongly oppose this amendment. The noble Lord talked about resolve, strength and all these things, but I do not agree with any of that. It is not for the Opposition to use an amendment to legislation to determine what funds a Government can spend on something in the future, when we do not know what is going to happen.

Just this week we have talked about the Drax situation; the Government have halved the subsidies to Drax. The money that the Government are saving from having to subsidise Drax is money that could well go to GB Energy—for example, to fund the long-duration energy storage that we desperately need, so that we can do the transition and keep the lights on. The money should be used for other renewables projects.

It is for the Government to make day-to-day spending decisions and they are accountable for the decisions they make, as GB Energy is accountable to the Treasury and the public for how it spends its money. Ultimately, the Government themselves are responsible to the public, but I do not think it is for the Opposition to put a cap on what Governments can spend. Core spending is a decision for the Government, so this would be a highly unusual amendment and, if it is put to a vote, we will oppose it.

My Lords, I support the amendments in the name of my noble friend Lord Petitgas. In tabling his amendments, my noble friend looks to protect the taxpayer while securing the financial integrity of GB Energy, establishing that GB Energy’s attempt to ramp up renewables must not come at the cost of fiscal responsibility and £8.3 billion. The drafting of Clause 4 is far too ambiguous. We must introduce sufficient safeguards by limiting the scope that the financial powers in the Bill afford the Secretary of State. The taxpayer is coughing up a significant £8.3 billion into an investment vehicle that, as my noble friend Lord Petitgas said, has the potential to completely de-risk the profits of multi-million pound energy companies. Meanwhile, the Government have cancelled winter fuel payments, introduced an NI jobs tax and launched a raid on British farmers, all to save money.

The reality is that £8.3 billion is actually a very tricky number. On the one hand, it is a lot of money, a big, significant investment into energy. On the other hand, in the scheme of energy investment required, it is a relatively inconsequential figure, especially when we talk about wind farms being built out to the potential tune of £100 billion. Either way, whether we consider that to be a big or a small number, the taxpayer deserves to know that the Government are deploying public funds appropriately. The Bill contains no limitation on how much financial assistance GB Energy will receive, there is no cap on the money that can be pumped into GB Energy and nor does the funding have to undergo any approval. What is to stop GB Energy becoming a bottomless pit?

Clause 4 states:

“The Secretary of State may provide financial assistance to Great British Energy”.

But, again, we are lacking in detail on ways to hold the Secretary of State and GB Energy accountable. We have seen no method to restrict the amount of financial assistance the Secretary of State may provide, nor do we understand how the success of each investment will be measured, or indeed reported on. I trust that the Minister will take these amendments seriously. Our transition to net zero must be done with an eye to fiscal responsibility, ensuring that the energy transition is both sustainable and affordable.

My Lords, I am grateful to the noble Lord, Lord Petitgas, for returning to a theme he developed in Committee. I assure the noble Lord, Lord Offord, that I take the amendments seriously. But, like the noble Earl, Lord Russell, I do not believe that they are appropriate, because I do not think it right to constrain the arrangements we set out in the Bill in this way. Nor do I think it appropriate for Parliament to take to itself the kinds of controls that the noble Lord is suggesting.

Let me make it clear, first, that in terms of the sum, we are committed to capitalising Great British Energy with £8.3 billion over this Parliament, but we have the flexibility in the future for a current or future Secretary of State to provide further financial support if it were required in this or a future Parliament. There must be flexibility here: one cannot set in stone a figure for all time. We must allow GBE to develop and grow, and we have to learn by experience.

However, the idea that the money being spent by GBE will not be subject to thorough tests and reviews is simply not true. As we have already said, any financial assistance to GBE provided by the Secretary of State will have to be subject to the usual governance and control principles applicable to public sector bodies, such as His Majesty’s Treasury’s Managing Public Money principles. GBE will be allocated funding through the spending review and will draw down on it when required in the normal way, through the supply estimates process, which is scrutinised, of course, by the other place. As is the case with any government spending, the Secretary of State will be able to finance planned activities only if Parliament votes the necessary financial provision.

The requirement for Treasury approval is a long-standing convention, being one aspect of the Treasury’s power of control in matters of finance and public expenditure. Let me be clear that, in relation to including spending limits in legislation, it is rare for financial or spending limits to be contained in primary legislation, for the reason I mentioned in my introductory remarks. I have asked officials to find me examples of legislation where it happens and there are a handful of Acts with spending limits—but they are limits on individual payments, rather than setting an overall limit on what financial assistance can be given. So, while I accept that the noble Lord is very exercised and has developed his points with eloquence, we think there are sufficient controls in place through the normal Treasury controls over how the Government will react with the body, so I do not believe that the amendments are necessary.

I thank the noble Earl, Lord Russell, for his comment, which I must say did concern me: in a way, he highlighted the fact that it is more likely than not that the amount will be exceeded. I should also thank the Minister. I am glad that he recognised a certain coherence in my arguments over the last few weeks, but I am not totally satisfied that we have the necessary limits on GBE and, with this in mind, I wish to test the opinion of the House on Amendment 15.

Ayes 148, Noes 195.

Amendment 15 disagreed.

Amendments 16 and 17 not moved.