Grand Committee
Energy Bill
The Deputy Chairman of Committees (Viscount Simon)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 3 : Further duties of the Secretary of State
Baroness Verma
Baroness Verma
Baroness Worthington
“(c) further actions the Secretary of State will take to reduce carbon intensity if it has increased since the last statement.”
Baroness Worthington
My Lords, first, I should like to thank the Minister for her very timely and quick turn-around of the letter that we have just received. It was incredibly helpful and I hope we can carry on in that spirit; it was very much appreciated.
Amendment 27 creates an additional duty in respect of the statement on the carbon intensity of electricity generation that is required under Clause 3(3). Currently, the Bill requires that an annual statement must be made once an order has been made and that that should include a summary of the means by which the carbon intensity was calculated for that year and a declaration of whether the carbon intensity has decreased or increased since the previous statement. Amendment 27 adds an additional requirement to the statement, requiring that it contains details of the actions the Secretary of State will take if intensity has increased since the previous statement.
As I have previously mentioned, carbon intensity of electricity fell dramatically in the 1990s but has since levelled off and in 2012 sharply increased. This was due to a change in the merit order thanks to high gas prices and low coal prices. On Tuesday in Committee, I stated that coal was a common enemy. What I meant to say was that inefficient, unabated coal stations are the common enemy. I apologise for not being clearer about that. Of course, coal can play a significant role in a low-carbon electricity system if it is coupled with carbon capture and storage, which is a very important technology. However, the longer these old unabated stations stay on the system, the longer we will have to wait for investment in low-carbon alternatives, since they are very profitable and can crowd out new entrants to the market.
The Bill must seek to create a legal framework for electricity market reform that provides clarity of purpose and accountability. The Bill contains significant and wide-ranging powers, but there is currently insufficient accountability. Given the implications of the measures in the Bill, it is only right that the Government should be held to account over its performance against its stated objectives. One objective is clearly to increase investment in low-carbon infrastructure and a clear measurement of success is the carbon intensity of our electricity. The requirement to deliver an annual report under Clause 3 is therefore extremely welcome. However, it does not go far enough. If progress is not being made, a statement ought to be made about what will be done to address the reasons for lack of progress.
Of course, increases in carbon intensity in any one year can come about for a number of reasons—the relative price of fuels and the carbon price are important elements that the Government are seeking to correct using the carbon floor price policy. However, there are other reasons why intensity may rise in a given year, such as weather fluctuations, which may lead to an increased demand for electricity, or low hydropower output. They may also be unplanned outages in our nuclear fleet. There are therefore circumstances outside the control of policy and government, which can affect intensity. In these circumstances, any requirement to report on actions to be taken should not commit the Secretary of State to having to act, but there should remain the option to state the reasons for the increase and then to make a case for not taking action. I want to be clear that we do not wish to ask for the impossible, but we do seek slightly more accountability.
If intensity is increasing because of policy failure—for example, if the carbon price is failing to dissuade coal burn or the number of CFDs being signed is too low to deliver sufficient investments in the infrastructure—it is right that the Secretary of State should be required to report this and to detail actions he or she intends to take to correct these failings. Another potential issue is that the UK could seek to delay the closure of coal plants planned as a result of the introduction of tighter clean air regulations. I hope that the Government will not seek a derogation of this kind, because it would have serious implications for the carbon intensity of electricity, and corrective action would then need to be taken to compensate.
The intent behind this amendment is similar to that behind Amendment 22, which was not moved, which sought to require that the duty to a lay a report before Parliament setting out policies and proposals for how the decarbonisation target would be met included a requirement that that report should be modified if it appeared that policies were not going to achieve the target. Amendment 27 has a similar sentiment but offers a much simpler way of achieving that goal. In the event that carbon intensity is not heading in the right direction, there is simply a requirement on the Government to tell Parliament what they intend to do to correct it.
This is a simpler way of achieving the aim that was set out in Amendment 22 and I hope that the Minister will give it serious consideration. The wording may not be perfect, but I think that the sentiment is correct and I wonder if the Minister might propose a workable suggestion of her own.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, as the noble Baroness, Lady Worthington, has said, Amendment 27 proposes that if carbon intensity has increased from the previous year, the Secretary of State will report additional actions he or she will take to reduce carbon intensity. I agree with the noble Baroness that it is sensible that, in addition to setting up plans for meeting the target range and the progress made towards it, the Secretary of State should also explain the action he or she will take to stay on track towards the target over time. However, I do not feel that the amendment as it currently stands achieves that.
My main concern is that the amendment would require the Secretary of State to set out additional action in response to an increase in a single year and this may not reflect, as the noble Baroness has rightly said, a number of variants under which the power sector operates in practice. There are many factors that can affect year-on-year measurements of carbon intensity and she has rightly said that cold years often require higher carbon intensities. Another factor could be power stations being offline for maintenance. This has been the case in recent years with some nuclear power stations, the emissions effect of which was reported in our annual statement of emissions. While bearing these points in mind, I support the aim of transparent reporting but it must be meaningful for the power sector to do that in the context of long-term trends rather than year-to-year variations. Therefore, while I support the aim of the amendment, I need to consider further how to address it, perhaps with a view to responding to it at a later stage. With that, I hope that the noble Baroness will withdraw her amendment.
Baroness Worthington
I thank the Minister for her comments. I am very pleased that she understood that the sentiment was what we were trying to press; the exact wording needs to be worked out. On that basis, I am very happy to withdraw the amendment.
Baroness Verma
“Decarbonisation obligation
(1) The Secretary of State must bring forward regulations for a “decarbonisation obligation” within a year following enactment for the purposes of ensuring obligations under section 1(1) are met.
(2) A decarbonisation obligation means the level of carbon intensity of electricity generation in the United Kingdom that a relevant supplier may not exceed in respect of the total kilowatt hours of electricity that it supplies to customers in England and Wales during that year.
(3) In setting a decarbonisation order, the Secretary of State must first obtain and take account of advice from the Committee on Climate Change.
(4) Under this section, a “relevant supplier” refers to electricity suppliers supplying electricity in the United Kingdom.
(5) Section 4 makes further provision in relation to subsection (2).”
Lord O'Neill of Clackmannan
This is a probing amendment and in some respects it follows on from what my noble friend has just been talking about. The opportunity to adopt a decarbonisation obligation, which would set decarbonisation targets for supply companies, arises as a consequence of a 2004 European directive, which required electricity supply companies to disclose the environmental impact—that is, the CO2 emissions and nuclear waste of the electricity that they supply to customers over a year. In 2005, this was given effect in the UK by way of an SI. Therefore, since 2005 up to the year ending 2011—this is a matter of public note—we have published information about the emissions that each of the major energy suppliers has been responsible for in a year.
I think that when the regulations were initially drafted, it was assumed that people would look at what they had emitted and try to reduce the total year by year, given the general consensus for, and desirability of, securing a degree of carbonisation. However, a deficiency in the regulations has meant that there has in fact been very little in the way of an appreciable reduction in emissions from 2005 to 2011—the period for which data are available. The UK average for the year ending 2011 is 430 grams per kilowatt hour, which is a fall of 30 grams since 2005, so one cannot really say that the existing regulation has been particularly effective in reducing the carbon emissions created by the energy generators. Indeed, for other reasons which I think have already been mentioned in respect of the cheapness of coal, in 2012 carbon intensity climbed to 530 grams per kilowatt hour because of the attractiveness of coal as an alternative to gas and other sources at that time.
This is only a probing amendment, as it obviously has not had the benefit of the hands of parliamentary draftspeople. Nevertheless, the point that I really want to make is that I do not think it would be unreasonable for the Government to consider that we ought to use this information and not let it just gather dust on the shelf. I should like to think that this information would provide us with an approach to the problem. It is pretty well spelt out in the amendment that within 12 months of the Bill becoming an Act there would be a decarbonisation obligation, which would be set by the Secretary of State after consultation with and advice from the Committee on Climate Change. In effect, it would be a target for carbon reduction for the main electricity suppliers. We talk in the amendment about the relevant suppliers. By that, I mean suppliers of a sufficient size. We are not talking about micromanaging this. We could say the big six and one or two others, and that would probably catch just about everybody.
Therefore, it is not a massive exercise but I think we are missing a trick here. We have information that is not very satisfying, and it ought to be employed to some extent. If it is not, then in some respects it almost begs the question: why bother gathering this stuff in the first place? Why bother requiring the companies to make these returns if nobody is paying any attention to them? It may well be that there are people within DECC studiously looking at these data every year. However, again, that begs the question: why are they doing it if they are not doing anything with the information?
We have an opportunity here to explore the possibility of using the information as another lever in trying to decarbonise, or certainly to reduce the carbonisation of, our electricity supply. It is a fairly modest amendment and would probably cost very little for the Government to set in motion. It would probably be a source of complaint for the relevant electricity suppliers but, given that they are always complaining anyway, one more reason for complaint will not make an awful lot of difference. It would give the Government the opportunity to take some leadership on this issue, because the previous Government and this one have been rather lax about it. We see quite clearly that virtually nothing has been achieved on decarbonisation during six years of recording. It is a fall of five grams per annum, which probably works out at just about 1.1% per annum. I am not sure that any Government would want to defend that record. I recognise that there are circumstances where there are cheaper sources of fuel, which are dirtier, but these sources will not be available for much longer.
Lord Deben
As the climate change committee is mentioned in this amendment, perhaps I could refer to some of the things that have just been said. I declare an interest as chairman of that committee. This is obviously a probing amendment and I am sure that the Minister will want to look carefully at how it falls. However, it seems to have two elements that the Minister might wish to look at rather carefully. My noble friend Lady Verma is right to be very careful about additional burdens and I am one of those who believe in that, because there is no doubt that any kind of burden will be magnified. There is today’s announcement from the Taxpayers’ Alliance, for example, which has produced a figure for the cost of energy to a normal taxpayer. Instead of the £100 in 2020 that it will be, it is suggesting six times that by using figures which just do not stand up. Whatever we do, we will have that kind of attack.
The first thing that the Minister may find to be of value in these suggestions is that this information is already required. There is no additional information that needs to be acquired. Secondly, we also have a mechanism in place—the climate change committee—to provide the additional information that the Minister might want. Thirdly, it is a way in which one could signify the great importance that we attend and attach to electricity decarbonisation. It cannot be said too often that this is the key to the future. If we cannot decarbonise electricity, we have no hope at all of meeting the obligations that are statutorily before us. It is important to say this again and again because people seem very reluctant to understand why that is. But it is obviously true that if you have decarbonised electricity, you can in fact provide many of the things that people have grown used to having without destroying the climate. If you look at the issue, it means that we can have electric vehicles, particularly with smart metering and smart grids. However, we can also have all the other electrical machines, like the ones we all use today, without feeling that we are contributing to climate change. Therefore, it is absolutely essential to what we need to do, which is why the climate change committee has recommended that we should be very tough in showing that we have to meet decarbonisation and carbon intensity targets by 2030, congruent with where we have to be in 2050.
I hope that my noble friend will look at these amendments, not in the normal way of being contrary but as a contribution to strengthening the Bill without adding extra burdens on anybody’s shoulders. They have to do this anyway—and we would not be able to do anything if they were not doing it. The Minister may find it a useful contribution.
Baroness Worthington
My Lords, I wanted to make a few comments about how such an obligation might work. Of course, I completely concur with noble Lords who have spoken already; this is clearly a probing amendment, and a lot of work will need to be done to think through how it might work in practice.
The one thing that I would like to illustrate is that, on the fuel disclosure requirements that we currently have, 12 suppliers are required to report and many of those report very low carbon intensities because they are specifically green suppliers. Of those that are mixed suppliers, there is a very great difference between them; at the top end of the scale, we have Scottish Power in 2011, whose CO2 intensity was 580 grams per kilowatt hour. At the bottom end of the scale you have EDF Energy, with 253 grams per kilowatt hour. Obviously, that is because the plant self-serves to those supply companies; they are both energy generators and energy suppliers, so they choose to use their own power. It would be hard to imagine giving one figure that they should all meet, but an obligation might be that they should demonstrate an improvement over time by percentage per annum on their current levels, as recorded over the past six years.
There are a couple of reasons why that idea might be a good one to explore. We know that there is an issue among independent generators, which fear that they will not be able to gain access to the market because of self-serving—the tendency to use your own plant and be vertically integrated. If they were required to shift to a low-carbon footprint and intensity, they would have an incentive to find those independent generators that can generate low-carbon electricity and reduce their footprint. That could knock off quite a few issues in one, if we looked at it in detail.
Another thing to commend that idea is that the measures in the Bill are designed to bring forward investment, but nothing is there to compel anybody to come forward. You can set up a CFD strike price and offer these contracts, but if no one wants to bother getting them they can simply carry on with business as usual. If they had this obligation, it would create a great incentive to find those CFDs, apply for them and come forward. The alternative is simply to keep offering higher and higher strike prices until the carrot becomes so attractive that they have to come forward. So it is a good insurance policy for the Bill, providing a way for the Government to link those targets that they propose to set in 2016 with an actual mechanism for delivery. Let us be honest: a target set by the Government to deliver carbon intensity of any value will be delivered only if you find a way for the commercial operators in the market to deliver it. This is one way, and it has potential supplementary benefits in giving independents confidence that their products will have a market.
I hope that we can look at this issue. As my noble friend has mentioned, this is a probing amendment and lots of the details have to be worked out, but it would be encouraging to hear some positive signals from the Government that we might be able to continue the discussion.
