Feed-in Tariffs (Amendment) (No. 3) Order 2015

Tuesday 2nd February 2016 Lords Chamber

Motion to Annul

17:10

Moved by

[Baroness Featherstone]

That a Humble Address be presented to Her Majesty praying that the Order, laid before the House on 18 December 2015, be annulled (SI 2015/2045).

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee

[Baroness Featherstone (LD)]

My Lords, this is an important debate, and it is with regret that I felt that I must table this fatal Motion, as I am aware of the significance of this action, but regard the matter as so serious as to merit such a Motion. The order makes policy changes which will have far-reaching and detrimental effects—effects which will not only put our renewables industries in serious jeopardy but impact on our ability to deliver our legally binding renewable energy targets. Furthermore, the strong economic case for investing in the sector seems to have been ignored, neglecting what could and should be an extremely significant source of Britain’s future economic prosperity.

The feed-in tariff scheme is the Government’s main mechanism to encourage the deployment of small-scale, low-carbon electricity generation, and the order imposes two caps: one financial and one that controls generation capacity. The financial cap of £100 million applies to all renewables technologies right up until 2018, meaning that they will get approximately £35 million a year between them all for new-build deployment. The generation cap on each technology sets a quarterly maximum which, translated, means that even if there is demand, suppliers will be prohibited from meeting it. That is extraordinary micromanagement of an industry.

The industry understands that subsidies must end—there is no argument about that—but the economically sound way to respond to that is to reduce subsidies at a rate that allows the industry to continue to grow and move to a stable, subsidy-free footing. That is not what the Government are doing, alas. The rug is being pulled from underneath the industry, reducing the size of the workforce by up to half, just when other countries around the world have spotted the business opportunities in this sector and are increasing their investment. The steepness and abruptness of the Government’s proposals caused shockwaves across the industry—security, confidence and investment all undermined at a stroke.

The Secondary Legislation Scrutiny Committee states:

“We draw this Order to the special attention of the House on the ground that it gives rise to issues of public policy likely to be of interest to the House”.

The committee further notes that there was a very high level of opposition to the DECC proposals in the responses to its consultation from the renewables sector, with a total of 54,630 written responses, of which 2,634 were unique responses. The majority objected to the proposed deployment caps and 90% disagreed with the proposed generation tariffs. Following the consultation, the Government made some changes: the reintroduction of the pre-accreditation scheme; the lessening of the reductions to the feed-in tariffs from 87% to 65%; and making tariff bands clearer—which are all very welcome. I have no doubt that the Government will argue in this debate that they moved following those representations, but I do not believe that they have moved one iota beyond their originally intended position.

Our renewable industries have been remarkably successful. In the new low-carbon sector in the United Kingdom, 11,500 companies are involved with 460,000 people turning over, in 2013, about £120 billion. The major player is solar. This is good for the economy and for the planet. The deployment limits will severely impact on the size of one of the cheapest low-carbon energy options just at the very moment that there is a need for greater deployment of renewables. Only one week ago, Ban Ki-moon said:

“I call on the investor community to build on the strong momentum from Paris and seize the opportunities for clean energy growth. I challenge investors to double—at a minimum—their clean energy investments by 2020”.

However, investors will not come here. We are going in the wrong direction.

17:15

Let me start with solar. Solar is one of the cheapest and safest ways for the UK to deliver on its renewable targets. Some 750,000 homes now generate their own power. Solar will now receive approximately £12 million a year. Last year, the estimated run rate was about £70 million. This huge drop in support of more than 80% is untenable. DECC’s own impact assessment shows up to 19,000 jobs at risk, more than half the jobs in the entire industry. Several solar and energy companies, including Mark energy, Climate Energy UK, Southern Solar and Zep Solar, announced that they are going into administration or withdrawing from the UK market with the loss of 1,000 jobs.

Yet this is a technology expected to attract trillions in sales globally over the next two decades, and which even the chief executive of Shell says will form the backbone of the world’s power supply. The Solar Trade Association has been contacted by British embassies right across the world trying to help British companies take advantage of the huge markets opening up in India, Africa, Mexico, Peru and elsewhere. Without a strong domestic industry, only a few companies are in the position to take advantage of what really are unprecedented opportunities. Bloomberg New Energy Finance predicts that British renewables are about to go over a cliff, just at the very point where they were about to come into their own.

