House of Lords

Wednesday 6th November 2013 Lords Chamber

Wednesday, 6 November 2013.

15:00

Prayers—read by the Lord Bishop of Norwich.

Introduction: Lord Allen of Kensington

Wednesday 6th November 2013 Lords Chamber

15:08

Sir Charles Lamb Allen, Knight, CBE, having been created Baron Allen of Kensington, of Kensington in the Royal Borough of Kensington and Chelsea, was introduced and took the oath, supported by Baroness Jay of Paddington and Lord Bragg, and signed an undertaking to abide by the Code of Conduct.

Syria: Refugees

Wednesday 6th November 2013 Lords Chamber

Question

15:13

Asked by

[Lord Selkirk of Douglas]

To ask Her Majesty’s Government whether they will pursue a dialogue with the governments of Jordan, Turkey, Lebanon and Iraq in order to ascertain the top priorities for those countries with regard to the present and future needs of refugees remaining in those countries who have fled the war in Syria.

[Lord Wallace of Saltaire (LD)]

My Lords, the situation in Syria is worsening. There are more than 2 million refugees in neighbouring countries, which is creating a growing regional crisis. The UK’s total funding for Syria and the region is now £500 million, the largest total sum the UK has ever committed to a single humanitarian crisis. This reflects the scale, despair and brutality of the situation. The Prime Minister and the Foreign Secretary regularly raise the issue with their counterparts from Jordan, Turkey, Lebanon and Iraq, the four countries where refugees are now mainly to be found, and they will continue to do so.

[Lord Selkirk of Douglas (Con)]

The Minister’s statement is extremely welcome. Does he accept that using aid in a country such as Jordan—for example, to improve water supplies and sanitation and to supplement the very hard-pressed health provision, education and other basic services—undoubtedly helps to reduce both tension and the increasing scope for friction between the refugees and the often vulnerable local communities who have so generously welcomed them?

[Lord Wallace of Saltaire]

My Lords, we do understand that. The sheer scale of the number of refugees now in Lebanon and Jordan in particular is such that it has the full potential to destabilise their societies and, therefore, their political systems. Of the £500 million that we have so far committed, £167 million is going to the neighbouring countries of Lebanon, Jordan, Turkey, and Iraq and, in addition to humanitarian aid, Britain is providing more than £15 million to support stability in Lebanon and Jordan, including support for their police and armed forces. The UK also recently announced an additional £12 million of support for Jordan, aimed at keeping essential public services running.

[Lord Bach (Lab)]

My Lords, in relation to Jordan and what the noble Lord has asked about, the Jordanian Government need particular help because a substantial number of refugees in Jordan are actually with host families rather than in refugee camps. This means that the Jordanian Government need more help because UNHCR aid is not as forthcoming as it would be in refugee camps. The Jordanian Government need more money in order that those refugees with host families are adequately looked after, particularly—here I repeat what the noble Lord who asked the Question said—with regard to drinking water and the price of it. What special help, beyond what the Minister has already stated, is to be given to Jordan itself because of the particular difficulties that that country has at the present time and because of what we owe to that country ourselves?

[Lord Wallace of Saltaire]

My Lords, I have already announced that the Government are giving specific aid to the Jordanians to support a number of activities. We are well aware that drinking water is a particular problem. As the noble Lord rightly points out, a number of refugees in Lebanon and Turkey, as well as in Jordan, are not in refugee camps but have been taken in by local families. That is a good thing in many ways but it does of course increase the strain on local communities.

[Lord Ashdown of Norton-sub-Hamdon (LD)]

My Lords, I declare an interest as the president of UNICEF UK and in that capacity I thank the Government for their generosity, not just to UNICEF but also to many other charities in helping with the terrible suffering of children, who of course suffer most in these circumstances. The last case of polio in Syria was 14 years ago, in 1999, but this terrible disease is now taking hold, especially among the children of the refugee population. In past conflicts it has been possible to arrange agreements for immunisation between the warring parties. I wonder whether the Government have pursued this matter with both the Syrian Government, who seem perfectly prepared to do this, and the rebels. Are the Government pursuing this opportunity?

[Lord Wallace of Saltaire]

My Lords, as my noble friend will be aware, alongside the United Nations Security Council resolution on chemical weapons there was a United Nations Security Council presidential statement on humanitarian access. That has not yet been fully accepted by the Syrian regime. There are many difficulties for humanitarian agencies and their staff in getting visas to enter the country and, as he rightly said, there are also difficulties in some of the rebel-held areas.

[Baroness O'Loan (CB)]

My Lords, as I prepare to go on Saturday to Jordan and the refugee camps, I ask the Minister, bearing in mind that there are in excess of 2.5 million Palestinian and Syrian refugees in Jordan alone and thanking the Government for the money and resources they are putting in, whether there is anything further that we can do in terms of influencing the European Union and United Nations to improve the situation, particularly of refugees seeking to get out of Syria and into Jordan.

[Lord Wallace of Saltaire]

My Lords, the noble Baroness rightly points out that some of the refugees in Jordan are Palestinians who were living in the huge refugee camp in Damascus, which I have visited myself, and who have now been forced, for the second time, to move out to Jordan. The United Kingdom has lobbied very hard for other countries to step up to the mark. We have currently provided more bilateral assistance than any other member state of the European Union. At the last G20, we put pressure on other members to produce more funds and a further £1 billion was pledged. The Russians have contributed only a very tiny amount of humanitarian aid. The amount they have contributed in arms to assist the regime is a great deal larger.

[Lord Wright of Richmond (CB)]

My Lords—

[Lord Judd (Lab)]

My Lords—

[Lord Jopling (Con)]

My Lords—

[The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)]

My Lords, it is the turn of the Labour side.

[Lord Judd]

My Lords, the humanitarian challenge is formidable. Of course, it is not just a matter of relief; it is also a matter of long-term investment in children—their education and their health—because they are going to be displaced for a long time to come. What are the Government doing to face up to the immense regional political implications of what has happened in the sense that almost a third of the population in Jordan will soon be refugees? That is acutely destabilising, and it is the same story in Lebanon, with all kinds of dangers for the future in terms of extremism, political disruption and the rest. Can we promote international discussions about how to have a positive pre-emptive regional approach towards the long-term political issues?

[Lord Wallace of Saltaire]

My Lords, I think that it may be beyond the capabilities of the United Kingdom Government to resolve all the problems of the Middle East. We are, however, now involved in a range of multilateral discussions. Sadly, the Geneva II conference, which we hoped would take place in November, is unlikely to take place before towards the end of the year. As the noble Lord knows, tentative dialogues with the Iranians are under way, and the Middle East peace process between the Israelis and the Palestinians is, thank goodness, also again getting slowly under way. We are engaged on a large number of fronts but, as the noble Lord knows, the problems are extremely complex and long-standing.

Carbon Monoxide Detectors

Wednesday 6th November 2013 Lords Chamber

Question

15:22

Asked by

[Baroness Finlay of Llandaff]

To ask Her Majesty’s Government what plans they have to make the installation of carbon monoxide detectors compulsory in all new and rental properties.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, this matter will be discussed during the Energy Bill debates later today but I can announce to the House now that my department will be undertaking a formal review of the rules and regulations relating to carbon monoxide alarms in rented homes. This will consider the technical questions of how best to ensure safety in the home, as well as regulatory mechanisms, given the overlapping regimes of building regulations, fire safety and housing standards.

[Baroness Finlay of Llandaff (CB)]

I am, of course, delighted to hear that there will be a review but I hope that, in the light of the coroner’s Regulation 28 letter following yet another fatal carbon monoxide poisoning, the Government will also consider giving fire and rescue services a statutory role in carbon monoxide safety, regulation and enforcement, given their good track record on fire alarms. I also ask the Government to consider how carbon monoxide tracks in buildings. Some of the deaths have occurred among people who have been resident in properties or rooms where the boiler has not been situated, although the boiler has been the source of the carbon monoxide and the source of the deaths.

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Baroness for raising this important matter. I pay tribute to her for everything that she has done to raise this issue over several years. She is right about the coroner’s Regulation 28 letter that we received following the tragic death of Mrs Kerr in Manchester. We are currently considering its recommendations, which include some of those that she has mentioned, and we will reply, as we are required to do. As to the noble Baroness’s second question, she is right to emphasise the risks to tenants in rented properties. In the wider review that I have just mentioned, we will be looking at the requirement for landlords to install carbon monoxide detectors.

[Baroness Gardner of Parkes (Con)]

My Lords, there is currently an obligation for rental properties to have a gas safety certificate every year. If the compulsory installation of carbon monoxide monitors is to be introduced, would it not be practical for those monitors to be tested at the same time, as people would then know that it had been done? Further, is it not important to indicate on the carbon monoxide monitor how long it will work satisfactorily? I have found great variation in what people tell you when they come about the gas. One will say that the battery just needs changing but another will say that the sensor stops working after a certain number of years. I noticed that whoever installed the carbon monoxide monitor in my home wrote on it the date when it will definitely need replacing.

[Baroness Stowell of Beeston]

My noble friend raises an interesting point. One of the new steps that the department is proposing as part of its wider review to enhance the safety of people in rented property is to ensure that they are properly equipped to ask the right questions about alarms and their longevity. Annual safety checks are about appliances and flues. The most important thing is that appliances are operating properly because, if they do so, the chance of injury or death is that much more diminished.

[Lord Sugar (Lab)]

My Lords, the noble Baroness will of course be aware that some of the regretful deaths that have been caused by carbon monoxide poisoning in people’s homes is due to a device driven by gas. Does the noble Baroness agree that the utility companies that supply gas should be under a legal obligation to ensure that the supply and installation in the homes of their clients are tested and that their premises are safe and, perhaps, retrospectively fit a CO device free of charge? Of course, they can easily afford to do so.

[Baroness Stowell of Beeston]

Appliances in rented properties are subject to an annual requirement for a gas safety check. As for the providers of gas pipes, since April this year the distribution network operators have been required by Ofgem to raise awareness and reduce the risk of carbon monoxide. So there is now a requirement on those companies as well as the annual safety check on the appliances which is part of existing regulations.

[Lord Tope (LD)]

My Lords, I welcome the Minister’s answer today. Is she aware that in its response to the recent CLG Select Committee report the Government also agreed with the Electrical Safety Council’s view that all private rented sector properties should be subject to electrical safety tests at least every five years? Can she say how and when the Government will ensure that landlords do that, and that such checks include appliances and are carried out by registered electricians?

[Baroness Stowell of Beeston]

I will have to write to my noble friend on the specifics of his questions on electrical checks, but I would point him to the wider review which is taking place to enhance the safety of all people in rented accommodation. It will cover a wide range of issues and not just gas, carbon monoxide or electricity.

[Baroness Masham of Ilton (CB)]

My Lords, are there enough warnings on gas stoves that are taken into tents when people are camping? There have been several fatalities.

[Baroness Stowell of Beeston]

My Lords, the noble Baroness raises an important point. The Department of Health has been working with the British Standards Institution to introduce warning labels on barbecues and barbecue fuels to warn people of the dangers of bringing barbecues indoors or into tents. I think that people are gradually starting to understand the risks and dangers of that.

[Lord McKenzie of Luton (Lab)]

My Lords, the Minister’s announcement is welcome. She will be aware that we now have some 3.6 million households renting privately in a sector that has hitherto been largely unregulated. Mention has already been made of the landlord’s obligations under health and safety legislation. Is she aware of research from Shelter that shows that in 2011-12 there were some 85,000 complaints against rogue landlords, two-thirds of which related to serious life-threatening hazards such as dangerous gas and electrical installations? Given savage cuts to the HSE and local authority budgets, how can the Secretary of State’s new-found zeal for cracking down on rogue landlords be brought to bear to ensure compliance with these vital health and safety regulations?

[Baroness Stowell of Beeston]

The noble Lord seems to want it both ways—he wants me to say that we are going to do more but then questions whether we can do more. As I said, a couple of weeks ago we announced a range of measures to enhance the safety of tenants in all kinds of rented accommodation. Among a range of measures that we will be introducing is guidance for local authorities to help them prosecute rogue landlords and press for the maximum possible penalties. From next month the courts will be able to take account of a landlord’s assets and not just their income, as at present, when determining an appropriate fine.

Nuclear War: International Conference

Wednesday 6th November 2013 Lords Chamber

Question

15:30

Asked by

[Baroness Miller of Chilthorne Domer]

To ask Her Majesty’s Government whether they intend to attend the international conference in Mexico in February 2014 on the humanitarian impact of nuclear war.

[Lord Wallace of Saltaire (LD)]

My Lords, we have not yet received an invitation to the conference in Mexico on the humanitarian impact of nuclear weapons and have not yet made a decision on whether the UK will attend. We continue to have concerns that the initiative would divert attention from the 2010 action plan agreed by states parties to the Nuclear Non-Proliferation Treaty.

[Baroness Miller of Chilthorne Domer (LD)]

My Lords, I thank my noble friend for his reply, which is a little more positive than I had feared in that at least it is not a negative. Does he see a problem in that, on the one hand, last April the Prime Minister claimed that Britain had taken the lead in pushing for progress towards multilateral disarmament while, on the other hand, we have not taken part in the UN open-ended working group that was set up to try to overcome the 17-year impasse on the Conference on Disarmament, and yesterday, in the UN General Assembly, the UK voted against resolution L34 to take forward multilateral nuclear disarmament negotiations—which are exactly the sort of negotiations the Prime Minister called for last April? How does he think that the rest of the world is viewing us?

[Lord Wallace of Saltaire]

As regards attendance at a conference that is still four months away, British officials have had conversations in Mexico City, Geneva and New York about whether we may attend. It remains very much an open question. Perhaps I may simply say to the noble Baroness that there are a great many different, and in some ways conflicting, bodies in which disarmament is now being discussed. These include the Nuclear Security Summit which will meet again in 2014, the UN Disarmament Commission and the Conference on Disarmament. There have also been a number of discussions on nuclear-weapon-free zones. The question of where one puts the priority and where you think it is most worthwhile to push for development is difficult We hold that the NPT review conference of 2015 should remain one of our priorities. We also think that there is value in the P5 process, on which Britain has been one of the leaders, and in the P5-plus process in which the P5 members discuss these issues with India and Pakistan.

[Lord Browne of Ladyton (Lab)]

My Lords, do the Government agree with the principal conclusion of the Oslo conference that no state and no international organisation has the capability to address the consequences of the explosion of a nuclear weapon and, much more worryingly, the view supported by experts that it might not be possible to develop such capacities? I hope that the Government disagree. If they do, where is the evidence that we have such capabilities?

[Lord Wallace of Saltaire]

My Lords, the valuable contribution that the Norwegians and others have been making on this whole question of the humanitarian and, incidentally, climatic consequences of the explosion of a nuclear weapon are very much something that the UK Government are taking seriously. We see this as a very useful expert contribution. Looking at how, if there were to be—heaven forfend—a nuclear explosion, we would cope as an international community with the consequences, is something that is very valuable to take forward.

[Baroness Williams of Crosby (LD)]

Does my noble friend agree that there was very substantial political support for the United Nations resolution on working on methods of dealing with nuclear disarmament, and in particular that although half of the NATO members voted in favour of that resolution, the United Kingdom and the P5, with the exception of China, all voted against it? Perhaps I may remind him that the United Kingdom has established a substantial record—perhaps the leading record among the P5—for work on specific actions such as the verification principle that has given us a great reputation on this issue. We might put that at risk if we do not recognise the strength of the pressures from not only the United Nations but many of our allies in this respect.

[Lord Wallace of Saltaire]

My Lords, this is an extremely serious area of international security that we take very seriously. We are worried about some of these conferences where it is easier to pass resolutions than to accept that we need, for example, to control: the storage of fissile materials; the creation of additional fissile material; and the potential trade in fissile material. This is what the currently blocked fissile material cut-off treaty is about, and what the nuclear security summit next year will also be concerned with.

[Lord Hannay of Chiswick (CB)]

My Lords, will the Minister be able to say what attitude the US Government are taking to attending the Mexico conference? Could it possibly be that we are just waiting to see which way they jump? If so, is that the best way to approach this matter?

[Lord Wallace of Saltaire]

My Lords, the United States has also not yet taken a decision. My understanding is that the other members of the P5 are unlikely to attend. I suspect that the considerations of the US Administration may not be totally dissimilar from those that are concerning the British Government.

[Lord Foulkes of Cumnock (Lab)]

My Lords, would the Government consider sponsoring a joint parliamentary delegation to attend the conference?

[Lord Wallace of Saltaire]

That thought had not occurred to me or, as far as I am aware, to anyone else. If the noble Lord would care to attend, we will consider his request.

Living Wage

Wednesday 6th November 2013 Lords Chamber

Question

15:36

Asked by

[Baroness Royall of Blaisdon]

To ask Her Majesty’s Government what steps they are taking to promote the adoption of the new rate of the living wage.

[Viscount Younger of Leckie (Con)]

My Lords, the Government support the living wage and encourage businesses to pay it when it is affordable and not at the expense of jobs. We recognise that these are challenging times. We applaud companies that have chosen to pay higher wages. We too are concerned with low pay. That is why we have frozen council tax, cancelled the rise in fuel duty, and by 2014-15 will have taken 2.7 million people out of income tax altogether.

[Baroness Royall of Blaisdon (Lab)]

My Lords, the living wage is good for the country in terms of wealth creation and saving money on welfare bills; it is good for business, as KPMG and the Resolution Foundation have observed; and it is clearly good for individuals who have been hit by the cost of living crisis, some of whom have had to resort to food banks. Do the Government have any understanding of the number of people regularly using food banks who are in full and part-time work? If not, what plans do the Government have to collect this information?

[Viscount Younger of Leckie]

We see that the right way forward—the only way forward—to achieve sustainable increases in living standards is through focusing on economic growth and employment. This is exactly what the Government are doing, with a particular focus on SMEs. As we know, 99% of all businesses are SMEs, with 14.4 million employees. With changes to the tax allowance, low-wage workers who have been squeezed through inflation and low earnings growth can take home much more of their income. We have taken 25 million people out of income tax; they have had a cut.

[Lord Naseby (Con)]

My Lords, does my noble friend agree that surely the first priority is to ensure that the minimum wage level is properly implemented across the whole United Kingdom; and that, secondly, the threshold at which anybody in this country pays tax should rise? It is to the credit of Her Majesty’s Government that the Chancellor has enabled that level to be raised in each of the last few budgets. On top of that, does my noble friend recognise that the dreadful situation that we inherited from the Labour Government—

[Noble Lords]

Oh!

[Lord Naseby]

Noble Lords can say what they like over there. We were told by one of their senior Ministers that the cupboard was bare. It is only my right honourable friend the Chancellor’s policies that have ensured we get the growth that we are beginning to get now. As I understand it from my noble friend—

[Noble Lords]

Question!

[Lord Naseby]

No, I am sorry; you have to listen to this. As I understand it, my noble friend is quite clear: the benefits of the growth that we establish will be for all sections of society.

[Viscount Younger of Leckie]

My noble friend has made some strong and passionate points and I agree with the gist. However, I should say that our key policy is to support the low-paid through the national minimum wage. It is set at a level that helps as many low-paid workers as possible, but without damaging their employment prospects. My right honourable friend Vince Cable has asked the Low Pay Commission to look at what economic conditions would be needed to allow the national minimum wage to rise in the future by more than current conditions allow, without having an adverse impact on jobs.

[Baroness Wall of New Barnet (Lab)]

My Lords, I am sure that the noble Viscount is aware of the benefits that the living wage have already demonstrated. He referred specifically to SMEs in his response. I advise him that many SMEs, particularly those in the engineering and technical sectors, already pay well above the minimum wage. They feel that it is the right way forward because they benefit from the commitment of their employees.

[Viscount Younger of Leckie]

The noble Baroness makes a good point. Unlike the national minimum wage, which aims to maximise support for the low-paid without damaging their employment prospects, the living wage is derived from an assessment of households’ living standards. Although that is important, it focuses on household expenditure rather than the income and affordability of companies.

[Lord Elystan-Morgan (CB)]

My Lords, does the Minister accept the recently published findings of the Resolution Foundation in relation to a minimum living wage? Its contention is that if a payment of £8.80 per hour in the London area or £7.65 per hour outside London were made to all public workers, there would be a net saving to the public purse of no less than £2 billion per annum? Do the Government accept those figures? Have they made their own calculations, and if not will they now do so and publish them?

[Viscount Younger of Leckie]

I remind the House that the living wage is a voluntary rate of pay, above the national minimum wage, proposed by the Living Wage Foundation. It is very much up to employers and employees through their contracts to decide what the rate of pay should be. However, I note the noble Lord’s point.

[Baroness Tyler of Enfield (LD)]

My Lords, does the Minister agree with the Mayor of London, Boris Johnson, who said only on Monday that more employers in the capital were recognising the benefits of the living wage for their workforces by specifically helping low-paid families to make ends meet, as well as promoting economic dividends for employers and boosting growth and productivity? Does the Minister share the mayor’s wish to spur more employers on to do the right thing?

[Viscount Younger of Leckie]

I certainly share that wish and the mayor has made his views clear. I said earlier that I also applaud what companies are doing, provided that they can afford it. But to help households manage the costs of their bills—I have said already that I recognise that there is a squeeze on them—this Government have already frozen council tax and cancelled the rise in the fuel duty escalator. We are encouraging competition and that consumers switch to get the best deals. Moreover, advice is available from citizens advice bureaux and the Money Advice Service.

[Lord Tebbit (Con)]

My Lords, does my noble friend accept that the first priority of a business is to stay profitable and in business if it is to employ anyone at all? It would be a bit odd if the wages paid to a worker were based not on his value to the business, but on his various commitments and obligations. Surely that cannot be right.

[Viscount Younger of Leckie]

It is certainly true that businesses, particularly small and medium-sized ones, need to decide whether they should increase pay from the national minimum wage to the living wage, but it is very much up to them. Certainly there has been quite a lot of negative media coverage about the Labour Party’s policy, in that small and medium-sized businesses felt that they would not be able to take more people on if they decided to increase pay from the minimum wage to the living wage.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Wednesday 6th November 2013 Lords Chamber

Order of Consideration Motion

15:44

Moved by

[Lord Wallace of Saltaire]

To move that the order of the House of 28 October be vacated, and that it be an instruction to the Committee of the Whole House to which the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill has been committed that they consider the Bill in the following order:

Clauses 1 and 2, Schedule 1, Clause 3, Schedule 2, Clauses 4 to 25, Clauses 36 to 39, Clause 26, Schedule 3, Clauses 27 to 32, Schedule 4, Clauses 33 to 35, Clauses 40 to 44.

[Lord Wallace of Saltaire (LD)]

My Lords, I beg to move the Motion standing in my name on the Order Paper.

[Lord McFall of Alcluith (Lab)]

My Lords, by mismanaging the lobbying Bill, the Government are wrecking the work of the Parliamentary Commission on Banking Standards, which was set up to reform the culture in the banking industry, by bringing forward this Bill early—on 18 November. That is the unanimous view of all members of the banking commission, who have said that they need until the new year to study these government amendments for the simple reason that this is an entirely new Bill. This is a Bill that left the House of Commons 35 pages long. It is now more than 160 pages and the government amendments are four times the size of their original Bill. This morning I spoke to Andrew Tyrie MP, the chairman of the commission, who said that if the Government go ahead before due consideration to this increasingly complex and dense legislation, the Parliamentary Commission on Banking Standards will not be able to carry out the mandate that the Government gave it to reform the banking industry. The collective efforts over one year—almost 200 hours of public evidence and 10,000 questions —will be wasted. The Government will not only be betraying their promise when they established the commission, but will be seen and disowned by members of the commission for indulging in cynical, low, political-level, sharp practice. I ask the Government to think again and give due time to the Parliamentary Commission on Banking Standards by bringing this Bill back in the New Year when it is appropriate.

[Lord Lawson of Blaby (Con)]

My Lords, as a fellow member of the banking standards commission, I agree with the conclusion reached by the noble Lord, Lord McFall, that the Leader of the House should think again about this important matter. I have great sympathy with him. I understand that the parliamentary timetable has been complicated by the late change of plan on the lobbying Bill and that presents him with a difficulty, but it would be wholly wrong to put Report of the banking Bill in as a stopgap. This is a massively important Bill. It is a completely different one from the Bill that emerged from the other place. It is hugely larger—about five times—and extremely complex. In Committee, a number of noble Lords asked for a particularly long gap between Committee and Report, and I was under the impression that the Government were extremely sympathetic to that. Now they are suddenly putting it forward as a stopgap.

That is the main reason for making this objection, but there is another one. The most reverend Primate the Archbishop of Canterbury cannot be in his place today because he is abroad, but he was an active member of the banking commission. I spoke to him by telephone this morning. He is most anxious to take part in Report and, as a member of the banking commission, he has strong and informed views on a number of the issues. The week that the Government have now chosen is the week of the annual Synod of the Church of England, over which he has to preside, which means that he cannot be present. I urge my noble friend to think again.

[Lord Laming (CB)]

My Lords, the noble Lord, Lord Turnbull, is not yet able to get to the House so he has asked me to convey his concerns about the scheduling of this stage of the Bill. The colleagues who have spoken already, like the noble Lord, Lord Turnbull, have invested an immense amount of time and energy both on the banking commission and on this Bill. It is a most important Bill and there is a huge amount of work that remains to be done, not least, as previous speakers have already pointed out, about the way in which it has been changed—though changed, I may say, for the better.

The noble Lord, Lord Turnbull, is well respected in this House, not least because of his measured tones. He asked me to convey his feelings on this subject, but I fear that I may not be able to do it accurately while keeping within the bounds of acceptable parliamentary language. Suffice it to say that he is, to put it mildly, put out. I hope that the Government will feel that they are able to look again at this matter because there is still much to be done in a great deal of detail and it is vitally important.

[The Lord Bishop of Norwich]

My Lords, I rise from this Bench in the absence of my friend the most reverend Primate the Archbishop of Canterbury, who cannot be in his place, to follow up a little on what the noble Lord, Lord Lawson, said. I know that your Lordships have sometimes observed that when these Benches are full, the General Synod must be in session and the Bishops are absconding. We sometimes are, of course, but the week after next, the Synod will spend a great deal of time on the new proposals for the consecration of women as bishops, and we are hopeful of progress.

I know that the most reverend Primate the Archbishop of Canterbury would be glad not to miss consideration on Report of the Banking Reform Bill but will, on this occasion, have to give the General Synod priority. I am sure that your Lordships would not wish him to abscond, as some of us hope to live to see the day when there will be women with us on these Benches. I realise that there are diary clashes for us all, but it would be a great pity if the Archbishop could not play a very full part in our debate here. He would be too modest to say it himself, but I can say it for him: we would be the poorer without his contribution.

[Lord Higgins (Con)]

My Lords, I think that it would be wrong to suppose that it is only those who have been serving with great diligence on the banking commission who are concerned about this matter. The size of amendments in relation to the size of the Bill is, I think, without precedent. It is a very important matter which should be properly debated on the Floor of the House.

[Baroness Royall of Blaisdon (Lab)]

My Lords, I regret the fact that the Chief Whip has taken the decision unilaterally to impose business on the House. I have to make clear that Her Majesty’s Opposition did not agree to the tabling of the banking Bill for consideration on 18 November. It is clear from the conversations that we have had with the members of the Joint Committee on banking reform that the huge number of amendments and truncated timescale run the risk of an important Bill not being taken seriously. The arguments made very cogently in the Chamber today demonstrate that.

We recognise that this House is a part-time House—that includes Front-Benchers—and welcome the expertise that comes from Members, including Bishops, of course; it means that Members of the House can keep their interests and remain part-time, so changes to the timetable have a profound effect on the work of the House.

I ask the noble Baroness the Chief Whip, in these unusual circumstances—that is to say, the fact that yesterday, the whole House agreed that there should be a pause in consideration of the Transparency of Lobbying Bill—why, for just one legislative day, the Government cannot schedule debates on some of the many reports that are languishing, waiting to be debated on the Floor of the House. I well understand the need to deliver the Government’s programme, but I do not understand the difference that one day will make. I look forward to the noble Baroness’s reply and add that I cannot agree to the change that has been proposed to the House, but the House will know that my door always remains open to constructive discussion about the forthcoming programme.

[Baroness Anelay of St Johns (Con)]

My Lords, of course, I am always sorry to cause concern to Members of the House in the matter of scheduling of business. In this House, as the noble Baroness the Leader of the Opposition said, Members are not expected to attend full time. I have to observe that many do and have a tremendous sense of duty to the work they do in scrutinising legislation. It is not a part-time House; we sit full time, but Members clearly have other expertise, which may keep them elsewhere on occasion. It is because of that, in scheduling business in this House, that we always take care to try to give advance notice. Commonly, we give three and a half weeks notice, which is considerably different from the one week given in another place, where elected, paid politicians are obviously in a different position.

As the noble Baroness said, yesterday, a deal was struck on the Floor of the House to delay part of the Committee stage of the lobbying Bill. An inevitable consequence of that was that I would have to make some changes to future business; there were two Committee days for the lobbying Bill which had to be vacated. I looked at all the available legislative business. This House is justly proud of the scrutiny that it gives to legislation. Of course, I looked at the availability of the opposition Front Bench spokesmen for that business; I always do. What I advertised today meets what I always try to do in looking at the availability of opposition Front Bench spokesmen and making good use of government time. I had other options available to me, it is true, but each of those options would either have been a worse use of time for the House, less convenient for the opposition Front Bench or, indeed, both. So I have decided that the only proper use was to schedule the Financial Services (Banking Reform) Bill.