Lord Oxburgh
My Lords, I simply add my support for this amendment and urge the Minister to give it careful consideration to meet its objectives, if not the words. Previous speakers have shot all the relevant foxes, so I will not pursue any of those, but simply comment that if we had been considering this Bill two years ago I would have urged the Government to use this as their main means of regulating emissions. We could have done away with acres of complexity in the rest of the Bill. However, that is, unfortunately, water under the bridge. I hope that the Minister will give this careful consideration.
Baroness Verma
My Lords, I am extremely grateful to the noble Lord, Lord O’Neill, and of course I look very carefully at all amendments and consider their impact. I am extremely grateful to my noble friend Lord Deben for rightly raising the important points about the information that is already available and the cost burden that it may impose further down the line on consumers. We must be very careful that we do not add to what is already a large pool of requirements put on suppliers and generators.
We are concerned about accountability. The Bill places sole responsibility on the Secretary of State to meet any target range. Once that is set, recognising that it is the Secretary of State who is responsible for setting energy policy in the UK, it is he who will be ultimately accountable to Parliament. My concern about the amendment is that it would be unfair for us to ask suppliers to manage their portfolios in order to meet national carbon intensity limits because, as has been said, it would be incredibly complicated to oversee and would confuse the responsibilities of the state in setting the target range with those of suppliers by specifying the annual level of carbon intensity that they must meet.
The question of the merit order, the order in which generation is dispatched, which is currently in response to price signals, is a commercial decision for industry and I would certainly have reservations about government interfering directly with it. There is, however, a role for government in seeking to achieve decarbonisation by supporting a market framework that will make it more attractive. I think that is what the noble Baroness alluded to by prioritising low-carbon electricity. That is exactly what we are doing through contracts for difference and the carbon price floor to improve the relative economics of low-carbon generation.
Those measures provide a much better means of addressing the gap raised by the noble Lord, Lord O’Neill, under his amendment. To quote my noble friend Lord Deben in the fifth report of his Committee on Climate Change:
“The gap between actual and achievable carbon intensity will be closed as coal plant is retired as the relative cost of coal increases under the rising carbon price floor and given tightening EU legislation on air quality”.
We are reaching that point but we do not need to add extra pressures to provide further information when there is more than adequate information around.
I will finish, and ask the noble Lord to withdraw his amendment, by saying that the Electricity and Gas (Energy Company Obligation) Order 2012 and its predecessors, the CERTs and CESPs, have always required energy companies to save carbon dioxide by promoting energy efficiency measures in households. There is enough going on in the system.
Lord Deben
Before my noble friend sits down, I did not suggest that there should be further weight further down the system, I was suggesting that we are already asking all that needs to be asked for this to work.
In what has been an increasingly long life, I have discovered that in most cases it is better to have “both/and” than “either/or”. I hope that she will at least leave a chink open to consider whether there might be some advantage in something after this sort of mechanism, even if it were permissive, so that it was clear that it was something that the Secretary of State could be asked about if he had not done it. Even if she went only as far as that, it would be of considerable help. Would she be willing at least to say that before we get to Report, she will have another look at this, because it seems to me that “both/and” might be better than “either/or” in this case?
Baroness Verma
First, I stand corrected by my noble friend. Secondly, I think that the measures we are taking address the noble Lord’s amendment. If I were to take it away, my response would probably be the same coming back. For clarity’s sake, I hope that the noble Lord will feel that I have addressed his concerns and withdraw his amendment.
Lord O'Neill of Clackmannan
If the Government are satisfied that they and their predecessors have done everything they could since 2005 to achieve a reduction of 30 grams per kilowatt hour, they are content with very little.
We are not asking the companies to do anything. They have already provided the information and it is clear that they are not pursuing decarbonisation with the enthusiasm and vigour that the Committee and the House want them to. It is therefore surprising that the Minister should be so complacent about this. She is suggesting that she will do no more than is being done at the moment: that the European directive will take out coal eventually and, once it does, we will have reached the sunlit uplands and everything will be fine. I shall withdraw the amendment but I think that when the Minister reads this she will be embarrassed because she is coming out with some fairly complacent stuff.
The major players have not been performing as well as they should have been and should be pushed harder. The Government have the information and the means of consultation to secure realistic targets, which would not be crippling but would be a great deal better than the, in effect, 1% per annum improvement that we have enjoyed over the past five or six years.
Earl Cathcart
I genuinely do not understand this. I can understand Europe wanting to get rid of coal altogether, but how is it that the Germans are planning to build 20 more coal-fired power stations? I do not understand how they will get away with it if the Europeans are going to get rid of coal altogether.
Lord O'Neill of Clackmannan
I am merely quoting what the Minister said. As a consequence of, for example, the large plant directives, our dependence on coal-fired generation will contract to a great extent. The Germans have created a number of problems for themselves and, in some respects, hell mend them. They have turned their back on nuclear power in a petulant and immature manner and they are now trying to resolve problems of generation in a situation where they have the wind in the north, the demand in the south and nothing in between.
Coal may well be an issue but I do not think that they will satisfy the regulations without CCS, which is still a pipe dream in many respects. It is one that we wish to pursue and, I hope, achieve, but for the next 10 years it will be a gleam in the eye of a few technologists and nothing else.
We are not asking the Government to do anything that they do not already do. It begs the question whether, were it not for a European directive, they would be collecting this information in the first place. They do not seem to be doing anything with it. It is there gathering dust and I do not understand the point of collecting it. It might be better to try to rescind the directive and say, “Let’s get this burden away from the companies. We do not need the information, we do not do anything with it and we are not going to use it to encourage them to reduce their emissions”.
Baroness Worthington
I am sorry to prolong the debate but I think this is really important. I stress that, in addition to providing a solution for how vertically integrated companies can meet their carbon intensity targets, by requiring them steadily to divest and move into low carbon, you solve one of the other problems that the Bill does not currently adequately address. I am getting e-mails daily from independent generators saying, “Fine, we can get CFD but who is going to buy our power?”. We are removing the obligation from the suppliers to buy low-carbon power. One of the features of the RO until recently was that there was an obligation on suppliers to increase their renewable percentage and that gave them access to the market. There is nothing to replace that in the CFDs. So, if you are an independent generator of renewable energy, you know that you have a good product but if no one wants to buy it you are really stuck.
On that basis, this issue deserves more attention, not merely because it helps us meet the carbon intensity targets but because it helps to solve the problem that the Bill currently faces of what we are going to do about access for independent generators.
Baroness Verma
My Lords, perhaps I may quickly respond to that. It was made very clear on Report in the Commons that we would consider the concern raised by the noble Baroness on access to markets of independent generators. I am sure we will debate that when we get to that part of the Bill.
Baroness Verma
Baroness Worthington
Baroness Worthington
In moving Amendment 36, I shall speak also to Amendment 37. Again, these are simply probing amendments to elicit more detail. I have a genuine question about definitions of electricity generation. We believe it would be helpful to have more information about what would be included under that descriptor. It is important that electricity is generated in a power station and is then transmitted long distances along transmission lines and through distribution networks. Quite significant losses accrue through that process. One of the advantages of distributed energy is that by locating the source close to the demand you get a potentially more efficient system. I would be interested to hear from the Minister about how far electricity generation will stretch. Does it take us through the plant into transmission and then to distribution? Where do we draw the line?
On what might seem a technical point, within that transmission network, there are sources of significant greenhouse gases other than CO2. SF6 is a very powerful source of greenhouse gas. In fact, it is the most powerful greenhouse gas. One kilogram of SF6 is equivalent to the emissions of 22,200 kilograms of CO2. It is significantly used in electricity substations. There are requirements to report losses of SF6 because it is such a significant pollutant. What policies do we have in place to reduce the emissions of SF6? Mechanisms can be used to reduce it. There are obvious leak detection and repair processes that companies should carry out. It is possible to recycle equipment. Employee education and training is a very important aspect.
I am sorry to spring this on the Minister. It is quite a technical issue and I would be surprised if her notes cover it. I use it only as an illustration of the fact that “electricity generation” is quite broad terminology. It would be helpful to know what is included. Anything that the noble Baroness can say about SF6 in a letter or in another way would be helpful.
As regards Amendment 37, I reiterate my thanks for the letter we received, which addresses the concern about how we are to marry up the fact that through the CFD process we may well fund generation outside the UK. I happen to think that is probably quite a good idea. Certainly, if Ireland is happy to have onshore wind that can be directly piped to Wales in a direct cable, that would be fantastic for us. I would prefer it if onshore wind were in the UK, where we would get the benefit of the jobs but there are problems associated with our being a very densely populated country. This is not to challenge the principle that CFDs can be assigned in places other than within the UK but merely to ask how we will account for that within the carbon intensity targets. Will those plants receiving CFDs count towards it? Will the noble Baroness say more about that?
Lord Teverson
This is a useful probing amendment. One of the other areas that has not been mentioned is the interest that the Government have had in geothermal energy from Iceland, which has started to be explored. I would like to think that we could have geothermal from Cornwall that we would be absolutely certain was within this regime—maybe I will come to that later in the Bill. It is useful to start to understand this and develop these arguments, because, in terms of dedicated sources of renewable energy that we work with other nations to bring to these shores, it would be regrettable if we were not able to take the full credit for that work within the decarbonisation targets. I would be interested to hear the Government’s thinking in this area.
Baroness Verma
Amendment 36 proposes that the Secretary of State makes further provision about the meaning of “electricity generation”. Clause 4 defines carbon intensity as a measure of the amount of carbon emissions generated in grams per unit. Before I go further, I will write to the noble Baroness on SF6, because my notes do not cover that detail. I will make sure that next time they are here at hand.
The Bill covers emissions from all electricity generated within the territorial boundaries of the UK, both from power stations and auto generators, and includes the emissions from electricity before any transmission losses. This approach is consistent with our international reporting system, which the noble Baroness will know about. I should also like to reassure noble Lords that the power in Clause 4(4) enables the Secretary of State to make further provision for the meaning of carbon intensity of electricity generation and this includes any changes to the definition of electricity generation. I think this goes a little way to responding to the concerns of the noble Baroness.
Turning to Amendment 37, Clause 4 currently states that carbon intensity of the power sector includes emissions generated in Great Britain only. Although, as I said, this will apply to the UK power sector following the Government’s amendments to extend the decarbonisation provisions, this does not include emissions from interconnection or non-UK low-carbon generation. The Government considered this very seriously when we were designing these clauses. While interconnection is important, the Secretary of State cannot realistically be responsible for, and would have great difficulty in measuring, the carbon intensity of electricity generated outside the UK. Fundamentally, what is coming down the wires is simply electricity, and we could not say for certain in most cases whether it is low-carbon or not. If anything, my concern is that we would find ourselves overclaiming, when in fact the electricity being imported was from a wide range of generation sources. However, as I previously mentioned, these provisions retain flexibility so that this approach can be reviewed at a later date and changed if we feel it is necessary to do so.
I reassure noble Lords that if it becomes necessary to alter the definition of carbon intensity of electricity generation, for example to include emissions from interconnection and non-UK low-carbon sources, further provisions can be made and will be made by the power in Clause 4(4).
I hope that I am able to reassure noble Lords that the Government’s provisions already have a purpose and a sensible and logical approach for measuring the carbon intensity of electricity generation, and that a further power to amend the default definition is available should the definition need to be modified.
My noble friend Lord Teverson raised a point on thermal support. The Government announced draft strike prices last week for geothermal energy sourcing to support the development of that technology. I know that my noble friend will be extremely pleased to see that.
The noble Baroness mentioned offshore wind turbines off the coast of Ireland. As yet, we have not said anything about limiting support to specific technologies. A memorandum of understanding was signed by the Irish and UK Governments earlier this year which covers renewable technologies, and we are working closely with the Irish Government to develop further dialogue on that. On that note, I hope that the noble Baroness will withdraw her amendment.
Lord Teverson
Before the noble Baroness withdraws it, may I make one further comment? I am not getting in the way of progress and I do not expect a response from the Minister, but there is a qualitative difference. I accept the point exactly about general interconnectors but there is a difference between the specific inter- connectors dedicated to wind energy and which are for those sources of power, whether it is around Iceland or Ireland, and general interconnectors. It may be useful for the Government to remember that, but I thank the noble Baroness and the Government for their continued attention to geothermal and I very much welcome her comments.
Baroness Worthington
I thank the Minister for her response and I look forward to receiving the letter. On Amendment 37 it is important to say, as the noble Lord, Lord Teverson, has just stated, that I was not necessarily probing in regard to interconnectors. However, in the fuel disclosure that we just described, suppliers are able to use electricity that they have purchased through the interconnector to count towards their fuel disclosure. They use an averaged amount that is worked out, in fact, so it is possible to account for interconnection. I am not asking for that, but I wanted to make sure that that was clear.
I was referring to a specific project, which I think is called Greenwire. That project may be called onshore-offshore, being built on the land of Ireland but connected by a direct cable to the UK. It is not an interconnector but a direct transmission line. If that goes ahead, it would potentially be a good and significant source of low-carbon electricity. It would be a shame if that were then not to count towards our carbon intensity target. After all, it would be UK suppliers and consumers who were paying for it. It really is important that when we think about these definitional issues, we get it correctly understood. The letter refers to the difference between direct connection and interconnection, so we are probably on the right track. I wanted to make sure and get it on the record that those projects will count towards our carbon intensity targets. On that basis, I am pleased to withdraw the amendment.
Baroness Verma
Lord Whitty
Lord Whitty
My Lords, I do not intend to move Amendment 38A, although the noble Baroness did not actually reject it during the previous proceedings. However, in view of the amendments that replace “Great Britain” with “the United Kingdom”, will the noble Baroness check carefully when reference is made to consultation with devolved Ministers that Northern Ireland Ministers are included at all points and that the reference in general is to Ministers rather than departments? If she is prepared to do that, I am happy not to move the amendment.