On wind, the uptake of medium wind projects—the area most consistently proven to be acceptable in size to both local communities and planners—will dramatically drop. Cost levels and corresponding feed-in tariffs for medium wind projects will become lower than local prices for grid power and tariffs for newly targeted centralised power sources such as nuclear and offshore wind. The cap will also result in higher, rather than lower, overall subsidy spending. With regulatory support and tax measures aimed at encouraging farms and businesses to install their own generation as part of a wider efficiency programme and action on carbon reduction, they would be able to move dramatically towards delivering power at a rate equivalent to, or lower than, retail energy costs.

The dramatic cut in the feed-in tariff budget has resulted in tariffs far too low for future development in the hydropower industry. Government action is threatening the very existence of high-quality jobs in a sector that operates predominantly in fragile, rural communities. On average, 70% of the cost of a new UK hydropower scheme is in civil construction, procured locally. The proposed reduced levels of support will certainly result in the loss of a significant number of jobs in many fragile rural communities right across the United Kingdom. The British Hydropower Association, representing the sector, believes that the Government overestimated the overspend for renewables in the levy control framework. The Government now expect consumers’ bills to be much lower than previously thought.

That brings me to the levy control framework. DECC argues that the levy control framework, which caps expenditure of renewable subsidies levied from consumer bills, has increased significantly above the £7.6 billion limit. However, there is 20% headroom in addition to the £7.6 billion envelope to address and underwrite risk, and risk has materialised in the form of the cost of gas dropping. Therefore, that headroom has to come into play. The LCF should be variable—the Committee on Climate Change itself recommended between £6 billion and £10 billion, depending on what happened to prices. A recent freedom of information request by Carbon Brief showed in the emails between officials and DECC that they already knew that energy bills would be 7% lower than originally projected. There is a complete lack of transparency in the calculations for the LCF. A sudden rise has not been properly accounted for, and to restore any industry confidence we have to have transparency. I very much hope in that regard that the Minister will agree to publish the full details of the calculations used to project the £1.5 billion overspend that the Government are claiming.

In terms of household bills—and I am sure that the Government and noble Lords on all sides of the House wish them to be as low as possible—renewable deployment reduces the cost of wholesale electricity. In 2014, it is estimated that wind and solar reduced the wholesale cost of electricity by £1.55 billion. The value of the merit order effect will grow with increased deployment. The value in 2025 was estimated at £2 billion. It is not rocket science; the more renewables are deployed, the cheaper our bills will be.

Low-carbon products and services, renewable energy, energy efficiency, low-carbon vehicles, carbon capture and storage and green finance will be the products that gain market share, creating exports and jobs. They will lay the foundation for long-term prosperity. The UK is so well placed to benefit, but confidence right now in this Government’s commitment to clean energy is under threat.

Since the election, the Government have not just ended support for onshore wind power and sharply reduced support for other renewable technologies; they have also ended renewable energy’s exemption from the climate change levy, reduced the incentives to purchase low-emission cars through reforms to vehicle excise duty, privatised the Green Investment Bank, scrapped the Green Deal, weakened the zero-carbon homes standard, added community energy to the list of sectors excluded from receiving enterprise investment scheme tax relief, as well as social investment tax relief, ditched the £1 billion budget for pioneering carbon capture and storage, and on and on. All those things indicate that there is no genuine commitment to the green economy, and a drastic undermining of investor confidence.

Lastly, I come to the issue of legally binding renewable energy targets. The UK is on course to supply around 30% of electricity from renewable sources by 2020. However, we risk missing our overall energy targets under the renewable energy directive due, largely, to chronic underperformance in renewable heat and transport. PricewaterhouseCoopers has estimated that, with its current renewable heat and transport performance, the United Kingdom will require more than 50% of electricity from renewables by 2020. In early November, the Secretary of State wrote in a letter that the United Kingdom was in danger of missing its legally binding renewable energy directive targets by as much as 25%. Addressing this is vital—this is not just a policy decision; it is a legal requirement to which the Government are obligated to comply. I cannot stress strongly enough the seriousness of not meeting this legal requirement, and I trust that the Minister will be able to address those issues in his response and confirm whether the Law Officers were consulted in good time before the Government committed to this critical decision.