I appreciate that those noble Lords who formed part of the commission—obviously, it no longer exists—play a very full and effective part. Committee finished on October 23, so we have not jumped in here. It is now two weeks later. In the normal run of things, Report could have been scheduled for today, but we wanted to avoid doing it within the normal time of two weeks. Taking it forward to 18 November gives almost a month after the end of Committee. It is not unusual to schedule after two weeks; it is quite unusual for it to have been left as long as it has after Committee. I have proposed today that Report should begin nearly a full month after the end of Committee.

There have been references to the Bill’s being longer. It is indeed longer, but that is due to the Government’s having accepted the commission’s proposals. It is because the Government have been responding positively that the Bill has grown to meet the recommendations. Reference has also been made to colleagues’ availability, and I note particularly what the right reverend Prelate said. Far be it for me to wish to take the most reverend Primate the Archbishop of Canterbury away from discussion of important matters at his next weekly meeting of the Church, particularly if it is on the matter of women bishops. By the way, I do not hold the right reverend Prelate to any idea that that meeting will pass a resolution in favour of women bishops. I look on and wait with interest.

On a serious point, I know that the most reverend Primate attended two out of three days. He did as much as he possibly could to attend two days of Committee. He decided not to speak until late one night, when he was of great assistance in speaking briefly but importantly. Members of the House will know what I mean when I say that I did so “to assist the staff”, if I may put it that way, at 10.30 pm. It was a generous thing to do. I know that he listened assiduously and I am sure that he has read Hansard.

This is not in any way a matter of trying to put people out on any of the Benches. I assure the House absolutely of that. I know that my noble friends Lord Deighton and Lord Newby have been, and continue to be, very involved in discussions off the Floor of the House with those taking part in the Bill. Those started in Committee; they continued after Committee. They continue now, and I feel that those have been very constructive discussions.

I do my best in the way of scheduling. There are other legislative options. The noble Baroness, the Leader of the Opposition, asks why we do not have more debates. This House scrutinises legislation. I have offered a considerable number of days to the Committee Office—indeed, last week I was thanked for so doing. Two days of government time have been given over to committee dates this Session. That was what the Committee Office asked for in the first place, and we have fulfilled that commitment. Last week, the Committee Office was not able to take up the full offer of the time that we gave them, but we had extremely good debates last Wednesday.

This House needs to do what it does best, to use time efficiently and effectively for scrutiny of legislation. There is other legislation available which could be scrutinised on that day. I say to the Leader of the Opposition that my door is open to the opposition Chief Whip if he wishes to discuss the availability of his Front-Bench spokesperson, to look again at those dates for legislation to be scheduled.

Motion agreed.

Defence: Aircraft Carriers and UK Shipbuilding

Wednesday 6th November 2013 Lords Chamber

Statement

15:59

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, with the leave of the House, I shall repeat a Statement made in another place by my right honourable friend the Secretary of State for Defence. The Statement is as follows.

“With permission, Mr Speaker, I would like to make a Statement on the future shipbuilding programme for the Royal Navy, and in particular the aircraft carrier project. As the House will know, the previous Government entered into a contract with the Aircraft Carrier Alliance, an industrial consortium led by BAE Systems, to build two 65,000-tonne aircraft carriers—the largest ships in the Royal Navy’s history.

In SDSR 2010, the incoming Government, faced with the challenge of dealing with a £38 billion black hole in the MoD budget, were advised that under the terms of the contract it would cost more to cancel the carriers than to build them. The Public Accounts Committee subsequently described that contract as “not fit for purpose” and identified in particular the misalignment of interests between the MoD and the contractors, manifested in a sharing arrangement for cost overruns that sees, at best, 90p of every £1 of additional cost paid by the taxpayer and only 10p paid by the contractor as the root cause of the problem.

I agree with the PAC’s analysis. In 2012 I instructed my department to begin negotiations to restructure the contract to better protect the interests of the taxpayer and to ensure the delivery of the carriers to a clear time schedule and at a realistic and deliverable cost. Following 18 months of complex negotiations with industry, I am pleased to inform the House that we have now reached heads of terms with the alliance that will address directly the concerns articulated by the PAC and others.

Under the revised agreement, the total capital cost to the Ministry of Defence of procuring the carriers will be £6.2 billion, a figure arrived at after a detailed analysis of costs already incurred and future costs and risks over the remaining seven years to the end of the project. Crucially, under the new agreement, any variation above or below that price will be shared on a 50:50 basis between government and industry until all the contractor’s profit is lost, meaning that interests are now properly aligned, driving the behaviour change needed to see this contract effectively delivered.

The increase in the cost of this project does not come as a surprise. When I announced in May last year that I had balanced the defence budget, I did so having already made prudent provision in the equipment plan for a cost increase in the carrier programme above the £5.46 billion cost reported in the major projects review 2012, in recognition of the inevitability of cost-drift in a contract that was so lopsided and poorly constructed.

I also made provision for the cost of nugatory design work on the “cats and traps” system for the carrier variant operation and for reinstating the ski-jump needed for STOVL operations. At the time of the reversion announcement, I said that these costs could be as much as £100 million. I am pleased to tell the House that they currently stand at £62 million, with the expectation that the final figure will be lower still.

Given the commercially sensitive nature of the negotiations with the Aircraft Carrier Alliance, I was not able publicly to reveal those additional provisions in our budget, since to do so would have undermined our negotiating position with industry. However, the MoD informed the National Audit Office of the provisions, and it is on that basis that it reviewed and reported on our 10-year equipment plan in January this year. I am therefore able to confirm to the House that the revised cost of the carriers remains within the additional provision made in May 2012 in the equipment plan, and that as a result of this prudent approach the defence budget remains in balance with the full cost of the carriers provided for, and that the centrally held contingency of more than £4 billion in the equipment plan that I announced remains, 18 months after it was announced, unused and intact.

In addition to renegotiating the target price and the terms of the contract, we have agreed with the Aircraft Carrier Alliance to make changes to the governance of the project to better reflect the collaborative approach to project management that the new cost-sharing arrangements will induce, and to improve the delivery of the programme. The project remains on schedule, with sea trials of HMS Queen Elizabeth in 2017 and flying trials with the F35 commencing in 2018.

Overall, this new arrangement with industry will result in savings of hundreds of millions of pounds to taxpayers, and I pay tribute to the team of MoD officials, led by the Chief of Defence Matériel, who have worked hard over a long period of time to deliver this result.

In reviewing the carrier project, we have also reviewed the wider warship-building programme, within the context of the so-called terms of business agreement, or TOBA, between the MoD and BAE Systems, signed in 2009 by the previous Government. As the House will know, we remain committed to the construction of the Type 26 global combat ship to replace our current Type 23 frigates, but the main investment approval for the Type 26 programme will not be made until the design is more mature, towards the end of next year. There is, therefore, a challenge in sustaining a skilled shipbuilding workforce in the United Kingdom between the completion of construction of the blocks for the second carrier and the beginning of construction of the Type 26 in 2016.

Under the terms of the TOBA, without a shipbuilding order to fill that gap, the MoD would be required to pay BAE Systems for shipyards and workers to stand idle, producing nothing, while their skill levels faded. Such a course would add significant risk to the effective delivery of the Type 26 programme, which assumes a skilled workforce and a working shipyard to deliver it. Therefore, to make best use of the labour force and the dockyard assets for which we would anyway be paying, I can announce today that we have signed an agreement in principle with BAE Systems to order three offshore patrol vessels for the Royal Navy, based on a more capable variant of the River Class and including a landing deck able to take a Merlin helicopter.

Subject to main gate approval in the coming months, these vessels will be constructed on the Clyde from late 2014, with the first vessel expected to come into service in 2017. The marginal cost of these ships, over and above the payments the MoD would have to make anyway to keep the yards idle, is less than £100 million, which will be funded from budget held within the equipment plan to support industrial restructuring. The order is good news for the Clyde, sustaining around 1,000 jobs as the carrier construction work reaches completion, securing the skills base there and ensuring the ability to build the Type 26 frigates in due course, while turning the MoD’s liabilities under the TOBA into valuable capability for the Royal Navy.

Turning to the final part of this Statement, the House will be aware that this morning BAE Systems has announced plans to rationalise its shipbuilding business as the surge of work associated with the carriers comes to an end. Regrettably, that will mean 835 job losses across Filton, the Clyde and Rosyth, and the closure of the company’s shipbuilding yard in Portsmouth. The loss of such a significant number of jobs is, of course, regrettable, but was always going to be inevitable as the workload associated with the carrier build comes to an end. I pay tribute to the men and women on the Clyde and in Portsmouth who have contributed so much to the construction of the Royal Navy’s warships, including, of course, the Queen Elizabeth class carriers. BAE Systems has assured me that every effort will be made to redeploy employees and that compulsory redundancies will be kept to a minimum. The company is now engaged in detailed discussions with the unions representing the workforce in Portsmouth and on the Clyde.

I know that the loss of shipbuilding capability will be a harsh blow to Portsmouth, and the Government and the city council, together with Southampton, are in discussion about a package to support the regeneration of employment opportunities in the area. As part of these discussions, I can announce that Admiral Rob Stevens, former chief executive of the British Marine Federation, will chair a new maritime forum to advise the Solent LEP on its maritime vision.

Despite the end of shipbuilding activity, Portsmouth will remain one of two home ports for the Navy’s surface fleet and will continue to undertake the vital support and maintenance work that sustains our most complex warships, including the Type 45 destroyers and, of course, the aircraft carriers. Indeed, with both carriers based in Portsmouth, the tonnage of naval vessels based in the port will be at its highest level since the early 1960s, sustaining some 11,000 jobs in total in the dockyards and related activities. To support this level of activity, I can announce today an investment of more than £100 million over the next three years in new infrastructure in Portsmouth to ensure that the carriers can be properly maintained and supported.

The chair of the Public Accounts Committee has previously described the carrier programme as,

“one of the most potent examples of what can go wrong with big projects in the public sector”.

That is the legacy that this Government inherited: a carrier contract that was “not fit for purpose” and a TOBA that would have required the MoD to pay BAE Systems to do nothing while our shipbuilding skills base faded away. These announcements today put that legacy behind us; secure the future of British warship building; set the aircraft carrier project on a new path, with clear alignment between industry and the MoD; and deliver important new capability in the form of OPVs for the Royal Navy. I commend this Statement to the House”.

My Lords, that concludes the Statement.

16:11

[Lord Rosser (Lab)]

My Lords, I thank the Minister for repeating the Statement made in the other place by the Secretary of State for Defence.

It is a Statement not entirely devoid of party political points. The first part of it—presumably, therefore, the more important part of it, in the Secretary of State’s eyes—continues the argument over the alleged £38 billion black hole and the cost of the aircraft carriers. It is only towards the end of the Statement that the Secretary of State refers to decisions that will result in hard-working people losing their jobs, with the consequent impact on families and local economies, which in the eyes of most will be the significant part of the Statement, along with its associated implications for the United Kingdom shipbuilding industry.

I would like to take this opportunity to express our appreciation of the work and contribution made by all those in our shipbuilding industry. My understanding is that there have already been extensive discussions between BAE Systems and the trade unions representing the workforce, seeking to work together to address the difficult situation that has arisen. All too often that is not the approach adopted when reductions in the size of a workforce have to be considered.

The news of the job losses will obviously be a major blow. Clearly, the loss of the capacity at Portsmouth to build ships will be keenly felt, although a repair and maintenance capability is being retained in the city. It is vital that we keep the skills needed to sustain our United Kingdom shipbuilding capacity, and the announcement of the decision to build three offshore patrol vessels in the gap between the completion of the major work on the two aircraft carriers and the build-up of work on the Type 26 destroyers is welcome. The retention of our shipbuilding capability is vital to our country, the defence of the United Kingdom and the long-term future of the UK shipbuilding industry.

The Statement indicated that the two aircraft carriers will be based at Portsmouth, leading to the largest level of tonnage of naval vessels at that location for a great many years. Does that mean that a decision has been made that both aircraft carriers will also be fully operational? The Statement refers to the revised agreement for the carriers and states that,

“any variation above or below that price will be shared on a 50:50 basis between government and industry until all the contractor’s profit is lost”.

By how much more does the current cost of £6.2 billion have to increase before all the contractor’s profit is lost and the Government presumably pay for 100% of any further cost increase? Can the Minister give an assurance that there have been no adjustments to the defence equipment programme in order to continue with the construction of the two carriers and retain the more than £4 billion centrally held contingency sum in the equipment plan?

Since the Secretary of State appeared to consider the alleged financial black hole and the cost of the aircraft carriers to be the issue of most importance, I will respond. As far as the alleged £38 billion is concerned, which is the Secretary of State's unverified figure, it assumes that everything which was then on the shopping list for the many years ahead was actually proceeded with, and it is dependent on the budget growth assumptions made. The 2009 National Audit Office report concluded that the size of the gap was highly sensitive to the budget growth assumptions used and that if the defence budget remained constant in real terms, the gap would be £6 billion over the 10-year period.

On the issue of whether the contract could have been cancelled by the present Government had they wanted to, the National Audit Office report said:

“The Department … considered cancellation, which was feasible and offered significant medium-term savings. It concluded that this would have been unaffordable in the short term”.

That statement does not fully square with the Secretary of State's bald assertion that he had been advised that under the terms of the contract, it would cost more to cancel the carriers than to build them. The Government proceeded with the carriers because they felt that it was in the national interest.

The NAO report also said that the contract was negotiated by the then defence commercial director, with the terms of the contract typical of those in other large defence contracts. Whether any contractor would have been prepared to take on such a major contract of the kind involving the construction of the state-of-the-art carriers on any other basis than the cost overruns being divided 90% to the Government and 10% to the contractor, is a debatable point. It is a different situation now that we are well into construction and final costs for these state-of-the-art carriers are rather more certain.

There has been a lot of conjecture about the role that the politics of the Scottish referendum may have played in the decision to keep shipbuilding on the Clyde. It would be helpful if the Minister could confirm that the decisions today were taken on the basis of what is in Britain's best interests, maintaining the future of our shipbuilding industry and our country's defence. Could the noble Lord also outline what safeguards are in place if Scotland does vote to leave the United Kingdom? None of us wants to see that but we need to know what plans he has for all eventualities. We must retain a sovereign shipbuilding capability.

Whatever difficulties we experience, this country is a proud maritime nation. We have a proud and dedicated Navy, serviced by a proud and dedicated workforce. We must maintain that across the United Kingdom and retain the ability to build the warships we will need to defend our nation, protect our interests across the world and keep us secure.

16:17

[Lord Astor of Hever]

My Lords, I also pay tribute to the employees of BAE Systems and their families. I congratulate them on the excellent warships that have been built. The job losses are obviously bad news and our thoughts are, as the noble Lord said, with those affected and their families. It comes as we pass the peak of naval shipbuilding on the carriers. We have worked closely with the company to manage the impact of the losses.

Our priority is to do all we can to secure jobs for people in Portsmouth and on the Clyde. We will set out how we intend to do this once the company has set out its plans. We are in very close touch with BIS to discuss the opportunities. As the Statement said, BAE Systems has assured us that it will look first to deploy members of the staff affected to other areas of its business.

The noble Lord touched on the £38 billion black hole, and we can debate this. The Secretary of State, in the Statement in the other place, has offered to write to the shadow Secretary of State. I am very happy to write to the noble Lord, or send a copy of the same letter to the noble Lord, setting out the position on the £38 billion black hole—the difference between the available budget and the commitments that were entered into.

The noble Lord asked about BAE Systems and the trade unions. I can confirm that serious discussions are taking place at the moment. He asked if both carriers will be fully operational. That will be for the SDSR in 2015 to decide. My own personal view is that I would very much like to see both carriers operational, as the Secretary of State said in the other place, so that when one carrier goes in for refit the other is available and can use the crew from the other. However, that is not for this coalition to make a decision on. The noble Lord asked if I could give a guarantee that there will be no further rises. I cannot give that guarantee. As the Statement said, any increase will be shared on a 50:50 basis.

The noble Lord welcomed the OPVs. They will be used for fishery protection, counterpiracy and, among other things, protection of the overseas territories.

The noble Lord asked me about Scotland. I can say, first, that decisions were taken in Britain’s—the United Kingdom’s—best interests. There is no politics in this: it is absolutely in Britain’s best interests. He asked about safeguards if Scotland leaves the United Kingdom. We are not planning on that happening.

Final decisions on the build location have not yet been made on the Type 26 and it would be speculation at this point. Should Scotland decide to separate from the United Kingdom we are sure that companies there would continue to make strong bids for UK defence contracts. However, they would then be competing for business in an international market and would be eligible to bid only for contracts that were open for competition from outside the UK. They would no longer be eligible to bid for these contracts that are subject to exemptions from EU procurement rules to protect essential national security interests and are therefore placed or competed within the United Kingdom. I can also say that, with the exception of the world wars, we have not built a warship outside of the United Kingdom and we do not intend to start now.

The UK has a number of commercial yards involved in the building of military warships which have been involved in the building of these carriers. It is recognised that these yards would need additional investment to enable them to participate in the building of the Type 26.

I hope that I have covered all the noble Lord’s questions but if I have not, I will certainly write to him.

16:22

[Lord West of Spithead (Lab)]

My Lords, I am saddened but not surprised by the tone of this announcement. My main reason for that is that there is not a single mention of strategic or operational requirements. My noble friend Lord Rosser mentioned that the Statement said that the Government looked at this and asked whether it would cost more to cancel the carriers than to build them. I would absolutely hope that the reason we build something like a carrier is that we need them for our nation’s security, which we do. There is no reflection of that anywhere in the Statement, or of the sovereign requirement for a shipbuilding capability. We do not build ships for admirals to play with in the bath; there is actually a requirement for them. That is why we do it. Was there any discussion in the National Security Council, of any length—I would like to know how long, if the Minister can tell me—about the strategic requirement for a sovereign shipbuilding capability within this country? It is widely understood that the 19 escorts, which is all we have, are too few in number. Therefore, we will hopefully at some stage start to build more. Is one building stream in Scotland enough to cover that? I do not think that it is. Has this been debated and looked at? It certainly was not touched upon in this paper.

[Lord Astor of Hever]

My Lords, we must face up to the fact that the coalition Government inherited a much smaller Navy from the noble Lord’s Government. On the operational requirements, the First Sea Lord came to see me this morning and has offered to brief Peers on how he sees these carriers being used. I quite agree with the noble Lord, Lord West, that we need the carriers. They are built to be used.

[Lord Palmer of Childs Hill (LD)]

My Lords, when the cost of building two new aircraft carriers is set to rise by £800 million to £6.2 billion, Harry Truman’s adage, “The buck stops here”, is bound to be inverted. We have heard this in recent exchanges. The coalition Government blame the previous Labour Government; indeed, the contracts in my view and that of many experts, were flawed because the contractor only has to pick up 10% of the overrun. The Ministry of Defence and the Secretary of State must be complimented on negotiating for the overrun costs to be spread at 50/50 between both. However, I note in the repetition of the Secretary of State’s speech that the arrangement is to go on until the contractor’s profit is lost overall. I think we need some more meat regarding how that profit is to be calculated, because there are many ways of calculating what a profit is and not much was said about that in the Statement.

Once we get rid of the blame element we must ask, as the noble Lord, Lord West, asked, whether we need the carriers. We have exchanged views on this before. There are people who say that in an era of conflict marked by counterinsurgency, terrorism and cyberwarfare, carriers are not quite the necessity that they have been in the past. My first question to the Minister is whether the saga of carriers supports the GOCO—government-owned contractor-operated—arrangements we are suggesting should go into procurement. The Chief of the Defence Staff gave an interview on 3 November in which he said he wants the Armed Forces to be available in international crises such as striking firemen, foot and mouth, and intervention in terrorist heartlands. How do the carriers and the F-35Bs fit into that scenario?

Finally, turning to the three offshore patrol vessels, we are told that the marginal costs will be less than £100 million; what guarantees are there?

[Lord Astor of Hever]

My Lords, we do need these carriers, as I said to the noble Lord. On the question about GOCO, as the Statement said, the chair of the Public Accounts Committee has described the carrier programme as one of the most potent examples of what can go wrong with big projects in the public sector. We need to change this and we feel that a change of procurement is necessary. We will all have a chance to discuss this when the Bill comes to this House later this year. As for the operational use of the carriers, they are very flexible ships, they have full strike capability and they can also be used for humanitarian aid and the use of Special Forces. My noble friend asked what guarantee there is on the OPVs. The deal secured today is for a fixed price.

[Lord Martin of Springburn (CB)]

My Lords, I have no need to tell the Minister that closures and redundancies are soul-destroying, not only for the workers, but for their families and the communities they live in. On the specific point of redundancies, can I have an assurance that those who have been taken on as apprentices will be entitled to complete their apprenticeships with the company?

[Lord Astor of Hever]

My Lords, I cannot answer the noble Lord’s question about apprentices—it was not in my brief—but we have been assured by the company that it will do everything in its power to find alternative work for those made redundant, both on the Clyde and in Portsmouth. As the Statement said, we are investing a lot of money in Portsmouth and we hope that there will be jobs in the support bases for some of those being made redundant. This is an area that the Government, BAE Systems and the trade unions are all talking about very seriously.

[Lord Reid of Cardowan (Lab)]

My Lords, I welcome the three offshore patrol vessels. This is exactly what was envisaged when the carrier contract was first negotiated, in order to ensure the continuity of a strategic asset for this country. Thereafter, I cannot be so generous. May I correct the misapprehension that has been put about that the carrier cost doubled? The original cost was more than £4 billion when the contract was signed. There was an additional £1.8 billion because, quite correctly, the Government decided, when the recession hit us, that it should be delayed for two years. So when the coalition Government came in, the cost was actually £5.9 billion. That has now risen to £6.2 billion, part of which was due to the Government’s mistaken belief, under the last Secretary of State, that they could somehow fit “cats and traps” over the weekend by some welder doing a “homer” and getting it cheaply. Of course, it cost £60 million.

Secondly, and finally, the Statement is curiously bereft of any strategic sense of what this country needs. The contract was signed to give continuity and retention of skills so that this country would have not only jobs but a major industrial and defence strategic asset. All I have to say is, if the Government believe that they can constitute a future strategic basis purely on the basis of the intrinsic contractual cost of any given contract, I fear for the long term. If the Government continue in that way we may well end up sending our carriers—if they are built—to repair in Korea. You can win the minutes in all of these things and disastrously lose the hours. I hope that the tenor of this Statement is not one that permeates the whole of the Government’s thinking on strategic defence issues.

[Lord Astor of Hever]

My Lords, that is not the case at all. We have secured a great many jobs upon the Clyde, and the future of the British shipbuilding industry is very secure. As regards the costs, we could debate this all afternoon, but the delays added considerably to the cost of the carriers. The decision to have the “cats and traps” was not made over the weekend; we gave a great deal of consideration to it, but then made the decision to revert to the stowable version, which the previous Government had decided on.

[Lord Burnett (LD)]

My Lords, I welcome the fact that the fleet is set to grow, with not just aircraft carriers but Type 26 frigates and offshore patrol vessels, which is good news, but also with the four submarines that are the successors to Trident and which I strongly support. The naval service will need in excess of 1,000 additional trained personnel to man these vessels. Will my noble friend assure the House that the Government understand this and that steps will be taken to increase the strength of the Royal Navy to cope with these demands? Will he write to me about the consequences of this Statement for Appledore Shipbuilders in north Devon, which is in my former constituency?

[Lord Astor of Hever]

My Lords, I welcome my noble friend’s support for the fleet and for Vanguard’s successor. As regards manpower, the Royal Navy attaches a great deal of importance to this, in particular to get the right people with the right skills. The Navy will need an extra 2,000 people for its expanding fleet over the next five to 10 years. We are very grateful to the United States Navy and the US Marine Corps, which have been especially helpful in training our people preparing for the carriers; whether they are training pilots, deck crew, or on air direction or engineering, they have been very helpful. Finally, my noble friend asked about Appledore, on which I will write to him.

[Lord Dannatt (CB)]

My Lords, the last question was on the increase in the size of the fleet in manpower terms that would be required if both carriers come into service and the three OPVs are fully manned. I welcome that and I do not want to get into that argument at all. However, the previous Government and the present Government took major decisions which affected equipment and manpower in the Armed Forces, and priority in big handful terms has been given to equipment. Therefore where savings have had to be found they have had to be found in manpower. Most of those savings have been found within our land forces—noble Lords will recognise that I would say that, wouldn’t I?

I know that the Minister cannot give a guarantee or even half a guarantee in answering this question, but will he ensure that if there is to be an increase in the fleet in manpower terms, which I welcome, it will not be at the cost of further reductions in our land forces, given that our Army is striving very hard to meet the 20% reduction in its regular size by 2020? Will he also ensure that in future discussions with the Treasury, argument is made most fiercely for an uplift in the defence budget in order to pay for the extra people, and that it is not another opportunity cost of one service against another? We cannot do that and remain credible on the world stage.

[Lord Astor of Hever]

My Lords, the noble Lord makes a very good point; the increase in numbers goes right the way across the Royal Navy—submarines, aircraft carriers and all the other ships—but we will not reduce the size of the Army just to provide extra personnel for the Royal Navy.

[Baroness Liddell of Coatdyke (Lab)]

My Lords, political point-scoring is, I suppose, inevitable in a forum like this, but it is unedifying when hundreds of people are losing their jobs and there are families who will be in real distress this evening. Will the Minister tell us what discussions there have been with the Scottish Government about what assistance will be given to the workforce on the Clyde who will lose jobs despite the new vessels? I welcome the decision to subscribe to these new vessels on the Clyde, but the Minister should take it into account that all of us in Scotland are also heartbroken about the decision to end shipbuilding in Portsmouth. It is a historic dockyard and it is tragic that we are coming to this decision to end shipbuilding there. Does the Minister agree with me that it is absurd that this debate should be taking place at a time when we have the diversion of separating Scotland from the rest of the United Kingdom, which will finish shipbuilding on the Clyde?

[Lord Astor of Hever]

My Lords, personally, I hope that that will not happen. On the noble Baroness’s point about it being very political, I obviously deplore that, but it is inevitable. As far as redundancies are concerned, the Government, BAE Systems, and the trade unions are all, as I said, working as hard as they can to find new jobs for those personnel.

[Lord Lee of Trafford (LD)]

My Lords, when I was a Defence Minister in the 1980s, I remember being told by officials that we could build all the naval requirements in the Vickers yard at Barrow alone. In other words, we have had overcapacity, sadly, in our naval yards for years, and it still applies. I have three specific questions. First, the Statement does not indicate the cost of the three offshore patrol vessels; it is a rather shrouded figure. Will the Minister give the cost of the three OPVs? Secondly, following the point raised by the noble Lord, Lord West, and given that there is a £4 billion retention in the contingency reserve, would it not have made sense to build one more Daring class Type 45 destroyer, as we are desperately short of escort vessels? Thirdly, my noble friend the Minister touched on the humanitarian possibilities of the new carriers. Will he give an indication of the medical facilities aboard the new carriers, in particular the number of new operating theatres that will be available for potential humanitarian and evacuation relief?

[Lord Astor of Hever]

My Lords, we have provisionally agreed a firm price of £348 million with BAE Systems for the supply of three OPVs, inclusive of initial spares and support. The cost of building these vessels and their initial support is entirely contained within provision set aside to meet the Ministry of Defence’s obligation for redundancy and rationalisation costs.

My noble friend Lord Lee of Trafford asked about the humanitarian position; I can confirm that the carriers would be able to assist in evacuation. They each have an operating theatre and a huge flight deck that would take 10 Chinooks while four Chinooks could operate concurrently. I hope that that answers my noble friend’s question.

[Lord Judd (Lab)]

My Lords, in the 1960s and 1970s I had the privilege of representing in the other place part of the community of Portsmouth, including the naval base and dockyard. I remind the House that it is impossible to record adequately what this country owes Portsmouth. It has been in the front line in the defence of the realm for many, many decades. It is, after all, the home of HMS “Victory”, and that in itself says something about it.

I put it to the Minister that it is not just a matter of going through the normal routine of ministerial Statements, assuring everybody that there will be consultations and that the city council has been consulted, and so on. This nation owes a tremendous loyalty and tribute to the people of Portsmouth, and it should be a priority of all the Government and those they are associated with to make sure that a closely knit community such as this does not carry a disproportionate burden as a result of the policies that are being followed.

Referring to what my noble friend Lord West said, surely the first priority in defence is to establish what the threat is and what contribution we want to make towards international security. Having established that, what is necessary to do that? As Libya illustrated very well, every conceivable analysis of the future suggests that we are going to need flexibility and free-standing platforms from which operations can take place, and the carriers are absolutely indispensible to that future. Will the Minister please accept that he will have widespread support in this House if, having made what I believe to be the absolutely right decision to go ahead with the carriers as a priority in defence policy, that is pursued with every possible commitment?

[Lord Astor of Hever]

First, I quite agree with the noble Lord that we owe a long-term debt of loyalty to Portsmouth. Portsmouth will maintain its proud maritime heritage as the home of the Royal Navy surface fleet and the centre of BAE Systems’ ship support and maintenance business. The long-term future of Portsmouth as a naval base for the Royal Navy’s most complex warships will be in undertaking vital support work for the fleet. This will include support and maintenance for the new carriers and the Type 45 destroyers—the most advanced warships ever built for the Royal Navy. I can add that Portsmouth and Southampton are also taking part in the second wave of the City Deals programme and have been working closely with the Government to agree an ambitious deal for the area which will boost growth and jobs in the local economy. We expect to be able to conclude that deal shortly. I am grateful for the noble Lord’s support for the carriers, and I will certainly do everything possible to ensure that that work continues successfully.

Energy Bill

Wednesday 6th November 2013 Lords Chamber

Report (3rd Day)

16:42

Relevant documents: 5th, 6th, 9th and 11th Reports from the Delegated Powers Committee.