Lord Whitty
Lord Whitty
My Lords, in moving on to this large group of amendments, we move to an entirely new part of the Bill, which deals with the regulation of the nuclear industry and, in particular, with the creation of the Office for Nuclear Regulation. That body is currently operating in shadow form within the HSE.
I need to thank the Minister and her department for a number of things. This is a large section of the Bill; I said at Second Reading that it was an extremely large section. It was not seriously considered line by line in the House of Commons and we, as the House of Lords, have an obligation to look at it.
I asked the Minister to provide me with an indication of where the regulatory structure of the new ONR, as compared with the previous powers of the HSE, had changed. I thank her for the letter she sent me clearly setting that out.
I congratulate the department on an important breakthrough—it must have had a hell of a job with parliamentary counsel—in managing to put everything relating to the ONR in one place in one Bill. Noble Lords’ previous experience is that, as with the Enterprise and Regulatory Reform Act, the Financial Services Act and the Public Bodies Act, there is a tendency for parliamentary counsel always to refer back to at least one layer, and often several layers, of previous legislation. It is therefore important that most of what will apply to the ONR is here in one place. I congratulate whoever negotiated with parliamentary counsel to that effect.
However, there are still some uncertainties and a lack of clarity, and possibly some tightening up can be done. It is important that we all recognise that we are creating regulations for a new body that is to oversee a major source of our energy. It is complex and controversial in both political and public relations terms; it is changing over time; and local, national and international issues are involved. It is therefore important that we get the regulation right.
I have tabled a number of amendments, most of which are probing. Subject to what the Minister says, I doubt we shall need to return to any of them on Report. They deal with issues of scope, relations with other bodies engaged in the nuclear industry, the effect of the health and safety provisions on workers on nuclear sites and governance, finance and staff transfer.
Perhaps I may make one other general point. The noble Baroness and other Ministers will be aware that the Delegated Powers Committee, although it did not reserve its most scathing comments for this part of the Bill but for Chapters 2 and 3 of Part 2, made substantial propositions on how the order-making function under this part of the Bill should operate. Regrettably, I had not read that report, which was published on 28 June, in time to meet the deadline for tabling amendments. It would be helpful if the Minister could indicate, either in total at the beginning of that part of the Bill or as we reach the relevant clauses, how the Government intend to deal with the recommendations of the Delegated Powers Committee.
Amendment 38E and other amendments in the group deal with the scope of the ONR and its regulatory authority. The principal issue is the sites which ONR will cover. The definition in the Bill is largely in relation to sites rather than activities, although activities circularly define sites that need to have licences. We need to know which sites we are talking about because many sites which deal with nuclear and radioactive matters will not be covered by the ONR or by the regulations in the way that they are reflected in this section of the Bill. There are, of course, substantial defence sites that deal with nuclear matter and nuclear materials; there are transportation issues, not all of which seem to be covered; and there are radioactive materials, processes and operations being conducted in a wide range of sites across industry, universities, research functions and the National Health Service. Therefore, we need to be absolutely clear what the ONR relates to.
Most of the non-nuclear industry sites are not really governed by the nuclear regulations, although some of them are, and certainly not by the ONR as it will be, but we need to be clear where those divides operate. Therefore, this group of amendments seeks to make that a bit clearer. Amendment 38B would make it clear that this provision relates to civil sites. There may be some ambiguity here because defence establishments, which are, as I understand it, regulated by the Defence Nuclear Safety Regulator, often have some quasi-civilian activity. If it is clear that even those activities are excluded from the ONR, we probably need to make that clear in the Bill, and that is why I suggest that we insert the word “civil”.
Amendment 38D proposes that, once it is clear which sites we are operating on, the Secretary of State or the ONR should be obliged to provide a public list of such sites. At the moment, such sites are defined by whether they have a licence. The licences may well be listed but licences may be at various levels of scrutiny. We need an absolute list somewhere in the system of what sites the ONR regards as nuclear sites for the purposes of the Bill.
There is also a reference in Clause 57 to “associated sites”. Whereas there is a definition of nuclear sites by reference to the licence and a definition of nuclear matter and nuclear material by reference to other regulations, there is no definition of associated sites. I have therefore offered a definition, although I think that it may be far too wide. However, certainly unless we explain “associated sites”, it will be difficult to know what is and is not covered by that.
Amendment 40N deals with the issue that I have just described—that is, sites that do not yet have a licence but are moving towards being areas that would require a licence. As the nuclear industry expands on the generation side, as well as perhaps into other activities, we will expect sites to be in various degrees of preparation. Not long ago, Hinkley Point C, which I have visited on a number of occasions, did not have a licence or planning permission and it had not met all the other requirements in order to set up a nuclear power station. Obviously the functioning power stations and the ones that closed had all those things covered, but the area of Hinkley Point C could not yet be designated as a site because it did not have a licence. Every prospective nuclear power station site will have a period before it gets a licence to operate. We need to make sure that that is also covered and that it is clearly the ONR’s responsibility and, to some extent, the responsibility of other organisations, which I shall come to in a separate group of amendments.
There is also the issue of transport. It is clear that the ONR will now be inheriting from the HSE not only road transport but rail transport, which previously came under the ORR and the rail regulations. It is also clear in this draft that the ONR will cover shipping. However, aviation is a rather difficult issue. Although not much civil nuclear material will be carried in aircraft, some will be, and, if the ONR is not the regulator for its transportation by air, it needs to be made clear who is. At a quick glance, I could not see whether the CAA’s responsibilities covered this, and the Minister may be able to put me right on that, but we need to know whether, if I am suggesting that we also cover air transport, where that responsibility lies.
Therefore, in this first group, there are several issues relating to scope. It would be helpful to have some clarity now but, if the noble Baroness and her advisers feel that it would be better to write to me and other noble Lords, then I shall be perfectly happy with that. I beg to move.
Lord Jenkin of Roding
My Lords, I congratulate the noble Lord, Lord Whitty, on the comprehensiveness of his amendments. When we approached this Bill, I was rather under the impression that there had been so much thinking about the creation of the new independent body, the ONR, and so much discussion about it that allotting most of today’s session to considering it was perhaps a bit excessive. However, having studied his amendments—and no doubt there will be others who will wish to make points—I think that the discussion may well take us until 6 pm, although I hope not.
I approach this from a number of different standpoints. First, I think that I am the only Member of the Committee who took part in the debates on the Nuclear Installations Act 1965. That was a few months after I had been elected to the other place, but I have since reminded myself of the provisions of that Act, which are very comprehensive. They have been amended down the years since then—through the lovely system of LexisNexis, one can get a very good summary of what the Bill originally was and how it has changed with time. Therefore, to take issue with the noble Lord, Lord Whitty, I think that the main licensing provisions of the 1965 Act are still going to be in force and are not repeated in this Bill. It is assumed that the authority, the ONR, will have those licensing provisions. There is a substantial area where people will need to look back. That is the first thing.
Secondly, before I entered Parliament I was an employee of a large chemical company and one of the things that we did was to supply CO2 to the Magnox nuclear power stations to be used as a cooling material— I will refer to that later. I have also been one of those who over recent years have been pressing very hard for this change to the ONR to take place. The case that had been very firmly made to me was that remaining part of the Health and Safety Executive meant that inevitably inspectors on the nuclear regulation side were civil servants and thus bound by Civil Service terms and conditions. In fact, experienced inspectors are very valuable people, much sought after around the world. They have been though a long period of training and have a lot of experience. Sometimes people will say an inspector is not really fully qualified unless he has been doing the job for about 20 years—and that has been said to me by more than one person. Therefore, there was considerable pressure from this part of the HSE, the nuclear regulatory part, to separate. I heard those arguments and paid considerable attention to them. The noble Lord, Lord Oxburgh, may remember that when the Select Committee interviewed Dr Mike Weightman, I raised this point and he was very kind to acknowledge that some of us had indeed been pushing this case fairly hard.
That is how I approach the amendments tabled by the noble Lord, Lord Whitty. He makes some good points but I hope that he will forgive me if I point out that some of his amendments may indeed perhaps not quite be what he intended or envisaged. However, as I make these criticisms, no doubt he will have good answers. To take the amendments in the order in which they appear on the Marshalled List, the first with which I take issue is Amendment 38D. The noble Lord made quite a point about associated sites and of course he is quite right to refer to the issue—it is in Clause 57(1)(a)—but, as he readily acknowledged, his amendment may go deeper and wider than he perhaps intended.
Let me return to my previous point. The distillers company for which I worked produced CO2, originally as part of the process of fermentation but eventually as a chemical process, and supplied it to a large number of different industries, not least, of course, the drinks industry. It would be absurd to regard those distilleries and factories as anything to do with the nuclear industry. Of course, when the material is delivered to the nuclear power station it has to be of nuclear quality, which is, quite rightly, properly regulated—but it is not the site where it is made that is regulated but the material that is delivered. No doubt there are many other examples.
I have recently ceased to be honorary president of the Energy Industries Council, which represents something like 600 firms in the energy supply chain businesses, of which nuclear is clearly one. On the rare occasion I was asked to talk to them, I always made the point that they had to make sure that they were producing materials and products to nuclear standards. This was something that quite a number of the firms found quite difficult to do. Those standards are higher than most other engineering standards, particularly for pieces of equipment, but that does not mean to say that the sites where they are made become nuclear sites. I hope that my noble friend the Minister will feel that it would be quite wrong to expect the ONR to go around inspecting sites where no kind of nuclear hazard could conceivably exist.
On Amendment 38F, I agree with the noble Lord. I do not see why this should not be extended to air transport. There must be occasions when nuclear materials are transported by air, although probably not very many, and clearly that should be within the remit of the ONR. That seems to be a reasonable change, but I have criticisms of some of the other amendments.
Amendment 38N refers to,
“other relevant agencies with responsibilities in the nuclear field”.
It is my impression that the nuclear regulator has always been able to consult and go much further than just consulting, having very detailed arrangements for regulating the interaction between the various bodies. There are long and substantial memoranda of understanding that cover that sort of field. I have made it my business to get a copy of the current memorandum of understanding between the HSE, which was the body that was running what is to be the ONR under this Bill, and the Environment Agency. When I came to print it out, it was 14 pages and contained a number of very important statements. I will not begin to read them all, but the objectives of the memorandum are to,
“facilitate effective and consistent regulation by ensuring that … activities of EA and HSE in relation to nuclear licensed sites are consistent, coordinated and comprehensive … the possibility of conflicting requirements being placed on licensees, or others operating on nuclear sites (collectively referred to as ‘operators’ in this memorandum), is avoided … synergies are exploited and the appropriate balance of precautions is attained”,
and,
“duplication of activity is minimised”,
which is of course very important if you are trying to keep the costs down. Perhaps most important of all is that,
“public confidence in the regulatory system is maintained”.
I shall not read more than that, but the annexe to the memorandum goes into very considerable detail as to how it is to be done. Presumably these will all remain in force. They may have to be signed by different people because the organisations will be different. The one that I have in my hand was signed by the noble Baroness, Lady Young of Old Scone, when she was chairman of the Environment Agency, and by Timothy Walker, the then director-general of the Health and Safety Executive. If there are to be modifications in the memorandum, they will need to be signed by the current people. I hope that my noble friend may be able to address that.
Amendment 40N would not be right. It would risk all sorts of difficulties, duplication and so on. In particular, it would risk classifying a site as licensed before a nuclear site licence is granted. I heard what the noble Lord said about that, but of course there is the elaborate process of the generic design assessment. He referred to Hinkley Point C. That has been absolutely combed over by the existing nuclear regulator. It was a hugely important step forward when it finally gave approval of the design, but the noble Lord is right that there is not a site licence yet. That will be the last stage. To argue that all this should be taken into account without taking account of the whole GDA process seems a little unreal. Therefore, I say yes as regards air transport but I suspect that the other elements may not be quite what the noble Lord, Lord Whitty, intends. I hope that my noble friend may be able to take account of these representations.
Lord O'Neill of Clackmannan
I congratulate my colleague and noble friend on the rigour with which he has approached this area. It is the nature of probing amendments to make sure that what it says on the tin is what the Government are going to do. If we can get it right, we can avoid the kind of problems which I encountered many years ago as a constituency Member. I picked up the local newspaper to be told that the local authority rubbish tip near one of my villages was a nuclear dump. I then had a terrible job trying to find out who was responsible for the nuclear element within it. It transpired that it concerned a lecturer at Stirling University and that all we were really talking about was the lowest of low-level waste coming out of the radiology departments of the local hospitals. For about 20 minutes, it afforded one of the local hysterics an opportunity to parade his anxiety about all things nuclear. However, it also indicated that there is an awful lot of loose talk. Therefore, if at this stage we can make the issue of associated sites clear and explicit, and even if it is a somewhat tortuous process, as I think my noble friend has indicated, that will be important.
We should not lose sight of the fact that, at some stage or another, a lot of low-level waste is gathered together and taken to Drigg, where it is treated. As we say in Scotland, “Many a mickle maks a muckle”. You end up with a whole lot of little bits of radiological and nuclear waste being brought together on a site and being treated. Therefore, it is important that we differentiate between that which is a nuclear site and that which is not.
It is clear that throughout, for example, the generic design assessment process, which looked at the two new forms of reactors that we may well see in the UK, the Environment Agency walked step-by-step with the nuclear agency at the same time. As Lord Jenkins just said, it is important that we make sure that—
Lord Jenkin of Roding
Perhaps I may make one thing clear at the beginning. I have no ‘s’ on the end of my name. There is correspondence in the archive at Cambridge University between my great-grandfather and the great Lord Kelvin. My great-grandfather said to Lord Kelvin, “Mind you, when you take out the patent, you must not spell my name with an ‘s’”.
