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Energy Bill – in a Public Bill Committee at 2:15 pm on 21 February 2008.

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Inspectors

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform)

I beg to move amendment No. 10, in clause 12, page 6, line 41, at end insert—

‘(d) the appropriate length of appointment for an inspector.’.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss amendment

No. 13, in clause 26, page 14, line 6, at end insert—

‘(d) the appropriate length of appointment for an inspector.’.

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform)

This is our next attempt at a probing amendment, to which I am sure the Minister will have an incredibly effective answer already prepared. Clause 12 relates to the appointment of inspectors

“to assist in carrying out the functions of the Secretary of State under this Chapter.”

Clause 26, to which amendment No. 13 refers, relates to inspectors with regard to carbon capture and storage facilities. The clauses give the Secretary of State powers to make certain regulations with regard to the inspectors. Specifically, they say that they

“may make regulations about the powers and duties of inspectors, the powers and duties of any other person acting on the directions of the Secretary of State and the facilities and assistance to be accorded to persons mentioned” in those paragraphs.

What we are suggesting is that as it stands, it does not include any guidance or rules about the appropriate length of service of an inspector. I am inherently uncomfortable about open-ended appointments where people are appointed for an unspecified number of years. With the best will in the world, whatever qualifications they have and whatever energy and drive they have when they take on an appointment, people will lose some of that over a period of time. These two amendments would give the Secretary of State the power to determine an appropriate length of appointment for an inspector—we leave it to his discretion, or indeed to that of a SOSREP, to decide what that time scale should be.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

Earlier I was questioning the wide latitude being given to the Secretary of State by some parts of this Bill, but in the case of this amendment, we seem to be lavishing very detailed powers on the Secretary of State which I am not sure really is appropriate. There seems to be too much detail and I thought the Conservative party was in favour of reducing red tape. The important point is that this is based, as I understand it, on the existing licensing regime for the petroleum industry and we should hesitate to muck about with it too much. I am all for giving more general, strategic powers and having those more closely defined—we referred earlier to the primacy of the environment in the issuing of licences and issues of that kind, but when it gets down to detailed human resource issues that should be naturally included in any appointment process, that seems ludicrously over-detailed. I seek clarification from the Conservative spokesman, but I cannot see the justification for these detailed prescriptions.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

Although I think that the Committee has stuck to its task very diligently this afternoon, as a sideshow, I am enjoying the traditional debate about the power of the state between the Tories and the Whigs, which has been going on for several centuries and which I follow with close attention. It is not for me to make a judgment. I understand the concern of the hon. Member for Wealden. Any politician facing regular general elections has to be jealous of open-ended appointments, so I understand the prejudice.

Before addressing the amendments, I would like to set out a little of what we are trying to achieve with clauses 12 and 26, because the proposals also relate to clause 26. Those clauses give the Secretary of State the power to appoint inspectors to inspect facilities used for offshore gas or carbon dioxide storage or related activities. They also give him the power to make regulations setting out the powers and duties of inspectors and other persons acting under his direction, for example, surveyors or other contractors. Examples of such powers  and duties are the power to enter premises, to carry out an investigation, to require information or to take samples. The regulations can also set out the facilities and assistance that licensees must offer inspectors in carrying out their duties.

Inspectors play a crucial role in ensuring that the terms and conditions of the licence are adhered to. They are the eyes and ears of the regulating authority and provide a valuable resource to ensure that the oil and gas industries comply with a raft of legislation that is in place to protect the environment. I suspect that we are in agreement so far.

To get to the point, in almost all instances, inspectors are civil servants, recruited on civil servants’ terms and conditions of employment. The amendment tabled by the hon. Member for Wealden to set out in regulations the appropriate length of appointment for an inspector appears, therefore, to cut across contractual matters that are normally covered within a contract of employment. Equally, if a contractor is employed for the purpose of inspection, the duration of their employment will be stipulated in the contract of employment.

There are currently a number of inspectors who act on behalf of the Secretary of State in respect of oil and gas licensing. Our proposal is not to recruit more inspectors, but to extend the powers of the existing inspectors, bringing their knowledge and experience of oil and gas into the new regime. With thanks for probing the Government, I wonder whether the hon. Gentleman might consider withdrawing the amendment.