Clause 122: Designation of statement

Amendment 92A

Moved by

[Lord Whitty]

92A: Clause 122, page 92, line 11, at end insert “including the strategy and objectives to be designated in relation to fuel poverty under section 136 of this Act”

[Lord Whitty (Lab)]

My Lords, we now come to an issue which concerns the final impact of the whole superstructure of energy policy on the lives of millions of people, because we are dealing here with the issue of fuel poverty.

I shall speak also to Amendment 92B. These two amendments seek to insert a reference to fuel poverty into the section of the report which deals with the statement of policy for energy. When we think about it, it is very odd that that reference is not already there. Energy policy has economic objectives and security and environmental aspects, but also a very important social aspect that should appear in the statement. My first two amendments in this group address that issue.

Amendment 104C is, in a sense, more substantive, along with the amendments in the name of my noble friend Lord O’Neill. They relate to the one clause in the Bill that really deals with fuel poverty—Clause 136. However, it is also important that we ensure that fuel poverty features in any statement of policy on energy in the future.

Before I go any further, I should declare a small interest in that I am the chair of a small charity which conducts research into fuel poverty and energy efficiency.

It is actually a bit depressing that right up to Clause 136 we cover almost every aspect of the energy market and do not mention fuel poverty at any point. Fuel poverty is the inability of millions of our fellow citizens to heat their own homes to a minimum standard of comfort. It is also true, I regret to say, that Clause 136 was introduced by the Government at only a very late stage in the Commons procedure, almost the last stage, and received virtually no consideration. The policy statement which backed it up following the Commons procedure—the blue document which the Government issued—set out aspects of their fuel poverty strategy.

The Government have come to this a bit late, in any case. The first period of this Government was a pretty disgraceful one, when they cut back on efforts to help bring millions of households out of fuel poverty. The Warm Front programme, which was taxpayer-funded and treated the homes of 200,000 low-income households every year, was first cut and then abolished, although parallel schemes still exist in Scotland, Wales and Northern Ireland. The Government also cut back on the decent homes expenditure for improving the stock in the social housing sector. They also made clear at a pretty early stage that the aim to eliminate and eventually abolish fuel poverty was being abandoned. This aim, set out originally in the Warm Homes and Energy Conservation Act, had been pursued by the previous Government with growing difficulty over the past few years as global oil and gas prices rose. Not until this Bill and the document to which I have already referred was that abandonment formally acknowledged.

The Government also closed the CERT scheme—previously known as EEC—which placed an obligation on the supply companies to provide energy efficiency improvements and was skewed towards the fuel poor. Admittedly, the Government have replaced that with the ECO provision, which is reflected in this Bill and the earlier legislation, but the ECO is supposed to do a multitude of things. It is supposed to replace Warm Front and CERT, but actually the feedback we get—and I am sure the Government get—from the ground is that it is not achieving anywhere near its targets. The feedback from the supply companies, the installation companies, the insulation companies, consumer groups, fuel poverty campaigners and the Government’s own fuel poverty advisory group is that what is supposed to be conducted under the ECO is less in volume and more expensive per item than under the previous system.

I am not blaming everybody in the Government. I am not even blaming every DECC Minister, because I know DECC has fought quite hard on this front from time to time. I know that it was Her Majesty’s Treasury that forced Chris Huhne to abandon Warm Front. I also know that there are attacks on Ed Davey and the DECC position which are now expressed in terms of removing green taxes, but one of the items that is described as a green tax is actually an allocation to help the fuel poor and to tackle the problems of fuel poverty. There is talk that the Government believe that that should come no longer from consumer bills, but from general taxation. But the first thing the Government did was to abolish the scheme which was paid for by general taxation. Can the Minister let us know what she thinks is now the prospect of HM Treasury agreeing to a new major scheme funded by taxation to address fuel poverty?

Of course, the Government do have some money. A little remarked fact about the latest developments over the past few years on energy prices is that one of the beneficiaries has been HM Treasury, with VAT on energy prices and on a lot of the so-called green taxes and, of course, with the VAT consequences of introducing the carbon floor price. The estimate is that upwards of £4 billion is going out of higher energy prices into the coffers of the Treasury and not one penny of that has yet been allocated to addressing the acute problems of fuel poverty.

I accept also that the Government have done one other thing: they have introduced a warm homes discount to override the tariff so that there is a cut in the energy bills of the fuel poor. However, that is not a solution. It is a welcome cushion for those people but it does not tackle the basic problem. The Government have not only dropped or seriously curtailed all previous energy-efficiency programmes, but also, during the course of this Bill, rejected propositions from myself and others that we should try to get a structure of tariffs which help the fuel poor.

In Committee, they rejected my proposition of a standing charge and removal of discrimination against people who pay by prepaid meter, which hits the fuel poor particularly, or having any structure of tariffs which favours the low-paid and the fuel poor. All were rejected by the Government in Committee and in another place. It is also true that one of the effects of the Prime Minister’s intervention in this—the so-called simplification of tariffs, aspects of which I approve of—has led to a number of supply companies dropping their specialised tariffs directed to the special needs of pensioners, who form a substantial proportion of the fuel poor.

I accept that it is not entirely DECC’s fault but the net effect of all this is to aggravate a seriously dreadful problem in our society. From about 2005, rising energy costs have made it very difficult to make a dent in fuel poverty. I know that Chris Huhne came to government in the first instance wanting to look at a new strategy. Indeed, it is no secret, because someone told the press that at one point he approached me as a former Minister in this area to conduct an assessment. I was flattered and surprised, and slightly tempted, by the proposition. But eventually I found out that DECC was under pressure to redefine fuel poverty so that it was not such a problem or such a requirement on government energy policy. I rejected the approach on that basis, as did others, because it was clear that whatever happened and however you defined fuel poverty, it is a big number which is going up under present world conditions.

I am glad that Professor John Hills took on this task. He has produced a very solid document in terms of strategy for tackling energy fuel poverty, very little of which appears in the Government’s blue book. He produced a new definition of fuel poverty, which has some merits and addresses some of the problems of the previous definition, but in my view is not adequate. It has knocked a few million off the total figure of fuel poverty but it is still, as I said at the time, a big number which is growing. The gap facing the fuel poor to keep their families warm is growing all the time.

This whole Bill is about how we run, regulate and provide for energy supply to our population and to our businesses. All we have is the pretty feeble Clause 136 as a hook on which to hang an as yet undefined and weak fuel poverty strategy. The first two amendments in the group try to make sure that fuel poverty is up there with the other objectives of energy policy in the Government’s statement of policy. I cannot see how they can possibly object to that reference. The third amendment relates to the strategy. It attempts to turn a very woolly clause into one which has targets—and clarity of those targets—that relate to the improvement and efficiency of the dwellings of the fuel poor, as well as to the reduction and eventual elimination of fuel poverty in this country. If the strategy does not have ambitions and targets, it will not receive the priority and future consideration in energy policy that fuel poverty deserves.

I accept that the Government probably need to do more work on that strategy, and that is why my amendment does not specify exactly what those targets should be, but it does require the Government to set out those targets for 2020 and 2030. My noble friend Lord O’Neill is more specific on that in his amendments in this group. Either way, to give any confidence to the millions of people who are in fuel poverty out there, and the many more who are aware of the problem—who are sympathetic and demanding action—the Government need to accept that the policy and the strategy they come up with should actually mean something.

We need to refer to fuel poverty clearly in the policy statement. I hope, therefore, that the Government can accept the first two of my amendments without any great difficulty. I also hope that they will accept either my third amendment or that of my noble friend Lord O’Neill, or at least commit themselves to coming forward at Third Reading with something very like it which gives a structure and a framework for fuel poverty. As we know, fuel poverty is a terrible curse on our country. It causes people to skimp on food, and to not buy necessities for their children. It causes serious lung and heart conditions in thousands of our citizens at an estimated cost of £1.3 billion a year to the National Health Service. It causes whole families to live in discomfort, in anxiety, in the cold, and in distress. It is shocking that this Bill and the energy policy of the Government do not give greater prominence to the need to tackle this curse.

These amendments, if the Government can accept them, would go some way to deal with this. The Government need to accept the first two amendments as they are, because they do not of themselves present an obligation but they indicate a commitment to tackle this issue. I hope that the Government will also accept something like my third amendment, so that we can start making it clear to the rest of Government and to the population out there that this Government do care about fuel poverty, are prepared to do something about it, and will do so as rapidly as they can in the context of the big reform of the energy markets. I beg to move.

[Lord O’Neill of Clackmannan (Lab)]

I am pleased to follow my noble friend. In addressing his amendments he covered, in part, some of the points I will raise in relation to my own. It is fair to say that the four amendments I tabled seek to add a bit of muscle and detail to the Government’s commitment. I will talk about this more in my later remarks, but the rather late insertion of concerns about fuel poverty into the Bill mean that it is rather late in the day for some of the amendments that we put forward, which are of a probing character. Therefore, one would hope that the spirit of these amendments will be carried into secondary legislation: that is, statutory instruments, of which many are likely to be forthcoming.

The existing legislation, namely the Warm Homes and Energy Conservation Act 2000, was steered through this House by the noble Baroness, Lady Maddock, who I regret is unable to be here today. All credit should be given to her for her efforts in that area, although I was always a little bit dubious about plucking a date out of the air. I know that the date was the subject of some arm-wrestling between the then Labour Government and the Back-Benchers. However, the fact is that it was an attempt. At the time there was a degree of optimism because, as noble Lords will recall, energy prices, particularly gas prices, were falling. We could see households moving out of what was known at the time as fuel poverty in quite considerable numbers. Not only were gas prices falling and thus people’s disadvantage in the energy market diminishing, there was also a sense that the general economic prosperity of the time meant that the situation of the poor would become easier and, as the Americans say, all the boats would rise together. Unfortunately, all the boats did not rise but the price of energy subsequently did, and the poor were left stranded in their inadequately insulated and poorly built homes.

17:00

Amendment 104D deals with housing conditions in two steps. Priority would be given to the homes that are hardest to heat, and where the household income is less than 60% of median income after housing costs. That is the Government’s own definition of poverty. The objective is for those householders to be helped by 2020. Over the succeeding 10 years, the remaining housing stock would be brought up to level B of the energy efficiency ratings. Rating B is the level that a new house is currently expected to meet when it is constructed. This is an ambitious target that would take some 17 years to meet. We are told that 70% of fuel-poor households are living in E, F and G-rated buildings, so we are talking about improving something like 1.7 million homes over the next six years, from 2014 to 2020.

It is certainly the case that houses with SAP ratings of E, F and G are where most of the fuel poor live. Moreover, only 7% of them have, for example, a condensing boiler. It is not just a question of insulating the houses; it is equally important to have more efficient means of heating water and providing central heating for these families. We know also that some 6 million households are not connected to the gas grid. These households are the ones where the fuel poverty gap, where it exists, is likely to be twice as wide as it is in households with gas boilers and central heating. Much the same can be said for a number of houses solid-walled accommodation.

The point of using the SAP rating is that it is probably the most up to date definition of disadvantage in respect of fuel costs. If you live in a house with an E, F or G SAP rating, it is likely that your home is very expensive to heat. The concept of low income, high cost is the basis of the Hills report, which defines fuel poverty and the fuel poverty gap. My noble friend has already referred to the fact that, according to the Hills report, we have seen a reduction in the number of households in fuel poverty from 4.5 million to 2.4 million. My colleague suggested, perhaps somewhat cynically, that this was an easy way of massaging the statistics. Frankly, there is a bit more to it than that, in so far as we now have a method of calculation that is not as vulnerable to fluctuations in price, which was the kind of problem that we had in the early part of the last decade. When gas prices were falling, the problems seemed to be decreasing, but in fact we know that the people who were living in these homes were not really very much warmer because most of the heat that they were paying for was still going out of the window or under the doors or not being properly contained within the building itself.

It is not unreasonable to use the SAP rating as the basis to do this, because one of the things about heritable property is that you cannot hide it. One of the things about local government taxes is that people do not really like rates, as we used to call them, and they do not like revaluation because you cannot hide property. The fact is that these homes, which are inadequately constructed, will not disappear because the price of gas goes down, as they seemed to do in the early part of the past decade.

This amendment is suggested as a means of tackling the issue of fuel poverty. Most of the fuel poor live in the most poorly insulated houses that are the hardest to heat. If we were to treat them in a step-by-step manner, we could be serious about tackling this problem. We need to get far more from the Government than the quite understandable expressions of concern about this social problem. We need a programme that will indicate how they propose to address this. They have had the Hills report for many months. In the summer we had the acceptance of the report and its incorporation within this legislation. I would have thought that five months later we should have the beginnings of some kind of programme or plan to address the issue.

I understand that these amendments are not perfect, but they enjoy the backing of a wide range of community, faith and campaigning groups that have been engaged in addressing this issue for many years. These groups are not expecting the Government to embrace these amendments tonight, but what they are looking for are clear indications that we are getting beyond the definition of the problem and moving towards a clear commitment to solving it. In this process we want to see clear reports, and also proper cognisance of our responsibilities under the 2008 Climate Change Act. We realise when we hear talk of green taxes, changes in ECO and the possibility of direct taxation being the means of funding some of these programmes, that we need to get assurances that we will not throw the environmental baby out with the bathwater.

We also have to recognise that we have come a long way. When I first came to Westminster more than 30 years ago, fuel poverty was not a given. It was an item of dispute and debate. The conversation around the Hills report suggested that the problem of fuel poverty was largely one of definition. Of course it was a rough and ready definition that was dreamt up by a young researcher in the 1970s who was doing work on poverty in Kensington. He was a man called Malcolm Wicks who went on to become a very distinguished Energy Minister in another place. Much of his work was given over to looking at how we could address this problem. Nearly 40 years after Malcolm wrote his first report—in which he quite starkly laid down the choice of “eat or heat” for the elderly of Kensington—we should be dealing with this in a far more organised and programmatic way than has been shown in the rather well intended but often ill directed scattergun approach that successive Governments have had.

I like to think that my amendments provide some milestones on a route that could be taken towards resolving this. I shall not press them, because they are in many respects of a probing character, and I know that on Report we should be a bit further advanced than that, but I should like some indication from the Minister of the Government’s thinking on the specifics of handling this problem. The excuses that we had in Committee on other matters about awaiting statutory instruments coming out of the air—coming out of the heavens—are not good enough. We know what the problem is.

We know that there are means whereby its resolution can be easily identified—not always easily resolved but easily identified. Let us use the inadequacy of our housing stock and the manner in which we are currently grading that inadequacy, as the means whereby we set out priorities which, over a period of 17 years, could probably eliminate the best part of 70% to 80% of fuel poverty in this country by a definition which, I think, is now accepted as being clearer, more robust and more statistically sound than Malcolm Wicks’s figure out of the air. If we could do that, we would do a great deal to enhance the memory of a colleague of many of us for whom we had great respect. One of his life’s causes was the resolution of that problem. I am not saying that we should do it for Malcolm Wicks; I am saying that we should do it for the people who will be cold and miserable in what will probably be a serious winter. Their health will be endangered and they may not see another winter after this because of the houses in which they live.

[Lord Howell of Guildford (Con)]

My Lords, I apologise for seeming to arrive into this very important Bill and debate at a late stage, but the plain fact is that on the afternoons when the Bill has been taken before, I always had to chair a Select Committee elsewhere, and I could not be in two places at once. I also declare interests as president of the Energy Industries Council, chairman of the Windsor Energy Group and an adviser to the Mitsubishi Electric company. I am very glad to have a chance to enter the debate at this stage and to follow the noble Lord, Lord O’Neill, whose persuasive eloquence I remember from distant days in the House of Commons. It does not seem to have deserted him now.

Of all the impacts of high prices—due to what I believe to be over-rapid application of decarbonisation strategies and the scramble, which we have been told the Bill is about, somehow to persuade new investment to replace all the plant that is being closed, but only by offering eye-wateringly high prices—the most painful and deplorable, and the one that fills me with the greatest concern, is the impact on low-income families and, in particular, the elderly and vulnerable in this climate, which can sometimes be very cold and cruel.

I am not against the amendments in spirit; behind all of them is a noble intention. Anything that can ameliorate the present situation—people always use the phrase, “We are where we are now”—for the elderly and low-income families and ease the ugly prospects which face people as cold winters descend on us is commendable. Although I think that the Government’s measures, also in the same spirit, have gone some way to meet the problem, it is perfectly natural that, in a very noble way, additional amendments to do still more should be moved. That is perfectly reasonable.

However, I urge your Lordships to understand that all this is only patch and mend. It is far from getting anywhere near the roots of the problem or taking the effective action that could be taken to ease some of the threats of fuel poverty, which is alleged to be exceptionally high in this country. It is patch and mend. Clause 136, which is paraded as a strategy, is not a strategy. It is the Secretary of State’s patch-and-mend list of hopes and intentions. The warm home discount and other excellent efforts like the cold winter payments which operate between November and March—people seem to have forgotten that April can be very cold for many elderly people—are good moves in themselves, but they are not anything like a strategy.

17:15

The real strategic cause of the suffering over which we do have some control is, as I have already suggested, the over-rapid decarbonisation programme—not that I believe that decarbonisation is the right objective, but its handling has been deplorable under both Governments. Certainly its handling was deplorable under the previous Government, and I am not particularly thrilled by the present Government’s continuation of some of these efforts. It is turning out to be incredibly expensive—much more expensive than the original experts insisted that it would be. It is challenging us at a time when wholesale prices for primary hydrocarbons have risen as well. So on top of everything, we are dealing with far greater expense and far higher prices than many of the experts and expert reports anticipated.

The truth is that in Britain but also in Europe as a whole, we are a pursuing a policy of expensive power. It may be for good reasons—if power is made expensive and bills are high people will move more quickly towards taking out these excellent schemes and towards energy efficiency—but that is what we are doing. Some of us believe that that is the wrong way to deal with global warming, the wrong way to reduce CO₂, the wrong way to ensure the prosperity of people and the wrong way to help the elderly in their suffering. The best green route, and the best way of justifying the green route, would be through cheap power, not expensive power.

I am frankly astonished at the ruthlessness—perhaps I should modify that and say the lack of compassion—that some folk show in their zeal in pursuing a policy of expensive power and high prices. I cannot understand why that was done. I shall make a party point now. The leader of the Labour Party, an extremely able man, was, as Secretary of State for Energy and Climate Change, the architect of these higher-price taxes—the green taxes which I shall come to in detail in a moment. Now he has gone the other way; he has seen the effect and is calling for a price freeze. It reminded me of the legend of the sorcerer’s apprentice. He unleashed the brooms and the buckets in his green policies, and now he cannot stop them and is calling for a freeze, which is probably going to be ineffective.

So this is regression on a grand scale. The poor and the vulnerable are, through various means, having to pay for a substantial transfer of funds from the consumer to various causes, to encourage investment in new, greener capacity to replace all the mothballed coal-fired stations and so on. As your Lordships may see, this is a three-pronged assault on the poor.

Recently there has been talk not only of freezing prices but of rolling back green levies. However, one must understand that that is not the only aspect. First, one of the reasons that the energy companies kept indicating, when they were being given a going-over by the Select Committee in the other place the other day, for raising their charges and having to make a substantial profit—I think 5% is the figure they all cited—is the need to finance extra plant to replace the plant closed down because it was deemed to be higher-carbon or unsuitable in accordance with EU regulations. We can accept that reason or not accept it. However, even before we get to the green levies, that is the first charge that arrives on the budget of the poor—on the budget of everyone, of course, but for the poor it is 15% or more of their disposable income. That is layer one of the challenge on prices.

Then, of course, there are the levies themselves, which fall into two parts, as we all know. One part is to finance and subsidise the new very high-cost renewables and the draw-droppingly expensive electricity from wind farms, which, as we know, is half as much again as the amount being offered to EDF for Hinkley Point C for the next 35 years, which in turn is half as much again as we are paying now, which is considerably more than we used to. The other half, oddly enough, is for good social and compassionate reasons: it is to redress the effects of the first two levies. The effect of the social programmes and the compensation is to offset the effects of the levies that finance the subsidies on the investment required because the pace of decarbonisation is just too fast and mishandled, and to offset the effect of the prices being charged by energy companies. It is an odd situation where the total cost is designed to offset some of the total costs that other measures have just pushed up.

More insulation is of course an excellent thing. There has been talk about woolly jumpers and that may help the younger folk, but all I can say for oldies —I think I can speak for them now; I used not to be able to, but I can now—is that cold limbs in a cold room or a cold house or flat really are extremely unpleasant and may lead to a very grim outcome. There are chilling estimates of how many will die of cold this winter in the UK, which make me personally quite ashamed.

The whole decarbonisation programme behind all this inflation of prices is paved with good intentions, as is the insulation programme. I lived in a house that had additional insulation. It had a thinner attic layer of carbon fibre over it and an additional three or four inches was added over the beams. I cannot say that it affected the bills very much but it may have held the warmth in the house for a little while. However, first you have to heat the house up before you can contain the heat within it, and that costs money. Those are the good intentions, and we all know what destination good intentions pave the way to. A cold house and an inability to meet these high bills is, frankly, hell for elderlies and families.

There is another issue here that we have not discussed because it is in other parts of the Bill: the so-called massacre—which is what the European Commissioner calls the effect of high energy prices in Europe, compared with other parts of the world—of industry and jobs, which means more distress in many more families. I do not vigorously oppose these amendments; I just warn that neither they nor Clause 36 are any cure at all for the real problem, which we should have the honesty to face and address in a sensible and balanced way.

[Lord Teverson (LD)]

My Lords, I do not disagree at all with everything that my noble friend Lord Howell has just said, but it is worth noting that heating in most households in this country is by gas or, for people like me who are off the mains, by oil. None of the green taxes applies to either gas or oil.

[Lord Deben (Con)]

My Lords, I think that, when we are making these decisions, we ought to be particularly careful about the figures that we use. We must also understand why we are decarbonising at this rate. We are doing so because the economic advice from the best economists that we have is that it is the cheapest way to decarbonise. If we were to put it off, the cost would be considerably greater, so we should do it at this pace. We can disagree with this, but to do so would be to disagree with the best advice that we have been able to get. I must say, on behalf of the climate change committee, that, if I thought that there was a cheaper, more cost-effective way of doing it, I would do that. I am proposing this and have been pressing it because it is, by all the evidence, the best thing to do.

I think that we also ought to get the figures right. The average cost of decarbonisation for payers of the dual tariff—about 80% of users—is £60 per year at the moment. I am not suggesting that £60 is an unimportant matter, but when the average payment for fuel bills is £1,300, I think that we have to be careful about overemphasising the influence of the one thing upon the other. By 2020, the amount will be £100—and the figure will rise accordingly between now and then. I do not know what the average fuel bill will be in 2020, but the idea that £100 will be the major reason why the fuel bills will be high is not true.

We must take these figures seriously. This is one of the problems that we are facing. People are using figures that are clutched from the air. I have been watching Twitter and I find that people—sometimes, I am afraid, from my own party—are busy putting out tweets saying that if we had had a decarbonisation target after 2020 it would have increased our bills by £125 per year. This is totally untrue. The figure is £20, and the climate change committee has spent a great deal of time trying to get the best and most accurate figure possible. If the TaxPayers’ Alliance or others want to pick a figure out of the air, it is not for us to quote it. We are faced with a real issue here.

If, despite evidence mounting all the time—today we have been told of the highest increase in surface temperatures that we know of for a very long time—you still do not believe that climate change is immediate and dangerous and say that it is something that can be put, if I may use the phrase, on the back burner, then of course you can always say that this is not the moment to do this. However, I must say to my noble friend that in that case it will never be the moment to do it, because that is always true at any given moment. However, if you see that climate change is the most serious material threat to our society, as happily this Government do—and it is a common view across the House—the £60 being charged for the insurance against it seems a reasonable amount.

There is an argument, although it is not for the climate change committee to make it, that we might change where the money comes from. However, I do not think that there is an argument to say that we should not be spending the money. Therefore I think that we ought to be very careful when we are having these discussions that we do not talk in a way that distorts the argument, either by the size of the price that we claim or by forgetting that most people’s heating does not come from electricity—it comes from gas and other sources—and therefore they are not paying this. Neither ought we to forget that other countries are doing more than we are. Germany is doing more than we are and much of Europe is doing at least as much, as we can see by looking at the Danes. The rest of the world is moving in this direction in a very serious manner; whether it is today’s announcement from Mexico or the changes in China, we can see that this is happening all around the world. It is not that Britain is doing better than others or is out of step, but that we are doing what the world is doing, because the world recognises the threat. That means that we have to be very considerate about the condition and situation of vulnerable people.

I am not sure that these are the right amendments, but I have listened very carefully to what has been said about introducing this measure into the Bill in a more pronounced way. I think that the Government have probably got it about right, but I have listened with some care. However, it does not help the argument to use the poor as an argument against fighting climate change, because the people who will suffer most from climate change are the poor throughout the world—not just here but in Bangladesh, the Pacific, India and elsewhere. I find this argument about the poor really very upsetting.

17:30

[Lord Howell of Guildford]

I do not want to upset the usual eloquence of my noble friend but he did refer to me. Given that he believes these burdens are necessary, ought he not explain a bit more clearly how this really does lead, in this country, to fighting climate change? He says we must be careful with figures—that applies as much to some of his figures as to others that are bandied around—but it appears that the pace of CO₂ growth generated by mankind is so large in other parts of the world that our only contribution can be by example. I would love to hear from him a rather more persuasive message as to why we should bear the pain we are bearing at the pace we are bearing it, although the destination is right, in the contribution we are making to controlling climate change and violence in the future, which I accept is very likely and is a great danger. But has he got the pace right?

[Lord Deben]

I can see the Whip looking at me with some care so I will be very quick. First, we have a moral duty because much of the climate change that is happening at the moment has actually been caused by us because we were the first in the Industrial Revolution. Secondly, if we want other, much less well-off people to follow, we have to set an example. Thirdly, 11% of the emissions in the world are made by organisations that are headquartered or sold on the London Stock Exchange, so we must realise how big our reach is.

Fourthly, because we have led the world—although we do not now—other countries are now doing significantly more than we are. The President of South Korea is here on a visit today. She comes from a country that has a programme of very considerable remit which will end up with it being carbon-neutral by 2050. China is moving from a carbon-intensity target towards a carbon-reduction target for the mid-2020s. It has already been shown that by leading the world, the world is changing. But if we stand aside and say, “After you, Claude”, nothing will actually happen. That is why we have to do it. We do it for the poor. To use the poor as an argument against doing things on climate change seems close—although I am not saying this about my noble friend—to reprehensible.

[Lord Jenkin of Roding (Con)]

My Lords, I shall be extremely brief because I sense the House would like to come to a conclusion on the amendments.

I listened to the noble Lord, Lord Whitty, with some astonishment. It was as though we had not even had a debate about fuel poverty in Grand Committee. I reread that debate and his first words were that he thanked the Minister for having brought fuel poverty into the Bill. You would not have guessed that from what he said this afternoon.

I have much more sympathy with the points made by the noble Lord, Lord O’Neill, but he, too, had his words of congratulation in Grand Committee. He said:

“The amendment goes some way to mitigate concerns that have arisen about that. It sticks in my craw to say this but the Government must be praised for obtaining support for the measure from Derek Licorice, the chair of the Fuel Poverty Advisory Group, and Jenny Saunders of the NEA”.—[Official Report, 11/7/13; col. GC 135.]

One must recognise Clause 136 is a considerable step forward. In Committee, I said that it was very worthwhile. Of course, the meat of this is going to be in subordinate regulations. We shall obviously want to watch that very carefully indeed. I totally understand the argument that my noble friend on the Front Bench advanced for not putting all the detail into the Bill, but wanting it in the regulations.

The impression I was given by the noble Lord, Lord Whitty, was that the Government were not doing anything for the fuel poor. In fact, he has had a copy of the letter that was sent to all of us from my noble friend on the Front Bench setting out the details of fuel poverty spending. The total resources spent in 2010-11 at 2012 prices—these are common prices all the way through—on fuel poverty spending was £821 million. The current year has gone up, at constant prices, to £841 million and the next year the estimate is £845 million. That does not take account of the fuel allowance, which is paid under the social security arrangements. These are arrangements under the carbon emissions target, under the energy company obligation, the warm homes discount and so on, which are specifically aimed at the poor. So I rather resent that.

I have one question for my noble friend. John Hills’s report made the hugely important point—indeed, it has been referred to earlier in the debate—that it is our uninsulated homes, particularly for poor people, which are the biggest single cause of cold homes and fuel poverty. He quite rightly says—and this has been widely welcomed—that we must change the definition to take account of that. What I hope to hear from my noble friend is what is now happening to our main programme, the Green Deal, which is supposed to be the main instrument for increasing the amount of insulation of homes. One has heard gloomy tales that so far very few people have been able to take advantage of that. What is happening on that? We must know. To my mind that is the most important thing we can do to reduce fuel poverty.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, I start by thanking all noble Lords for a very full and informed debate. I thank my noble friend Lord Jenkin for reminding the House of the warm welcome from the opposite Benches for us taking forward this measure. It is really important that we all agree that something must be done. What has been done in the past has not been enough. We need to be working far more constructively together to get solutions, particularly for those who are most vulnerable and least able to respond. I also thank my noble friend Lord Deben. He is absolutely right: any measures that we take here will have an impact somewhere else in the world. It is really important that we are mindful that this Bill is in part there to help decarbonisation. The bigger picture is to play our role in helping other countries, which can look at how we are putting those measures in place.

I also thank the noble Lords, Lord Whitty and Lord O’Neill, for their amendments, because they enable me to clarify a little further points that I made in Committee so that they feel reassured that this Government really take seriously the issue of fuel poverty. We take the issue no less seriously than the previous Government did, but the measures that were put in place were not working well enough. We need to make sure, therefore, that what we are doing gives better results.