Lord O'Neill of Clackmannan
If only an “s” were the only thing that I had to worry about. When you have a name such as O'Neill, it can be spelt about five different ways. In some instances, it is an ‘l’ of a difference at the end—but we will pass over that.
The point that I wanted to get at here is that we know that there are problems with the successor agency. There is a proliferation of agencies with which the nuclear agency will have to be associated and will be linked to. It is very useful that we have this opportunity for the Minister, probably somewhat tortuously, to make the matter quite clear. In this day of judicial review and the like, what we say in these Committees, when we are being sensible and relevant, is of some significance outwith this place. Therefore, it will be guidance for people. I still have some sympathy for constituency MPs confronted with the prospect of a nuclear dump in their back yard. In my constituency, it was almost in the field where we believe the Battle of Bannockburn was fought, but it was not quite. They did not need to use nuclear weapons in 1314, although we might have to use something akin to them in 2014—but that is for another day and another debate. I welcome the amendments and wish them well until they are withdrawn.
Lord Deben
My Lords, I do not think that one can add much to what my noble friend Lord Jenkin said, except to underline one thing, which is the question of the sites and their management. I declare an interest as the chairman of Valpak. We are responsible for a good deal of recycling.
First, there is a real issue about sites and the checking of sites. Wherever the check can come on the product, one is in a much stronger position. My noble friend’s point is that, in many cases, the site is actually not a nuclear site at all but the product is provided for a nuclear installation. In those circumstances, it is very important that any consideration of the checking of sites should be limited to those which one has to check and not include those which one does not. That is more important than one might think, given how difficult such checking is.
Secondly, I support the point made by the noble Lord, Lord O'Neill, as I was also previously a Member of Parliament—for a constituency with two nuclear power stations. It is interesting how quickly people become happy to have those nuclear power stations once they understand the situation but how easy it is to stir something up when you have them. The only way to overcome those things, as I know the Minister will understand, is to have absolute clarity and to state matters in a form and in language that people can understand.
When we sought planning permission for Sizewell B, I held nearly 50 parish meetings. The trick was that the only people who could come to those meetings were people who lived in the parish, so the peripatetic protesters could not arrive and we could have a proper conversation. The protesters had to go to their own parish meetings. At most of them, they were well known and not altogether liked. Therefore, the discussions, considered and reasonable as they were, ended up with all those parishes supporting the opening of the new nuclear power station. My noble friend should be reminded that what made it work was the simplicity and clarity with which we discussed the issue. I hope that in answering what I think has been an interesting debate, particularly the discussion between the noble Lord, Lord Whitty, and my noble friend Lord Jenkin, she will give us an assurance that we will continue to be as clear as possible. This is a very dangerous area in which to be unclear and it helps a great deal if there is clarity from the beginning.
Lord Judd
My Lords, I ought to declare an interest in the sense that, unless climate change has made a difference, I live about 10 miles due north-east of Sellafield. I also regularly use the A66, which is used by vehicles carrying nuclear materials and waste, and I also use the M6. I am sure that other noble Lords and I have that in common.
I shall start by reflecting on what my noble friend Lord Whitty said. It is good to see that the department has taken these issues seriously in the Bill. His amendments are extremely constructive and helpful in strengthening what the department obviously takes seriously, and that is right.
Perhaps I may make a couple of observations. First, I should like to pick up on what the noble Lord, Lord Deben, said. The Minister knows about my preoccupations with the recycling and waste process. I believe it is essential always to remember that this is a national responsibility and that we have to be certain that the sites selected are the best—or, at any rate, the least worst—available in the United Kingdom. It is irresponsible to get this tangled up with localism, local responsibility and so on. It is quite unfair to place on a local authority and local representatives responsibility for strategic decisions on such an important national issue. This is a national responsibility and we must approach it in that context. Of course it would be appropriate, at the right time, to get involved with local authorities on the implications, but we have to be satisfied that we are acting responsibly as a nation.
Secondly, I have often reflected in life that one of the problems that we run into as legislators is that we are inclined to think that legislation provides the answer. Of course, it does not. Legislation at its best underpins what should be in society’s behaviour and enhances the opportunities for good, effective professionalism and so on. Inadequate arrangements work exactly in the opposite direction and inhibit good action. Although sometimes with imperfect structures wonderful things can happen, it is much better and more reassuring to have the best possible structures and arrangements.
My most important point is that what matters most is the culture. It has to be a culture shared by workers and management at all levels. It cannot be the responsibility of only the safety experts or those named with a safety responsibility or the inspectorate. That is a losing game; it is like a gamekeeper trying to catch poachers. The responsibility must be central to the professionalism and culture of all those involved in this work because the hazards are considerable. From that standpoint, I hope that in our deliberations we will look at this sense of shared cultural responsibility.
I do not want to be sensationalist—it is easy to be sensationalist in an area such as this—but for those of us who live in an area like Cumbria there are too many stories of one thing after another going wrong. We have just had another massive fine imposed in the past few weeks. We have had stories of lorries coming from the Midlands with waste dribbling from them all the way across to their destination in west Cumbria. It is important to make sure that this issue is properly seized and that there is an indispensable culture of commitment in the whole nuclear operation. I want nuclear to succeed but this is essential to its success and contribution to humanity.
My final point is simply this: there is probably room for us to explore a little more the relationship between what we are talking about now and health. There needs to be full co-operation between all those involved and those operating the health services in the vicinity. Sometimes in these areas matters come to light that need attention, and I hope that that point can be taken on board.
Baroness Verma
My Lords, I am extremely grateful to the noble Lord, Lord Whitty, for his careful consideration of this part of the Bill. I will start by commenting on questions that have been raised before going through my notes to be able to answer, I hope, each amendment that the noble Lord, Lord Whitty, has raised. The noble Lord mentioned the Delegated Powers and Regulatory Reform Committee’s report. We are extremely grateful to the committee and are giving careful consideration to its recommendations and working closely with it to provide it with further documentation. I hope to get that to it very soon.
The noble Lord asked whether the Bill covered sites yet to be granted a licence. The definition of a relevant nuclear installation includes proposed installation sites, so the answer is yes. No safety critical work can ever happen unless a licence has been issued.
I start by congratulating my noble friend Lord Jenkin because next year he will be completing 50 years of continued service in Parliament and we are extremely grateful for that.
Baroness Verma
When my noble friend said 1965, I tried to remember what I was doing then and I think I was probably playing around in a nursery playschool. I am extremely grateful for the wisdom and support of my noble friend and for being able to count on his great experience when I need information and advice. He is clearly very formidable in his experience and we all greatly benefit from that, even though he sometimes poses incredibly difficult questions for me to answer. One question he posed was whether ONR still has licensing provisions in the Nuclear Installations Act 1965. The answer is that ONR will be responsible for enforcing the nuclear safety sections of the 1965 Act, including, for example, the granting of nuclear site licences.
I am also extremely grateful to my noble friend Lord Deben for his contribution. He is absolutely right about engagement and clarity. I hope that I will be able to respond with clarity to the amendments that the noble Lord, Lord Whitty, has raised. I have also learnt a new terminology today from the noble Lord, Lord O’Neill. I am always amazed at these debates at what they turn up and I can then use—probably at an event tomorrow, when I am going to be speaking on “mickles” and “muckles”. I perhaps need to get greater clarification on exactly what it means, in case I end up in huge amounts of trouble.
The noble Lord, Lord Judd, and I share sometimes opposing views on the way in which we deal with waste, but I hope that we remain in constructive dialogue on this subject. The noble Lord should understand that I still firmly believe in localism and the involvement of local people in how sites in their communities are located. While a site is always in the national interest, we must never forget that those communities have to live with whatever site is on their patch.
I turn to Amendment 38B. The noble Lord has asked that the definition “GB nuclear site” in Clause 57 should be replaced by “GB civil nuclear site”. While the ONR’s role does not extend to regulating nuclear safety on Crown nuclear sites—as the noble Lord has picked up—such as those owned by the Ministry of Defence, there is a number of licensed nuclear sites which are operated by civil contractors for defence purposes. The ONR will have overall responsibility for these sites, which include the Atomic Weapons Establishment sites at Aldermaston and Burghfield and the Rolls Royce nuclear submarine fuel production plant in Derby among others. Therefore, while I appreciate the noble Lord’s efforts to add greater clarity to the Bill here, I do not think that amending it in the way that he seeks will make the definition any clearer.
Amendment 38C extends the definitions included within Clause 57 to the rest of the Bill. This amendment, however, is not required, as the terms defined in the clause are not used without appropriate reference elsewhere in the Bill. Therefore, the noble Lord should rest assured that the terms are covered, if not at the front of the Bill.
Lord Whitty
My Lords, I will be very happy to withdraw the amendment and I thank the Minister very much for the clarification. I think there are still things which in some respects are not as clear as perhaps the noble Lord, Lord Deben, and I would like, and I will quickly go through them. I am grateful for the support of the noble Lord, Lord Jenkin, in relation to air transport and his general intervention. He talked a lot about the relationships with other organisations, which arise in the group after next, and that also tempted my noble friend Lord O’Neill down the same road. If my noble friend does not mind, I will not respond to that at this point. I am also grateful for the Minister’s indication about how the Government intend to deal with the report of the Delegated Powers Committee, and no doubt we can return to that on Report.
In relation to the designation of “civil” and the requirement on the list of sites, I regret that I failed to notice that there is a reference to a list of sites on page 180. That would be extremely helpful. It would clarify the issue, because I do not expect anybody would expect the AWRE at Aldermaston to appear on a civil nuclear site list but I suspect they might for the Rolls Royce engineering works. I also suspect there will be others where it is not absolutely clear. I am not arguing that they should be within the ONR’s remit, but from first principles, it will not be obvious that it is not. So, while the list will be helpful, some clarity is still needed.
Regarding aircraft, I am still not absolutely clear. Clearly the CAA does have some responsibilities here, as does the international regulatory authority, but the noble Baroness, Lady Verma, seemed to say that internal flights were already covered. Both I and the noble Lord, Lord Jenkin, could not see where that is in Clause 59, where it very clearly refers to internal shipping and internal or territorial waters for shipping and to rail and road, but not to air. I am not expecting an answer now, but to me what the noble Baroness was saying did not seem absolutely clear.
On the issue of “associated sites”, clearly my definition is too wide and I would not expect the ONR to be regulating the activity of the distillers that are putting bubbles in our bubbly. I think that operationally there is a need for a definition of associated sites. As the noble Lord, Lord Deben, said, it is more product-related, but whether they regulate that only at the point where it arrived on a licensed nuclear site is at the frontier of the ONR’s responsibility.
All I was trying to establish regarding the pre-licensing activity, which I think the noble Lords, Lord Jenkin and Lord Deben, describe—and taking Hinkley Point as an example—was that the HSE and the ONR as was and the new ONR have a responsibility well before there is any nuclear activity on that site. So that is within its area of responsibility. It is not a licensed nuclear site until the activity begins, but it has a major role in preparing for that. Therefore, it should be part of the ONR’s responsibilities. That is all that amendment was attempting to establish.
We have had an interesting and wide-ranging debate—slightly wider ranging than the actual amendment—and I thank the Minister for clarifying some of that. If her officials feel that there is more which needs clarifying, either in a letter or by way of some discussions, I would be very open to that. I beg leave to withdraw the amendment.
Lord Whitty
“( ) For the purposes of this section, the provision of section 2 of the 1974 Act with regard to information to and representation of workers on health and safety issues shall continue to apply.”
Lord Whitty
My Lords, this amendment deals with relatively bread-and-butter matters and with the effects of the transfer of responsibility for non-nuclear health and safety functions on nuclear sites from the HSE to the ONR. In various ways, we seek to ensure that there is continued protection for the workers on those sites, even though the ONR and not the HSE is now the appropriate regulator and enforcer, and that the provisions of the health and safety Act of 1974 would continue to apply.
Amendment 38E states unambiguously, for clarity’s sake, that the workers on ONR sites still have the rights provided under Section 2 of the 1974 Act. I was involved in the discussions on the 1974 Act. I cannot go back quite as far as the noble Lord, Lord Jenkin, did—to 1965—although, within three years of that Act being passed, I worked on one of the nuclear sites that it applied to. However, Section 2 of the 1974 act provides the basic health and safety rights: to information, to representation through safety reps and to consultation. I am concerned here mainly with non-nuclear matters on nuclear sites, but I want it made clear that that provision will still apply to those workers in relation to both nuclear and non-nuclear matters.
I will jump to Amendment 38U, which is perhaps a bit esoteric. It deals with existing compensation schemes for workers on nuclear sites where there is the issue of existing schemes, particularly in relation to radiation damage, and where collective arrangements were established 20 or so years ago. The change of regulations and the change in responsibility should not alter the ability of workers on nuclear sites to receive the compensation provided under those schemes, which avoid lengthy and complex legal proceedings. The Minister is looking puzzled at this. I am happy to talk to her officials outside but it is important that that is retained.
More controversially, Amendment 38T would delete the application to this sector of a change that was made under the Enterprise and Regulatory Reform Act a few weeks ago. It was pretty controversial in this House and I suspect that even those who voted for it here did not expect it to apply on nuclear sites. Writing the implications of that Act into this Bill means that on nuclear sites, whether for non-nuclear issues or for nuclear issues that are not specifically provided for in the regulations, there is no ability for a worker to seek compensation for a breach of statutory duty. Taking the economy as a whole, “breach of statutory duty” can cover a wide range of things—we had that debate the other week. However, that a breach of statutory duty on a nuclear site, for whatever reason, should not allow the worker to sue for that breach is not what the public would expect.