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform) 2:30, 21 February 2008

The Minister began by talking about why politicians will be jealous of people having these sorts of contracts. I remember well on the final day of the 1997 election campaign, when I was the MP for High Peak, being told by somebody in a factory, “The problem with you Members of Parliament is that you do not understand what it is like to work on a short-term contract.” Within 24 hours, I did.

I am grateful to the Minister for clarifying the issues. I understand that two types of people may act as inspectors: those who are civil servants and it would therefore be inappropriate for them to have a particular period of appointment and people who are brought in from outside, in which case it would be standard working practice for the term of the appointment to be stated in their contract. That provides the assurance that we need and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform)

I beg to move amendment No. 11, in clause 12, page 7, line 8, at end add—

‘(c) by the revocation of the licence, at the discretion of the Secretary of State.’.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss amendment No. 14, in clause 26, page 14, line 14, at end add—

‘(c) by the revocation of the licence, at the discretion of the Secretary of State.’.

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform)

As you will have seen, Mr. Amess, these amendments also relate to the clauses on inspectors. They relate to the penalties that can be given out where  people have deliberately obstructed inspectors in their work. As with earlier amendments, we want to send a clear signal that we recognise the potential dangers of the activities being carried out in relation to the importation and storage of combustible gas or CO2. That is especially the case with CO2 storage, given that it is a very new technology and science and it will be a long time before we understand all of the risks involved.

The inspectors are fundamental in ensuring safety. We should not contemplate anybody blocking their work. The inspectors should have access to inspect whatever they want, wherever they want and whenever they want. We need to understand the motivation behind somebody refusing access to an inspector. They could, for example, say that a dangerous manoeuvre was going on and the inspector would understand why they might suggest that he should come back at a different time, if the inspection did not relate specifically to that manoeuvre. It would also be understandable if the relevant person whom the inspector needed to see was unavailable.

In almost every other circumstance, we would have reason to be suspicious of why an inspector should be refused access or obstructed in his or her work. A fine provides punishment, but the threat of revoking a licence if the operator wilfully obstructs an inspector is far more powerful. I hope that the Minister will agree. He may say that that is covered in clause 30, on the termination of licence regulations, but we believe that more detail is needed on the circumstances in which licences could be terminated and it should not be left so vague as the clause currently provides it to be.

Operators need such a level of guidance, given the tens of millions they are being asked to invest in the projects. They need to know in what circumstances the licences could be removed. We do not seek an exhaustive list, but we need an indication of the level of offence that would result in such draconian steps. I would suggest that blocking the work of an inspector would be grounds for such revocation.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

Perhaps my phraseology in relation to the last amendments was a little harsh, but I am also puzzled by these amendments and whether they need to be included at all. I suspect that they do not.

On amendment No. 11, I find it difficult to believe that the Secretary of State does not have the power to revoke the licence of someone who acts to obstruct the work of inspectors, which appears to be the object of the clause, if the licence has been appointed by him. That is a natural part of any licensing regime that would come out of the regulations and the design of the licence, on which we have already been told there will be consultation, before we see the meat of the licensing regime. In a sense that is the meaning of the word “license”. There is only continued license to operate providing the terms of a licence are not broken, which obstructing the work of inspectors would clearly do.

Even if provision does need to be included more clearly in the Bill, as the hon. Member for Wealden suggests—I would love to take credit for this, but my talented researcher Anna Harvey suggested to me that there were more logical places in the Bill for similar amendments to be made, such as clauses 7 and 8, which  we have already gone past. Perhaps it provides an opportunity to explore with the Minister exactly what the Secretary of State could have the power to do in sanctioning those who operate without a licence or break the terms of their licence.

Coming to amendment No. 14, I find myself once more puzzled that it needs to be included. As the hon. Gentleman stated, it could be said that clause 30 already covers the matter. That is exactly right. It sets out the regulations under which a licence may be terminated. Obviously, it is important to outline specific provisions to clarify what those circumstances would be, but that would also be a natural part of a licensing regime.