I am sure that all of us in this House want nothing other than that our renewables industry should be successful. That can be delivered if the Government were willing to make further changes to lessen the rate and degree of subsidy reduction and loosen the generation capacity cap. I will listen carefully to all the contributions in this debate and to the Minister’s response. I beg to move.

[The Deputy Speaker (Lord Brougham and Vaux) (Con)]

My Lords, I should inform the House that if this Motion is agreed to, I cannot call the Motion in the name of the noble Lord, Lord Grantchester, due to pre-emption.

[Lord Grantchester (Lab)]

My Lords, the statutory instrument before your Lordships’ House today is the latest in the recurring string of announcements from the Government that severely limit the UK’s renewables industry, the mishandling of which severely damages confidence among all investors in the sector. This SI contains massive restrictions in the deployment of small-scale renewables, including a 65% cut to the rate of feed-in tariffs available for small-scale solar, from 12p to 4.39p. It also contains a system of deployment caps and degressions that shackle the growth potential of what should be a flourishing new industry. The Government’s impact assessment puts the number of jobs lost at 18,700, which is half the number of jobs in the sector. This Feed-in Tariffs (Amendment) (No. 3) Order introduces quarterly deployment caps which, once capacity is filled, participants transfer to the next available quarter, with a 10% degression rate. Will the Minister explain to the House how this deployment cap will operate transparently for participants?

This is a terrible scheme. In the wake of the Paris agreement on climate change, everyone should be working together to bring forward investment in low-carbon and zero-carbon power. This sudden and severe change in policy with built-in cliff edges risks cutting the industry off at the knees rather than supporting it to get up and running on its own feet and guiding its graduation towards being subsidy-free. Your Lordships’ Secondary Legislation Scrutiny Committee drew attention to the high levels of opposition to these changes in responses to the consultation. Participants found it hard to be convinced on future deployment levels when the department was unable to substantiate its claims. Industry is losing faith with the Government on the way it is being treated.

The noble Baroness, Lady Featherstone, proposed from the Liberal Democrat Front Bench that the order be annulled. This is opportunistic posturing. Liberal Democrats can have short memories. They were willing participants in the coalition Government with the Conservatives. They had a Lib Dem Secretary of State at the Department of Energy and Climate Change who brought in the first alterations and cuts to the FIT scheme. In 2012, the then Lib Dem Secretary of State introduced changes with the following perverse logic and curious soundbite:

“By lowering the tariff we can extend it to more people—making clean, green, renewable energy available to the many not the few”.

They did not set a long-term policy outcome. They did not base the policy on the best outcome for the UK to bring forward industry in partnership.

Our Motion clearly puts on record our serious concerns about the Government’s feed-in tariff policy. Nobody can be in any doubt about that. Labour in this House seek to take on issues where we believe progress can be made within the constitutional limitations we have as an unelected revising Chamber. Furthermore, this House has agreed that it should only rarely threaten to defeat statutory instruments, as to do so would be an effective veto on the Executive Government. The Motion moved today by the noble Baroness is at least the fourth on an SI from the Lib Dem Benches this Session, and there is a fifth fatal Motion to come. If they had all been Government defeats, there would have been as many fatal SI defeats as there have been since World War II, but let us not allow that to deflect the House from the tactics of the Conservatives. At least they have been consistent in bringing forward vague manifesto commitments by putting them in Bills—for example, cuts to onshore wind in the Energy Bill presently in the other place—in contrast to the unannounced policy changes being brought forward in the negative statutory instrument we have before us today. I understand the concern expressed that this is incompatible with the recognised conventions.

When the Minister replies, will he clarify why changes to the onshore wind regime merit a few clauses in the Energy Bill with grace periods and provisions that can be amended, whereas this order on solar energy generation and the solar RO changes to come in another SI are negative instruments that cannot be amended? What are the substantial differences that merit these different approaches? I recognise that the parent Acts may allow this, but to a wider audience they are inconsistent. In view of the strength of argument against the order, will the Minister withdraw it for future reflection?