Noble Lords have rightly highlighted the seriousness of fuel poverty; it is because of this that we are committed to tackling this. This is why we made the amendments in Committee which will set a new target and put in place a new strategy for tackling the serious issues around fuel poverty. This framework will allow us to maintain a concern for fuel poverty beyond the current date of 2016. That concern needs to be set out in legislation. However, the right balance must be struck between what is set out in primary legislation, what is subsequently laid out in secondary legislation and what is included in the strategy, to maintain an appropriate use of parliamentary time and level of government accountability.

I turn to Amendments 104C, 104D, 104E, 104F and 104G, which would put a specific target for fuel poverty in the Bill, and limit the changes that can be made to the target as well as proposing a review of that target every two years. We proposed setting the target through secondary legislation as we felt that this struck the right balance between the certainty of legislative targets and the need for flexibility in the future. The flexibility will, for instance, be important to reflect changes in the way energy efficiency is measured over time. The setting of the target, and any changes to it, will be subject to full parliamentary debate and the importance of that debate is why we have proposed that these are subject to affirmative resolution by both Houses.

We know from Professor Hills’s independent review that the way in which we understand the problem, as well as the best ways of tackling it, can change over time. Primary legislation is not the appropriate vehicle, given the importance of a nuanced, flexible approach to tackling fuel poverty.

I agree with noble Lords that we must be ambitious if we are to be successful in tackling fuel poverty, and the strategy must be a comprehensive one. However, it is neither sensible nor appropriate to put this level of detail into primary legislation. We will bring forward proposals on both the fuel poverty target as well as the strategy in due course, both for public consultation and, subsequently, for a full debate by both Houses.

In the mean time we will continue to deliver policies to tackle one of the main causes of fuel poverty, which, as noble Lords have already mentioned, is living in cold, draughty homes. The energy company obligation is set to deliver permanent energy savings in 230,000 households by the end of the year, including for the hardest-to-treat homes. We anticipate the ECO affordable warmth and carbon saving communities obligations should generate investment in home thermal efficiency improvements equivalent to around £540 million per year. As a result of the ECO, we should see more than 60,000 boilers—which were mentioned by the noble Lord, Lord O’Neill—being installed in fuel-poor homes, as 60,000 have been installed since the policy was launched in January.

[Lord O'Neill of Clackmannan]

Before the noble Baroness leaves this point, I accept the procedural point she makes, that it is difficult to put detail of the character of which we were talking in the Bill. However, we are entitled, some five months after the initial welcome that we gave to the incorporation of the Hills principle, to some greater detail than a simple rehash of what we are doing this year. We want an indication of what will happen in subsequent years, in advance of the consultative document being produced. At the moment, from what the Minister said, the Government do not seem to have a clue what they are doing in that respect.

[Baroness Verma]

My Lords, that is very harsh of the noble Lord. I am trying to lay out clearly the direction that the Government are taking. The measures that we are taking are crucial to addressing concerns which he raised. I have addressed the issue he raised about boilers. Of course we are taking measures now but we need to make sure that, although there is ambition on all sides of the House to do more, we get it right in the long term.

Amendments 92A and 92B specify that the strategy and policy statement and the Gas and Electricity Markets Authority’s duty in relation to the statement must include the strategy and objectives on fuel poverty. The Government take the need to address fuel poverty seriously, and are already bringing forward proposals to do so. These amendments are therefore unnecessary. The contents of the SPS will be subject to consultation and parliamentary approval. Placing a particular priority in the Bill would pre-empt this consultation and the ability of the Secretary of State to start with a clean sheet in considering the full range of energy policy.

17:45

I will try to touch on issues that were raised by the noble Lords, Lord Whitty and Lord O’Neill. Before setting a position on where we need to take these proposals we need to fully understand the proposals, the cost of the proposals, how they will work and what period they will work over. It may be very easy in opposition to say, “We want this now”, but we have already had 13 years of proposals that have not worked. We need proposals that have some meat—some body—and work. That is why it is really important that we do not get rushed into things because it makes a good political headline tomorrow. It is in the interest of all those who are suffering in inefficient homes, with the cost of energy going up, that we have a clear, proper strategy that works and that addresses those with low incomes but high costs around energy. I hope that noble Lords will be reassured that I, particularly, take these issues very seriously. I look forward to working with noble Lords to ensure that we put forward something that is not political but is a remedy to help the most vulnerable in our country. I hope that, on that note, the noble Lord will withdraw his amendment.

[Lord Whitty]

I thank all noble Lords who have taken part in this debate. It proved to be rather more wide-ranging than I had anticipated, largely thanks to the first intervention by the noble Lord, Lord Howell. I agreed with some of it, but he provoked a debate we have already had several times in the course of the Bill. I disagree with his central point and I think we need to take advice from the noble Lord, Lord Deben. It serves nobody’s interest to trade off the interests of the fuel poor against the objectives of reducing carbon in our energy. We have to tackle both as far as we can: it is not a trade-off. Indeed, many of the measures we are talking about to help the fuel poor, in particular improving the energy efficiency of homes, also help to reduce total demand for energy and reduce carbon. There is no conflict: they are synergetic, if that is the word, in many respects. It was a bit of an unfortunate diversion, but at least it livened up the debate.

The noble Lord, Lord Jenkin, and the Minister, to some extent, accused me of a volte-face. Certainly when the Government—between proceedings in the Commons and the Lords—came up with Clause 136, there was a sigh of relief, which I shared, that fuel poverty was being addressed in this huge reorganisation of the electricity market and energy policy generally. I have no doubt that other noble Lords on this side shared the relief that fuel poverty was at least appearing in the Bill. The problem is that it appeared at a rather late stage and that, as I said and maintain, it is a rather thin clause. It refers to the Government “setting out an objective” at some date “for addressing” fuel poverty—it does not even say “reducing fuel poverty”. We therefore want a little more meat on the bone. Some of it can no doubt be done by secondary regulation, but it would be better, frankly, if the Government were open to strengthening Clause 136.

The issue immediately before us is slightly different. Amendments 92A and 92B suggest that we should clearly signal within the statement of energy policy that fuel poverty is one aspect. Indeed, the programme, the policy and the strategy that the Government intend to bring forward under Clause 136 should be seen as part of that. It needs specific mention because it was not there for most of the Bill’s existence, it does not appear in most of the Bill, it was not there at all for the whole of the Commons procedure on the Bill and it needs to be clear now. This is our last opportunity in consideration of the Bill to make sure that fuel poverty is a major dimension of overall energy policy.

That is a fairly simply thing for the Government to accept. I am sorry that the Minister thinks that it is superfluous or otiose, as it is very important. If the objective of fuel poverty is not in the minds of not only DECC Ministers but those who are concerned with social policy and health policy, those in the Treasury and those who determine the priorities of this Government when we come to energy policy, we are in some difficulty.

[Baroness Verma]

My Lords, I make it very clear to the noble Lord that the amendments that we have tabled give a clear timetable for bringing forward proposals for a new target and a strategy to achieve it. Therefore noble Lords can have great certainty that we will put in place a comprehensive framework within a fixed time of the Act coming into force.

[Lord Whitty]

My Lords, I accept the Government’s good faith—and certainly the Minister’s—in this respect. Certainly, Clause 136 gives the Government the opportunity and the requirement to do that. However, my point on these first two amendments is that we cannot ghettoise fuel poverty into one clause of the Bill and one aspect of government thinking. All approaches to tariffs, investment and the source of energy, as well as to measures to improve the energy efficiency of homes and other direct measures to help the fuel poor, need to be seen in the totality of energy policy as part of the Government’s obligation. That is why Amendment 98A proposes that a reference to fuel poverty should be written clearly into the policy statement. It is nothing more than that, but it is very important that that is reflected. I would have thought that the Government could have accepted it, but given that the Government are clearly not prepared to accept it I wish to test the opinion of the House.

17:52

Division 1

Ayes: 172

---

Labour: 139
Crossbench: 25
Independent: 4
Plaid Cymru: 1

Noes: 233

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Conservative: 134
Liberal Democrat: 67
Crossbench: 26
Independent: 1
UK Independence Party: 1
Ulster Unionist Party: 1

18:05

Clause 123: Duties in relation to statement

Amendment 92B not moved.

Amendment 93

Moved by

[Lord Judd]

93: Clause 123, page 92, line 39, at end insert—
“( ) The Authority must demonstrate that it has complied with its general environmental duties as stipulated in national and international legislation.”

[Lord Judd]

My Lords, I shall also take the opportunity to speak to Amendments 94, 95 and 96. I declare an interest as a vice-president of the Campaign for National Parks, a patron of the Friends of the Lake District, and a member and supporter of the Campaign to Protect Rural England and other environmental agencies. In the context of this amendment, I pay special tribute to the John Muir Trust, which has done outstanding work in this area and with which I have been incredibly fortunate to co-operate in the preparation of what I want to say.

We must never forget that we are custodians of this planet for future generations. Our responsibility to safeguard the environment, especially those parts of it that our generation has not so far severely damaged, must always be at the forefront of our minds and policy-making. We must never fall victim to misguided, damaging and unnecessary short-term measures, whatever our commitment to what is regarded as essential growth. I fear that some government policies that are intended to protect the environment are instead driving action that is damaging it. In particular I think of the deployment of energy infrastructure on our most precious and wild landscapes.

My amendments are certainly not intended to challenge the Government’s climate change goals and their efforts to move to a green energy system. As I made clear in Committee, I fully support these but I remain firmly of the view that, in certain respects, we are losing sight of the purpose behind them. We cannot safeguard the environment for future generations by targets alone. Here and now—right now—we must give equal regard to upholding and enhancing existing hard won protections for the UK’s natural environment—its landscape, ecosystems, habitats and biodiversity. Energy is not an end in itself; we need it to have a society worth living in, but sadly we seem to be in an era of public policy -making where protections for landscapes and the environment are seen as an obstacle to growth and to keeping the lights on. It should not—and indeed need not—be a case of having to make a choice. The present Government pledged to be the greenest ever but, in reality, safeguards for the environment are being systematically weakened.

The Bill, in its current form, is no exception. Energy infrastructure has huge impacts on the environment. These amendments seek to prevent the Bill eroding environmental safeguards and to ensure that they are meaningful and effective. The first amendment would ensure that the strategy and policy statement places a responsibility on Ofgem to demonstrate compliance—and I emphasise those words—with its general environmental duties. This includes duties to have regard to the purposes of national parks, areas of outstanding natural beauty and the Norfolk and Suffolk Broads.

When I put forward a similar amendment in Committee, the Minister sought to reassure me that the strategy and policy statement would not override Ofgem’s existing duties to contribute to sustainable development, and that those duties would still apply. In the Minister’s view, therefore, the amendment was unnecessary. I understand her point and I also appreciate that she may wish to avoid a detailed amendment listing all the various duties. However—noble Lords must forgive me if I did not make this clear at an earlier stage—that is really not the issue. The point is that, while there are indeed existing legislative duties that would not change, there is currently no explicit requirement in the Energy Bill for Ofgem—again I underline these words—to demonstrate compliance with them. The amendment would also require the authority to demonstrate compliance with its obligations under the conservation of wild birds and habitats directives, which is crucial given the perilous state of the UK’s biodiversity.

The second amendment, also to Clause 123, would insert on page 92 after line 39:

“The Secretary of State shall issue guidance on social and environmental policies to which the Authority shall have regard in carrying out its functions”.

The purpose of the amendment is to ensure that the Government issue social and environmental guidance to Ofgem. At the moment, Clause 129(1) repeals, and does not replace, sections in the Gas Act and the Electricity Act that provide that the Secretary of State shall issue guidance on social and environmental matters to which the authority, Ofgem, shall have regard when carrying out its functions. In the Explanatory Notes, the Government argued:

“The strategy and policy statement will replace existing guidance for the regulator on social and environmental matters”.

However, surely replacing existing guidance on social and environmental matters means precisely that: replacing it—that is, providing new guidance and not removing all reference to it, which is what has apparently happened.

Specifically, Clause 123(1) requires Ofgem to,

“have regard to the strategy priorities set out in the strategy and policy statement when carrying out regulatory functions”.

As I understand it, these include functions to which the principal objective duty is applied. This duty is to be found in the Gas Act 1986, with equivalent provisions in the Electricity Act 1989. These provisions make it clear that the principal objective is to protect the interests of existing and future customers of gas and electricity and, wherever appropriate, to promote competition.

Therefore, Ofgem’s commercial responsibilities are clearly defined. However, because there is no explicit requirement in the Bill for the Secretary of State to set out social and environmental guidance to Ofgem, such as exists at present, the priority given to social and environmental factors in public policy will be significantly weakened.

The repeal of the Electricity Act and Gas Act clauses will result in another significant change that will weaken environmental protection. Currently, these clauses ensure that any guidance on social and environmental matters issued by the Secretary of State is on an equal footing with the principal objective duties: namely, the protection of customers and the promotion of competition. However, once they are repealed, any guidance that the Secretary of State deems it appropriate to issue in future will be subordinate to the principal objective duties in a way that is not the case at present.

I am afraid that the Minister’s responses in Committee failed to reassure me that there will be equivalent social and environmental protection if Clause 129 is passed into legislation. In fact, to be honest, they further convinced me that it is the Government’s intention to subordinate environmental considerations to the commercial imperative.

The Government may well feel that there is no need for this amendment as Ofgem’s existing duties to,

“have regard to the effect on the environment of activity connected with the conveyance of gas through pipes or with the generation, transmission, distribution or supply of electricity”,

remain intact because Section 3A(5) in the Electricity Act and Section 4AA(5) in the Gas Act are not being repealed. However, surely without guidance from the Secretary of State on the meaning of “have regard to” and the policies to be followed, compliance with the duties is left to the discretion of the regulator. Surely the interpretation of this duty is not a matter to be left to the regulator; it is for the Government to determine the social and environmental factors that should be considered by the regulator and the value that should be placed on them. The amendment would ensure that provision for the Secretary of State to issue social and environmental guidance to Ofgem remained in primary legislation in accordance with what, I submit, was the original intent as set out in the guidance to the Bill.

18:15

The third amendment in this group is to Clause 125. It proposes that the words,

“and in accordance with any guidance issued under this section”,

should be inserted at the end of line 36 on page 94. The fourth amendment seeks to insert, also on page 94 after line 36:

“The Secretary of State must issue guidance about arrangements for wider public engagement including consultation on social and environmental matters”.

Again, I refer to the original DECC background note to the Bill. This states that the Government intended that there would be a wide public consultation in drafting the strategy and policy statement. Indeed, it emphasised:

“Consultation will be important given the effect of this instrument, to ensure the priorities and outcomes are well-chosen and do not have unintended effects”.

Obviously, I wholeheartedly support the aspiration for wide public consultation on the strategy and policy statement. However, in the absence of a clear prompt in the Bill, I am, frankly, doubtful that this will happen effectively. In order to avoid unintended effects, it will be vital to ensure that a broad range of stakeholders, including technical experts, consumer groups, land managers, planners and NGOs concerned with environmental issues are involved.

In Committee, the Minister felt that the Bill already made provision for wide public consultation and that it was inappropriate to list specific consultees in the Bill. However, the Bill makes no reference to wide public consultation, merely referring to,

“such other persons as the Secretary of State considers … appropriate”,

which could of course mean no one at all. The Secretary of State needs to issue clear guidance about how, and with whom, consultation is to take place. This is surely a necessary provision if, as the Minister stated during discussion in Committee, the Government wish to,

“engage fully with all … stakeholders, including, where relevant, those who represent an environmental perspective”.—[Official Report, 9/7/13; col. GC 52.]

The House will note that the amendment as worded no longer lists consultees. This, I hope, addresses the Minister’s concern. However, it does require the Secretary of State to issue firm guidance to cover arrangements for wider public consultation.

[Viscount Ridley (Con)]

My Lords, I declare my interests in various forms of energy as listed in the register. Before I turn to the topic of the amendment of the noble Lord, Lord Judd, it has been drawn to my attention that when I spoke on the Bill at Second Reading I perhaps should have declared a potential interest. Having taken advice on the matter and satisfied myself that a shareholding was declared in the register, I do not believe there is a conflict. However, for the sake of good order, I am happy to declare that I have a shareholding in a company called the Weir Group, one of whose divisions supplies equipment to the oil and gas industry. I was unaware of Weir Group’s activities in this area at the time but I am happy to add the declaration now if it is thought necessary.

I have a lot of sympathy for what the noble Lord, Lord Judd, has said. I hope that my noble friend the Minister can reassure us that we can close some of the loopholes through which developers can currently drive what is nothing less than the despoliation of many of our most beautiful parts of the countryside in the name of supposedly saving the planet. In particular, I would like to seek reassurance that the Bill will not weaken but will strengthen the guidance issued in June by the Department for Communities and Local Government to ensure that renewable energy does not automatically override environmental protection. Reaction to that planning guidance has been disappointing. The wind industry boasted in July that the national policy has not been changed by recent ministerial statements. It seems to me that there is insufficient protection at the moment for the most treasured landscapes of this country from the blight of wind farms. It is, to quote a spokesman for the Council for the Protection of Rural England,

“a bit of a free for all. The general view held by developers is to have a go—to put in an application and see what happens”.

Some 188 onshore wind farms were approved in the first eight months of 2013. Applications have trebled this year. National parks are affected either directly or indirectly, areas of outstanding natural beauty as well, and in Scotland, national scenic areas. We read this week of the threat to Hardy country near Tolpuddle. Navitus Bay off the Isle of Wight—the New Forest is seeing a connection to this—mid-Wales, Snowdonia, the Llyn peninsula, the Meifod valley, are all affected by enormous numbers of applications for wind farms. All too many parts of the highlands of Scotland are seeing what is effectively the industrialisation of the countryside. It is not just the turbines but the pylons that connect them to the grid which are marching through people’s most favourite views.

Already many of the most beautiful parts of this country have been scarred. In my native Northumberland my view of Simonside is now affected by wind farms, as are the Cheviots and the Wannies. Above all, the sensational view of the Northumberland skyline from Lindisfarne has been turned into a Golgotha. To quote the right reverend Prelate the Bishop of Newcastle, who is not in his place:

“There is no evidence that I have seen that wind farms will ever provide the reliable controllable energy this is required by our society, however many there may be. It is a basic Christian truth that we all have a duty and a responsibility to care for and exercise wise stewardship over God’s creation, which has been entrusted to us”.

That echoes what the noble Lord, Lord Judd, said about our temporary stewardship of the planet.

The right reverend Prelate made a crucial point because this might all be worth while if these things produced worthwhile amounts of electricity, but they do not. This morning, about 6% of our power was coming from wind, which is about 1% of our total energy. There is a feeling that wind seems to be exempt from the normal rules. If I were to erect a structure 140 metres high, doubling the height above sea level of the hills alongside the valley of the Stinchar in Ayrshire, for example, there would rightly be an outcry. If I were to kill hundreds of birds of prey every year, there would be outrage. If I were to kill thousands of bats, I would go to gaol. How can it be that the wind industry uniquely is allowed to ride roughshod over the environmental rules that protect the rest of us from anyone spoiling the view, killing eagles, decimating bats, and pouring concrete into peatland?

The wind industry has proved uniquely insensitive when it comes to looking after the countryside. These amendments are a chance to put environmental safeguards in place to ensure proper consultation.

[Baroness Whitaker (Lab)]

My Lords, I would like to record my support for this group. I declare an interest as president of the South Downs Society. I, too, thank the John Muir Trust. Environmental protection does not go by default. It cannot be left to arrive on its own. The whole history of our relatively commendable standards of environmental protection is vigorous, defensive and positive action by individuals, associations and states. State action, state confirmation of the quality of our environment, is necessary to protect the future. I hope that the Minister will accept these amendments.

[Baroness Worthington (Lab)]

My Lords, I am grateful to my noble friend Lord Judd for tabling this group of amendments and for his incredibly detailed explanation of the points that he seeks to raise. He not only gave an incredibly detailed explanation of why the group is so important; he also very commendably addressed some of the answers that the Minister gave in Committee. We are very grateful for that.

It is absolutely clear that, at the moment, we talk about an energy trilemma—the difficulty of marrying up the needs to tackle change, to keep bills affordable and to keep the lights on—but actually it is a quadlemma, if noble Lords can bear my coining a new phrase, because in the process of meeting those three objectives we cannot see the sacrificing of social and environmental standards in the process. For that reason, this group of amendments is very important.

I came into environmental campaigning through an interest in the natural world and the natural environment. The Countryside and Rights of Way Act was one of the first pieces of legislation that I worked on because I care passionately about preserving areas of beauty, species and habitats and the diversity of the natural world for future generations. But that is not incompatible with moving forward into a low-carbon energy system.

The noble Viscount, Lord Ridley, has singled out wind for particular opprobrium in terms of despoiling our landscape. It is easy to forget that one of the major sources of despoiling our landscape is industrialisation in general. This includes mining, particularly opencast mining, and the new form of industrialisation which may well be coming upon us in the form of gas fracking. If you want visual disturbance, then the rigs that will need to be placed for fracking will also have an impact.

The noble Viscount was correct in also highlighting pylons and grid connections as an issue. However, those apply to all forms of generation, not just wind. The reinforcement of the grid for nuclear will also be an issue that needs to be taken into account.

We are very supportive of the principle behind these amendments. It is important that the first amendment is about demonstration of compliance. If noble Lords read these amendments, it might be easy to dismiss them and say, “Of course they have to comply with laws. That is why we have laws”. However, I think that my noble friend’s point is about the degree to which the authority is required to demonstrate compliance.

The very important point is that the Bill seems to be removing and repealing existing guidance and replacing it with a second-order replacement. I look forward to hearing the Minister’s reassurance that that is not the case and that social and environmental guidance is not being made subordinate to other primary concerns.

The final amendment on public consultation is also very important. I look forward to hearing the Minister’s reply. We are sympathetic to this. It is rather late in the day and other forms of wording might be more appropriate but I very much support the principle behind these amendments.

[Baroness Verma]

My Lords, I thank the noble Lord, Lord Judd, for his amendments. The Government recognise that energy production and consumption should be sustainable. That is why Ofgem has been given duties to contribute to the achievement of sustainable development and to have regard to the effect on the environment of activities connected with the conveyance of gas and the generation, transmission, distribution and supply of electricity.

Ofgem can also consider sustainability implications when it carries out impact assessments for important regulatory decisions. The amendments before us would require Ofgem to demonstrate that it has complied with its general environmental duties. We agree that Ofgem should be accountable. It already has to produce an annual report on matters that fall within the scope of its functions, including its environmental obligations. This accountability will be reinforced by the strategy and policy statement as Ofgem will be required to set out its strategy for implementing the statement in forward work programming. It will also be required to report annually on its contribution towards furthering the delivery of the policy outcomes.

18:30

The amendments would also require the Government to issue social and environmental guidance. It may help here if I explain why the Bill removes the guidance provision. The Ofgem review found that the guidance has not achieved coherence between the Government’s energy strategy and the regulatory regime. They recommended that it should be replaced by a strategy and policy statement. This statement will set out the Government’s strategic priorities, the main considerations which have informed their energy policy and the policy outcomes which are to be achieved to implement this policy.

Ofgem must have regard to the strategic priorities when it carries out its regulatory functions and it must carry out these functions in the way it considers best calculated to further delivery of the policy outcomes. This is a stronger requirement than applied in the guidance, to which Ofgem only had to have regard. The Bill therefore goes further than the noble Lord’s amendment and the statement will be a fitter mechanism for achieving coherence between energy policy and regulation. The strategy and policy statement can include material on social and environmental matters. We will take the current guidance into account as we develop its contents but keeping the guidance alongside would dilute the value of the statement.

The amendments would require the Secretary of State to publish guidance on wider public engagement, which would apply before he decided either to leave the strategy and policy statement unchanged or to withdraw it after a review. The Bill already provides for the Secretary of State to consult Ofgem, Scottish and Welsh Ministers and such other persons as he deems appropriate. In practice, when the Government review the statement, they will consult a range of stakeholders before deciding how to proceed. Guidance on wider public engagement, as proposed by this amendment, is therefore unnecessary. I should also stress that the strategy and policy statement will not be used to introduce new policies. It will reflect on established policy, which would have been consulted upon previously, as appropriate.

The noble Lord, Lord Judd asked whether the repeal of the social and environmental guidance would reduce protection for social and environmental matters. I hope that I have reassured him that social and environmental matters will be taken into account in identifying which policy outcomes should be included in the strategy and policy statement. Ofgem already is required to have regard to social and environmental matters as part of its existing remit.

The noble Lord also asked what practical difference the strategy and policy statement would make. I hope that he is reassured that it clearly lays out the strategic priorities of the Government’s energy policy and that the policy outcomes are expected to be achieved as a result of implementing that policy. Ofgem will have new duties to have regard to those strategic priorities when carrying out its regulatory functions and must carry out these functions in a way that it considers best calculated to further the delivery of a specified policy outcome.

I hope that the noble Lord feels reassured that the Government have taken very much into account his concerns on sustainability. Ofgem has a range of powers and duties, including its principal objective to protect the interests of existing and future consumers in relation to electricity conveyed. These statutory duties are applied through the price controls that regulate the monopoly networks. The aim is to drive real benefits for consumers and to provide companies with strong incentives to meet the challenges of delivering a sustainable energy sector at a lower cost.

[Lord Judd]

Perhaps I may ask the Minister a question, because her answer would be immensely helpful for me in considering what to say in my reply. Will she reassure me that she will write to me a letter, which can be placed in the Library and elsewhere, setting out precisely how the Government will satisfy themselves that Ofgem will pay due regard to the effect on the environment of activity connected with the conveyance of gas through pipes or generation, transmission and the distribution or supply of electricity? What measures and benchmarks, and associated matters, will be taken into account and used in establishing those benchmarks?

[Baroness Verma]

My Lords, of course I am absolutely happy to ensure that I write to the noble Lord on the points that he has raised today. I also say to my noble friend that I hope I have reassured him that planning decisions are as they have been laid out and that we will take very much into account the views of the local communities, as has been laid out by the Secretary of State for the Department for Communities and Local Government. I hope that on that note I have conveyed enough reassurance for the noble Lord to withdraw his amendment.

[Lord Judd]

My Lords, first, I thank those who have spoken in support of my amendments. I particularly welcome the strong support from my Front Bench. The Minister certainly has reassured me that she takes these issues seriously. I think that she is a civilised person who sees the force of what I have been arguing. I just would like to make several observations. First, we all bemoan, and English literature is full of references, what happened in the Industrial Revolution. Without in any way undermining the drive and everything that was so important in the Industrial Revolution, with the benefit of hindsight we can see that things could have been done much better. We would not have seen the same degree of rape and misuse of valuable rural, scenic assets in the country.

My second observation draws on the OECD report that has just been published. One of the reasons why the UK apparently scores relatively highly as being a good place to live is because of the environmental considerations of living here. We should jealously preserve that quality in our life. I have no doubt whatever that, in the context of what I have come to regard a very ideological age with its total commitment to the market, the quantative issues in forward policy will be very well put forward and strenuously advocated. If we really take seriously the preservation of our heritage, the landscape and all that makes for a wonderful country in which to live, those arguments will not necessarily automatically by market mechanisms come forward in the same way, because these are public goods. Therefore, from this standpoint, a much stronger argument about just what it means to take into account these considerations and who should be involved in representing and presenting them should be in the Bill. At the moment, because she is a very reasonable person, I am sure that the Minister will understand that however much aspiration there is in the drafting of the Bill, it leaves an awful lot to the subjectivity of the regulator. To be told that the regulator is going to have to report annually on the fulfilment of the objectives is, again, a nice aspiration; it is full of good intention, I am sure. But against which precise benchmarks is he going to report? That is why the letter could be so important, and why I hope—I am sorry, I should have stipulated this—that it will be with us before Third Reading.

From all the standpoints, it is important to recognise that we are talking about what the right reverend Prelate the Bishop of Newcastle expressed so well, as put to us by the noble Viscount, Lord Ridley. We are talking about our duty to the future. I am sure no noble Lords want their children and grandchildren to grow up in an age in which we have enshrined in law and legislation the need to know the price of everything, but in which we have allowed the decline of knowing about the value of things. That is why the considerations before us are of such importance.

I do not question the Minister’s goodwill, but I suggest to her—because we are friends, I can put it to her bluntly—that in the light of experience it could quickly look like an awful lot of waffle. What matters is to have some muscle in the Bill, supporting the excellent aspirations of the Minister, and that we ensure that the right course is taken. At this stage, in thanking those who participated in this, I beg leave to withdraw the amendment.

Amendment 93 withdrawn.

Amendment 94 not moved.

Clause 125: Review

Amendments 95 and 96 not moved.

Clause 130: Power to modify energy supply licences: domestic supply contracts

Amendment 97

Moved by

[Lord Roper]

97: Clause 130, page 100, line 16, at end insert—
“(ba) require information to be provided in a form that is clear and easy to understand;”

[Lord Roper (LD)]

My Lords, on behalf of my noble friend Lady Maddock, who is away from the House with her Select Committee today, I shall move Amendment 97 and speak to the other amendments in this group. At Committee stage, she tabled an amendment to the tariff reform clauses in the Bill which we are now considering, suggesting that suppliers should provide details of their cheapest tariff on bills,

“in a clear and easily understood format”.

She developed that in her speech in Grand Committee. For those who were not in Grand Committee, I recommend that they read it, because she made her argument extremely effectively. The clauses in question provide the power to require suppliers to provide a message on bills telling customers if they offer a tariff which could save them money, and how much money they could save by moving the tariff.

In Committee, my noble friend Lady Maddock raised concerns that suppliers would make this confusing on their bills, and gave examples of how much difficulty people had in reading their existing bills. She suggested that her amendment, which indeed is being proposed again at this stage in a slightly amended form, would prevent them from doing this. My noble friend the Minister agreed with the sentiment of the amendment during Grand Committee, and said that she would consider it. I know how grateful my noble friend Lady Maddock is that the Minister gave a great deal of attention to it and has been able to add her name to the set of amendments which we are considering today. Although this amendment is not exactly in the same place as originally envisaged by my noble friend Lady Maddock, it sits within the same clause and has the same intent and legal force as the original proposals.