The explanatory notes to the Bill suggest that any provisions of a licence relating to its termination will be made under the regulations in clause 30. So, I cannot see the purpose of the amendment. Perhaps, on a probing basis they provide the Minister with a useful opportunity to explore the powers that might be exercised in those circumstances.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

That was another useful discussion and I congratulate the researcher of the hon. Member for Cheltenham. I know that it would not be accurate to say that that is what families are for.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

I am not so much of a Whig that I follow my august predecessor Craven Berkeley, the first MP for Cheltenham, who was elected in a family tradition. We have abandoned those practices now, I hasten to add.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

I know that Hansard will have followed my words carefully when I said that I knew it would not be accurate to say that in the hon. Gentleman’s case. That is important. However, just in case, parliamentary privilege is a wonderful thing, is it not?

To encourage compliance with these requirements, clause 12(5) specifies that the regulations may also create offences relating to inspections. For example, it would be an offence to obstruct an inspector when he is exercising his duties under the regulations. The clause lays down penalties that may be imposed for such offences. Those offences will be punishable

“(a) on summary conviction by a fine not exceeding the statutory maximum or such lesser amount as is specified in the regulations, and

(b) on conviction on indictment by a fine.”

The maximum penalty provisions contained in clauses 12 and 26 reflect those outlined in the Petroleum Act 1998 for offences against submarine pipeline inspectors. That enforcement regime has worked successfully to date. The liability to a potentially unlimited fine will act as an effective and proportionate deterrent to operators engaged in offshore gas or carbon dioxide storage. I remind the Committee of that because these words are now becoming familiar to me.

However, it is felt that financial penalties are insufficient in relation to offences committed against inspectors. A revocation of a licence may present an additional sanction. Under clauses 5 and 19, the licensing authority could include a provision in a licence that specifies that the  licence could be revoked if the licensee committed any offence as set out in the relevant regulations. Moreover, in the case of carbon dioxide storage, the appropriate sanction might not be revocation of the whole licence, but withdrawal of the rights of the operator to continue storage activities. That is because we may wish the operator to continue to be bound by the monitoring and the remediation obligations under the licence, even if they no longer have the right to continue storage activities.

I hope that I have reassured the hon. Member for Wealden that the proposed penalties for offences relating to inspections are adequate. I hope that I have also explained that a revocation provision is not required in the Bill because it could be included in the terms and conditions of licences if the regulatory authority deemed it necessary. There are circumstances in which that might not be appropriate. I would like to reassure colleagues and the hon. Gentleman that refusing to allow an inspector entry to a site would be very serious indeed, but that is true across a range of areas from this to child protection. Such a refusal would be enough to attract a penalty or the loss of a licence. That will be in the terms and conditions of the licence.

The hon. Gentleman has been very kind this afternoon. I hope that in the light of those reassurances, he will consider withdrawing his amendment.

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform)

I am very flattered by the attention that the Liberal Democrats have been paying to the various amendments that we have tabled. They seem to have given more thought to our amendments than to the Bill itself, which I think is very generous of them and we appreciate it greatly. It is an interesting approach to look at retrospective amendments once we have gone past the clause and say, “What a shame that we didn’t think about this a little bit earlier on.”

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

Just to clarify, I was not actually suggesting that the amendments might have been more logically amended in those places. Since we were not in favour of making them anyway, we would have been the last people to suggest them at that point.

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform)

That sounds a very Liberal Democrat position—we should have done something that we are not in favour of somewhere else in the Bill at an earlier stage. However, we will not get involved in this petty partisan politics, Mr. Amess, because I know that you would disapprove of that strongly.

To go back to our traditional love-in with Minister, he has been so helpful in reassuring us on all of our concerns. In particular, the final comments that he made about what would happen if someone sought to bar an inspector from a particular facility or from looking at records. The Minister made it very clear what is inherent in the Bill. With those particular assurances in mind, I am happy to seek leave to withdraw these amendments.

Amendment, by leave, withdrawn.

Clause 12 ordered to stand part of the Bill.