There is a particular sensitivity about this change applying to nuclear sites, whatever the merits of a general change. Your Lordships can imagine the situation arising where workers had been affected as a result of a breach of statutory duty by the management or the contractors on a nuclear site. If those workers were unable to sue for that breach of statutory duty, there would be outrage in every newspaper from the Daily Mail to the Morning Star. The department and the ONR need to be conscious of that and at least modify these clauses a little to ensure that that eventuality could not arise. I beg to move.
Lord Deben
My Lords, on the controversial comment that was just made, I find it very difficult because I do not believe that the noble Lord, Lord Whitty, has quite got it right. The sort of error that would cause there to be a special need to be able to sue would be suable under the law without the breach of statutory duty, which is a very narrow statement that you can sue for the statutory duty being breached irrespective, in a sense, of the effect. The kind of concern that the noble Lord, Lord Whitty, has raised, which he does not mention but is pressing towards, is something that I cannot conceive could possibly not be available in a law case for someone who was damaged by it.
I have a particular reason why I hope that the Government will not give way to this proposal. One problem of nuclear sites—I have dealt with them for much of my adult life, with Sizewell A and Sizewell B—is that for the most part they are like any other site. One difficulty of treating them as if they are always nuclear rather than like any other site is that often quite unnecessary concerns are raised. I always remember a very small fire in a small shed a long way from the actual nuclear site, but on the nuclear periphery, and the sort of headlines that it got, whereas if it had been on an allotment there would have been no news about it at all. It became a nuclear accident.
I hope that the noble Lord, Lord Whitty, will understand that the sort of issues that might properly excite him, the Daily Mail and the Morning Star—although whether anybody would notice that the Morning Star had been excited by it would be a real question—are covered by the law in any case. To make a special exemption here would cause a problem to those of us who have to deal with those sites, because it suggests that they are so different from other sites that they should have special protection, of the sort that we talked about in the previous debate. I hope that noble Lords opposite will remember that I was not entirely a supporter of the Government on many aspects of that Bill, so it is not because I am trying to defend it. However, this amendment would be a mistake, is unnecessary and would not be worth having, because it has a disadvantage in how it treats nuclear sites that would be damaging.
Baroness Verma
My Lords, in creating the ONR as a statutory body, it is important to ensure that the tenets of health and safety will continue to apply to the regulated community. Before I go on to respond to Amendment 38E, I should like to respond to Amendment 38U first, because it is important that I allay the noble Lord’s fears early on.
We considered in detail during the drafting of this clause that the amendment ensured that existing rights of compensation continued to remain available if people developed cancers or were subject to accidents. It is clear that it is still covered under the Nuclear Installations Act 1965, which puts in place a regime for compensating those who suffer injury or damage as a result of a nuclear incident. The regime covers nuclear incidents at nuclear-licensed sites or Crown sites, and claims are permitted to be made up to 30 years after the incident. I hope that has helped to address the noble Lord’s concerns lying behind the amendment.
In Amendment 38E, the noble Lord seeks to ensure that Section 2 of the Health and Safety at Work etc. Act continues to apply to nuclear sites in Great Britain regulated by the ONR. I can reassure him that the Health and Safety at Work etc. Act and relevant legislation made under it will continue to apply to ONR-regulated sites. This will include Section 2, and therefore I do not think that the amendment is necessary.
For clarity, amendments to the HSWA in Schedule 12 to the Bill will create the statutory ONR as an enforcing authority on nuclear sites and, as such, the statutory body will be responsible for the enforcement of all non-nuclear health and safety legislation, including operators’ compliance with the requirements for the provision of information and representation of workers. I think that that addresses the noble Lord’s fears.
Amendment 38T deals with civil liability. Clause 65 of the Bill sets out the application of civil liability for a breach of a duty contained in nuclear regulations and the safety provisions of the Nuclear Installations Act 1965.
As noble Lords may recall—I think that the noble Lord referred to it earlier—in the last parliamentary Session the Enterprise and Regulatory Reform Act amended the civil liability provisions contained within the Health and Safety at Work etc. Act 1974. The amendment would remove the provision setting out that breaches of a duty imposed by health and safety regulations would always be actionable where they gave rise to damage. Such regulations would include any made for the ONR’s nuclear safety, security, safeguards and radioactive materials transport purposes.
The amendment seeks to undermine the decision made in this House and the other place that civil liability should apply to health and safety legislation only where specific provision is made. Therefore, rather than making clear provision reversing the situation, the amendment would remove the clear wording of the existing clause, making it unclear whether a claim for breach of a statutory duty could be brought. The amendment does not seek to amend parallel provision in the Health and Safety at Work etc. Act 1974. By not doing so, it would create an unequal regime between the two major pieces of health and safety legislation in the field—this Bill and the Health and Safety at Work etc. Act. It would be inappropriate and untenable for us to create a statutory regime between the civil nuclear industry and others.
I hope that the noble Lord has found that explanation reassuring. However, if he would like further clarification and would like to meet with officials, I shall be more than happy to extend that invitation to him and to other noble Lords.
Lord Whitty
My Lords, I am grateful to the Minister for that. I am very satisfied with at least one and a half and possibly two out of three. I certainly accept her assurance that the provisions in Amendment 38U are not necessary. I was concerned that the Bill should not affect a scheme which provides a set level of damages for minor radiation activities and which has run for 30 or 40 years. I was party to the negotiations that set it up. Although there will now be very few people claiming under that scheme, there are some, and I hope that it will not be affected by the change of jurisdiction. Therefore, I am grateful for the Minister’s reassurance, which I hope is sufficient.
I do not expect the Government to change their mind about civil liability but I think that it was right for me to table this amendment because it draws attention to the consequences. The noble Lord, Lord Deben, says that we should not treat such sites any differently from any other sites. However, for all sorts of reasons, nuclear sites are dealt with differently, and the whole of this legislation deals with them differently. There is a highly subjective dimension to it and, in effect, he referred to that. If there is an incident on a nuclear site, it gets blown out of all proportion. I think that all sides of this Committee are in favour of an extension of the provision of our nuclear energy sources in this country.
We also know that it would not take a lot to turn public opinion in the wrong direction—we need only look at Germany—and for the whole strategy to fall flat on its face. It would be quite wrong if that arose because of a health and safety issue that was not provided for in the nuclear regulations, whether it concerned an omission regarding nuclear waste or nuclear material, or some other breach by the management at a nuclear plant. The reality is that the level of safety on nuclear sites, not only in respect of nuclear issues but on all others, has to be—the industry recognises this—of the highest order, and any breach must lead to a sanction.
Lord Deben
I would not want the noble Lord to mistake what I said. Of course a nuclear site, by its very nature, has to be treated seriously and differently. The Bill has a great deal of that difference in it. The issue I raised was this. The noble Lord referred to something that was not about nuclear sites but was a general statement of workers’ rights, and in particular of their ability to sue. The ability to sue here is based on a failure to meet responsibilities in a way that all of us would deplore. However, it has nothing to do with nuclear matters. Any failure in the nuclear area is already covered.
I know that the noble Lord wanted another go at what we discussed before. That is all well and good, and I would not for one moment stop him. I have done it myself and no doubt I will do it again. It takes one to see another; let us be perfectly clear about that. However, I say to the noble Lord that it is not sensible, even in his delicate way, to give people fears that are not reasonable. This question is dealt with fully in the Bill, and in other Acts. What the noble Lord is asking for has nothing to do with nuclear sites. If we were to agree to it, it would suggest that somehow or another it did. As it does not, it would be a faulty suggestion.
Lord Whitty
My Lords, I did not expect to convince the Minister, but before he stood up I had a slight hope of convincing the noble Lord, Lord Deben. Clearly, I have none whatever now. However, on a site such as Sellafield there are things that can go wrong that are not related to the handling of nuclear material but that could be fairly disastrous not only for objective reasons in terms of the damage they might do to workers and others on the site, but for the general reputation of the site. The fact that that would then lead to an inability to sue for a breach of statutory duty seems wrong. As the noble Lord, Lord Deben, indicated, I think that it is wrong in other sectors as well. However, we have special responsibility in going through the Bill to make sure that the nuclear sector is not vulnerable to things that government lawyers have changed in other respects that will have a disproportionately negative effect on the image of the nuclear industry. For that reason, I am not happy with the Minister’s reply, but I beg leave to withdraw the amendment.
Lord Whitty
“(4) Operations of the ONR under this section shall be conducted in conjunction with the Department for Energy and Climate Change.”
Lord Whitty
My Lords, I will speak also to the other amendments in this large group, to which the noble Lord, Lord Jenkin, and my noble friends Lord O’Neill and Lord Judd, have already referred. The ONR does not operate in isolation. Many other bodies—both regulatory bodies and operational, quasi-regulatory bodies—operate in this field. The ONR has relations with government departments and bodies such as the Environment Agency. I declare a recent past interest as a board member and non-executive director of the Environment Agency. In my final two years on the board, I had responsibility for nuclear matters.
The Nuclear Decommissioning Authority has huge responsibilities in relation to nuclear waste. Although not directly a regulator, it is a quasi-regulator on account of the conditions in which it deals with contracts and with the care of nuclear waste. We have referred to the Defence Nuclear Safety Regulator; there is clearly some overlap in responsibilities there. On the security side, there is also the Civil Nuclear Constabulary. There may be others. There are certainly some local authority responsibilities as well.
Lord Jenkin of Roding
My Lords, I must start with an apology. I dealt in my earlier speech with arguments which are much more relevant to the group of amendments to which the noble Lord, Lord Whitty, has just spoken. I sometimes wish that there were a cut and paste facility for Hansard so that the relevant paragraphs could be taken out and inserted at the appropriate place. I will not repeat those arguments as they are on the record, even if they are in the wrong place. I apologise for that and hope that colleagues will forgive me.
However, I must take issue with the noble Lord, Lord Whitty, on Amendments 38G and 38H. I understand his argument that because the ONR will not be, as it were, under DECC but under the DWP, there therefore needs to be a reference to DECC. I ask him to think what the public perception would be of a clause which said that the operations of the ONR had to be “conducted in conjunction” with DECC. One can only imagine the situation that might arise. Supposing there was an argument whereby the ONR was unhappy about certain aspects of a licence for a nuclear installation but DECC was seriously worried about the implications for the country’s security of supply.
To my mind, any suggestion that DECC could lean on the ONR to modify its advice in order to satisfy the DECC requirement would be hugely damaging. For that reason, the noble Lord’s amendment needs to be looked at with great care. As I said earlier, the essence of this part of the Bill is to give the ONR a much greater degree of independence than it has had so far. That is done for a variety of reasons, not least of which is that people should have confidence in its expertise to do what is right to secure the safety of nuclear installations and all who work there and of the public who live near them, without showing fear or favour to any government department. Of course, in the end, somebody has to bid for the money to provide that. That is the role of the DWP and in that sense it is separate from DECC. However, that should not give rise to any possible suspicion that the ONR could come under the influence of DECC. That is my view. I shall be very interested to hear what my noble friend has to say about that.
I have already dealt with the question of collaboration. I am worried that if there is too much, one will get a clouding of who is responsible for what. I would not complain in the least if my noble friend were to agree to the request of the noble Lord, Lord Whitty, for a diagram to be produced before Report showing where the lines of responsibility fall. It seems to me that that would be helpful to the debate. Perhaps eventually it could be made available for public consumption, if that appeared to be appropriate. However, one has to be jolly careful in this area. Some of the issues are dealt with already in other parts of the Bill—I have no doubt that my noble friend will refer to that—or in legislative powers that exist elsewhere. I have again looked through the 1965 Act and some of them are there, surviving as current legislation. As I said, the memorandums of understanding are hugely important. Although they may have to be modified in the light of the passing of the Bill, they should certainly continue to exist.
The question of whether regulators other than the ONR should have powers and responsibilities for the enforcement of regulations is difficult. Already, nuclear operators can be prosecuted by two regulators if they are guilty of offences that offend the legislation of both of them. Again, we have to be very careful not to muddle the lines in any way. I ask my noble friend to look at that matter with some circumspection. The noble Lord, Lord Whitty, has posed a series of important questions, and I, for one, look forward to my noble friend’s reply in due course.
Lord Deben
My Lords, I want to refer particularly to the suggestion that DECC and the DWP should in some sense be brought together in this. I speak as a former Minister for health and safety. I also speak from a family background with a great interest in what happened in the coal industry in South Wales. There is no doubt that one of the problems of the nationalisation of the coal industry was that it was always thought that, because it was a nationalised industry, there was no need to make a real distinction between the industry and the way in which it was policed. In the early days, that was not thought to be important because people had a very high-minded view about what nationalisation meant. I am not going to enter into that discussion but that was what people thought. They felt that if it were nationalised there was no need to have too strong a distinction between the way the whole thing was run because everyone was working particularly for the benefit of the miners as well as for the customers outside. One can perfectly understand the history of what led to that.
However, there is no doubt that as time went on it became more and more clear that you had to be very different. You had to think about the fact that, whatever else was true, management—even management with the highest ideals and attitudes—could not really be responsible for policing itself. You had to be very careful about that. Therefore, increasingly we divided it and made sure that the policing of the system—looking at the mines and making sure that they were safe—was very separate.
As a Minister for health and safety, it always seemed that the most important thing about our regulation was that it showed that the ministry responsible for a particular industry had to be second-guessed right the way up to the Minister. The Minister responsible for health and safety was not the same Minister as the one who was responsible for many of the industries which the Health and Safety Executive policed. I always thought that that was terribly important. Inside the then department of whatever it was, now the Department for Work and Pensions, there was a culture of seeing that as a most important independent difference.