The remaining amendments in this group are minor and consequential to ensure consistency in the terms used throughout the clauses. I look forward to these amendments being made to the Bill. I beg to move.

18:44

[Lord Whitty]

My Lords, I would briefly like to add our support to these amendments. It is very good that the intentions of the noble Baroness, Lady Maddock, have been taken on board by the Government, and it should lead to a significant improvement in the way in which consumers understand this market and their own bills. At the end of the day, with the massive changes that are expected in energy policy, unless consumers are themselves convinced that this is all part of a coherent and positive strategy there will be serious political problems down the line for the Government in power, whoever they are. I therefore think the Minister has been very sensible. I congratulate her on taking this initiative and making it her own, and give my thanks to the noble Baroness, Lady Maddock, and the noble Lord, Lord Roper, for pursuing it in the first instance.

[Lord Phillips of Sudbury (LD)]

My Lords, I will comment briefly on this clause because in my life hitherto I have spent a great deal of time trying to help the great British public understand some of the contracts that have come their way. I am afraid to say—and I do not think anyone in the House will disagree—that a good deal of cynicism has been employed by some of the very large energy suppliers, and indeed other suppliers in recent years, designed expressly to confuse the consumer with a view to preventing ordinary folk from understanding what their best tariff, for example, might be. This is a clause of great virtue, which should be supported.

[Baroness Verma]

My Lords, I thank all noble Lords for their support for this amendment and the noble Lord, Lord Roper, for speaking on behalf of the noble Baroness, Lady Maddock, to her amendment. These amendments would place in the Bill a requirement that information in consumer energy bills must be,

“provided in a form that is clear and easy to understand”.

My noble friend Lady Maddock raised the importance of this at Second Reading and in Committee, and the Government agree it is vital. Ensuring consumers are provided with clear and simple information regarding their existing tariff and others available to them is one of the key aims of the powers in question, and of Ofgem’s retail market review. I am therefore very grateful to my noble friend for bringing forward these amendments and I can confirm that the Government are happy to accept them.

[Lord Roper]

My Lords, in the circumstances, there is nothing I need to say.

Amendment 97 agreed.

Amendments 98 to 100

Moved by

[Lord Roper]

98: Clause 130, page 100, line 18, leave out from “information” to “about” in line 23

99: Clause 130, page 100, line 24, after “terms” insert “to be provided”

100: Clause 130, page 100, line 24, at end insert—
“(c) make provision about the way in which information is to be provided, which may in particular require information to be provided—(i) by means of a code or otherwise using a format readable by an electronic device, or(ii) in a way which facilitates processing of the information by means of an electronic device.”

Amendments 98 to 100 agreed.

Amendment 101

Moved by

[Baroness Verma]

101: Clause 130, page 102, line 9, at end insert—
“(13) A statutory instrument containing an order under subsection (10) is subject to annulment in pursuance of an order of either House of Parliament.”

[Baroness Verma]

My Lords, Amendments 101, 103 and 104 make the order-making power relating to domestic tariffs in Clauses 130 and 131 subject to the negative resolution procedure. This was a recommendation of the Delegated Powers and Regulatory Reform Committee. I again thank the committee for its consideration of the Bill. The Government agree that the recommendation would be an improvement, so I will move these amendments to give effect to it.

[Lord Roper]

My Lords, I welcome the response that the Government have made to the report of the Delegated Powers and Regulatory Reform Committee. This and other recommendations were raised in Grand Committee. In virtually every case the Government have been able to come back and accept those recommendations.

[Lord Grantchester (Lab)]

My Lords, the House is rightly wary of allowing wide discretionary powers without being able to suitably assess their application later. Your Lordships’ Delegated Powers and Regulatory Reform Committee expressed concern about the powers in the Bill. In Committee, on 9 July, along with the noble Lord, Lord Roper, we highlighted these concerns. At the time the Government agreed to bring forward amendments to ensure that the Bill and the secondary legislation would be complicit. While it has taken several iterations between the Minister’s department and the Select Committee to get it right, I am pleased to see that the Government finally listened to the recommendations that were made and tabled these amendments. Parliament must be able to scrutinise the Secretary of State’s complicated power to make orders about domestic supply contracts. After all, the power under Clause 130 would in effect enable the Secretary of State to categorise the terms of domestic supply contracts as “discretionary terms” or “principal terms”, which is a significant power. We welcome the government amendments because they will ensure that any such order is given appropriate parliamentary scrutiny under the negative resolution procedure. There will be a 40-day window during which Parliament can review the draft of the proposed modifications.

Amendment 101 agreed.

Amendment 102

Moved by

[Lord Forsyth of Drumlean]

102: After Clause 130, insert the following new Clause—
“Transparency for consumers
The power under section 130 to modify energy supply licences may be exercised so as to make provision requiring a licence holder to provide information on a consumer bill that breaks down the total cost charged to the consumer by showing each of—(a) the amount that goes to Government environmental levies or programmes;(b) the amount that goes to administration costs;(c) the amount that goes to wholesale energy costs;(d) the amount for raw energy costs; and(e) any other categories of cost.”

[Lord Forsyth of Drumlean (Con)]

My Lords, my noble friend Lord Marlesford is doing his duty with the European Union Sub-Committee in Berlin and has asked me to move this amendment, to which I have added my name with some considerable enthusiasm. I find it quite extraordinary that my noble friend put her name to the previous amendment, the first line of which refers to requiring,

“information to be provided in a form that is clear and easy to understand”.

In preparing for this amendment, I looked at a selection of energy bills from various providers. They are almost impossible to understand. Some of them provide information about the amount that is being levied in order to meet the Government’s green agenda, while some do not. Some provide the information in the form of percentages. But surely an absolutely basic example of justice for consumers is that they should know what they are paying for. If you take your car into the garage to be serviced, you expect to see what the items were that make up the bill at the end of the day. What we have here, I am sorry to say, is a kind of conspiracy within the political classes to load on to people’s bills the cost of the green agenda in a way that is not transparent.

Although the Government’s rhetoric is continually about the need for transparency, as people go about their day-to-day business and receive their electricity and gas bills, they are not able to see how much is going on subsidising windmills and how much is being used to provide for the transfer of electricity by building huge pylons and other infrastructure programmes. For example, a line of pylons is being erected all the way down the A9 in Scotland, going past Stirling Castle, in order to deliver power from windmills which are themselves being subsidised. I believe that most consumers in the country have no idea that all this is being levied on their bills, and as such it is a highly regressive tax that is being paid by the poorest. At the very least, whichever side of the argument one is on, it is right that people should know exactly how much of their bill is going towards government environmental levies, how much is going towards wholesale energy costs, how much relates to raw energy costs, and the various other elements.

During the course of what has been a frustrating day—I am most grateful to my noble friend Lady Verma, her special adviser and her officials for discussing this amendment with me—I have found it impossible to understand why the Government are not prepared to ask Ofgem to ensure that all of the providers of gas and electricity break down their bills in a way that is consistent and comparable. It should not be done in percentage terms, but in financial amounts. If the bill is £300 for the quarter, it should show how much of that was spent on the various added components but which are hidden in the bill at present. I have a horrible feeling that there is, among those who are keen on pursuing the green agenda, a desire to keep this quiet because of the concern it would cause among the electorate and in the population; namely, that we are asking some of the poorest people to pay what is a highly regressive tax.

I know that my right honourable friend the Prime Minister has promised to roll back these green taxes on people’s bills, which were originally the idea of the leader of the Opposition, Mr Miliband, when he was the environment Secretary. I would respectfully suggest to my right honourable friend the Prime Minister that if he wants to get any credit for rolling back the green levies on people’s energy bills, it would be a good idea to identify them before they are rolled back, because they are likely to be subsumed into the price increases that are being brought forward by the energy companies. Consumers will then be unaware of the impact of the policy, which presumably would mean yet another burden being placed on taxpayers. In the light of recent experience, that actually means the people in the middle, who are bearing the brunt of the additional tax burden which is already being levied by this coalition Government.

I hope that my noble friend will feel able to accept this amendment. If she is unable to do so, I hope that she will at least give us a clear statement of the Government’s policy on this matter. Is it the Government’s intention that every consumer of electricity and gas in the country will receive a bill that is broken down in explicit terms, showing how it is made up and what the costs of the Government’s policies are? They should include the policies in terms of insulation and the policies that are paying for additional, expensive offshore and onshore wind generation. If the Government’s position is that consumers should not have that information, can they explain exactly why they feel that this should not be a priority? I know that my noble friend will say that the Government are in favour of transparency and that they would like to see less complex bills, but we already know that the utility companies are capable of producing them. What we need is a conductor to make sure that they do so on a consistent and comparable basis.

My right honourable friend the Prime Minister has also said that it is important that people should be able to switch in order to get value for money. If you do not know how much of your bill is being spent on, say, insulation programmes—one energy provider may be more efficient than another—how can you choose between different providers according to their efficiency if that information is not made available to you? A cursory scan of some of these bills reveals that the regulator requires all sorts of information to be included. That may be of interest, but not, I suspect, to many customers. What they want to know is how much is their bill and how much of it actually relates to keeping the lights on in their homes and how much relates to other desirable or undesirable policies. I hope that my noble friend will feel able at the least to give a commitment that this shambles, because shambles it is if one studies the way in which these bills are presented, will be put right quickly. I beg to move.

[Lord Campbell-Savours (Lab)]

My Lords, unlike the noble Lord, Lord Forsyth, I am a strong supporter of the green agenda. This is an amendment about transparency, and I like it. I like it a lot and I strongly support it. It appeals to a belief that stands at the heart of my politics: transparency shapes conduct, knowledge and understanding. However, the current arrangements for utility billing make understanding impossible in precisely the way the noble Lord, Lord Forsyth, has set out in his speech—much of which I support but, of course, much of which I do not.

In the last Parliament I moved a whole series of amendments on a number of Bills. I call them the transparency amendments as they were all based on a simple principle: shine a light, expose the truth and trust the people to make the right judgment. I believe that the issue of transparency will dominate the politics of this century. It will transcend partisan, party political debate. It is the principal driver behind justice, fairness, honesty in administration and personal conduct, integrity in politics, restraint in exploitation—which is what we are considering here—and general enlightenment. It will help restore public confidence in our public institutions and ultimately the private sector.

19:00

This amendment is adventurous because it is about the private sector. The response of my party should be a knee-jerk “yes” to this amendment. We have everything to gain from it. It would be a worthy component in the series of Miliband initiatives which are now regularly being announced. The reality is that there has been an undignified assault on the whole spectrum of environmental taxation, much of it based on untruths. Those attacks need a response. We are not winning the argument. The tabloids are slaughtering our case in the absence of readily available information which the public understand. The amendment by the noble Lord, Lord Forsyth, seeks to make information available which the public can readily understand.

If we want to win this argument, let the people decide for themselves on the basis of the facts, not partisan political tabloid fiction. The provision of this kind of information will lead to a far more sensible, informed debate. It will reveal the truth behind green taxation. The noble Lord, Lord Marlesford, is to be congratulated. I am sorry that he is not here today to hear this debate which he will no doubt read. I strongly support this amendment and I hope many of my colleagues do as well.

[Lord Teverson]

Normally when we have bills, either from supermarkets or other places, we do not actually have a breakdown of those costs but in an industry that is regulated as much as energy has become, I think this is a really excellent idea. It is something that would become a myth-buster. My noble friend Lord Forsyth is right that there has been an embarrassment in terms of trying to shield some of these costs or sweep them under a carpet. That has backfired because they have been used as an excuse by energy companies to justify major increases when clearly they are not the major cause of the increases. One way of breaking that myth about the extent to which green taxes—or however they are described—have contributed to the rise of energy bills would be to have this level of transparency.

Which?, as noble Lords will know, is one of the major consumer campaign organisations and puts the green tax at 5% of total electricity bills. If you add in all the other government initiatives it comes to about 9% of the total. I think that is the most trustworthy of organisations because it is consumer-focused. I would also like to see on regulated industries’ bills how much UK corporation tax they pay in relation to their total turnover and profit. I am not saying the electricity industry is particularly bad in that way, but such a scheme would be particularly interesting in an industry which, through its bills, receives a fair degree of public subsidy towards the generation it undertakes.

In principle, I think that this amendment is excellent. I am not saying I would vote for it if it came to a Division but more transparency would break the myths and anti-green propaganda that we have seen, particularly over the last couple of years.

[Lord Forsyth of Drumlean]

Before the noble Lord sits down can he just explain—I am very puzzled—why he would not vote for an amendment that he believes is right?

[Lord Teverson]

That is because I feel there are some proposals that are even more important. If the noble Lord wanted to test me, I suppose it would be interesting to see what I would do. Perhaps he can put me on the spot. It would be interesting in terms of gas bills but of course the figure would actually be zero.

[Viscount Ridley]

My Lords, I support the amendment of the noble Lord, Lord Forsyth. There is no doubt that the policy of putting green subsidies on to consumer bills was designed to disguise and hide the costs and hope that we would not notice. We can disagree about whether the results are going to be pleasing or not, but we have noticed that the consumer has rumbled the ruse, so it is time, as the noble Lord, Lord Campbell-Savours, said, to be transparent and honest. It would help to resolve some of the disagreements we have heard again this afternoon about how much green levies are adding to bills.

There is an infographic on the Government website that says that £286 will be added in 2020. The Department of Energy and Climate Change says that the figure is £199. The Committee on Climate Change, as we have heard this afternoon, says it is only £100. A lot of these calculations leave out VAT, upgrades to the grid and system integration costs. They often make unreliable assumptions about wholesale gas prices and how they are going to change but above all these calculations leave out the indirect bill—the cost of green levies that is added to industrial and commercial users of electricity who then pass it on to individual consumers through the cost of goods and services. A pint of milk will be more expensive because of green levies paid by the dairy and the supermarket. If you look at the quantums involved, this roughly trebles the cost of green levies, two-thirds of which fall on commercial customers.

The way we have of doing things at the moment is underhand, regressive—as has been said—and unfair. Those who heat their homes with electricity are hit the hardest by these green levies. Contrary to what has been said today, 2.9 million people in this country heat their homes with electricity and those include many of the poorest people. Ideally we would remove these costs altogether and put them into taxation. Then the rich would pay more of them and the poor would pay less. If we cannot have that, then let us break it out honestly and transparently and see what there is. To those who say that it cannot be done and that it is too difficult, the noble Lord, Lord Marlesford, has shown me one of his own bills where it has been done very nicely. I think it is definitely possible and it should be done.

[Lord Berkeley of Knighton (CB)]

My Lords, I would like to follow up on that point and also agree with the noble Lord, Lord Forsyth. I feel I represent people in mid-Wales—another area which is profoundly threatened with pylons and wind farms. When I get my council tax bill, the police, the fire services and everything else is listed in just the way the noble Lord, Lord Forsyth, is suggesting. I do not really see any problem in bringing greater transparency which we would all like to see and which might help us to understand how these bills are put together.

[Lord Jenkin of Roding]

Some years ago I moved amendments to an energy Bill to the effect that the bills should actually show the breakdown of the costs on the supplier that is then charged on the bill. I was therefore quite pleased when I found that my electricity bills—I draw my supplies from British Gas—in fact do that. They do not show the details of what it paid up but have the total cost of government, environmental and social schemes. It is 11%. I can understand the desirability of providing people with an opportunity to break that down and find out how that figure is made up.

When we debated this in Committee, the right reverend Prelate the Bishop of Chester made this case very strongly. As it was in Committee there was quite an exchange between him and my noble friend on the Front Bench, at the end of which my noble friend said very firmly:

“My Lords, as I said earlier, I am taking the amendment away and shall reflect on what the right reverend Prelate the Bishop of Chester has raised. Like noble Lords, I am very keen that information is available, simple and understandable, but I am also keen to ensure that I can deliver what I am able to. Part of that is by taking this away and giving it further consideration”.—[Official Report, 9/7/13; col. GC 80.]

That she did, and subsequently sent a letter to those of us on the Committee. I will not read the whole passage, but it is headed “Information on consumer bills” and states:

“I undertook to reflect on”—

the right reverend Prelate the Bishop of Chester’s—

“suggestion that companies should be obliged to include information on consumers’ bills about Government environmental levies and programmes”—

thereafter pointing out that the bills are pretty crowded documents. My bill not only tells me what I have incurred during the quarter in question but what my estimated total consumption will be and how that compares with the estimated total consumption of the previous year. All those things are quite interesting, but one feels, how far does one go?

My noble friend continued:

“I agree that we must be transparent about the impact of Government environmental levies and programmes on consumer bills and that is why the Government has committed to publishing this information annually, through the Price and Bill impacts Report. In addition Ofgem produces fact sheets that provide a breakdown of costs which make up a typical energy bill”.

How many consumers are aware of those documents? Even if they were aware, how would they get hold of them? I understand the difficulty in seeking to break down that 11%. If someone is really interested in that, no doubt they can pursue it by looking it up on the internet, where I am sure that the figures are available. I hope that my noble friend can give us some reassurance about the information. As my noble friend Lord Ridley said, the public have rumbled that already; they now know that that is what is happening; hence the suggestion from the Prime Minister that some of it should be placed on taxation and not on the bills. That will no doubt be considered.

My noble friends Lord Forsyth and Lord Marlesford have a point here. I am not entirely sure that the letter from my noble friend Lady Verma has dealt with that. Can we not be told how people can best get hold of that information if they want to? Why is it not possible for every energy supplier to do what British Gas does on my bills and what Southern Electric does on a sample bill which it has given to me, which shows the cost of government, environmental and social schemes to be 11%. That does not seem an unreasonable thing to ask for, and I shall listen to what my noble friend says with considerable interest.

[Lord Kerr of Kinlochard (CB)]

My Lords, it is probably quite unnecessary to add to the avalanche of support for the amendment of the noble Lord, Lord Forsyth, which I am sure that the Minister will accept. Just in case she is still in any doubt, I will add my support for the amendment, which is absolutely right. Of course, this is the anti-hypocrisy amendment. It is much needed today, when we have spent a lot of time discussing fuel poverty. One very good way to deal with fuel poverty would be to keep prices down and finance environmental and social objectives through general taxation. That would be socially wise and would assist in dealing with the problem of fuel poverty.

I should say that my interests recorded in the register include the fact that I am the director of a power company. I am delighted not to hear boos and hisses—although I think that there was a silent one. There is hypocrisy in the current criticism of the power companies, given that this year sees the introduction of the Energy Companies Obligation and the Green Deal. The energy companies are obliged to spend huge sums of money on insulating domestic property. Then they are criticised for putting prices up.

19:15

I do not know exactly what number would be shown if a breakdown of that kind showed the amount that goes to government environmental levies or programmes. I do not know what is the correct number among those listed by the noble Viscount, Lord Ridley. Like him, I think that it would be far better to have none of them and do all this through taxation. It is right that the public should know what the levies are. I know that you can work it out company by company if you are very clever and use the website, but I do not see why it should not be in the Bill. I therefore agree with the noble Lord, Lord Teverson. He and I might dispute what is myth and what is reality, but let us have it all out there. Let us get away from all the hypocrisy. I totally disagree with the noble Lord, Lord Phillips, who talked about deliberate obfuscation in energy bills. That is absolutely not the case. If the regulator required the companies to produce information as set out in the amendment, the companies would, in my view, be delighted to do it.

[Lord Howell of Guildford]

My Lords, I hate to see my noble friend Lady Verma surrounded, as though she is having to defend the OK Corral. She has defended the Bill, with its many complexities, with superb clarity and energy, but in this case, I see the walls closing in around her. It seems to me that the case is nearly unanswerable. I will give her one defence.

We all have our own experience. I am currently resident in London. My gas bill specifically says that 19.3% is added as a result of green levies, charges and taxes. I imagine that that includes VAT. That probably sounds too much. Some clarity would make clear whether it was too much or too little. On the other hand—this is possibly the only argument against the amendment—it does not show all the other green elements locked into the charge that the energy company makes as it delivers the gas or electricity before all those identifiable levies and taxes.

My noble friend Lord Ridley reminded us that the costs involved in the accelerated decarbonisation programme—driven by various EU directives, among other things, I cannot resist saying—the closing down of coal-fired power stations and our need to replace our nuclear fleet at colossal cost to the consumer in future, are already incorporated in the final price of the gas or electricity product before any of those additional taxes. The real cost of the whole programme—which may or may not be worth it; we are not debating that now, although I have my views—is not in the same league as the very small figures we heard earlier from my noble friend Lord Deben and others for the marginal additional cost of the identifiable levies.

We really need to take a step forward on that front. My noble friend Lord Marlesford has, rightly, been arguing about these things for many years. The time has come when, if there is to be a sensible debate about the price being paid, who should bear that cost, how regressive it should be and how much of the burden the poor, and particularly the older poor, should bear, the case is almost unanswerable for requiring energy suppliers to say what charges they are making, what is the origin of the charges and how they make up the total bill.

[Lord Lawson of Blaby (Con)]

My Lords, I, too, support my noble friend Lord Forsyth. I do not think that anyone can disagree with this amendment—although, sadly, I suspect that the Minister may. It has been striking that there has been no disagreement on any side of the House, and support on all sides, for this transparency amendment. Indeed, support has come not merely from all sides of the House but from all sides of the green debate. Everybody agrees that there should be transparency. Everybody agrees, as the noble Lord, Lord Kerr, suggested, that there should be no hypocrisy. There is no argument against this amendment other than a desire for concealment. A desire for concealment is not a very reputable position for the Government to take. As a strong supporter of this Government, I regret that they should be in the business of promoting concealment, for that is what this is about.

If the amendment is not carried and the Government do not get the credit for introducing this transparency, sooner or later—I suspect it will be sooner rather than later—one of our great newspapers, maybe the Daily Mail, will run a great campaign, saying that the Government are concealing the position and that consumers should be told. Eventually the Government will have to give in. It will be a great triumph for the Daily Mail, or whichever newspaper it is, and it will be a great defeat for the Government. It is very foolish for the Government to go into this knowing they will get—I do not know whether this is a parliamentary expression—a bloody nose. So I ask my noble friend to think again. She is skilful and politically aware. Her officials are not—that is not their job. She should have the nous to accept this amendment, which has been so reasonably proposed by my noble friend Lord Forsyth and so widely, indeed universally, supported on all sides of the House.

[Lord Pearson of Rannoch (UKIP)]

My Lords, very briefly, I, too, support this amendment. My only regret is that perhaps it does not go far enough in suggesting that all the various environmental levies should be broken down to show how much has been spent on wind power, and what percentage of electricity consumed and paid for came from wind. If that were revealed to the general public through this amendment, it would hasten the end of the absurd and socially unfair wind farm project.

[Lord Whitty]

My Lords, this has been an interesting debate. Nobody who spoke was against transparency of costs. In passing, as an avid reader of the Daily Mail, I say to the noble Lord, Lord Lawson, that the Mail has made a pretty good job of drawing the consumer’s attention to the fact that there are such charges—although not always accurately, as the noble Lord, Lord Teverson, implied. It may be that from all points of view that a different form of transparency would make things clearer.

My noble friend Lord Campbell-Savours hoped to get a knee-jerk reaction from his Front Bench in support of this, and that was my initial inclination. I am in favour of transparency for consumers. I am not in favour of concealing any costs which make up the bill, including those imposed by the Government, whether the charges were started under the previous Government or were, like the carbon floor price, started by this Government. The problem all Governments have with this is that it is all very well to argue for this all going onto direct taxation—intellectually that must be the case and in terms of fairness one can argue it—but I am afraid that there are those in government, one of whom is not unknown to the noble Lord, Lord Howell, who would object to significant amounts of money coming from direct taxation. To be frank, I do not think any Government would easily be persuaded, having put these charges on consumer bills, to move them back to direct taxation. However, that option is always there.

The other, less drastic option is to make these charges less regressive, because they are effectively a poll tax. However, I am not completely joining the surrounding of the Minister on this because, while it is right to seek transparency, it is not right to do so in order to attack the Government’s green or social charges. We should look at the totality of costs which make up the consumer bill. The noble Lord, Lord Teverson, is right, but it needs to go further.

The corporations have used the green charges to explain price rises. Sometimes they have been right and sometimes they have been, at best, misleading. There are other things which go on within supply companies. We do not know the cost of the network. Network charges are a significant part of costs. Nor do we know how the internal finances of the energy companies operate. Some of these companies are vertically integrated. Are they buying from themselves? What is the actual price that is reflected in the bill?

The Minister should take this away and look at how we would break down all costs in a way which consumers could understand, and which did not highlight just one aspect of them. With my noble friend Lord Campbell-Savours and the noble Lord, Lord Teverson, I support green charges. I do not think they are geared in the proper way, and perhaps schemes funded by taxation might be better, but I am in favour of green charges. I am also unafraid of scrutinising them and getting greater transparency, but that should be done in the context of looking at all the costs which make up a bill.

The list here is incomplete. If it had been a longer list, or if it had stopped as a general principle at the word “consumer” in the last line of the main paragraph, I think that the Minister could accept it and I would support her. I hope she—

[Lord Forsyth of Drumlean]

How can the noble Lord say that the list is incomplete when the last item on it is,

“any other categories of cost”?

[Lord Whitty]

Because it draws attention to the first four, which relate to other matters. It does not allow for the lumping together of tax costs and environmental charges, as some companies voluntarily do. Rather than end with a vague, catch-all phrase we should be balanced, we should look at the totality of costs and we should list them. I hope that the Minister will take away the spirit of this amendment and the wording of the first couple of sentences, and look at it in a rather wider context, perhaps coming back at Third Reading with a rejigged amendment. However, I cannot support the amendment of the noble Lord, Lord Forsyth.

[Baroness Verma]

My Lords, I thank my noble friend Lord Forsyth for moving the amendment on behalf of my noble friend Lord Marlesford and the right reverend Prelate the Bishop of Chester. I sympathise with the aims behind this amendment. Consumers have a right to know what they are paying for, particularly when it is a basic essential, such as energy. The Government recognise the importance of providing clear and consistent information about the content of bills. Every year my department publishes a breakdown of costs that make up an energy bill along with a detailed assessment of the impacts of our policies. We feel strongly that suppliers should be open and honest about the costs that they incur, and noble Lords will have heard my colleagues in the other place repeating this call in recent weeks.

19:32

Our priority is to make bills as useful as possible for consumers and to ensure that they have the clearest information possible to help them engage in the market. We want to see key information presented clearly and simply, including information on the cheapest tariffs available to them. We want the information that suppliers provide on bills to prompt consumers to consider whether they are getting the best deal that they can and to empower them to shop around. Ofgem’s retail market review proposals are designed to do just that, and have required suppliers to make a major overhaul of their bill design in order to comply with the new requirements.

I do not want to pre-empt the work that is going to be done by the Cabinet Office as laid out by the Prime Minister in the context of the competition test. My noble friend is aware that I am sympathetic to the idea of ensuring that consumers know exactly what they are paying for.

I have listened very carefully to arguments from across the House. Given the strength of feeling shown in today’s debate, I would like to take away the arguments that have been made and perhaps follow through with noble Lords who are happy to discuss with me how to better look at this amendment. In the mean time, my noble friend needs to recognise that I and the Government have a commitment to transparency and clarity on bills. While I undertake to take my noble friend’s amendment away, I reassure noble Lords that it is not about not wanting clarity and greater transparency; it is also about ensuring that consumers do not get an overload of information on their bills that will make it even harder for them to disaggregate what they are actually paying for. With that undertaking to take this away and to work with noble Lords, I hope that my noble friend will withdraw his amendment.

[Lord Forsyth of Drumlean]

My Lords, I am most grateful to my noble friend and to colleagues around the House who have spoken in support of this amendment. It is a remarkable thing to have an amendment that unites the noble Lord, Lord Kerr, with the noble Lord, Lord Pearson of Rannoch, and I do not think that even the speeches from the Front Benches could quite bring themselves to oppose it.

I am grateful to the Minister for agreeing to take this away, think about it again and talk to people about it. Of course, the very last thing that I want is to create a Division and thereby put my noble friend Lord Teverson, not to mention many of his colleagues on those Benches, in a position where they might have to vote against something that they thought was the right thing to do.

Rather wisely, my noble friend Lord Lawson pointed out that this matter has considerable strength of feeling in the country behind it, and it would be a pity if this cause were taken up by a tabloid newspaper, for example. It would be an even greater source of concern to me if that proved to be more influential than the combined voices around this Chamber. If it were taken up by a tabloid newspaper, judging by the brief that the Minister has been given by her department, I would not want to be the press officer responding to the inquiries because the Government have nothing to say on this.

This is not an issue about whether we are for or against decarbonisation or whether we are sceptics or enthusiasts—it is an issue of trust and transparency. I welcome the Minister’s comments that she is sympathetic, that she believes in transparency and that she would like to get there, but she is sounding a touch like St Augustine. Still, I take her commitment seriously, even though it is a commitment that she made earlier, in Committee. Therefore, while giving notice that we will return to this at a later stage in the Bill if no beef is produced following what has been a widespread consensus position in the debate, I beg leave to withdraw the amendment.

Amendment 102 withdrawn.