17:30

Since being established, the feed-in tariff scheme has been hugely successful, supporting the deployment of renewable sources of energy. The scheme sustains over 700,000 installations with a capacity of 4.2 gigawatts. Since the scheme is funded through the levy control framework, paid for through customers’ and consumers’ energy bills, it is right that the scheme must be as efficient as possible. However, far from being a gradual reduction in scheme rates to support an industry’s development through to being subsidy-free, these changes risk going too far and too fast. Research from Bloomberg New Energy Finance has warned that the proposed changes we are considering today risk driving the solar PV industry “over the cliff”. The Solar Trade Association says that parts of the industry, instead of being supported gradually towards grid parity, will suddenly be left with,

“in effect … no support at all”.

The association says that there are “a few simple changes” the Government could make to the statutory instrument that would considerably improve the outlook for the solar industry. It asks how the statutory instrument could be amended to improve the situation. Perhaps the Minister can advise. Could he withdraw this order for further consideration today?

The Minister may reply that the department has listened and, in consequence, lowered the proposed cut from 87% to a modest 63.5%, and that what it has brought forward makes it difficult for noble Lords to follow the noble Baroness, Lady Featherstone. Taken as a package, though, these measures put the UK solar industry in jeopardy, not merely at a severe disadvantage competitively in what the Prime Minister likens to a global race. Yes, the average rooftop scheme cost has fallen from about £8,400 three years ago to perhaps £6,800 today. In addition, the National Grid has said that balancing solar, if the UK were to have more than 10 gigawatts, would become difficult. However, the costs of solar deployment have not fallen by anything like the cuts in support.

Sadly, many in your Lordships’ House will be familiar with the remarks from the renewables industry. I repeat that, since May, the Government have announced an end to all funding under the Green Deal programme—set up by the coalition Government to make homes more energy-efficient—whereby, with solar panels, people can join in with the energy revolution needed to combat climate change. The Government are now selling off the Green Investment Bank; they have abolished the rules on zero-carbon homes; they have scrapped £1 billion of funding for a landmark carbon capture and storage commercialisation project; they have reduced funding for the renewable heat incentive; they are proposing to bring forward the closure dates of the RO for onshore wind by one year in the Energy Bill, and closure dates for the RO for solar in another statutory instrument.

Many of those announcements have come without warning, when people have invested in important schemes in good faith. They do not form part of a coherent energy policy. This is what is most regrettable about these proposals. On what basis are investors in UK-based renewable projects expected to put their money on the line? Given the Government’s refusal to set an overall decarbonisation target this year for the power sector, and the smattering of deep cuts such as the measures contained in this instrument, businesses are looking elsewhere. The degree of policy uncertainty is massive.

Regrettably, the most damaging aspect of this SI is that it is happening at all. In 2011-12 the FITs were cut; a judicial review then reversed the cut, which the Government then reintroduced. Now, they are reviewing the whole scheme again. Business cannot be set up on the basis of a three-year policy time horizon.

Regrettably, the UK misses out on developing the knowledge and skills that will fit the UK for the low-carbon future. This is a sector in which job growth consistently outstripped the wider economy during the last Parliament. Regrettably, the Government are not supporting and encouraging its development. Investors need long-term policy targets. Regrettably, the measures before your Lordships’ House today are just the latest in a string of damaging short-term policy changes which put a whole industry in jeopardy and severely damage that investor confidence. We regret them emphatically.

[Viscount Hanworth (Lab)]

My Lords, the energy policy of this Government is in utter disarray. One can take no pleasure in their discomfort; the adverse effects will be felt by all of us in the immediate future and in the longer-term.

The Government ought to have taken a strategic approach to the supply of energy. The explanation of their failure to do so lies partly in their ideological tenets and partly in the mistaken lessons that they have drawn from a previous experience. The experience of denationalising the electricity industry has led them to believe that investment decisions could be left to the market. At the time of this denationalisation there were ample supplies of North Sea gas and the private companies were able to invest cheaply in gas-powered turbines for generating electricity. When these were placed alongside the existing conventional coal-fired power stations, there was an ample supply of generating capacity. With the decommissioning of the coal-fired power stations, this is no longer the case.