I feel very strongly that there is always a suspicion among the public that the nuclear industry is so powerful and strong that it can lean on Ministers. I remember that the industry used to act like that. When I was Secretary of State for the Environment, I got some pretty offensive interventions by senior people in the nuclear industry because I waited until I had the full reports as to whether I should give planning permission for the test drilling of a deep site for nuclear waste. When I turned that down because the nuclear industry had failed to meet the requirements of the Planning Acts, I cannot tell the Committee how rude, offensive and utterly self-opinionated the industry was because I said, “You haven’t obeyed the law. As the planning Minister”—not the nuclear Minister—“I will not give you planning permission because you have not looked at alternative sites and all kinds of other things”, and I turned it down. That was done by someone who was known to be in favour of nuclear power. However, I felt uncomfortable about the two connections because, as the environment Minister, I had responsibilities which ran across the two.
Lord Jenkin of Roding
Does my noble friend recollect, as I do, the ghastly events of the landslide at Aberfan? With three other Members of Parliament, I was due to go on a visit to the mining industry just after it happened. I remember that we were briefed by Lord Robens, who was then the chairman of the National Coal Board. He was completely shattered by what had happened in Aberfan and he made it a matter of personal responsibility. He went down there, he attended a number of the meetings that were held and he followed it up.
My noble friend has given an example of the kind of thing that can go wrong if you muddle the responsibilities. My noble and learned friend Lord Howe of Aberavon was one of the counsel who took part in the Aberfan case and for him, too, it was one of the most shattering events that he had ever taken part in. Aberfan is a very good example of why one has got to make absolutely certain that these responsibilities are separated.
Lord Deben
I agree with my noble friend about that example. The reason I drew from familial experience was that I was brought up by a father who had pastoral responsibility for one of the mining villages in south Wales. For him, that event was most devastating. Although as a family we were not affected by it, my father was affected by his memories of what he had to do in those kinds of circumstances. I remember vividly his comment that you can never trust to police an industry those for whom the main interest is the industry as a whole. That is not because they are bad men and women, but simply because they would have to wear two different hats, and you should not ask people to wear two different hats. That is why we keep on talking about declarations of interest and so on. We know that however good and sensible you are, it is sometimes quite difficult to remember which hat you are wearing.
Again, I agree with my noble friend—Aberfan remains in one’s heart in a very special way and will be there until the day one dies, even though one was removed from it. That is simply because of the effect it had on people one knew and upon the memories of my father. I feel strongly that we should not allow the lesson that we should have learnt from the coal industry to be forgotten in this industry.
Lord O'Neill of Clackmannan
I have some sympathy with the remarks that have been made, which sets me at variance with my noble friend. When I was chairing the Trade and Industry Select Committee in the late 1990s, we went to Dounreay, which has been the subject of many investigations and problems. Had other colleagues been here, I am sure they would have be able to embellish this far more than I can. At Dounreay, there had quite clearly been a failure to scrutinise the safety arrangements on the part of what was then the Nuclear Installations Inspectorate. It is fair to say that that part of the inspectorate had pretty well gone native. Dounreay is in a very isolated part of the UK. You cannot go very much further north without getting wet. It is natural that everybody was living and working together, playing golf on the same golf courses, probably drinking in the same pubs and what have you. They came together.
An independent report had to be carried out. It was carried out and, as the Select Committee, we wanted to see it. We were told by the DTI Minister at the time, who I think was John Battle, that it would not be appropriate for a Select Committee to see it. The DTI was the sponsoring ministry. The Nuclear Installations Inspectorate was in those days, as it is now, sponsored by the equivalent of the DWP. It took the Secretary of State for Scotland, who had environmental responsibility for the area, to step in and say, “Publish and be damned”, so we got access to the report. In fact, it was not anything like as damning as people had anticipated, but it was essential that it was produced.
There is a danger in establishing this umbilical link between the sponsoring department and the functions. We have seen it in agriculture and food safety in the past. And we have taken strenuous steps to correct it, but there are still problems. In my experience, the nature of the nuclear industry is such that it is a secretive industry. It grew out of the production of weapons-grade material for nuclear weapons. While it is now under commercial control in a number of respects, it nevertheless still has a culture of understandable secrecy, partly because of what would be regarded as security but also because it is so damn dangerous. The truth is that because of the way in which in the industry is handled, the dangers are minimal.
The culture of the industry is determined not only by security but by safety. At times, there is a sense in which the industry is covering its own back as well as trying to protect people. That is natural. Even today nuclear installations are for the most part in relatively isolated, secluded areas. It is common knowledge that Sellafield was chosen during the war because it was most unlikely that German bombers would ever be able to find the place because it is shrouded in mist and it is likely to be raining all the time, hence the Lake District. In those days, it was just a weapons store.
The industry has a security culture and a culture that is understandably and correctly preoccupied with safety, but it is also at times unduly linked to matters of secrecy where safety can be jeopardised. In my limited experience, I confronted a situation where there had been regrettable failures at Dounreay, which have now been corrected. The report on that was nothing like as condemnatory as people thought it would be but there was reluctance to have it published. It took an independent agency, the Scottish Office, and the late Donald Dewar as Secretary of State—who made it quite clear that he saw no reason why we should not have access to it—for us to get the report. I remember that we got a faxed copy of it as we got off the plane in Caithness. The clerk had summarised it by the time we got to Dounreay and we were able to make use of it when we were questioning officials.
There is a danger in creating too close a link between the ministry and this function. It is important that we discuss it and have it aired but I would like to think that we do not go any further with it because there are too many examples of departments looking after their own too carefully. The ONR took a long time to come about. It should really have been in the previous Energy Bill but in those days the DWP and DECC were arm wrestling over it. It was a turf war. The compromise was that they would let it go as long as they had a control over it. The DWP conceded a bit and held a bit and we just have to accept that that is the way in which the matter was agreed. For the reasons I have given, it would be desirable for us to leave it to the DWP rather than having a sponsoring department that might take an overprotective view of what could be at stake here, which could be very serious.
Lord Roper
My Lords, when I heard the noble Lord, Lord Whitty, introduce this amendment I had a good deal of sympathy with it. It seemed strange that we should be losing contact with something of such importance but having heard the last three speeches, I see the strength of the points made by my noble friends Lord Jenkin and Lord Deben and by the noble Lord, Lord O’Neill. I hope that on this occasion the noble Lord, Lord Whitty, will think carefully about this amendment.
Lord Whitty
My Lords, before the Minister replies, perhaps I might point out that most of this debate has been about a sponsoring department. I regret making what was a throw-away remark as a background to this, because none of my amendments attempt to or could reassign sponsorship responsibility from one department to another. It is entirely a matter for the Prime Minister. It is not a matter for regulation. I hope the Minister will deal with the amendments on their merits because there is clearly an overwhelming view in this Room on the matter of sponsorship. I am certainly not pursuing that today.
Baroness Verma
I am extremely grateful to the noble Lord, Lord Whitty, and I hope that I will be able to allay his fears. In fact, I think my noble friends Lord Deben and Lord Jenkin and the noble Lord, Lord O’Neill, have explained far more eloquently than I could why it is important that the DWP should remain the main sponsor body. I am extremely pleased to hear that the noble Lord, Lord Roper, has been convinced by argument and has changed his mind. That is the benefit of your Lordships’ House: we can have these detailed debates which highlight how things can be illustrated far better by people with far more experience than I have.
I assure the noble Lord, Lord Whitty, that DECC will still have appropriate statutory levers to ensure the effective delivery of policy areas for which DECC Ministers are accountable to Parliament. Such independence is a requirement of the European nuclear safety directive, which has been implemented by the UK.
I will now address the other amendments in the group, which have not had as much of an airing as the noble Lord would perhaps have liked. Amendments 38K, 38L and 38P allow for changes to how nuclear regulations are made, in particular that they could confer powers on other bodies. The Bill is deliberately focused solely on the ONR and the functions and remit that it needs to be an effective regulator. It would be a significant change of focus to make provision for conferring functions and responsibilities on other regulators and would require changes to many aspects of the Bill. In addition, any regulations made that covered the remit of another organisation could be made jointly with them, using the Bill and another more appropriate legislative vehicle. To that extent, I take the view that these amendments are unnecessary.
Lord Roper
I welcome what the Minister said about considering between now and Report the Delegated Powers Committee report on how these regulations are made for the first time. It is important that that is done and I hope she will give us some indication—perhaps in the reply which the Government will make to the committee’s report—of what is to be done on that matter. We will otherwise need to come back to this matter on Report.
Lord Whitty
My Lords, I join the noble Lord in welcoming what the Minister said. It is important that the Government give a clear response before Report to the Delegated Powers Committee’s recommendations, which affect powers under three important clauses in this section.
I appreciate the Minister’s reassurances and that she is going to give me a picture of how all this operates and who relates to whom. I should have started with that before I began drafting amendments for this complex part of the Bill. I thank noble Lords who have spoken and who, by and large, were not in support of writing much into the Bill.
I have largely dealt with the issue of relations with DECC on sponsorship. However, for the sake of historical accuracy I should say that the Health and Safety Executive and its predecessor bodies, such as the nuclear inspectorate and the Safety in Mind organisation, have frequently been in the same department as the sponsoring department for all or part of their activities. That may be tidied up by banging it into a department which has little responsibility for the industry, and that may be the right place. However, I reiterate that my amendments do not seek to change the sponsorship role but to create an important relationship between ONR and DECC. The two points at which I have inserted them relate to the nuclear security and nuclear safeguards areas, which are also covered by international obligations—and the department negotiating on international obligations, along with the FCO, will be DECC.
Clearly, the Committee’s view is that we should accept the status quo, and I will withdraw any implication that I or the Labour Party will not stick with the status quo. Without wishing to upset the general sponsorship arrangements, there is an issue of whether the legislation should at least at some point reflect the relationship with DECC as well. This is not to compromise the independence of the ONR, which is clearly set out in the early parts of this section of the Bill. I would not want to do anything to jeopardise that for the reasons that the noble Lord, Lord Deben, and others have spelled out.
As to the other regulatory bodies, I will look at the map or picture and see whether I need to come back on any specifics. However, Clause 84 refers to the co-operation between ONR and the HSE, for obvious reasons. Will the Minister look at that clause—she has no obligation to respond to this—and consider whether there should be a general requirement to co-operate with the other bodies operating within the nuclear area, without going through the specifics of my individual amendments? With that, I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, in moving Amendment 38R, I will also speak to the other amendments in this fairly mixed group. Perhaps Amendment 38R, and Amendment 38Q with which we have just dealt, should have been in the earlier group relating to workers in the nuclear sector. However, Amendment 38R deals with the provision that the ONR would have the ability to prohibit the employment of certain people under paragraph 10 of the schedule. Paragraph 9 provides that employment can be restricted to those who have met appropriate qualifications. I therefore wonder why we need the additional provision here; it is a relatively technical point.
Amendment 38V would make clear that the ONR is not seen as a Crown agency, whereas the HSE for most purposes is seen as a Crown agency or at least as a body which is an emanation of the state. Even where other regulators are public corporations in the form of their incorporation, there is no denial of their Crown status in legislation. I wonder whether this is simply to ensure and underline the fact that ONR employees will no longer be regarded as Civil Service employees, and therefore the inspectorates and highly technical skills that are needed by the ONR in the nuclear field can be rewarded at, probably, substantially higher rates than would be allowed under the Civil Service pay structure. That seems a slightly heavy way of ensuring that one could make appropriate market-rate payments to a very small and important sector. I hope that I can get clarification on that.
Amendments 40H and 40J relate to the provision of training, which is of course another important aspect. You do not need the quality of staff only when you recruit and pay them, you also need to continually update them within the ONR with the best possible training. Clause 8 provides that the ONR may provide training, whereas the HSE’s provisions, the equivalent of the Health and Safety at Work Act, provides that the HSE must provide training. Amendment 40J makes it clear that training is appropriate and relevant—it is not training for anything—but the lack of a requirement on the ONR to provide training needs to be addressed.
Baroness Verma
My Lords, I am extremely grateful to the noble Lord, Lord Whitty, for allowing me an opportunity to clarify some of the points he has just raised. Amendment 38R, when read with Amendment 38Q, as the noble Lord rightly said, seeks to limit the indicative list in Schedule 6 so that it can make reference only to nuclear regulations, including provision to restrict employment on the basis of qualifications or experience. The reason that broader provision has been included in the Schedule is that nuclear regulations may need to specify situations where individuals cannot do certain jobs—for example, pregnant women working at greater risk from ionising radiations, or restrictions on employment for certain types of person for security-critical posts. While Schedule 6 is only an indicative list, it would be a retrograde step to remove the examples in paragraphs 10(a) and (b).
Amendment 38V in the name of the noble Lord, Lord Whitty, seeks to remove the explicit provision in the Bill stating that the ONR is not a Crown body and that its property is not property of the Crown. The decision to include specific provision in the Bill to establish the ONR as a body outside the Crown was not made lightly. It is, however, integral to the policy of creating a more independent, flexible and efficient regulator. Most notably, the position of the ONR outside the Crown enables its staff not to be classified as civil servants. Recruiting and retaining skilled specialists is crucial for the ongoing effectiveness of ONR and Civil Service restrictions on pay and recruitment pose a serious risk to this.
Clause 76 includes a power for ONR to provide training which relates to its purposes. For example, if new regulations were brought in, it might be appropriate for ONR to provide training to duty holders on new requirements. Alternatively, if ONR has access to certain safety or security expertise of limited supply on the open market, it might be appropriate to make best use of this by offering training to up-skill the regulated community. Amendment 40H seeks to make this power a duty. While the provision of training by the ONR might be a useful and effective tool to promote safety or security, it is not a core function of the ONR. By making this a duty, it could divert valuable resource away from its core regulatory functions. Amendment 40J seeks to ensure that the ONR carries out only appropriate and relevant training. The ONR’s power to provide training is already limited to its purposes; therefore, I am confident that the Bill already focuses sufficiently on the ONR’s role in this area.