Clause 131: Section 130: procedure etc

Amendments 103 and 104

Moved by

[Baroness Verma]

103: Clause 131, page 102, line 13, leave out paragraph (a)

104: Clause 131, page 102, line 21, leave out subsections (3) and (4) and insert—
“(3A) Before making modifications under section 130(1) the Secretary of State must lay a draft of the modifications before Parliament.
(3B) If, within the 40-day period, either House of Parliament resolves not to approve the draft, the Secretary of State may not take any further steps in relation to the proposed modifications.
(3C) If no such resolution is made within that period, the Secretary of State may make the modifications in the form of the draft.
(3D) Subsection (3B) does not prevent a new draft of proposed modifications being laid before Parliament.
(3E) In this section “40-day period”, in relation to a draft of proposed modifications, means the period of 40 days beginning with the day on which the draft is laid before Parliament (or, if it is not laid before each House of Parliament on the same day, the later of the 2 days on which it is laid).
(3F) For the purposes of calculating the 40-day period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
(3G) The Secretary of State must publish details of any modifications made under section 130(1) as soon as reasonably practicable after they are made.”

Amendments 103 and 104 agreed.

Amendment 104A

Moved by

[Baroness Finlay of Llandaff]

104A: After Clause 132, insert the following new Clause—
“Carbon monoxide detection
(1) The Secretary of State may make regulations to ensure—
(a) any particular class of residential premises is fitted with an appropriate carbon monoxide alarm where any carbon fuel burning appliance is in situ,(b) the supply, sale and fitting of a carbon monoxide alarm may be undertaken by any registered carbon fuel burning appliance engineer, smart meter installer or by local authority fire and rescue service personnel.(2) Regulations under this section shall be contained in a statutory instrument which shall be laid before Parliament and subject to annulment by resolution of either House of Parliament.”

[Baroness Finlay of Llandaff (CB)]

My Lords, the amendment before the House today is greatly simplified from the one that I tabled in Committee. It is a regulation-making power, and that is all. It would allow the Government time to gather information from the review that was helpfully announced today. Northern Ireland and Scotland have already introduced a requirement to fit carbon monoxide alarms when new or replacement boilers or heating appliances are installed in a dwelling. In England and Wales a domestic carbon monoxide alarm is required only when a new or replacement solid fuel appliance is installed, and does not apply to other types of fossil fuel.

So far as we know, there has never been a death from carbon monoxide in the UK when an audible alarm has been present. The first part of the amendment concerns a recommendation from the inquiry by the All-Party Parliamentary Carbon Monoxide Group, which I chair, which recommended that the Gas Safety (Installation and Use) Regulations 1998 be amended to require all rented properties to be fitted with an audible carbon monoxide alarm, manufactured to European Standard EN 50921. The amendment’s wording would ensure that any property, including local authority housing, rented housing, holiday lets, rented static caravans and other high-risk properties received attention around carbon monoxide that they currently lack. All carbon fuels, including biomass, are covered in the text of the amendment.

As I said in Committee, recorded figures on carbon monoxide poisoning are the tip of an iceberg. The true morbidity and mortality remain unrecorded. The current increases in fuel prices, along with the increased cost of living, mean that many are likely to forgo the annual servicing of appliances. Initiatives to increase home insulation have decreased draughts in houses, effectively making them sealed units, so that if carbon monoxide is produced the concentration steadily rises and thereby endangers life.

The second part of the amendment relates to fire and rescue services, such as the Chief Fire Officers Association voluntary Blue Watch scheme, which attempts to address the national absence of carbon monoxide alarms. It would allow others who fit or service fuel sources or appliances or meter fuel usage to supply, sell and fit an alarm. A co-ordinated fire rescue service response was shown with smoke detectors. Before the regulations changed, about 8% of homes had smoke detectors; now over 80% of households have a working smoke alarm.

The final part of the amendment would require a statutory instrument to be laid. That would ensure that Parliament was aware of the progress being made in addressing this silent killer, and would demonstrate how seriously the Government were taking the issue of these preventable deaths. I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I support the noble Baroness. I speak as president of CO-Gas Safety. Like the noble Baroness, for many years I have been concerned about the lack of action in relation to carbon monoxide poisoning. As she said, the official figures disguise the true extent of the problem. Because the official figures have not really reflected the size of the problem, various agencies, particularly the Health and Safety Commission, have never really been prepared to take this issue seriously. The noble Baroness has found an ingenious way to bring this to your Lordships’ attention within the Energy Bill.

This afternoon, the Minister gave a very welcome announcement in relation to a government review. However, we would like to see this issue go further. All that my noble friend is doing is setting a framework within which the Government can take action following such a review. I think it particularly important that it gives the Government a regulation-making power. As the noble Baroness has said, not only are the figures just the tip of the iceberg but there is a real concern at the moment about the cost of servicing appliances. If people put that off, particularly because of concerns about the cost of living at the moment, the risk to many people will be greater. For that reason, I hope that the Government might be sympathetic. If not, perhaps the noble Baroness will decide to press this at some point. I hope that she does.

[Lord Teverson]

Regrettably, my Lords, as has already been mentioned, my noble friend Lady Maddock is in Berlin on an EU Select Committee. It seems to be the place to be this afternoon. I know that she is very keen to support this amendment.

We hear of many tragedies that have happened because of this silent killer, often, but not exclusively, within rented accommodation. It is perhaps worth reminding those of us who are landlords in any way that we are already under an obligation to have our gas installations checked. I think it would make sense for a way to be found, without requiring more bureaucracy or a lot of extra work, to include carbon monoxide indicators through a clause of this sort.

I had a new wood-burner fitted in my house recently. Although carbon monoxide is often thought about in connection to traditional gas boilers, I was reminded by my installer that wood-burning stoves can be far more dangerous than gas boilers in this area. They took it upon themselves to install a carbon monoxide indicator and alarm in that room before they left. I thought that that was excellent; the industry was starting to get ahead of the problem. However, I hope that the Government will pursue this agenda in whatever way they feel is appropriate in order to ensure that more of the tragedies which have happened in the past do not happen in the future.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, as I said at Oral Questions this afternoon, I am very grateful to the noble Baroness, Lady Finlay of Llandaff, for raising this issue, both at Questions and by bringing forward this amendment this evening. She has given us a clear description of the effects of carbon monoxide poisoning and the terrible consequences that it can have on victims and their loved ones. As I think I indicated at Questions today, this is something that the Government take very seriously indeed.

I will start by reminding your Lordships, as some noble Lords who have contributed tonight have reflected already, that the most important element that we must ensure is in place is effective public awareness and education of the risks around carbon monoxide poisoning and of the fact that safety measures apply to people whether they live in homes that they own or homes that they rent.

As time is short, and noble Lords are keen to move onto other business, I will not go through the measures in detail, but they have been increased recently and are quite extensive in ensuring that the public are aware of the risks. As I mentioned at Questions today, there are now warnings on the sale of disposable barbecues, for instance, and Ofgem has placed a requirement on gas distribution network operators to ensure that they raise awareness. One of the important reasons why they are the right people to raise awareness, rather than the suppliers, is that the network providers are constant in the supply of gas to people’s homes as they are in charge of the pipes, while consumers are encouraged often to switch between suppliers in order to get the best deal that they can for their energy bills.

19:45

Of course regulation has its place. Following a comprehensive review of building regulations by the previous Government, new regulations were brought in in 2010 that require the installation of a carbon monoxide alarm when a new or replacement solid-fuel appliance is installed. I note what my noble friend Lord Teverson said about the installers of his wood-burner. The new regulations actually require the noble Lord to have a carbon monoxide detector.

[Lord Teverson]

My Lords, I thank the Minister for putting me right on that. I shall no longer praise my installer but say “quite right, too”.

[Baroness Stowell of Beeston]

Very good. All new gas appliances are subject to various standards laid down by the European Union. People in rented accommodation are covered by the requirement on landlords in the gas safety regulations to ensure that there is an annual gas safety check

As discussed at Questions today, we in Government feel that the real risk is to those people who live in rented accommodation where their landlords are not reputable or do not take care properly of the property that they rent out. We are putting in place a package of measures that we think will lead to greater safety for those who are in rented accommodation. As I said earlier today, I am pleased to announce that we have decided to extend the scope of the review announced a couple of weeks ago, so that it considers whether there is a need to require the installation of carbon monoxide alarms in privately rented housing. We are working on the matters to be covered in this review but I envisage that they will include questions as to whether the actions that I talked about earlier today are sufficient to raise and maintain awareness or whether other approaches, including regulation, might be needed.

When we think about regulation, we need to consider how any regulatory approach sits with building regulations, fire safety rules and housing standards regulations, because there are overlapping regulatory regimes. We will certainly want to look at the interaction with regulations on smoke alarms and perhaps include the scope for promoting combined carbon monoxide and smoke alarms.

Clearly, there are a lot of technical issues to consider, but once we have completed the review, if regulation is considered to be the right course of action, we must take all the necessary steps so that it is done in a proportionate and targeted way and interested parties, including housing groups and landlords, are properly consulted. The last thing that we would want would be ineffective regulation that did not result in the outcomes that we all want—reduction in deaths and in the effects of carbon monoxide poisoning—and that made the situation even worse by forcing up rents or discouraging good landlords from being in the market, thereby limiting choice to renters.

[Lord Hunt of Kings Heath]

My Lords, I am very grateful to the Minister for her constructive response up to this point, when she came to the noble Baroness’s actual amendment. Surely it is not the contents of the regulation that are being determined here; what the noble Baroness is seeking to do is to give the Government a regulation-making power that can then be constructed in the light of the review that they have undertaken. Of course, the Minister says that if it were decided that regulation was needed in the future, she would find the vehicle for it. We all know the difficulty of finding suitable legislative opportunities in this area—now is the time. I really hope that she will give this further consideration.

[Baroness Stowell of Beeston]

As much as I was very happy to give way to the noble Lord, and I had finished the point that I was making at that time, the noble Lord still managed to intervene before I had finished making all the points that I wanted to make today. I hope that by the time I finish—in what is going to be a matter of seconds—he will feel a bit more reassured by what I have to say.

Before I conclude, it is worth repeating that the noble Lord’s Government did a very comprehensive review of building regulations in 2009 and concluded that the regulations they should introduce are the ones that I have just spoken about, which apply to the new wood-burner that the noble Lord, Lord Teverson, has had installed in his house. I commend the work that his Government did, but the point that I am making, while he is pressing me, it that it is not so long since his own Government did a very thorough piece of work and concluded that the regulations should be limited as they are currently.

All that said, I am very grateful to the noble Baroness, Lady Finlay, not least because of my recent arrival in this post and this being the first opportunity I have had to consider these points and respond to a debate on this matter. I am happy to reflect further on this in light of today’s debate. Of course, I will discuss this matter further with my ministerial colleagues and, if the noble Baroness is willing, have a further conversation with her before we reach Third Reading. On that basis, I hope that she feels able to withdraw her amendment.

[Baroness Finlay of Llandaff]

I am most grateful to the Minister, who has already met with me prior to this debate and been most helpful. I accept her offer to look at this again, discuss it further and come back at Third Reading. Therefore, I will not be pressing my amendment tonight.

Amendment 104A withdrawn.

Consideration on Report adjourned until not before 8.52 pm.

Health: Birth Defects

Wednesday 6th November 2013 Lords Chamber

Question for Short Debate

19:52

Asked by

[Lord Rooker]

To ask Her Majesty’s Government what assessment they have made of the impact of fortifying white flour with folic acid on the number of pregnancies affected by neural tube defects.

[Lord Rooker (Lab)]

My Lords, I am very pleased to have the opportunity to raise the subject of fortifying white flour with folic acid in the interests of public health.

Deficiencies in folic acid have been found to lead to neural tube birth defects, including spina bifida and hydrocephalus. It is both a national and an international issue. Public health policy has been to encourage those planning to become pregnant to ensure a voluntary input of folates, either by supplement or by folate-rich foods, in that crucial period covering conception and the first 12 weeks. However, this policy is known to fall on deaf ears in some socioeconomic groups, and does not cover the issue of unplanned or unintended pregnancies. In some countries, where bread is part of the staple diet, it has been found that fortifying bread flour with folic acid can cover both the issues of the target group and unplanned pregnancy.

Bread has been a staple food in the UK for centuries. Consumption has fallen a little but it still contains more than 10% of our daily intake of key nutrients and remains a major source of them. Since the 1940s, just after the war, most of our bread flour has been fortified with four added nutrients, and that is still the case today. On 5 August this year, at the start of the Recess, Defra announced the result of the consultation on the bread and flour regulations, which was that the mandatory fortification of flour will continue on health and scientific grounds.

The idea of folic acid fortification has been around for many years. I can confirm from my own personal experience that in 1999, as Minister for food safety—before my Food Standards Agency days—I was lobbied on the issue by a leading scientist during a journey to a food conference. My initial reaction was, “It’s mass medication”. But I soon realised it was not then, and it is not now. By 2007, Her Majesty’s Government had been advised by the independent Scientific Advisory Committee on Nutrition and the Food Standards Agency to go down the route of mandatory fortification. This advice was reinforced in 2009-10, during my term as chair of the Food Standards Agency.

Scientists involved in the research, such as Professor Nicholas Wald of the Wolfson Institute of Preventive Medicine, have chased the issue up over the years. Others, such as Professor Colin Blakemore, have raised more generally the issue of the lack of feedback from government on advice from scientists, where there seems to be no clear decision on policy or action to be taken, or not taken, on the basis of the advice. He cited folic fortification as a recent example.

Delay has been caused by some scientific doubts regarding the effect of too much folate in the diet, which might be the cause of some rare cancers. Justifiably, Ministers and Chief Medical Officers required reassurance on this aspect. I believe—and this is why I am raising the issue now, after leaving the FSA—that the publication in March this year of the paper by Vollset et al in the Lancet puts the concerns to rest. The study analysed data on 49,621 individuals in 13 evenly randomised trials and found that there was no significant effect of folic acid supplementation on the incidence of cancer of the large intestine, prostate, lung, breast or any specific site. Furthermore, in interpretation, the scientists pointed out that the fortification of flour and cereal products involves doses of folic acid that are on average an order of magnitude smaller than the doses used in the trials they examined.

On 1 July the noble Earl, Lord Howe, the Health Minister for England, told Parliament that Ministers were “taking stock”. Has that included talking to Ministers in the other three countries of the UK? More than 50 countries are fortifying flour with folic acid, including the United States, Canada, Iran, Argentina and South Africa. So far, none in Europe are, due to the concerns I have mentioned, which are no longer justified.

Australia introduced mandatory folic fortification in September 2009. It has been found, in a paper by Brown et al in the Medical Journal of Australia in January 2011, that,

“the introduction of mandatory fortification with folic acid has significantly reduced the prevalence of folate deficiency in Australia, including in woman of childbearing age”.

A study in the American Journal of Medical Genetics in 2010 found that food fortification with folic acid prevents neural tube defects but not other types of congenital abnormalities. The study covered more than 3 million births in Chile, Argentina and Brazil over a 25-year period, according to the authors, Lopez-Camelo et al. The paper by Blencowe et al in 2010 in the International Journal of Epidemiology concluded:

“The evidence supports both folic acid supplementation and fortification as effective in reducing neonatal mortality from NTDs”.

So it works.

The latest study, published earlier in the year in the Lancet, clears the way to vastly improve the health position in the UK. We start from a low position. England has the highest rate of unintended or unplanned pregnancies after the USA—well in excess of 200,000. As such, the women concerned will see no need for supplementation. So far as the pregnancies that are affected by neural tube defects are concerned, there are hidden and avoidable family tragedies involved.

The best figures I have—they are a little old but I am advised they are the best—are those used by SACN, the Scientific Advisory Committee on Nutrition, in its report, drawn to my attention by the Shine charity. In England and Wales, there were 178 neural tube defect-affected births from 853 neural tube defect-affected pregnancies. That means that there were 675 terminations. In Northern Ireland, there were 11 affected births and no terminations. In Scotland, there were 49 affected pregnancies with 50% terminations. That means that there were more or less 238 neural tube defect-affected births and 913 affected pregnancies, with around 700 terminations. These will be late, following the 20-week scan, when neural tube defects show. In summary, therefore, there are 150 to 200 babies born with neural tube defects leading to spina bifida and other conditions, with a total of 750 to 1,000 pregnancies. Eighty per cent of the neural tube defect-affected pregnancies are terminated.

Nothing I say diminishes my life-long support for a woman's right to chose, but it is self-evident that decisions for termination based on neural tube defect-affected pregnancies would decline with folate increases. More than one in 1,000 pregnancies in the UK is affected each year. Folic fortification has been shown in the countries that have a mandatory policy to have prevented between 27% and 50% of cases of neural tube defects. Based on these figures, we have a potential to save 100-plus neural tube defect-affected births per year in UK; and significantly we could prevent hundreds of late terminations every year. Putting it crudely, the current reduction in the number of babies born with neural tube defects is actually brought about by the termination of pregnancies. I do not like the idea that in the past some DoH officials have claimed that NTD is well managed.

The Prime Minister said at PMQs on 27 February that,

“conditions such as spina bifida have come down and that folic acid has an important role to play”.—[Official Report, Commons, 27/2/13; col. 311.]

They have “come down” as terminations go up, due to the rate of diagnosis getting more accurate. What we need is primary prevention. Putting folic acid in white bread flour is not mass medication. Those who wish to avoid it just avoid white sliced bread. It gets to the groups of women most difficult to get to.

I want to hear what assessment the Government have made of the impact over the past seven months while they have been taking stock of the operation in England and what discussions have taken place with the devolved Administrations and their Chief Medical Officers. It is better to have a UK solution, as I know that flour mills are not always in the most convenient locations for four separate policies.

The science policy advice to government is to do it. Scientific concerns have been raised and cleared. It is not mass medication; it saves lives and misery, and it saves money. It reduces the hidden cost of the present policy, namely the costs of terminations as a management tool. It produces more healthy babies and improves public health.

[Lord Wallace of Saltaire (LD)]

My Lords, one speaker has scratched. That will allow us to stretch speaking times from seven to nine minutes, provided that the next four speakers all observe that when 9 comes up on the clock, they stop.

20:03

[The Countess of Mar (CB)]

My Lords, I do not think I am likely to get to nine minutes. I am very grateful to the noble Lord, Lord Rooker, for bringing this subject to our attention this evening.

Under normal circumstances, I would prefer that young women should all have a good balanced diet with plenty of fresh fruit and leafy vegetables, regardless of whether or not they were considering pregnancy, to give them sufficient folic acid to prevent neural tube defects and, come to that, a very large number of other subclinical conditions linked with folic acid deficiency. Unfortunately, life does not work like that. Many young people—women and girls in particular—lead rather frenetic lives and tend to eat on the hoof. Food which takes little preparation and cooking is the easiest way for them to get their calories. Many have little idea of the nutritional values of the food they eat and cooking a good, balanced meal comes very low in their order of priorities. Others simply cannot afford to buy fresh green vegetables and fruit on a regular basis. While some cereal and snack manufacturers fortify their products with folic acid, these too might be out of range for those on benefits. No amount of education or health promotion material can overcome these problems.

As a mother and grandmother of healthy girls, I find it hard to imagine the anguish and grief that a pregnant woman suffers when told that she is bearing a baby with neural tube defects. The noble Lord, Lord Rooker, has pointed out the abortion rates for this condition. She and her partner have to decide whether they wish to continue with the pregnancy. She has the added knowledge, and the guilt that would accompany it, that if she had taken folic acid before she became pregnant, or immediately she knew that there was a possibility that she was pregnant, she might have prevented potential disaster.

There are people who object on principle to what they regard as mass medication. The noble Lord, Lord Rooker, again has made very clear that it is not without consent. We are all aware of the objections to fluoridation of drinking water. I know that there have been discussions about removing calcium fortification in flour, although these seem to have stalled. Few people realise that, as well as calcium, our white flour is already fortified with thiamine, iron and niacin. They also ask why they should have to have their products made with flour fortified to prevent disease in a very small minority. I believe very strongly that, in the case of folic acid, flour should be fortified. This belief is endorsed by researchers at the Institute for Science and Society at the University of Nottingham in their 2007 report The Ethical Implications of Options for Improving the Folate Intake of Women of Reproductive Age.

The prevalence of neural tube defects started to fall before folic acid supplementation was introduced in the 1970s. Perhaps the abortion laws that came in around that time had some effect. When I was newly married I was told to avoid eating green potatoes because these were seen as the cause of spina bifida. The prevalence fell quite steeply for about 20 years but it has remained stubbornly at between eight and 15 per 10,000 pregnancies since the 1990s. One possible reason could be that nearly half of pregnancies are unplanned; by the time a woman finds she is pregnant it is too late for the supplements to have the greatest benefit.

Most of the UK population eats white flour in some form or another as part of their staple diet, although we must not forget those who are gluten sensitive and do not eat wheat for medical or other reasons. A standard loaf of bread is relatively cheap and filling. It tends to be a substantial part of the diet of those who cannot afford fresh fruit and vegetables or other foods rich in folic acid, such as offal and pulses. It seems likely that fortified bread has a better chance of reaching the target than education or promotional campaigns to encourage this group of women to take folic acid as a precautionary measure. It would also catch those who have unplanned pregnancies.

As well as preventing neural tube defects, folic acid may have a role in reducing congenital heart defects, cleft lips, limb defects and urinary tract abnormalities. It may also help to protect the unborn infant from disease in the mother. It seems to be important that vitamin B12 levels are checked as there is concern that high prenatal levels of folic acid combined with low B12 may cause epigenetic changes. There is a complex interaction between B12, folic acid and iron. As our flour is already fortified with iron we would need to ensure that B12 deficiency would not be masked by the other two.

As the noble Lord, Lord Rooker, has already said, concerns have been voiced about the possibility that folic acid fortification might mask vitamin B12 deficiencies in the elderly and that it might cause bowel cancer, but recent research would appear to negate both these concerns, particularly for the elderly. There would appear to be very little, if any, risk from fortified bread to the general population—indeed, it might even prevent a number of subclinical conditions which could become serious, particularly in the elderly.

The one small concern that I have is that, if white flour is fortified, it will be difficult to determine the folic acid status of women who want to become pregnant or who are pregnant because we will not know their average daily intake. The Department of Health recommends that,

“‘all women who could become pregnant should take 400 microgrammes”—

that is, 0.4 milligrams—

“of folic acid per day as a medicinal or food supplement prior to conception until the twelfth week of pregnancy”.

The RDA for folate equivalents is 600 micrograms. The BMA suggests that the guidance level set for the UK of 1 milligram a day is satisfactory,

“provided there are appropriate controls on mandatory fortification to ensure that individuals do not exceed the upper intake level of 1mg per day”.

There must be huge variations in the amount of white bread and other white flour products that UK consumers eat on an average daily basis. How are we to ensure that young women get enough folic acid to protect their unborn children, or that the elderly do not get too much? What advice about additional supplements will be given to women of child-bearing age who do not eat a lot of bread and to those who have had a previous pregnancy with neural tube defects or who have a genetic risk? We need to be cautious about depending too much upon fortification of white flour with folic acid to solve all the problem of neural tube defects. Nevertheless, that is not an excuse for not doing it.

I support the noble Lord, Lord Rooker, who is himself supported by the BMA, the Scientific Advisory Committee on Nutrition, the Department of Health’s Committee on Medical Aspects of Food and Nutrition Policy and the Food Standards Agency. I hope that the Government will listen to him.

20:10

[Baroness Grey-Thompson (CB)]

My Lords, I thank the noble Lord, Lord Rooker, for tabling this interesting debate. As ever, your Lordships’ Chamber gives us a wonderful opportunity to think about certain topics in more detail and to challenge ourselves and our opinions.

Until this debate was tabled I had not previously considered other methods of taking folic acid apart from the pills that were available over the counter. My first thought was that I was not sure that it was a terribly good idea—mass medication, as the noble Lord, Lord Rooker, has said. However, I thought of other areas where there is fortification, such as fluoride in the water, mentioned by my noble friend Lady Mar who raises some good points on the level of folic acid that should be taken. I came to realise that it is probably a reasonable idea if it can be done in the right way and not cause any other issues.

I felt compelled to speak because I have spina bifida—that is why I am a wheelchair user—and perhaps if the benefits of folic acid had been known when my parents were planning a family, my life might have been very different. Many of the opportunities that I have experienced are due to the fact that there was little knowledge in this area, whether it was around supplementation or various scans that are now routinely available. For me personally, it is kind of hard to regret that there was no knowledge at that time.

When I was born, my parents were told that I had spina bifida. I do not think that they really knew what it meant. There was little education and disabled people were not as visible in society as they are now. My parents were also told that if I had been born just a few years earlier, because of my condition, I would have been taken away and not fed.

My parents were also given a whole host of reasons why I had spina bifida. My mother was blamed. She was told that she had not eaten enough vegetables, even though she was virtually a vegetarian. My father was then blamed because of other family conditions or illnesses which were then a precursor. The final reason we were given was that it was more common in areas of coal mining or industry, so therefore the figures were much higher for the Welsh mining valleys, Nottingham and Newcastle. I grew up in Cardiff; I do not know whether that is good or bad.

I am very pleased that there is better knowledge today. Although everything I have read says that spina bifida was not hereditary, I and other family members were told that there could be a slightly higher incidence of the condition, and I was advised to take a double dose of folic acid. Obviously I was able to take it because my daughter was part of a planned pregnancy, but we must consider unplanned pregnancies and, indeed, women taking folic acid for the correct amount of time. When I was pregnant, it was not made that clear that it was meant to be for 12 weeks of pregnancy. I know that, in my own case, I experienced dreadful day sickness—I dreamed that it might just become morning sickness—and, as a result, I was never entirely sure of the amounts I had taken or whether it had remained in my body. I took several pills a day, just hoping that some of it would benefit me. I treated taking folic acid in the same way as I thought about my diet; I do not drink or smoke. It was about doing the best I could for my unborn child.

I read with interest the documents produced by the British Medical Association in April this year about the falling rates of spina bifida. Like my noble friend Lady Mar, I believe that part of it is about scanning and the opportunity to discuss and offer termination in a different way. That certainly was not available when I was born. Certainly, it appears that the best medical advice is that taking folic acid will contribute to preventing this condition.

This is a difficult subject to discuss because it would be so easy to move into a wider discussion on scanning and termination, but that is not what this debate is about. In a note which I received from Jackie Bland, the chief executive of Shine—the charity for people with spina bifida and hydrocephalus—she indicated that we might well have a situation where it seems many of us are more comfortable managing the occurrence of spina bifida through scanning and termination, when fortification combined with more robust public health information could reduce occurrence by up to 72%. This is really interesting.

Perhaps there is also a failure to acknowledge the extremely traumatic consequences of a late-pregnancy termination. I do not believe that termination is an easy option. I also know of several people who, knowing that they are having a child with spina bifida, have chosen to carry on. Shine’s health advisers have also said that many parents have reported a strong pressure to terminate and a sense of guilt if they choose to continue. That is a consequence of the acceptance of management by termination. We must recognise that whatever people choose, these are hard decisions that families have to take.

When I was pregnant I was asked so many times what I would do if I knew I was going to have a child with spina bifida or who would become a wheelchair user. I think that people were expecting me to give a definite, immediate answer. My response was that I would ensure that my child had the best self-propelling wheelchair on the market from the age that they were meant to be crawling. It is about managing it, and the choices that you make.

I have only one question. I was wondering, when researching this area, whether consideration had been given to including folic acid in other food products. I do not eat a lot of bread and am not planning on having another child. It is about understanding the right amount of folic acid that should be taken.

Finally, I reiterate that I am strongly in support of prevention, in the way that I support things like the seat-belt law, which had a significant impact on the rate at which people experienced traumatic spinal cord injuries, or something like cycle safety. Prevention is a positive step forward. I look forward to debating this again in the future.

20:16

[Lord Turnberg (Lab)]

My Lords, I, too, am grateful to my noble friend Lord Rooker for bringing the subject to our attention and for introducing it in his usual robust and forthright way. It is a privilege, too, of course, to follow the noble Baroness, Lady Grey-Thompson, who spoke so movingly of her personal experiences.

It is pretty obvious that spina bifida in its severe form is indeed a nasty disorder. It affects one or two in every 1,000 pregnancies, causes paralysis of the legs, problems with bladder and bowel control and, in some children, learning difficulties. It can cause serious lifetime problems and distress both for the children and their families. On top of all that, it poses a considerable economic burden on the families and on the health service.

Yet we can prevent—according to my figures—about 70% of cases with a simple dietary manoeuvre; that is, by increasing the intake of folic acid in women before they become pregnant. It was in 1991, 22 years ago, that a study by the Medical Research Council was the first to show that we could prevent these neural tube defects by giving mothers 4 milligrams of folic acid a day, before and during their pregnancy. The incidence went down by about 70% which was a remarkable discovery first made here in the UK. Even much smaller doses were shown to be equally effective. Since then, it has been more or less routine practice to recommend that folic acid should be given to all pregnant women.

However, the problem that soon arose was that simply prescribing it to women who were already pregnant did little or nothing to prevent the disorder. It had to be given before they were pregnant, because the defect arises very early in pregnancy. The neural tube closes at 23 to 27 days after conception; that is before the first period is missed. By the time a woman realises she is pregnant, it is usually too late. She has to take the folic acid before she is pregnant for it to be effective and that immediately eliminates all those women who do not plan their pregnancies. That is particularly the case, for example, in single women and it is exacerbated in those with poor dietary habits whose intake of green vegetables, the natural source of folic acid, is limited. In fact, there is a linear relationship between the level of folic acid in the red cells and plasma and the incidence of neural tube defects. The higher the folate level, the lower the incidence—that is a clear relationship.

So how can we make sure that all women take it before they become pregnant? We inevitably come to the conclusion that we should fortify our food. The Government’s own Expert Advisory Group and COMA, the Committee on Medical Aspects of Nutrition, have been repeatedly recommending that we fortify our flour with folic acid over many years. The idea is that everyone eating average amounts of bread will take about 280 micrograms, about a quarter of a milligram, of folate per day. It is a very small amount but sufficient to prevent spina bifida in a majority of cases. We in the UK have unfortunately not taken that advice, even though more than 70 other countries around the world, including the USA and Canada, supplement their flour with folic acid.