The Conservatives have come to believe that this experience provides a model for an energy policy. They have convinced themselves that a centrally directed strategic policy for energy provision is a thing of the past. They persist in believing that the private sector can be relied on to deliver a mixed portfolio of generating technologies. They imagine that in this way they can avoid the risk to government of choosing and pursuing an inappropriate technology.

The feed-in tariffs, which we are discussing today, became an important part of the laissez-faire approach when it was recognised that certain infant technologies might need some assistance. Households and small enterprises have been given incentives to pursue small-scale generation. The incentives consist of a pro rata payment for each kilowatt of electricity they generate, together with a so-called export tariff, which is supposedly tied to the amount of electricity that is fed into the grid. In the absence of a meter to determine how much electricity has been exported, it is assumed that 50% of the electricity generated by photovoltaic cells will be exported and that 75% of the electricity generated by wind turbines will be exported. The intention was gradually to reduce the financial support given to the infant industries via a process described as “degression”—a neologism unrecognised by most dictionaries.

Instead of a steady reduction in the support for small-scale generation, the Government have reacted to the success of the scheme and its consequent expense by proposing a step change in the support, which virtually abolishes it. Their reliance on a laissez-faire market-oriented policy has exposed the Government to the unintended consequence of a vigorous expansion of photovoltaic generation. There is now a significant industry devoted to the installation of the equipment and a major import bill to be paid to the suppliers of solar panels, who are predominantly the Chinese.

Why have the cuts been so drastic? The reason is that the expenditure in support of the feed-in tariff threatens to pre-empt too large a proportion of the expenditure allowed under the so-called levy control framework, which limits the expenditure on subsidies that are levied from consumer bills. The Government wish to devote these funds to other purposes, which are their support of nuclear power and fracking. However, by some quirk of European Union legislation that could easily be disregarded, the funds devoted to supporting infant enterprises under the levy control framework are accounted as government taxation and government expenditure. This is a matter of statistical classification, which would be regarded as unimportant were it not for the Government’s obsession with the nominal size of the budget and the budget deficit.

The effects of the withdrawal of support have been acknowledged in the Government’s own impact assessment. An infant industry will be threatened with extinction and many people will be thrown out of work.

The advent of photovoltaic electricity generation is important because of the manner in which it can stimulate further technological advances, as well as the way in which it promises to change consumer behaviour. The technology in question is that of smart metering, which will allow the price of electricity to be varied according to the level of demand, and which will inform the consumer accordingly. Consumers will become increasingly aware of the cost of grid-supplied electricity and of the desirability of avoiding its use during periods of peak demand. With smart metering, it should become self-evident to consumers that they should deploy energy -intensive electrical appliances only in off-peak periods.

The disarray of the Government’s energy policy, of which I spoke at the outset, is the result of their reliance on willing providers to undertake the required investment in electricity generating capacity. But there has been a dearth of willing providers. In consequence of their failure to invest, the large energy suppliers should bear the cost of maintaining the present feed-in tariffs.

The prospective investors in nuclear power are the nationalised and semi-nationalised energy corporations of two foreign countries; namely France and China. There are now doubts regarding the commitment of EDF, the French national electricity supplier, to build the nuclear power station at Hinkley Point. If the French withdraw from this project, it seems likely that the Chinese will do likewise. What then will remain of the Government’s energy policy? They will have to rely on increasingly expensive supplies of gas. Their ambition to derive ample supplies of gas by fracturing the ground under our feet appears to me an implausible one. The alternative supplies of gas, which are from the Middle East, the north Atlantic and Arctic Russia, are beset by geopolitical hazards. Moreover, if we are to rely on imported gas to satisfy our energy needs, it will not be possible to fulfil the commitment to staunch our emissions of greenhouse gases.

I strongly support these Motions, which oppose the cuts in the feed-in tariffs, and I call on the Government to think again.

[Lord Cavendish of Furness (Con)]

My Lords, I rise to oppose both these Motions, but especially that in the name of the noble Baroness, Lady Featherstone. I should perhaps declare an interest, in that I have been a beneficiary of feed-in tariffs, albeit not with solar.