Finally, Amendment 40P seeks to protect ONR staff’s continuous service should they move in and out of the Civil Service. I reassure the noble Lord that pension rights of ONR staff will be preserved under existing provisions in the Bill, and I refer him to paragraph 15 of Schedule 7. As for preserving their seniority, I am reliably informed that civil servants are appointed on their skills and experience and that an official record of their continuous service is not retained for this purpose.
I hope that the noble Lord has found my explanation helpful and will accordingly agree to withdraw his amendments.
Lord Roper
My Lords, could the Minister give assurances that, on the references in Clauses 68, 80 and 104, the reports of the Delegated Powers and Regulatory Reform Committee will be looked at very carefully by the department and that she will be able to give us some assurance fairly soon? Otherwise, those are matters to which we will want to come back on Report.
Baroness Verma
My Lords, as I said earlier, of course, I am doing my level best to ensure that the Committee gets the information. We are considering very carefully what the committee laid out.
Lord Whitty
My Lords, I thank the Minister for going through the amendments. I accept the argument in regard to people’s physical conditions, such as pregnancy, and other reasons why they should not go into certain areas, and I understand that the provision is for that. I am afraid that my suspicious and conspiratorial mind thought that it was something to do with security, with a big S, and therefore could be quite a wide and broad requirement. However, after the explanation that it is confined to those sorts of things, it is fine.
On the issue of the Crown, it seems to me that there are not many other bodies that are public bodies which have that explicit divorce from the Crown. I am not sure whether in shrinking the state, as the coalition intends to do, there is a whole range of these coming up. I assume that the ONR will never be privatised and that this is, as the Minister and I indicated, really a ruse to pay people more, which is necessary—although it is necessary for a number of other regulators, not excluding the Environment Agency’s nuclear staff, which will not be met by this change. I will not take it further now, but it is peculiar, and we will keep a weather eye open for any other use of this in relation to public bodies. We may have to consider at a later stage whether it is appropriate.
I do not want the ONR to be diverted on training, but it is the employer’s responsibility to ensure training; it does not necessarily have to provide it itself. It is explicit in the Health and Safety at Work etc Act and necessary in the HSE that the organisation has a responsibility to make sure that its people are trained up to full modern requirements. That is every employer’s responsibility but, in relation to nuclear regulation, it must be a particularly acute responsibility, which the employer ought to accept. So I do not really accept the Minister’s complacency about leaving “may” there, when “must” would reflect the status quo and what I hope is the reality of the ONR’s future regulation.
I accept that the Civil Service has changed a bit since my day when seniority used to be very important. I also accept that there is a reference specifically to pensions. But other aspects of seniority and continuous service are still relevant, including retirement dates and the point at which you can apply for, for example, early retirement on sickness or other extraneous grounds. I accept that it probably is not a point which needs to be covered in legislation. I do not think that it is a trivial point and may not be a trivial point for some of the staff who are due to transfer. With that, I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, this group is fairly straightforward and deals with the structure of the board of the ONR. The amendments allow us to move to increase the minimum number of non-executive members by one and to provide that among those non-executive directors there should be experience of the nuclear sector. The amendments in the name of the noble Lord, Lord Jenkin, probably express that slightly better than mine and I therefore hope that the Minister, if she does not smile on mine, will at least smile on his. The amendments also propose that the ONR board reflects at least some of the structure of the organisation from which it is coming. The HSE has always operated on a broadly tripartite basis, with employers, trade unions and representatives of workers represented on the Health and Safety Commission. The shadow ONR within the HSE also reflects that position.
I recognise that the Government are not that keen on trade unions and that regrettably, for the first time ever since 1974, through periods of government of every hue, this Government did not consult the TUC on the latest appointment to the board of the Health and Safety Commission. However, they appointed a trade union person to it. Therefore, they obviously continue to have some belief that the tripartite nature of the organisation is helpful. I think that that needs to apply also to the ONR, which operates some of the HSE’s non-nuclear functions and all the HSE’s nuclear functions. Therefore, it should be explicitly representative of people with experience as employers and people who have experience of representing employees—which, by and large, will involve trade unions.
It is very important to understand that the sector which the ONR will regulate is still quite a highly unionised sector. Although there have been difficulties, the co-operation between the workforce and the management is very important, which has been greatly appreciated at most points during the history of the nuclear sector. It also has been one in which the HSE has helped, by its structure of governance, to ensure that there is co-operation between the workforce, the management and the Government in relation to the management of the nuclear sector.
Whether in broader terms they like it or not, the Government would be wise to ensure that there is representation of the two sides of industry, as we used to say, in the nuclear industry and in the regulator which deals with the nuclear industry. Amendments 38V to 38X clear the ground for that and Amendment 38Y provides for it. I also support the amendments in the name of the noble Lord, Lord Jenkin, which, as I have said, perhaps are a better way of expressing the absolute necessity for people on that board to have experience of nuclear safety in operating their functions on the board. I would be interested to hear the Minister’s comments. I beg to move.
Lord Jenkin of Roding
I am extremely grateful to the noble Lord, Lord Whitty, for his kind remarks about the two amendments which stand in my name. It is very important, when you are setting up a board of this kind, to have a proper balance between executive and non-executive members. We are in an interim position concerning the executive members. The chief inspector, Dr Mike Weightman, retired earlier this year, and that was a considerable loss. He established not only a huge personal relationship but an important overseas relationship with the regulator in this country. There is great admiration from many nuclear countries overseas for our system of regulation, and a succession of chief inspectors, not least Dr Weightman himself, have made a major contribution to that.
Obviously, one has to have a strong chief executive and chief inspector, but it is also very important that one has on the board a mixture of executive and non-executive members. My amendment simply prescribes that:
“At least one non-executive member must have experience of, or expertise in, matters relevant to the ONR’s nuclear safety purposes”.
That is self-evident, but it is not in the Bill. I think that that is the right way to do that.
On the other hand, I do not agree with the amendment of the noble Lord, Lord Whitty, that there should be appointments from the NDA and the other body mentioned. They seem to me to be much too directly involved in the work of the board and of the ONR. They are among the regulated, and that is probably not right. There are a number of experts from academia and elsewhere in industry who could fulfil that role without having to look to the Government’s own bodies to provide people for the board. Under my amendment, at least one of them must have experience in the matters which concern the board. That would strengthen the board and the legislation and add to the public reputation of the ONR and its board.
Baroness Verma
My Lords, again, I am extremely grateful to the noble Lord, Lord Whitty, and my noble friend Lord Jenkin for their amendments prompting this debate.
Amendment 38W increases the number of non-executive directors on the ONR board from seven to eight, and Amendment 38X makes a corresponding change. These amendments would result in the ONR’s board having a maximum membership of 12, which is quite large for a relatively small organisation. Amendments 38W and 38X accommodate Amendment 40A of the noble Lord, Lord Whitty, which empowers the Secretary of State to appoint an executive member nominated by the Environment Agency or a member nominated by the Nuclear Decommissioning Authority. Although I fully appreciate the importance of the ONR having a strong working relationship with other regulators and relevant bodies, including the Environment Agency and the Nuclear Decommissioning Authority, such relationships are already in place and we expect them to continue when the ONR becomes a statutory body. The Bill does not prevent persons recommended by those organisations being appointed as non-executives, so I do not feel that the amendments are needed. Consequently, it is not my view that Amendments 38W, 38X and 40A are required.
Amendment 38Y sets out some areas of expertise that the Secretary of State might consider when appointing a non-executive. Nuclear matters, governance, health and safety, and employment are all areas where an ONR non-executive could have expertise, but they are not the only ones. We also need to look at areas such as finance, audit and project management, which are crucial to the effective and efficient operation of any organisation and should not be dismissed.
I do not believe that the legislation should limit the skills that a non-executive can bring to the ONR or fetter the Secretary of State’s ability to make appointments. Nor do I think that persons without a background in such matters are incapable of bringing valuable skills and experience to the ONR. On that basis, I do not believe that Amendment 38Y is required.
Amendment 40B would remove the power of the ONR to pay non-executive members, except for the HSE member, a pension or gratuity. This power helps to enable the ONR to draw upon the widest pool of suitably qualified people as prospective non-executives. It is especially relevant for those with an extensive range of relevant skills and expertise who have reached or are approaching retirement age. Such sums that the ONR might decide to pay must be approved by the Secretary of State, so there will be suitable checks on the ONR’s spending on this front. On that basis, I do not believe that Amendment 40B is desirable.
I now turn to the amendments tabled by my noble friend Lord Jenkin. These concern the expertise and experience held by the ONR’s non-executive directors in the areas of nuclear safety and nuclear security. Amendment 39 is designed to enable more than one non-executive director with security experience or expertise to be appointed to the ONR board, and Amendment 40 requires at least one non-executive to have experience relating to the ONR’s safety purposes.
As drafted, the legislation gives the ONR a skills-based board, ensuring that there is a balance of individuals with the necessary experience and expertise to provide strong governance to a modern regulator. To ensure that the ONR’s security interests are carried out in the context of wider national security policies, the legislation makes it a requirement for the board to have one non-executive director with relevant security experience. The legislation also enables more than one such non-executive to be appointed by the Secretary of State. I therefore reassure my noble friend that the current wording of the Bill does not limit the ONR board to simply one member with security experience or expertise, and on that basis I hope that he recognises that Amendment 39 is not required.
Nuclear safety expertise on the ONR board will be provided, at the very minimum, by the chief nuclear inspector, who will be an executive member. Further executive or non-executive members with nuclear safety experience can be appointed if it is felt necessary. I agree wholeheartedly with my noble friend that in the former chief nuclear inspector, Mike Weightman, we had an excellent, world-class inspector who was globally recognised, particularly given the work that he did post-Fukushima. Due to him, we have strengthened our reputation across the globe as a lead inspectorate. Tribute must be paid to Mike Weightman. His eight years of service have been highly appreciated by us all.
The ONR is an organisation whose role is predominately concerned with safety. The Government are confident that the ONR board will, without specific provision in the Bill, include individuals with the experience and expertise to provide governance in this area. Thus, experience of safety issues will be held not necessarily in one individual but across a number of members, who will bring with them a range of expertise. Therefore, I do not believe that Amendment 40 is required.
I shall just touch on the question asked by the noble Lord, Lord Whitty, concerning the presence of a member from the unions. The ONR board will be a skills-based board rather than being made up of representatives of particular stakeholders. I reassure the noble Lord that the board will not be minus just the trade unions; industry representatives will not be on it either.
I hope that the noble Lord, Lord Whitty, and my noble friend Lord Jenkin have found my explanation reassuring and that they will agree to withdraw their amendments.
Lord Jenkin of Roding
My amendment has of course not been moved so I cannot withdraw it, as I am sure that my noble friend realises. I may study her remarks quite carefully, together with the advice that I have been taking on these matters. I hope that I will not need to return to this on Report, but the advice I had was that people felt pretty strongly that there had to be one non-executive director with experience in the area of the ONR. I am not quite sure whether the Bill gives them the power to do that. We hope that it should be firmly written into the Bill that they must, but I have not moved the amendment so I cannot withdraw it.
Lord Whitty
My Lords, I am somewhat disappointed by the Minister’s reply, but I should first apologise to the Committee that I did not refer in my opening remarks to the last three amendments in this group, which deal with cross-appointments. They would not be compulsory, but the Secretary of State should have the option of appointing people from other bodies with a role within the nuclear industry. It would be helpful to have something like that in the Bill, as co-ordination between agencies is aided by having non-executive directors who cross-represent. We do too little of it and, as a result, we have turf wars and misunderstandings between agencies. I could bore the Committee with some of those from my experience as a non-executive director of two such agencies and as a Minister. I agree that the Secretary of State should not be bound to do this, but the Bill should at least point him in that direction and I am disappointed that the Minister does not accept that.
On the point about pensions, this was a probing amendment. Very few regulators pay pensions to their board members. It is all part of the market rate for nuclear-trained and qualified people. I will not say any more about that in that case, as it is fine, but it is slightly odd to have that in legislation.
On the central question about the make-up of the board, it seems to me that the board, including the non-executives, must represent the best traditions in health and safety governance. That means that they have to have a high level of expertise and knowledge of the law, and of the technical and scientific areas, in which they operate. I am therefore a bit surprised that the Minister is not prepared to accept something like the amendment of the noble Lord, Lord Jenkin. It also means that the success of the Health and Safety Executive over 40 years—it has been a great success, since it has brought down the level of injuries, deaths and dangerous practices across the board in industry—has in part depended on it being seen as a collaborative effort.
The symbolism, and usually the reality, of that was that at the top level there were people representing the unions as well as the Government. Clearly, the Government still accept that view of the make-up of the HSE board even though they do not want to consult the TUC about it. Their advertisement for the board of the HSE, which I briefly considered, makes that clear.
It seems wrong that we should depart from that culture for the creation of something which is taking on responsibilities such as those of the ONR in a sector where collaboration and understanding between management and unions—and their ability to have a coherent approach to the management of risk on a daily basis—is so important, because the results of not so doing could be utterly catastrophic. The Government will regret not putting that structure in. Depending on the judgment of future Secretaries of State, they may regret not explicitly saying that they want one of the non-executive members to,
“have experience of … nuclear safety”.
It is not sufficient to say that that will be provided by the executive directors. The whole point of non-executive directors is that they can, on equal terms, discuss these issues with the executive directors. In terms of representation, it may not have the structured or corporate state kind of formal representation that was there in the origins of the HSE, although I regret the passage of that. In reality, they ought to have been able to reproduce the culture of the Health and Safety Executive at top level, and they ought to have on the board people who have experience of the main areas which are the responsibility of the ONR.