Of course, there is always a reluctance to add things to the diet that everyone is going to eat. Noble Lords have talked about this. Worries about side-effects and unexpected adverse events are always raised and it is usually wise to be cautious. In the case of folic acid there were worries about the possibility of two sorts of danger: that it could cause cancer; and that it might cause a peripheral neuropathy in those elderly people who were also deficient in vitamin B12. This is a disorder of the nerves going to the arms and legs, a condition caused by a combination of B12 deficiency and folic acid excess. So delay in taking up the recommendations of COMA was inevitable until these dangers could be eliminated.

Now we know from a huge number of studies that they have indeed been eliminated. In the meta-analysis that noble Lords have referred to of a large number of trials by Vollset and his colleagues in the last year, trials covered almost 50,000 individuals given a largish dose of 5 milligrams a day for five years or more and there was no sign of an increase in the overall number of all cancers or of any individual specific type of cancer. Incidentally, these trials were done largely in the belief that folic acid might prevent coronary artery disease. It did not show that, but it did show that cancers did not increase, which was a useful side-effect. Nor has there been any sign that the B12 deficient neuropathy I mentioned has increased in the population of America or Canada where they have been fortifying their flour since 1998, 15 years ago. Incidentally, the manufacturers of breakfast cereals—All-Bran and the like—routinely fortify them with a range of vitamins, including folic acid. Perhaps the noble Baroness, Lady Grey-Thompson, could take breakfast cereals; that might help her.

It is hard now to refute the scientific evidence, gathered from huge populations, that supplementing the diet of everyone by an average of 280 micrograms a day of this vitamin is harmless to the population at large. It clearly reduces the incidence of this nasty and burdensome disease in our children. It is more than 20 years since we discovered that we could prevent neural tube defects by this simple measure. The discovery was made here in the UK and it is high time we caught up with much of the rest of the world and took advantage of what we now know.

20:23

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am delighted again to applaud my noble friend for raising this matter and I hope that we can look forward to a positive response from the Minister. My noble friend Lord Turnberg explained the science and it is clear that there is very credible support for my noble friend’s position. The Scientific Advisory Committee on Nutrition’s 2006 report recommended mandatory fortification of flour to the Government. That was endorsed in 2007 by the Food Standards Agency board. More recently we have all, I think, had a briefing from the British Medical Association which also supports folic acid fortification of flour. I thought that the BMA was very much to the point when it argued that the current guidance to women to take folic acid supplements has a number of limitations. As the noble Countess, Lady Mar, said it does not take account of unplanned pregnancies and, given that almost half of all pregnancies in the UK are unplanned, it is clearly an inadequate response. It is also a fact that poor compliance with the advice to take supplements means that women planning a pregnancy only marginally increase their compliance with folic acid supplement use. The noble Baroness, Lady Grey-Thompson, made some very powerful points about this and about the very hard decisions parents subsequently have to make.

Noble Lords have already dealt very effectively with the concerns that have been raised about the links between folic acid and cancer. The Scientific Advisory Committee on Nutrition, which advises the Food Standards Agency, said that the evidence in relation to bowel cancer was insubstantial and that any increase in cases could be down to improved screening. It recommended that those deemed to be at greater risk of colon cancer should receive precautionary advice on taking extra supplements containing folic acid and that the situation should be monitored. The Chief Medical Officer then requested further investigation by the Scientific Advisory Committee on Nutrition into the potential link between folic acid and colorectal cancer. The committee upheld its previous recommendation, with an amended recommendation to clarify the advice on supplement use for particular population groups.

We roll forward to January 2013, when the noble Earl, Lord Howe, told the House:

“Additional advice on folic acid and cancer risk was requested by the then Chief Medical Officer and provided by SACN in 2009. The papers underpinning the advice from SACN have not yet all been peer-reviewed and published in a scientific journal. Ministers need to very carefully consider this complicated issue and would like to see all information in the public domain before making any decision”.—[Official Report, 8/1/13; col. WA 44.]

I am a great admirer of the Department of Health, having enjoyed many happy years there, but I recognise long-grass briefing when I see it and that is the kiss of death. I hope that the Minister, if she cannot say that the Government are going to go down this route, will at least give a timetable for when the Government will make a definitive decision, or must we wait, month after month, for every single paper to be peer-reviewed? I think that that would be a great pity.

In conclusion, I shall ask the Minister a rather more general question coming back to the issue of advice given by health visitors and midwives in relation to vitamins and minerals generally. The reason I do so is that in September 2012 in another place my honourable friend Kate Green secured a Westminster Hall debate about the rise in the incidence of rickets. She talked about vitamin D deficiency across large sections of the population and quoted a study by the Clinical Effectiveness Unit at Stockport which found a surprising lack of awareness among health professionals about vitamin D across eight acute and six primary care trusts in the north-west. Only 24% of health visitors and just 11% of midwives reported having had training in vitamin D supplementation. I realise that this is a little distant from folic acid, but since the Government now put such reliance on advice given to women, does the Minister think that, as part of a wider response to the issues raised by my noble friend tonight, more needs to be done to ensure that midwives and health visitors are adequately trained in providing advice in relation to vitamins and minerals in pregnancy and before?

That is not a substitute for the action that my noble friend wants, and I very much hope that the Government will recognise that this would be the right thing to do. I hope that the Minister will be able to make a happy announcement.

20:30

[Baroness Jolly (LD)]

I am grateful to the noble Lord for securing this debate on this very important issue, and I thank all noble Lords for this thoughtful and informative debate. The department is considering this issue very seriously. We know that approximately one in every 1,000 pregnancies is affected by a neural tube defect, which can result in miscarriage, neonatal death or lifelong disability. We also know that poor folate status is an established cause of neural tube defect-affected pregnancies, and therefore how important folic acid is for women of childbearing age. I will take your Lordships briefly through the detail of how the Government are currently taking action to reduce the risk of women having insufficient levels of folate—a risk that may result in potential neural tube defects such as spina bifida in unborn children.

It is possible to get all the folate you need from food in a healthy diet, but for women who are trying to conceive or are newly pregnant, getting enough particularly matters. That is why, since the 1990s, the Department of Health has advised women who can become pregnant to take folic acid supplements before conception and for the first 12 weeks of pregnancy, and to increase their intake of folate-rich foods. That advice is promoted as strongly as possible through all the channels we use to communicate with women and health professionals. NICE guidance ensures that health professionals are equipped with comprehensive advice on folic acid and on action to take with women who may become pregnant.

For women, advice is disseminated through a variety of sources such as the NHS Choices website, which sets out why folic acid is important for pregnancy and gives guidance on taking supplements. The Department of Health also provides funds to the charity Tommy’s to produce The Young Woman’s Guide to Pregnancy, which advises young women to take folic acid. Start4Life, a campaign to give the best start in life to nought to two year-olds, gives information on five key healthy behaviours during pregnancy, one of which is taking folic acid and vitamin D supplements. Their leaflets are written in a friendly and accessible style and are very popular with healthcare professionals as a tool to facilitate conversation with parents and expectant parents. The NHS Information Service for Patients offers to send e-mails and texts to women and their partners in the fifth week of pregnancy to remind women to take their folic acid.

Folic acid supplements are widely available and cost as little as £1 for a month’s supply, but are also available on NHS prescription. Pregnant women and women who have had a child in the previous 12 months are exempt from prescription charges, as are people on certain benefits or those who qualify through the NHS low-income scheme. We also offer free vitamin supplements containing folic acid without an NHS prescription to pregnant women and new mothers in very low-income families throughout the UK who are supported by the Healthy Start scheme. More than 150,000 pregnant women and new mothers are eligible to claim vitamins through that scheme. However, we know that some women do not take supplements, and of those that do, some start too late. That is of real concern to the Government and health professionals, and an area on which the Chief Medical Officer is keen to see action, as she set out in her recent annual report.

In 2000 the Committee on Medical Aspects of Food Policy first recommended the fortification of flour with folic acid to reduce the risk of NTD-affected births. Your Lordships will be familiar with the developments of the scientific advice since then. The Government are very grateful for the full advice which has been provided by consecutive expert committees and for the rigour and scrutiny with which the Scientific Advisory Committee on Nutrition—better known as SACN—considered the issue for its report in 2006 and its subsequent reviews of evidence. The noble Lord, Lord Rooker, will know that SACN sought to understand and clarify the risks of fortification carefully as it sought to make clear the benefits of its recommendation.

The advisory committee concluded in 2006 that mandatory fortification of flour with folic acid would reduce the risk of NTD-affected pregnancies, but that there was a potential risk to some population groups, particularly older people, including a potential increased risk of bowel cancer. In 2007, the then CMO asked SACN to further consider the evidence in this regard. In 2009, SACN’s majority view was that the new evidence did not provide a substantial basis for changing the original recommendation. However, it recommended fortification only if accompanied by a number of other actions, including restricting voluntary fortification of foods with folic acid, developing guidance on supplement use for particular population groups, and implementing measures to monitor evidence of long-term exposure to intakes of folic acid above the guideline upper limit per day.

SACN’s recommendation about monitoring and review explicitly reflected concerns around the potential for the numbers of people consuming levels of folic acid above the guideline upper limit. Health Ministers considered it prudent to ensure that all available evidence on the risk of colon cancer was peer-reviewed and in the public domain, which noble Lords referred to earlier, and the evidence was published in the Lancet this January. Following publication, Ministers confirmed earlier this year that they were taking stock of the issue. I assure the noble Lord who, as former chair of the Food Standards Agency, will understand this better than many, that because of the complexity of the issue it is essential that we weigh up carefully the risks and benefits in coming to a decision, and that we fully think through the implications of the other recommendations made by SACN. We are now doing that, and, thanks to the expert scientific committees and the consideration of this by the FSA and others, there is a wide range of evidence and advice to consider.

I pay tribute to the work of the voluntary sector, and in particular to one organisation mentioned earlier in this debate, Shine, which supports individuals and families as they face the challenges arising from spina bifida. It works tirelessly to raise awareness of the importance of folic acid and in May this year held the first ever national Folic Awareness Day.

Noble Lords have asked many questions, and I will work through them in the time I have available. However, if there are any still outstanding I will be happy to write to noble Lords after the debate. The noble Lord, Lord Rooker, asked whether we had talked to Ministers in Scotland, Wales and Northern Ireland. As noble Lords are aware, food and health policies are devolved issues and discussions on fortification outside England are for those Administrations. However, the views of those authorities will be taken into consideration by Ministers.

[Lord Rooker]

I am sorry to interrupt, but this dismissal of devolution is symptomatic of Westminster; it just does not do devolution. Rather than simply saying that it is a matter for them, it would be better to have a UK-wide policy. Is the Minister admitting that Ministers in England—this is what we are talking about here—have not discussed the matter with Ministers in Scotland, who may take their own route, as they are free to do, and that the four chief medical offices have not discussed the issue among themselves?

[Baroness Jolly]

My Lords, I am telling noble Lords what I have been briefed. I am more than happy to write to noble Lords and, if they are happy for me to do so, leave the letter in the Library for everyone to check. I will also need to respond to the noble Lord, Lord Rooker, on his question regarding terminations.

The noble Countess, Lady Mar, asked about the risks and benefits, and assessing impacts, of fortification, giving due consideration to the implications of additional recommendations by SACN. We will take into account the views of the Chief Medical Officer, who raised the issue in her annual report, and of the devolved Administrations. The other point raised by the noble Countess was on ensuring that NTDs are avoided in pregnancy and on preventing vitamin B12 masking. We need to get this right. SACN considered the amount of folic acid to recommend and also recommended developing guidance on supplement use for particular population groups, along with implementing measures to monitor evidence of long-term exposure to intakes of folic acid. We are carefully weighing the benefits and risks of SACN’s recommendations and will take account of all views.

The noble Baroness, Lady Grey-Thompson, asked what foods would be considered for fortification. Currently, breakfast cereals are voluntarily fortified with folic acid in the UK. The FSA considered other foods, including soft drinks, fruit juice, milk and chewing gum, when it made that recommendation, but the consumption rate of these products is not considered to be universal across women of child-bearing age and would therefore not be suitable for fortification. Other foods were also considered. Bread was finally decided upon as the universal food as—to answer a point raised by both noble Baronesses—it is universally consumed across the population and all socioeconomic groups: more than 90% of households eat bread. Fortification of wheat flour would also include other wheat-based products such as pizzas, pastries and biscuits.

I think I have replied to several points that were raised.

[Lord Hunt of Kings Heath]

My Lords, will the Minister write to noble Lords—clearly the Government will have to consider this—and set out a timetable on when they will come back to Parliament with an answer?

[Baroness Jolly]

That sounds eminently sensible. I am happy to write to noble Lords to give them that information. I hope that I have provided reassurance—I am not convinced that I have—that the Government are committed to reaching the right decision on the fortification of flour with folic acid, doing proper justice to the work of SACN and others and ensuring that, while seeking to deliver the benefits, we minimise the potential risks. In the mean time the Government will continue to raise awareness of the need to take folic acid supplements and are supportive of all those who are raising awareness of this issue. I thank the noble Lord for securing the debate.

20:42

Sitting suspended.

Energy Bill

Wednesday 6th November 2013 Lords Chamber

Report (3rd Day) (Continued)

20:52

Clause 135: Consumer redress orders

Amendment 104B

Moved by

[Lord Whitty]

104B: Clause 135, page 104, line 5, at end insert—
“( ) Within six months of the coming into force of this section, the Secretary of State shall, following consultation, propose regulations that provide for collective redress by consumers of gas or electricity.”

[Lord Whitty (Lab)]

My Lords, this amendment relates to the redress element of Part 6. I approve of the increase in protection for consumers in the redress provisions in the Bill and have supported them throughout. However, there is a dimension that is not there, and there is one that has been discussed with successive Governments but has never been fully put into operation. The present Government, in their consultation through BIS on consumer rights and protection in general, mentioned the possibility of moving to a system of collective redress.

In the energy situation, the whole structure of the market and the whole history of the scandals in relation to consumers underline the need to have some collective resolution of these matters. If you look, company by company, at most of the mis-selling and misrepresentation, the overcharging, the failure in billing and the wrong billing, right up until the very recent case where Ofgem fined ScottishPower, you will see that thousands, and in some cases tens of thousands, of consumers have effectively suffered from exactly the same mistake-cum-misdemeanour by the relevant energy companies.

At the moment, complaints against energy companies are running at an all-time high—you have only to look at the ombudsman’s figures and facts. The need for redress systems is very important, but if every individual consumer has to take that case either through the ombudsman or through the courts, the ombudsman’s agenda is going to get cluttered up and the courts are going to lead to individual decisions, which may be different in different parts of the country. A form of collective redress for everybody who has suffered from what the regulator will have found to be a mistake, or an error, or a breach of the licence or other regulations, affecting tens of thousands of consumers, needs to be treated in a somewhat different way.

I am not stipulating here precisely what way. There have been a number of formulations for collective redress in different sectors. The best of these was never put into legislation, but was dropped during the wash-up at the end of the last Parliament, because the Treasury was proposing very effective collective redress systems within the financial services sector.

The Government, in their draft Consumer Rights Bill, which is now being considered in pre-legislative procedures, have not followed up on what was in their consultation paper, which had a different formulation. In relation to gas and electricity, the degree to which there are large numbers of people suffering from the same act of a company, the fact that there are licence conditions attached to that and the fact that there is a whole structure of regulatory ombudsmen in that area, make it a relatively easy sector, in principle, for which to produce a system of collective redress.

My amendment requires the Secretary of State to come forward with regulations to that effect within six months of the passage of this Bill, so I am leaving the Minister and her colleagues a bit of time to do this, but I think the principle will be recognised. This would be pretty much well supported by, I think, all the consumer groups and many of those who have dealt with individual cases of consumer detriment which have arisen within this sector. I hope that the Government will consider this and, at least, give me some encouragement, if not tonight then in the future, that they will be looking in this direction. The way in which this industry has treated its consumers; the degree of mistrust among them and the level of redress that individual consumers have achieved in this sector show the need for something more systematic. I hope that the Minister and her colleagues will use this amendment to have another look at the issue. I beg to move.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, I thank the noble Lord, Lord Whitty, for this amendment. Amendment 104B would require the Secretary of State to consult on and then bring forward regulations to allow collective redress for energy consumers. I agree with the noble Lord that consumers need to get the redress that they are due by the most straightforward means available. I fear, however, that the introduction of collective redress in the energy sector would not achieve these aims. My concerns centre mainly on the time and cost of bringing such cases.

The noble Lord has said previously that collective redress offered a quicker and cheaper solution for cases than if cases were pursued by individuals either through the ombudsman, Ofgem or the courts. This presupposes that action through the courts is the only option available where an issue affects more than one consumer. That is not the case. One of the reasons we have introduced the consumer redress order powers in this Bill is to provide consumers with the means of redress without the need to initiate individual complaints.

21:00

Consumer redress order powers offer an alternative to lengthy and expensive litigation in that investigations are initiated by Ofgem to benefit all affected consumers, with no legal fees to pay. These powers benefit consumers without the need for consideration of the relative merits of an opt-in or opt-out, as orders can be made on behalf of all affected consumers, whether they come forward or not, including many who may not have been aware that they have suffered a loss. The powers are proportionate, and build on the redress available to consumers through the ombudsman and the power to impose penalties on energy companies when things go wrong.

Collective redress, on the other hand, cuts across the role of the ombudsman as the most cost-effective and simplest form of agreeing redress when things go wrong. Collective redress opens the prospect of court action becoming the first route to redress. I ask: what is wrong with that as an approach? It is true that some would be happy if this were the case, as collective redress inevitably requires third parties or intermediaries to take action on the consumers’ behalf. In the event that a case is successful, these parties will seek to recover their costs from either the pay-outs due to individuals or from the energy companies. The problem with this approach is therefore that it introduces an entirely new cost that these companies will pass on to consumers. Permitting private collective redress would not just encourage advocates intent on righting things when consumers are harmed; it could also encourage litigation on the finer points of law. The cost of litigation is not cheap and this would again be passed on to consumers as a whole.

As has been referred to in previous debates, the draft Consumer Rights Bill puts forward proposals to amend the existing collective redress regime for cases where competition law has been broken. These proposals, together with the consumer redress order powers in this Bill, represent a far more streamlined and cost-effective means by which consumers can be compensated. I hope that the noble Lord is reassured by my explanation and, on that basis, will withdraw his amendment.

[Lord Whitty]

My Lords, I am disappointed by that reply because I do not think that the Minister is right in the description of consumer law. You could write the regulations so that you would have to go to the ombudsman before going to such a system. The cost to consumers of starting a process in the court is prohibitive but, were it a collective provision and the ombudsman had found in a certain way, that cost would fall on no one.

If you take the equivalent of the PPI scandal in the financial sector, there is not a collective redress but there is a collective problem. If anything, the banks probably have paid out more money than they otherwise would have done had they offered a collective form of redress right at the beginning of the process. They have been obliged to try to find all sorts of people who may or may not have been aware that they had been mischarged.

However, it is clear that the Government are not prepared to pursue this issue in that context, which is disappointing. I also think that the briefing that the Minister has is not entirely in parallel with what is being discussed in BIS and in the consultation on consumer protection in other arenas. This is an area where common problems arise much more frequently than in the normal buying and selling and contractual arrangements throughout the economy. That is because everyone has similar Bills and similar charges whereas in other places there are differentiations to be made. Therefore, this is a prime potential sector for collective redress. However, for tonight, I accept the Minister’s rebuff and I will say no more. I beg leave to withdraw the amendment.

Amendment 104B withdrawn.

Clause 136: Fuel poverty

Amendment 104C

Tabled by

[Lord Whitty]

104C: Clause 136, page 104, line 14, leave out “a target date for achieving the objective” and insert “targets for 2020 and 2030 for achieving energy efficiency improvement of dwellings of low income households and for the reduction of total numbers of the fuel poor, leading to the eradication of fuel poverty.
“(2A) The Secretary of State shall set further targets beyond 2030 in line with the 2008 Climate Change Act to reduce greenhouse gas emissions by 80 per cent by 2050.”

[Lord Whitty]

My Lords, had this Bill and the procedure taken a slightly different course, I would have pursued this amendment. It was debated earlier. Normally, the vote would come up at this point.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, perhaps I may interrupt the noble Lord. If he is proposing to speak to this amendment, he should move it first.

[Lord Whitty]

My Lords, I am referring to Amendment 104C, which was debated earlier. I am not going to move it. I am just registering with the Minister that, had it fallen differently, this amendment would have been the most important one in the first group and I would have called a vote. I therefore hope that the Minister and her colleagues will have another look at it.

Amendment 104C not moved.

Amendments 104D to 104G not moved.

Amendment 104H

Moved by

[Lord Whitty]

104H: Clause 136, page 105, line 3, at end insert—
“( ) For the purposes of allowing a comparative assessment of progress in addressing fuel poverty, assessments under this section must include, until at least 2018, the extent of fuel poverty as measured according to the definition set pursuant to the Warm Homes and Energy Conservation Act 2000.
( ) Reports under subsection (5) shall also include an assessment by the Secretary of State of the impact and projected impact of implementation of the strategy on—
(a) the mortality rates and health needs of persons living in fuel poverty;(b) the cost of cold-related illness to the National Health Service and wider economy;(c) the level of debt as a result of energy bills, and the number of unpaid bills;(d) any change in the number of jobs created and supported as a result of implementing the strategy; and(e) emissions of carbon dioxide and other greenhouse gases from fuel poor households.”

[Lord Whitty]

My Lords, these amendments relate to the strategy which will be required under Clause 136. As I indicated earlier, the clause itself should be beefed up. At the moment the Government clearly think it can all be done by secondary legislation. But whatever the substantive content of the strategy, and whatever definition of fuel poverty is adopted, careful and regular reporting and monitoring of progress on improving the energy efficiency of the houses in which low-income households live, and on reducing the total numbers of the fuel poor in our economy, are important to hold the Government and the supply companies to account. This reporting would also ensure that the policies the Government intend are pursued, whether they are the current ones via the ECO or, to some extent, the Green Deal, or whether they are new policies that the Government come up with at a later stage.

Noble Lords earlier argued for it to be a taxpayer-resourced intervention in improving energy efficiency. As my noble friend Lord O’Neill said earlier, we need to measure the success of that policy in terms of the energy efficiency of buildings, and to look year by year—and in particular to set target years—at how the energy efficiency of our dwellings is improving, as other noble Lords have acknowledged. Even now, after nearly 20 years of activity in trying to improve the quality of our buildings, we fall far short of the northern European standard in terms of insulation and warmth retention. We are therefore far more afflicted by the resultant fuel poverty than other equivalent countries.

One problem is consistency of reporting. We need to report on the achievement of the objectives: on energy efficiency, and on reductions of the number of the fuel poor; but we also need to report on the effects of fuel poverty, and how we are managing to reduce those. Some of those are set out in the amendment. There are references to mortality rates due to fuel poverty; to the cost of fuel poverty-related diseases to the NHS; to debt; and to emissions of carbon dioxide, because this is an energy efficiency and carbon reduction policy as well as a fuel poverty and social policy. These should all be monitored and reported on, and checked against the milestone targets which I hope the Minister will eventually come up with in the strategy.

The other point is consistency with past data. There is a problem here because there is some cynicism that a change of definition of fuel poverty has statistically got rid of nearly 2 million homes without anybody actually being any better off. Some people should have been excluded from the total, but most people would regard that the majority of those are still fuel poor, and the run of statistics we have had from the year 2000 or even earlier onwards would be discontinued if the change of definition also led to an end of those historic statistics. We also have the complication that in Scotland, Northern Ireland and, I think, Wales, the old definition is to be retained. Therefore, when we look at UK numbers for the fuel poor, there will be an inconsistency between the adoption of Professor Hills’s definition and the government monitoring and tracking that, and what is happening in the devolved Administrations, which would mean that we could not have an overall UK figure.

That may change over time, but all I am suggesting is that for a few years we mandate that the old series should continue so that the old definition—as I say, we already have a 15-year run with it—should be extended at least to 2018 and be reviewed at that point. For the first few years of the strategy, the two criteria could be judged. There would be the new definition, which will have a starting point in, say, 2014 or 2015 and is the Government’s preferred definition—for the moment I accept that—and a comparison with the old, historic trend. We would then be able to see whether the change in definition led to a change in outcome statistically and whether that change actually meant something real on the ground. In some ways, the two might diverge significantly, because while the criticism of the old definition was that it was too price sensitive, the criticism against the new definition is that it is not quite sensitive enough. In the end, the judgment of poverty is that someone cannot afford something because the price is too high. I fear that the Government will find that even if they have a relatively successful policy on energy efficiency, if prices continue to go up, that will not show in the figures. It is my subjective judgment that that will be a problem.

All I am saying tonight is that the Government should accept, for a limited period, that we should run the two series together to see if they diverge and whether there are any policy or future monitoring conclusions to be drawn from that. I hope that the Government can accept that, and that there should be systematic reporting of the level of fuel poverty, the success of energy efficiency activity, and of its outcomes and impacts in the terms of these provisions. I beg to move.

[Lord Jenkin of Roding (Con)]

My Lords, the noble Lord, Lord Whitty, has made a sophisticated case for his amendment. When I read it, my first reaction was to say, “We have all agreed that the Hills proposed definition is likely to be more effective in dealing with real fuel poverty than the existing one that was suggested under the Warm Homes and Energy Conservation Act”. Indeed, as I said earlier today, having reread the debate on this subject that we had in Committee, I had the impression that there was very little disagreement that the new would be a good deal more effective than the old.

The noble Lord has now given two reasons for running on. One is to be able to have a continuous process whereby the old one goes on while the new one is being introduced so that there is no gap, and with that I have some sympathy. But if he is saying that the second reason for running the two in parallel is so that you can compare one with the other, I would find that more difficult. I am not sure how the officials would manage to do that. If the old definition has been established by Professor Hills’s report as really not being an effective measurement of fuel poverty and therefore providing the basis for annual reports, it would seem that the less one relies on it the better, and the quicker one can go on to the new one the better. However, it may be that I have misunderstood the noble Lord. I do not think it can be used to compare; the only possible reason should be for continuity, which I am sure could be achieved in other ways.

21:15

[Baroness Verma]

My Lords, I would like to thank the noble Lord, Lord Whitty, for his amendment. It sets out the issues that must be contained within the strategy that will set out how we are going to meet the target. As I mentioned earlier, we will publish the strategy for consultation next year and intend to use this opportunity to set out our plans for how we will tackle fuel poverty. I agree with noble Lords that there are clear links between fuel poverty and health, and a clear health benefit to the NHS by acting in this area. That is why we already include excess winter death rates as part of the annual statistics we publish on fuel poverty. We are working to better understand the costs and benefits to the NHS and we will be building on this within the strategy.

The proposed amendment also suggests that the strategy covers a number of other issues such as debt, the depth of fuel poverty and the number of children who are living in fuel-poor households. These are all very important concerns. It is for this reason that we already report widely within the annual fuel poverty statistics and these issues are included. In reference to the noble Lord’s query about the old and the new definitions, I confirm that we will continue to include fuel poverty numbers under the 10% definition. This is something to which we are already committed, and it will continue to appear in the annual fuel poverty statistics. I hope that the noble Lord, Lord Whitty, is reassured that the fuel poverty strategy will be a comprehensive one and that it is not necessary or appropriate to set out the issues that it will cover within the primary legislation. I trust that he will feel reassured enough to withdraw his amendment.

[Lord Whitty]

I am very grateful to the Minister. If she is saying that the method of reporting and the issues which we cover in those reports will continue, I certainly welcome that. On the issue of the measurement, I should say to the noble Lord, Lord Jenkin, and to the House that I do not think Professor Hills’s definition is necessarily a better one. I agree that there are defects in the old one but I think there are also defects in the new one. Professor Hills’s proposal of measuring the depth of fuel poverty as well as the absolute numbers of fuel poverty is a very useful tool and I strongly support it, but time will tell as to whether or not his definition is better than the old one.

I am gratified that the Minister is saying that the series will be continued, at least for some time. By implication she may have meant for longer than is provided for in this amendment. That will give continuity and time for the new series to build up because the new definition will start from next year. We will not have much of a series for very long. That will greatly help those who have campaigned long on the basis of the 10% definition to understand how the policies are impacting that, and to see whether or not the new definition is robust. I am reasonably assured by the Minister, rather more than I expected to be, and so I beg leave to withdraw the amendment.

Amendment 104H withdrawn.

Amendments 104J and 104K not moved.

Amendment 105

Moved by

[Lord Campbell-Savours]

105: After Clause 137, insert the following new Clause—
“Rising block tariff energy supply scheme
(1) The Secretary of State shall have regard to the desirability of establishing specifications for the introduction of a rising block tariff scheme governing electricity and gas prices and shall consult representatives of the gas and electricity supply industries prior to the establishment of such regulations.
(2) A rising block tariff system of energy pricing is one in which there is a basic threshold price for electricity and gas and an additional percentage price premium applicable to each block of units above that threshold.
(3) A national standard for rising block tariffs shall cover the following matters—
(a) the number of units of gas or electricity to be provided by the supplier of the basic threshold price annually;(b) the number of units comprised in each subsequent block of units;(c) the additional price premium payable per unit applicable to each block; (d) the calculation for the purposes of setting the minimum number of units to be applied at the basic threshold price quarterly;(e) the arrangements for the setting of standing charges.(4) Nothing in this Act permits the Secretary of State to determine the basic threshold price of electricity where a rising block tariff is in force.
(5) The Secretary of State shall report to Parliament on the operation of the scheme within 12 months of the coming into force of this section.”

[Lord Campbell-Savours]

My Lords, I apologise for my non-attendance in Committee. This was due to a clash with sittings of a number of domestic committees which I needed to attend.