Feed-in tariffs cost about £1 billion a year—last year it was £851 million—and most of that goes on solar. That is a considerable sum of money, and every penny of it is added to the bills of electricity consumers. I find it significant and surprising that speakers so far have spoken up for the producers rather than the consumers. Adding that money to consumers’ bills hits the poor harder and rewards the rich, because electricity makes up a bigger part of the expenditure of the poor. So it is a regressive transfer of money from the poor to the rich.

What are we getting in return for this expenditure? We get rooftop solar running at 10% load factor, which is less than 1% of final electricity consumption. That is a trivial trickle. Most of it is generated on a summer’s day, rather than on a winter’s night when it is most needed.

The Minister’s own department’s renewable energy planning database shows that the UK has already given planning permission for sufficient renewable energy capacity to overshoot the 110 terawatt-hours required to meet the 2020 target contribution for electricity. The overshoot, if it is built, would be about 35%, but there is no budget for that excess. The department reckons a budget overshoot of £1.5 billion is possible. However, some people calculate that it could easily be £2 billion and that the department is being conservative.

My final point is political. I have checked my party’s manifesto, and it seems to me that the Government’s actions are entirely consistent with it. I am therefore extremely sorry that the noble Baroness should choose quite soon in her career in your Lordships’ House to introduce a fatal Motion. A lot of people are increasingly being left with the feeling that these fatal Motions are not just discrediting your Lordships’ House—they are actually intended to discredit your Lordships’ House.

17:45

[Lord Steel of Aikwood (LD)]

My Lords, I blundered into this debate on 19 January during the Committee stage of the Scotland Bill. At that stage, I was making a very simple point, which is that hydropower is much overlooked in comparison with solar power and wind power. That was the only point I was making. However, in the course of his reply to that debate, the noble Lord, Lord Dunlop, the Scottish Minister in charge of the Bill, gave some figures that I did not think to challenge. No sooner had the ink dried on Lords Hansard then coals of fire were heaped upon my head for not having challenged those figures. I did not know any better and I do not think that he knew any better, because he was quoting figures given to him by the Department of Energy and Climate Change. It is worth stopping for a moment to consider them.

I congratulate my noble friend on raising this matter and the excellent speech that she made, and the noble Lord, Lord Grantchester, on his speech from the Front Bench. I do not think we should get into a long argument about whether we should do something about this or just wring our hands, which appears to be something that the noble Lord, Lord Grantchester, feels strongly about.

I am concerned about the drift of this Government away from the commitments that they made at the time of the election, posing as a green Government. My new party leader has a very nice way of putting this. The other day he said:

“The prime minister has not so much hugged a Husky as led it behind the coal shed, shot it in the head and told his energy secretary it is gone to live on a farm”.

That is quite a good way of putting the about-turn of policy that we are experiencing.

To return to the point that I was making, the noble Lord, Lord Dunlop, argued on 19 January that the tariff injections proposed for hydropower would result in something like 500 new projects over the next three and a quarter years. I do not see how that can happen now that the Government have themselves reduced the tariff for the small hydropower schemes. Those are the ones that I am talking about; the little ones that I have been to see in the Scottish borders, not the massive public hydropower schemes. I was very glad to see that the noble Lord, Lord Sanderson of Bowden, supported me on that occasion because he and I live in an area where there is no shortage of water. There is sometimes a shortage of sun and occasionally there is no wind, but there is plenty of water and the water flows at a time when peak demand is so strong during the winter. That was the point that I was making.

Yet I have in my hand the consultation tariffs that the Government propose, and for small hydro schemes in the 100 kilowatt to 500 kilowatt bracket the Government’s own consultation document suggests a tariff of 9.78p. The actual tariff that they are now proposing is 6.14p. I therefore do not see how they will get 500 schemes with that reduction. Will the Government enter into a serious discussion with the British Hydropower Association to see what is wrong with the figures that they have given and how they can possibly justify the proposal for 500 new hydropower projects with this severely reduced tariff? A reduction of some 37% makes all the difference in the world and I am very glad that my noble friend mentioned hydropower in her speech.