I think that it is unfortunate that the Government do not reflect that in the legislation. It is one of the things we may return to. If the Bill goes through in this form, I hope that the judgments of future Secretaries of State, whichever department is responsible, will take these things into account anyway. It would be better, frankly, if it were in legislation. That would set the tone and nature of the organisation. In the mean time, I beg leave to withdraw my amendment at this stage.
Lord Whitty
Lord Whitty
My Lords, the Committee will be relieved to know that Amendment 40C is the lead amendment in the final group for today. This group deals with aspects of the financial structure of the ONR. I am not sure that even the totality of 60 pages of regulations and another 60-odd pages of schedules makes this subject clear to me.
Amendment 40C is pretty straightforward. I cannot see in the reporting mechanism, although I am sure that this would be the fact in practice, that the report that the ONR has to give to the Secretary of State, and that the Secretary of State gives to Parliament, must include a fully audited set of accounts. That seems fairly straightforward. If it is there somewhere else in the Bill, I will withdraw, but it seems helpful to put it in the formal reporting structures.
Amendment 40D deals with borrowing. It is a probing amendment. I do not, in principle, object to the ONR being able to borrow, but it is not a provision that we find very frequently in the powers of regulators. We know that there has been some indication that the amount of public funding that the Government will give to the ONR—directly out of the taxpayers’ pocket, as it were—will be £35 million a year, I think, potentially rising to £80 million. It is a fairly hefty whack and a very important contribution.
The ability to borrow over and above that, and the ability to charge fees, is pretty unusual in a regulator. Can the Minister give us some indication of what she expects the total expenditure to be, not just the taxpayers’ and the fee income, but the total expenditure, roughly, of the ONR in its early years of operation? How much of that does she expect will need to be raised through borrowing? This is quite a delicate area. I am sure there are some public bodies that can borrow but, generally speaking, not regulators.
In the nuclear sector, speakers on previous amendments have emphasised the absolute necessity of the ONR being independent. There is a wider issue of conflict of interest over whom it would borrow from and what obligations that borrowing would provide. It is presumably not helpful if the ONR borrows from the industry it intends to regulate or anybody with connections to it. If we go ahead with an ability to borrow, there should be some pretty explicit restrictions on it. If the provision simply means that the ONR can borrow from the public works system of loans from the Government, we probably should say so. If it goes outside that, issues do arise.
This is not only an industry issue; security and safeguard issues are also involved. Would we want it to borrow from overseas sources? Probably not in most cases. In a subsequent clause we allow the ONR to operate overseas, but should it be able to borrow money to do so? Again, who will it borrow the money from to regulate or help regulate someone else’s nuclear sector? I am suspicious about this. My amendments would delete the lot but I am willing to listen to something short of that. Before we finish with the Bill, the Government need to be cautious about this and make explicit what powers we are giving it, what the limitations are and what the money is for.
On Amendment 40G, Clause 34 allows the ONR to charge fees. However, it is not clear on what basis those fees will be charged. In general, the Treasury would require regulators to charge fees based on full-cost recovery. Is that the principle on which the ONR is to operate? It is not quite the principle on which the HSE operates, but it is moving towards it. It is, broadly speaking, the principle on which the Environment Agency operates and it would be useful to know on what basis it is to charge fees to the industry and to whom in the industry it is to charge fees. Is it simply the operators of the nuclear sites and installations, or is the whole of the supply chain feeding into that operation to be charged fees as well?
Clause 79 allows the ONR to provide services to anyone, more or less, provided it has the consent of the Secretary of State. Presumably that includes overseas. In principle, it may be okay to provide the expertise of ONR staff in areas for which the ONR is not responsible—which, as I read it, Clause 79(2) to (5) allows—but that seems a bit odd. If the expertise and services it is providing are not in the areas for which the ONR was set up, you could have all sorts of odd operations. A top nuclear inspector in his spare time may also be an expert in karate or in almost any area. On the basis of this clause, the ONR could hire out its services under the label of ONR. More likely, you could get the ONR running an engineering consultancy service, a scientific and technical service or a metric measuring service using its expertise, but not in the areas for which it is responsible.
If we are going to do that, we will be creating a somewhat different beast—a beast that can diversify. As we find with quasi-public bodies that diversify, if that side concern turns into a seriously commercial money-making concern, it can distort the priorities and the nature of the organisation as well as create areas for conflicts of interest.
I hope these wide and bland powers to provide services to almost anyone will be looked at again by the Government, and that clarification will be given, if not in legislation then at least in the guidance, on how the ONR board and management will eventually operate. I beg to move.
Lord Jenkin of Roding
My Lords, I have doubts about two amendments in this group. On Amendment 40G, I am told that full cost recovery always takes place. However, you have a potential position whereby a licensee who needs to be properly regulated may be in financial difficulties and unable to pay the charges that he would otherwise have to. It may be a rare occurrence but, given that they attempt a full cost recovery at the moment, there needs to be a possibility that some essential services may not be paid for on the spot by the licensee because they do not have the money. I would be very interested to hear any other arguments.
I am unhappier about Amendment 40K. This point has been raised with me by the Nuclear Industry Association, which feels that it would be greatly to the advantage of the UK generally and the ONR in particular to be able to develop and make the best use of its expertise in markets not just in this country. The effect of eliminating subsections (4) to (9) of Clause 79 would be to reduce the ONR to its absolutely core activities. There is quite a strong feeling that that would not be to everybody’s advantage.
My noble friend referred to the effect of the Fukushima disaster and the great tsunami there, and I said earlier that it greatly enhanced the reputation of regulation in this country because of the work of Dr Weightman—but it goes wider than that. The supply chain for the nuclear industry is very much concerned with spreading its activities abroad to increase overseas earnings, and here, too, the ONR could provide valuable services and should not be prevented by the Bill from doing so. Of course, it will always be concerned primarily with its regulatory duties in this country, but it has the expertise, and will develop increasing expertise, to provide wider services and perhaps earn some money for itself and for this country. So I would be unhappy to see the elimination of those four subsections.
On the question of the account of what the total money might be, I await with interest the answer from my noble friend.
Lord Deben
My Lords, I wanted to build for one moment on what my noble friend Lord Jenkin has said and take it to a further degree. This House should be very careful about restricting a body that we have been careful to construct. There is a terrible habit in your Lordships’ House, of which there was a good example today when somebody got up and said to the Minister, “What are you doing about Egypt?”—as if we were doing anything about Egypt, or as if we should always do something about everything. It is about time that we realised that there are a lot of things in this world that we are not likely to do anything about at all. One thing that we should not do is to do things about things about which we cannot at this moment know anything whatever.
We have no idea how this organisation will develop. We have some suggestions, which my noble friend Lord Jenkin has put forward, which may represent some of the routes. But here is the idea that we should be so frightened that we should write down now what this organisation may or may not do, when it has been carefully built, with a whole lot of non-executive directors and all sorts of restrictions as to the nature of the people who run it. I find that one of the problems of government. I would prefer the organisation to be in the position of doing rather too much or doing something wrong than not being able to do what it needed to do, or what came to it, or to take up opportunities that might arise. We have to be a bit freer on this. There is a kind of determination to control that we should resist. I would much prefer this organisation to be sensibly built and then left to get on with it. So I hope that we resist any suggestion that, at this moment, we should decide what this organisation should do in two or three years’ time, or indeed in five or six or 10 or 11 years. It is much better to leave it as it is, and I hope that my noble friend will resist any such proposal.
Lord O'Neill of Clackmannan
I rise in defence of my noble friend—although we disagreed on the previous amendment. We are losing sight of what is a legitimate tactic in the process of scrutinising legislation. In order to have the Government justify what is in the Bill, we have to ask them to remove things for them to tell us why they should be in it in the first place. That is what my noble friend has sought to do in a variety of areas. No one is suggesting that the ONR will decline the invitation. It seems to be general public knowledge that one or two Middle Eastern states that are envisaging or engaged in the development of nuclear power have looked to the United Kingdom as an independent regulator separate from the supplier of the kit and the running of the kit which they anticipate having. In order for us to have a clear understanding of the powers and the responsibilities of the ONR, we have to use the rather brutal method of seeking to delete those powers from the Bill so that they can be better defined. I realise that I have spoken for about two minutes longer than I should have done, but we are making rather heavy weather of this and I hope that my noble friend’s amendments will be treated fairly, as the Minister always does.
Baroness Verma
I am extremely grateful that the noble Lord ended on his last note, because I consider everything extremely carefully, but I agree with my noble friends Lord Deben and Lord Jenkin that we must not be so restrictive on what the ONR could do to enhance its standing in the world. I would like to address the amendments of the noble Lord, Lord Whitty, as they are grouped, so that I can clarify for him the reason why we are taking the position that we are.
Amendment 40C would require that the ONR’s accounts are presented to the Secretary of State and laid before Parliament at the same time as the annual report. The noble Lord, Lord Whitty, asked whether the accounts would be made available. Accounts are already required to be audited and laid before Parliament under paragraph 21 of Schedule 7, and, in practice, the accounts and the annual report will be published together. I hope that that answers the noble Lord’s question on reporting and laying before Parliament.
Amendment 40D would remove the ONR’s powers to borrow. This is not an element of the Bill that it is intended that the ONR would use frequently, and it can be used only with the Secretary of State’s approval. It is certainly not a blank cheque, but there may be instances where the ONR’s work may require extra funding in the short term to achieve a long-term goal, and in this instance I believe that the ONR’s power to borrow money, with appropriate checks and balances, is suitable for an independent public body.
Amendment 40G, on the other hand, would seek to require the ONR to recover the full costs of an inquiry. Laudable though the intention is, we cannot always guarantee that full cost recovery will be appropriate. The costs of some inquiries may not be fully attributable to one or even a group of duty holders. We would not wish unfairly to add extra charges to business for costs not incurred by them.
I am grateful to the noble Lord for tabling Amendment 40K. It would remove provision in Clause 79 for the ONR, with Secretary of State approval, to provide services related to its expertise but not part of its purposes. My noble friend Lord Jenkin eloquently articulated how important the provision is, because of the specialist knowledge that ONR possesses, if resource were available, to, for example, assist another country with assessing the safety of a new reactor design. Under the Bill, ONR could charge for such work, including at a commercial rate. The provision of such advice would have real benefits—not just financially, but, as my noble friend said, by helping to spread the UK’s high standards of practice internationally and giving ONR inspectors wider experience.
Let me be clear: the ONR’s first priority will be to meet its obligations as the UK’s nuclear regulator. Nothing will allow us to detract from this. My noble friend Lord Deben is right; we must allow the ONR to get on with its core activities. To ensure that there are no actual or perceived conflicts of interests, any commercial work which the ONR undertakes will be only with the consent of the Secretary of State. For those reasons, I hope that the noble Lord will withdraw his amendment.
Lord Jenkin of Roding
Before my noble friend sits down I hope I may be allowed to say how much we owe to the noble Lord, Lord Whitty, for enabling us to have debated a large number of matters during the course of the afternoon. As I said earlier, I had my doubts about whether we would take the time. We will stop just half an hour short and are most grateful to him.
Lord Whitty
Flabbergasted as I am, I thank the noble Lord and others who are saying, “Hear, hear!” I wondered if we could get through a full day when I started on this process, because, in principle, we agree with the Government’s broad strategy and we certainly want an ONR which is effective, independent, vibrant and innovative. Anything I have said is not intended to restrict that. I am grateful to the noble Baroness for pointing me to paragraph 21 of Schedule 7 about the annual accounts. It would be helpful to have them all in one place, but nevertheless this seems to cover the point.
On full recovery of costs, there will be situations in which regulators cannot do that. They usually have to explain why to the Treasury, certainly if it is done on any systematic basis. There will be exceptions, but I think that the Government have said they will be pursuing the principle of full recovery of costs. I am not therefore pursuing the argument that this needs to be in legislation. At least we have a clear answer that that is the principle and that fees and costs will be covered plus the Secretary of State’s allocation of grant in aid—or whatever we call it these days.
That might still leave a gap which presumably is intended by the borrowing provisions here. As my noble friend Lord O’Neill says, I have proposed deletion, not to say that I am utterly opposed to borrowing powers, but to see to what degree the Government are likely to use them. The Minister has pretty much indicated that they would not use them that often, but they are there. Given that they are there, I think that in some capacity or another, the Government—it could be the Secretary of State in guidance, or whatever—need to be pretty careful of what kind of borrowing the ONR engage in, because this gets into the area of conflict of interest.
This also applies to my amendments in relation to what services the ONR can sell. Because my deletions would still leave subsections (1) and (2) of the clause, which allow the ONR to sell services anywhere in the world which relate to its areas of purpose—that is, nuclear safety in the widest sense—all the objectives of selling services to other states that are interested in developing nuclear power would be allowable, even if my full deletion was accepted. I am worried about a provision that says we can also sell services to anyone anywhere that are not related to our purpose. That seems to allow for a money-making venture which is not really related to the role of the ONR.
At the end of the day, through all of this, we have to remember that the ONR is a regulator. As a regulator it has to be cleaner than clean. It has to have clear sources of operation; clear standards to which it operates; clear standards for the qualification of its staff; and—yes—some limitations on what those staff and the organisation can do. To retain a genuinely world-class regulator in a very difficult and delicate field, we need to be careful not to allow any loopholes which allow a conflict of interest to be claimed, even if it is not for real. I am a bit suspicious about the issue of selling services. I think the Government should reflect on it. For now, I am happy to complete this stage—only 20 minutes in advance, regrettably—and beg leave to withdraw my amendment.
Lord Gardiner of Kimble
My Lords, this may be a convenient moment for the Committee to adjourn.