This is a subject I have raised on a number of occasions over the years both at Question Time and in the form of amendments to previous legislation. Since last raising it in 2008 I have had the opportunity to further refine and simplify the scheme. RBT— rising block tariff—arises from what appears to the public to be an anomaly in energy pricing which defies all logic. The rising block tariff applies to domestic suppliers of gas and electricity.

If we examine our gas or electricity bills, we will note that initial units of electricity and gas are charged at a higher rate than subsequent units. Low-use consumers are penalised by the pricing structure, not only because of the early units penalty but by the levying of standing charges. The present system is regressive in its financial impact by penalising poorer sections of society. The system also lacks any incentive to conserve energy. If we are serious about energy conservation, we should use the pricing structure for units of energy to influence investment in conservation.

The problem is that, although a relatively free market in domestic energy prices can influence conservation investment as prices increase, the effect is limited due to a lack of real incentives. We need a penalty built into cost to the domestic consumer, whereby the higher the consumption of units, the higher the price—in other words, a reversal of the present arrangement. Furthermore, introducing such incentives would provide an opportunity to affect the position of people on low incomes without necessarily drawing them into means-testing.

Why cannot domestic energy prices be set at a discount for the first block of units, with subsequent blocks priced at increasing rates? It would be perfectly possible for the first block, what we might call block A, to be set at a discount from block B, the standard tariff, which itself could be priced at less than block C, the premium tariff: discount tariff over standard tariff over premium tariff. The block A tariff would be universally available to all consumers and set at a level that maximised the benefit to low-income households in blocks A and B. A fixed allocation of units would be available to all domestic customers. The Government would set the number of units in each of those blocks and the percentage difference in cost per unit in between blocks A, B and C.

However, it is critical that the block A price, the discounted tariff, is set in the free market by the energy suppliers. The Government would play no part in setting the block A discounted tariff unit price, but would leave suppliers free to set their prices, which would need to be at a rate to ensure that their block B and C prices were viable, competitive and affordable for consumers.

What would be the advantages? The system would induce investment in conservation, and there would be more careful management of energy use by householders, as consumers sought to avoid moving into higher blocks, particularly into block C. There would be an element of redistribution. It would reduce the growing shift towards means-testing. It would reduce CO₂ emissions. Suppliers would retain control of the price by, crucially, being responsible for setting the block A discount price.

I recognise that it would be difficult to set the volume of units to be applied to each block—in particular, block A. It would be necessary to calculate and agree a reasonable number of units to be allocated to block A for a core usage of electricity—I call that the CUE. The CUE would be set taking into account multiple occupancy, disability and basic energy requirements per household. As I said, the RBT would be available to all, but set at a level that provided for basic energy needs. It could be calculated on the basis of an agreed square footage space energy requirement. In particular, pensioner households’ space requirements would need to be fully considered, but it is likely that many pensioners would move into block B areas of consumption; certainly in heating fuel requirements. The RPT does not do away with state support for low-income pensioner households but, as I said, it would reduce dependency on the state for heating support and transfer responsibility for that support to “heavy users” in the process of redistribution.

Some households are single fuel, and would lose out compared with dual-fuel households. The answer is to provide every domestic hereditament with two energy entitlements: one for gas and the other for electricity. Single-fuel households would be entitled to two electricity entitlements. The need to provide two entitlements for single-fuel households stems from problems with heating requirements. It may seem complicated as I put it to the House, but when you analyse it, the system I am advocating is quite simple.

It might be possible to have a separate RBT for certain separately defined disability groups with prescribed greater heating requirements. They could be assessed on a different basis. In their case, it might be possible to have either fewer blocks with greater spread in terms of volume of units, or a greater number of blocks with a narrower spread. Regarding seasonal temperature differentials, householders invariably consume more energy in the winter months, when there are greater heating requirements. It would be necessary to ensure the transfer on of units between quarters at the end of each quarter, as is currently done with free minute allocations for some mobile phones.

Differentials in regional temperature are not fully considered under present domestic energy pricing arrangements. It has been argued that a national pooling arrangement should be in place to compensate consumers in colder regions for their higher energy costs. Privatisation of the industry and competition in the market place have made this difficult to introduce. Under RBT, any such pooling arrangements, if required, would need to be based on block A volumes of units allocated, rather than on price.

A problem could arise over the timing of the introduction of RBT. It could be constrained by limited public understanding of the value of investing in conservation measures. The answer is to introduce a rising block tariff system over an extended period, perhaps as long as 10 years. Such a period would enable power suppliers, consumers and the energy conservation industry to adjust. In particular it would enable suppliers of energy to refocus their efforts on further developing and refining their conservation packages, which will be of greatest interest to domestic energy users.

In October 2008 in an article in the Guardian, Ed Miliband referred to the principle behind the amendment when he said he was,

“looking at the structure of tariffs so that people might no longer have to pay the highest price for the first tranche of gas and electricity they used”.

Unfortunately my party has not been exactly sympathetic to following up the original idea, primarily put off by large family energy requirements, which I have now set out to address through the core usage of electricity, the CUE. The larger the CUE, the steeper the subsequent block increases.

There is much support for the idea in Europe as countries increasingly find themselves struggling with higher energy prices. Arguments over climate change and the more efficient use of resources will inevitably take us down this route. The noble Lord, Lord Oxburgh, came to my rescue during the closing moments of the debate in 2008, when he advised the House that,

“in eastern Australia this rising block tariff is used on domestic water”,—[Official Report, 28/10/08; col. 1510.]

to help conserve water supplies. I also understand that Ofgem was supposed to have had a look at my and other proposals for RBT during a recent review of energy prices. Perhaps the Minister might give an update on what happened to the Ofgem inquiry.

This system, or one based on the same principles, is utterly inevitable. The public understand what this discussion is about. Just as everybody understands the arguments put by the noble Lord, Lord Forsyth, in his amendment, this equally is an argument that the public understand. The public are interested as to why the energy companies insist on charging the highest prices for the lowest volume consumers. Perhaps the Minister will explain whether she thinks there is a way out of this conundrum. I beg to move.

21:29

[Lord Teverson (LD)]

My Lords, this is a very noble cause. I myself tried to introduce a similar amendment to the first of this Government’s energy Bills. I first came across the real problem with it when I tried to draft an amendment that would make block tariffs work. They are incredibly difficult, and I congratulate the noble Lord, Lord Campbell-Savours, on having got as far as he has. I must admit, though, that at the end of the day this was one of the few instances where I was actually persuaded by DECC officials that the idea was not possible and would not work—much to my regret. One of the reasons was the fact that my noble friend Lord Ridley mentioned: namely, that poor people are the ones who use a lot of electricity for their heating. It is an irony that people in fuel poverty have to use electricity for heating, so block tariffs are very difficult to use in order to get the outcomes that we want. I look forward to hearing the Minister’s arguments about this amendment, because I suspect that they will be exactly the ones that persuaded me that this scheme was not practically possible.

[Baroness Worthington (Lab)]

My Lords, I am grateful to my noble friend for tabling this amendment and for his pursuit of this issue in other fora. It is correct that the way that electricity is priced at the moment is illogical: the more we consume as a whole, the higher the cost of producing the electricity. Once our demand rises, we have to bring on marginal plant, which is less efficient and more costly, pushing up the wholesale price for everyone. The people who consume the most therefore cause us to carry a cost that we should not have to bear.

It should therefore be logical that we disincentivise the bringing on of marginal plant by tariff pricing and tariff structures. However, although the idea has been raised on many occasions, the moment has never been found to make it a reality. I hope—and I think that this will be the case—that once smart metering comes into play, this will become an absolute no-brainer. At that point, when we have detailed information about each individual household’s demand across a given period of time, this will become enabled. At present, though, it is a very difficult thing to bring into practice.

Noble Lords have touched on some of the issues. One of them is the question of the variance in demand between households. It can be perfectly true that you have two identical semi-detached houses with very different energy bills, because of different socioeconomic circumstances. Someone who is at home all day will have the heating on and that will increase their bills. If you have a high occupancy rate—if you have children, for example—your energy bills will go up. It is quite difficult to identify the right point at which to say, “This is a fair use of electricity and after this we are going to increase the price”.

That said, though, it is not impossible. It should not be the case that electricity companies incentivise greater usage and reduce the rate of tariffs after a certain point of consumption. If we are not yet able to get to a fully comprehensive rising block tariff system, then at least the Government could perhaps make it clear that tariffs should not have such a regressive effect that the highest price would be for the first units of consumption and then there would be a reduction in the unit price—that should be ruled out. The Prime Minister has indicated that he has a desire to make tariffs simpler. The simplest thing would be to have one unit price for everyone and for everything. Let us start there, and if we can establish that principle and stop the incentivisation of greater consumption, that will be a step in the right direction.

I still think that there is something in this idea. We need to look at it, although it is possibly true that now is not the time. I am sure that that will disappoint my noble friend; one can always say, “Now is not the time”. However, with the advent of better technology such as smart meters and a greater understanding of demand with better data, we will be able to get there. The way that the system is currently structured is illogical, and I am sure that something like this will be introduced within the next decade. I congratulate my noble friend on being so prescient and ahead of the curve.

[Baroness Verma]

I, too, thank the noble Lord, Lord Campbell-Savours, for his amendment. The noble Lord has a long-standing interest in this matter and I understand his desire to encourage more energy efficiency and to reduce the energy bills of low-income households. We considered in the past the case for rising block tariffs. When the issue was debated during the passage of the Energy Bill 2011 we were concerned, as we are now, that they would have an adverse impact on fuel-poor households with high energy consumption. I followed very carefully the noble Lord’s argument that this would not happen, but I believe that many consumers would see their bills rise under a rising block tariff.

The Committee on Climate Change has also examined the case for rising block tariffs and concluded that they,

“should not be introduced until fuel poverty has been addressed through targeted energy efficiency improvement and other fuel poverty policy measures”.

We are addressing fuel poverty through the Warm Home Discount. This year more than 1.1 million households will receive an automatic rebate on their electricity bill of £135 and more than 2 million households will receive assistance from the scheme as a whole. As the noble Lord rightly points out, we are also tackling the poor energy efficiency of our homes through the Energy Companies Obligation and the Green Deal. Some 230,000 vulnerable and low-income households will be warmer this year because of the measures installed in their homes under ECO.

Clauses 130 to 133 are intended to enable the Secretary of State to simplify the tariff market, to increase competition in the retail domestic energy market through greater consumer engagement and to get consumers on to the best tariff for them. We have introduced these clauses to give statutory backing to Ofgem’s reforms of the retail energy market. These reforms have been developed to ensure that customers are on the cheapest tariff that is in line with their preferences with their current supplier. They will introduce a simpler, clearer tariff framework so that consumers can compare tariffs across the market more easily.

The noble Baroness mentioned smart meters. I agree with her. When people have smart meters installed, that will help them recognise the amount of energy that they are paying for at the time of use, and will inform them of when to use energy at different times of the year to get the best value out of it during the day. However, we are just rolling out smart meters now. They are not yet part of a mass rollout. So a key measure is to give consumers the ability to compare tariffs, banning complex multi-tier tariffs and requiring suppliers to structure all tariffs as a standing charge and single unit rate.

Introducing a framework for rising block tariffs would cut across Ofgem’s reforms to deliver a fairer, more transparent and competitive market. We are backing its proposals, not instructing it how to regulate the market. Ofgem is an independent regulator and is best placed to assess the regulatory changes needed. Although I suspect that he will not, I hope that the noble Lord will find my explanation reassuring, and that he will withdraw his amendment.

[Lord Campbell-Savours]

My Lords, the Minister said that she thought that it would be easier for consumers to compare tariffs. The reality is that, if she had supported the amendment moved by the noble Lord, Lord Forsyth, that would have been the case. In reality, there will be very little difference in the way that billing is presented, and certainly in the ability of the public to comprehend billing.

I latched on to the statement made by my noble friend on the Front Bench when she referred to smart meters. Although I was engaged, as was the noble Lord, Lord Teverson, in the smart meter debate in 2008—we had those critical meetings at the end before we managed to win, as he will remember—I did not realise the significance of this until my noble friend referred to it just now. It is possible that smart meters will give us some of the information that I need to further reinforce my argument when, no doubt, in a few years’ time, I once again table the same amendment in the hope that one day someone will pick it up and we will transform the energy consumption arrangements for the average household in the United Kingdom. I beg leave to withdraw the amendment.

Amendment 105 withdrawn.

Amendment 106

Moved by

[Lord Teverson]

106: After Clause 141, insert the following new Clause—
“Amendment of Electricity Act 1989: generating station and overhead line development by non licence-holders
In Schedule 9 to Electricity Act 1989 (preservation of amenity and fisheries), after paragraph 4 insert—“4A (1) Sub-paragraph (2) applies where a person who is neither a licence holder nor authorised by exemption to generate, distribute, supply or participate in the transmission of electricity applies for the consent of the Secretary of State under section 36 or 37 of this Act.
(2) Paragraphs 1 and 3 above apply to the making and consideration of the application as they apply to the making and consideration of relevant proposals made by a person who is a licence holder or so authorised by exemption.””

[Lord Teverson]

My Lords, this amendment and the next concern the Electricity Act 1989. I have not yet read it all but I have not once come across the word “decarbonisation” in it. It shows how we have moved forwards—or backwards, depending on how one looks at it—over the years.

Amendment 106 relates to a decision made only a few weeks ago concerning Viking Energy, which was looking to obtain a consent under Section 36 of the 1989 Act for a wind farm in Shetland. There was a judicial review of that decision, which was upheld by the Outer House of the Court of Session. That has done something that this Energy Bill is trying to prevent —that is, it has increased uncertainty for investors—and changed completely the view within Scotland of what is needed to obtain a Section 36 consent for a major power project over 50 megawatts. The judgment laid down that the people who were applying needed a generating licence before they could obtain that consent. That is not always the case and I suggest that it should not necessarily be the case.

These schemes tend to be joint ventures involving generating companies that already have licences—in this case, Scottish and Southern Energy was one of the major shareholders of Viking—and which try to obtain their Section 36 permission for the generating station to go ahead; it could be wind power or any form of power. But clearly there has to be a licence to operate before the project can go ahead and generate electricity, so there is no question about the organisation that gets the consent being competent and being able to move forward. Indeed, given the amount of investment that is required for these projects over 50 megawatts—in this case, one-third of a gigawatt—clearly there would be no financial backing if the organisations were not seen as competent.

The decision north of the border has introduced a great deal of uncertainty into the system and made the progress towards investment in power generation far more difficult. It has also put into question those Section 36 consents that perhaps were granted when the operators did not have a licence. I would be very interested to hear how my noble friend the Minister sees the status of those past consents now that this court ruling has taken place.

I understand that the Scottish Government have appealed against that decision to the Inner House of the Court of Session, and that the appeal will take place in February and March. Once again, that causes a hiatus in investment. It means that there is great uncertainty over future investment in power in what is a particularly important part of the UK for renewables. Therefore, I have tabled this amendment in order to bring clarity and ensure that the way in which this system was always thought to operate is reinstated. I should add that within England and Wales this is not an issue, as I understand it, because there has been consequent legislation, either primary or secondary, since the Electricity Act 1989. South of the border, the position is quite clear. I beg to move.

21:44

[Lord Forsyth of Drumlean (Con)]

My Lords, I am very disappointed that my noble friend Lord Stephen is not here tonight. This issue first came to my attention because of some very unfortunate publicity in the Daily Telegraph, where he was accused of promoting his business interests through this amendment. Quite rightly, he withdrew his name and made it clear that his name had been added to the amendment in error.

[Lord Teverson]

My Lords, perhaps my noble friend will allow me to intervene. I absolutely endorse that and make it clear that the name of my noble friend Lord Stephen was added to this amendment completely by error and without his permission at the time.

[Lord Forsyth of Drumlean]

Whatever one’s views on wind farms—I confess I am not an enthusiast for them—it is absolutely essential that the process by which permissions are given and projects are undertaken are seen to be fair and take account of all objections and environmental and other interests. This example is about a particular wind farm development in some respects, but it is also about the rule of law and our attitudes to the rule of law.

The fact of the matter is that this whole saga arose because of the Viking project in Shetland, with over 100 turbines, where there was considerable local opposition. The project is being promoted by the Shetland Islands trust, which has got the oil money—and a large number of the trustees are councillors in Shetland—together with Scottish and Southern Energy. They are the people who are promoting this project. There was very considerable local opposition to this project, but the council decided that it was not conflicted, even though the Shetland trust was a party to the development. As a result, there was no public inquiry. The Scottish Ministers in the Scottish Government gave the project the go-ahead. Some local opposition sought judicial review of that decision, which went to the Court of Session, which is the equivalent of the High Court in England.

Former law officer, Lynda Clark, after three months of deliberation and a well argued and clearly very considered opinion, which I have read and is freely available, concluded that this proposal was unlawful because it did not meet, as my noble friend has said, the requirements of Schedule 9 to the Electricity Act 1989, which makes it clear that anyone who is planning on producing a power plant which includes a wind farm should have a licence from Ofgem before planning approval can be granted. When the judge asked the parties to the development who had the necessary consent, none of them had, and the project had to go back to square one.

When I was a Secretary of State—and for as long as I have known—the principle has been that when a judge reaches a conclusion as to the state of the law, that is the law until such time as it is subject to an appeal. What happened next is an absolute scandal. The Scottish Government then decided that they disagreed with the judge in her opinion and that they would go ahead anyway. In a letter signed by Catherine Cacace to John Campbell QC, the Energy Consents and Deployment Unit said:

“Scottish Ministers note that the Court has found that an application for consent under section 36 of the Electricity Act 1989 can only be made (and so granted) where the applicant at the time of making the application either holds a licence to generate electricity or is exempt from that requirement”.

It goes on—wait for it:

“Scottish Ministers’ position is that they disagree with, and have appealed, the decision … The decision on the legislative interpretation runs contrary to the established practice relating to the handling of applications for consent which has been in place both north and south of the border for many years … Our intention is therefore to continue to operate in accordance with the practice … and to deal with current applications on that basis”.

In other words, “We will ignore the law”. It goes on to say:

“Scottish Ministers consider that the balance of public and national interest is in favour of continuing with the current approach until the appeal has been determined, in particular because of the need to continue to support the economy and our renewable energy ambitions”.

So their renewable energy ambitions trounce the law of the land. That is very undesirable and unprecedented —as far as I know; I see a noble Lord sitting on the Front Bench who is familiar with both the law and Shetland. I can think of no other case. The normal practice would be to stay any development until such time as an appeal had been considered. What I very strongly object to about the amendment is that it would take away the legal position that has been established for many years, and which has been confirmed by the court, in a retrospective manner. It would create a situation in which any Tom, Dick or Harry could apply for permission to establish a wind farm—or, I guess, any other form of generation. Those tests about their ability to meet environmental and other requirements under the legislation would then be applied to them.

This is an undesirable development, by both the Scottish Government and my noble friends. The proper procedure here would be to at least wait for the appeal. It is certainly quite wrong for the Scottish Government to continue in this way. If you look at it from the point of view of the objectors, they have gone to a judicial review, won their case—and everyone knows how difficult it is to win a case on judicial review—and the Scottish Government are just saying that they are going to ignore that. Should this House to seek to overturn the effect of that judgment, when people are talking in terms of the need to support “our renewable energy ambitions”? Our renewable energy ambitions must carry public consent. This is no way in which to proceed. I have strong objections to the amendment, and I hope that my noble friend will reject it.

[Lord Berkeley of Knighton (CB)]

My Lords, earlier this evening, I found myself in agreement with the noble Lord, Lord Forsyth, about transparency. I feel even more strongly about this issue. It seems that we are challenging the rule of law. I know that a lot of people in this country feel that their ability to object to something is often overruled by big business and large amounts of money, and that they do not really have a voice. The Government promoted a Localism Act which is often in conflict with what they wish to see for energy generation.

The noble Lord, Lord Teverson, mentioned an argument which planners are always throwing back at objectors: “Well, they wouldn’t do it if it didn’t make sense and they didn’t know what they were doing”. I repeat: Mammon has a role to play here. The objectors must be allowed to put their point of view. If you are now going to insult them by saying, “We are even going to take judicial review and the law away from you”, where does that leave them?

[Lord Mackay of Clashfern (Con)]

My Lords, it is some little time since I did applications for power stations in Scotland; the last one was about 35 years ago. However, I have some understanding of the way in which these matters were approached.

As your Lordships know, in order to generate, transmit or supply electricity you must have a licence and there is a pretty good reason for that. Section 36, which my noble friend mentioned, provides for an application for consent to construct or operate a power station. Of course, a wind farm is a generation system which amounts to a power station. In order to operate that you must have a licence, or have an exemption from a licence, usually because the power station you want to operate is very small. It does not seem very strange to require that as a condition for applying for a station. It would seem a little odd that the relevant authorities could grant consent for a station if you were not authorised to operate it. It could happen, I suppose, but it seems a little unlikely. Therefore it is not at all surprising that it is assumed in the definition of the conditions for consent that that would be so.

Schedule 9 to the Electricity Act 1989 is a set of requirements for the protection of the environment, basically, which a person—it is described in the amendment of the noble Lord, Lord Teverson—who is either a licence holder or exempt for a licence must take account of in his proposals. It is pretty obvious that the proposals are for the construction of a generating station and that you would therefore be a person who would have a licence to operate the generating station if, in fact, it is agreed and consented to by the relevant authority.

The judgment of the noble and learned Baroness, Lady Clark, which is well reasoned and a little longer than my speech so far, is just to that effect. Schedule 9 starts with the condition that you are either a licence holder or exempt and then you have to ensure that your proposals, in effect, do not damage the amenity, or the environment. That is the crux of this and I find her reasoning rather convincing. In fact, it is what I always understood. As I say, it is a long time since I understood it, but it was my understanding at the time. The last application I made, as it happens, was for Torness power station, which was the last nuclear power station to be built in Scotland and is now coming near its decommissioning. I was under the instruction of the noble Lord, Lord Tombs, who was at that time the chairman of the South of Scotland Electricity Board, whose station it was. Anyway, so far as I have an interest in this matter it is a very aged interest and it has nothing to do with finance or anything of that sort.

In my submission, it seems that what the noble and learned Baroness, Lady Clark, who was a law officer in the previous Government, has decided is right. However, it is, of course, subject to appeal and as the noble Lord, Lord Teverson, said, the appeal is to be a reclaiming motion, strictly speaking, in the Scottish terminology, and to be heard by the Inner House of the Court of Session in February. The rule in relation to sub judice does not apply when we are discussing legislation, so we are free to discuss this matter, but I think that the judgment of the noble and learned Baroness, Lady Clark, is extremely cogent and I will look forward to hearing what happens on appeal. In the mean time, that is the highest assertion of what the law of Scotland is, and, indeed, for that matter, anywhere else where the same rules apply. In the law of Scotland the Supreme Court of Scotland, the Court of Session, has decided that to be the fact. Therefore it is highly undesirable for this House to alter that position at this moment. It seems pretty sensible that before you get consent to erect a power station you should be qualified to operate it. As I said, that is the crux of the decision. I therefore hope that the Government will not accept this amendment, which is not very well placed from the point of view of logicality.

22:00

[Lord Forsyth of Drumlean]

Before my noble and learned friend sits down, will he comment on the conduct of the Scottish Government, who say that they will continue as if this judgment had not been made because they do not agree with it?

[Lord Mackay of Clashfern]

I have made known my view about what the judgment says and my noble friend Lord Forsyth has made his view known about how the Scottish Government approach these matters. I do not particularly wish to comment on what they have done so far as I do not know fully enough the facts about these other applications. However, certainly in so far as the application from Shetland is concerned, there is no doubt that the decision of the Court of Session until reversed will set that consent aside. There is no question at all of going ahead to erect the station in Shetland at present. That would be completely without sanction, because the judge has set aside the consent as being unlawful. The rule of law will certainly be applied in Shetland, so far as that is concerned; the noble Lord has said whether the Shetland law applies more generally, and I will leave it with what he said.

[Lord Lang of Monkton (Con)]

My Lords, I had not intended to speak in this debate; I know that the hour is late, so I will be brief. However, when I saw that my noble friend Lord Forsyth had tabled an amendment that seemed to be almost in diametric opposition to the preceding amendment—we have not yet reached my noble friend’s amendment—it seemed that there was probably something of interest to be debated. Having heard what has been said, I am glad that I was here to hear it, and I am appalled at what I have heard. However, I am greatly reassured by the views of my noble and learned friend Lord Mackay.

My own views on windmills, which I first made clear in this House some 12 years ago, is of strong opposition to them. They are an appalling waste of time and money; they ruin the environment and damage wildlife; they do not deliver power when the wind is too strong or when there is no wind at all; and when they do deliver power, there is so little of it that it is completely worthless and has to be backed up by other forms of energy. I will not repeat all those views again to the House tonight.

What is at issue is not a matter of energy generation but of the rule of law. I am aghast to hear that the Scottish Government are now cheerfully setting aside a judgment in the High Court in anticipation of an appeal, which may or may not go in their favour. My noble friend referred to his time in the Scottish Office, and my noble and learned friend Lord Mackay referred to his experience many years back. I was present at the opening of the Torness power station, although I had no hand in its design or in the legalities behind it. However, I served in the Scottish Office for nine years, ahead of my noble friend, so between us we did about 12 years.

At no time, then or before, when I was the Scottish Whip for five years, do I ever recall any contemplation of defying the will of the courts. That is the fundamental issue that we are addressing underneath these two amendments. The issue of the licence is fundamental, and this amendment seems to set aside one of the few controls that are in place to try to impose some kind of discipline and proper judgment on the relevant importance of windmills in Scotland. We read every day of how the country is being covered with them like a rash, ruining the environment and all attraction to tourism, with no regard to the future or to the value of these excrescences. Therefore, setting aside my strong views on windmills, this rule of law issue has to be addressed very seriously indeed.

[Lord Whitty]

My Lords, I think I will leave this one to the Government.

[Baroness Verma]

My Lords, I thank my noble friends Lord Teverson and Lord Roper for tabling this amendment and my other noble friends for their contributions, especially my noble and learned friend Lord Mackay of Clashfern, as he laid out very clearly the position of the law without referring to windmills or any other type of energy source. The judgment referring to planning consent under Section 36 of the Electricity Act 1989 can be made only when the applicant, at the time of making the application, holds a licence to generate electricity under the Act or holds an exemption from this requirement, as my noble friend Lord Teverson pointed out. This judgment is being appealed and we are monitoring the position carefully. Given that the appeal is under way it would be premature, and indeed inappropriate, at this stage to adopt a legislative amendment without knowing what the outcomes were. Any legislative change would need to be considered in the full light of the outcomes of this case and it would be a mistake to assume that the judgment of the Outer House, if upheld, would be decided upon in exactly the same terms in the Inner House.

If we legislate now, we may find that the amendment does not deal with the final interpretation of the legislation, taking into account the arguments that are being developed as part of the judicial review hearings. In the event that this decision is upheld in terms equivalent to the original opinion of the noble and learned Baroness, Lady Clark of Calton, we will of course work with the Scottish Government to review the situation. For those reasons, I ask my noble friend Lord Teverson to withdraw his amendment.

[Lord Forsyth of Drumlean]

Does my noble friend agree with the position of Scottish Ministers that they should continue with their current approach until the appeal has been determined, or does she take the view that there should be a stay on these matters until the law is clarified?

[Baroness Verma]

My Lords, I will repeat what I have said, which is: let us wait to see what the outcome of the appeal is.

[Lord Teverson]

My Lords, this was tabled as rather a probing amendment, given the situation that has arisen, and I am grateful to noble Lords for their contributions. I do not wish to detain the House on this for too long but I will say that this has nothing to do with retrospection; I absolutely disagree that someone who develops a wind farm or any other energy-generating station over 50 megawatts is necessarily going to be the operator. It is a fact in industry in Britain and worldwide that the developer is often not the operator, in whatever industry we may talk about—they are two entirely separate processes. If you took the view that they had to be the same legal person then you would probably have to go back to 17th-century economics, let alone 21st-century ones. It does not work that way any more. It would also bring the practicalities back into line with the English and Welsh situation. In no way does this amendment make any judgment about whether people should be able to judicially review such decisions; clearly they should be able to do so. I would hope that such actions would not be vexatious, and I am sure that this one was not. Indeed, there was a judgment parallel to the licensing one concerning the wildlife directives, on which I make no judgment at all. It might have been completely valid in terms of their application.

With this amendment I was simply trying to bring the situation back to some certainty and to the situation that was understood prior to this judgment. That is not in itself retrospective. However, I am persuaded by the Minister that perhaps the right course is for this to go through the appeal process—I certainly do not think that it is a good idea for Parliament to interfere with that—and then the situation should be looked at. I am highly persuaded by the argument put forward by my noble friend Lord Forsyth about the reaction of the Scottish Government, in that clearly the rule of law is the rule of law wherever we are within the United Kingdom, and I would never wish to pull the carpet from under that important principle in how we live our public life. I beg leave to withdraw the amendment.

Amendment 106 withdrawn.

Amendment 106A not moved.

Clause 145: Extent

Amendments 107 and 108

Moved by

[Baroness Verma]

107: Clause 145, page 113, line 1, leave out sub-paragraph (iv) and insert—
“( ) section 49 (transition to certificate purchase scheme);”

108: Clause 145, page 113, line 6, at end insert—
“( ) Section (Closure of support under the renewables obligation)(4) extends to Northern Ireland only.”

Amendments 107 and 108 agreed.

Clause 146: Commencement

Amendments 109 and 110

Moved by

[Baroness Verma]

109: Clause 146, page 113, line 32, leave out paragraph (c) and insert—
“( ) section 49 (transition to certificate purchase scheme);”

110: Clause 146, page 114, line 7, at end insert—
“( ) section (Closure of support under the renewables obligation) (closure of support under the renewables obligation);”

Amendments 109 and 110 agreed.

House adjourned at 10.10 pm.