[Lord Robathan (Con)]

My Lords, for many years in the House of Commons I was the vice-chairman of the All-Party Parliamentary Renewable and Sustainable Energy Group because I happen to believe that renewable energy has a hugely important part to play in the future energy provision for this country. I hope that most noble Lords would agree with that. But it is only a part, and that is where the noble Viscount suggested that there is a contrast between nuclear, fracking and renewable energy. They all have a part to play in making a good policy to provide energy for this country.

I have been a loyal Government supporter and I was particularly pleased when the Prime Minister said some years ago that he would create the greenest Government ever. I hope very much that the Minister will bear that in mind. He rightly said to the noble Viscount that FITs were very high. They were high for a reason: in order to attract investment, which they have done, and indeed to attract landowners—possibly such as my noble friend who has also spoken—to put up wind generators, for instance, and it has worked. I should say that I am quite interested in putting one up myself on my farm in Leicestershire, but I do not yet have an interest to declare. However, it is right that these very expensive feed-in tariffs should be brought down. They are extremely lucrative and they need to come down. As the costs of putting up solar, wind or indeed hydro energy plant come down, so too should the feed-in tariffs.

I know that the Government have reviewed their initial plans in this area, but I would say gently to my noble friend the Minister that, as I am sure he is aware, we should not as a Government kill the golden goose that has led to a resurgence of renewable energy in this country, which is all to the good. In quite rightly reducing unnecessary government expenditure, or perhaps one should say government largesse, we need to be careful that we do not end the wind and solar energy industries in this country or stop the generation of renewable energy which began so well under the coalition Government and up to now.

[Lord Teverson (LD)]

My Lords, I apologise to the House for not being in my place for the start of my noble friend’s speech. I was interested in the speech of the noble Lord, Lord Grantchester, who I admire and for whom I have a great deal of time. As has been said by Members on the Benches opposite, the whole point of feed-in tariffs is that they should come down in order to reflect the cost of investment by producers in that industry. That is what the Secretaries of State, Chris Huhne and then Ed Davey did during the coalition Government period. Producers should not receive more money than they deserve. The point is that it was done in such a way that the industries did not die. That is why we are debating this subject. As the noble Lord said, this cliff-edge change will probably see the end of these industries, and that is a problem. It is therefore appropriate that we have a fatal Motion for an SI that will be fatal to a very important part of our renewable energy provision. That is why we are here and why this debate is so important.

Last night I was privileged to be at an event where the Secretary of State, the right honourable Amber Rudd, spoke at some length about the Government’s energy policy. It was interesting and I was taken by her enthusiasm for and excitement about the Paris agreement. She and the Minister who is to respond to the debate were involved in bringing about that important agreement. She feels inspired by it and those of us attending the event agree with her absolutely. It has its difficulties, but the fact was that there was unanimity among all the nations present.

This Motion is important because not only do we have to talk the talk, sign the agreements and be the good guys internationally, we actually have to walk the walk as well. All I can see in the Government’s policy, apart from one or two areas such as taking out coal by 2025, for which I give it credit, is that the direction of travel, as the noble Lord, Lord Grantchester, and my noble friend Lady Featherstone put it so well, is going in the opposite direction. That concerns me greatly. Exactly as my noble friend Lord Steel, said, one of the great things about the Conservative manifesto 2015 was that it committed itself to the Climate Change Act. It did that unequivocally; it was there in black and white without fear, and it said it proudly. However, this is not meeting those targets, not meeting the carbon budgets and not finding a way to meet those commitments. That is why this Motion is important and why I support it.

[Viscount Ridley (Con)]

My Lords, like the noble Lord, Lord Teverson, I was not here at the start of the debate, but I hope the House will indulge me if I add a few short remarks. The noble Lord, Lord Grantchester, said that the policy of feed-in tariffs has been highly successful. What do we mean by that? It has been highly successful in taking money off people and giving it to other people. As my noble friend Lord Cavendish said, something in the order of £1 billion a year is now going through this programme. It is going, on the whole, from the poor to the rich because electricity bills are a bigger part of poor people’s bills than they are of rich people’s bills, and most of the people who can afford to put up the upfront costs of drawing down feed-in tariffs are on the whole rich people.

That is not the measure of success surely by which we should judge this policy. The noble Lord, Lord Teverson, just said that it should be judged by its impact on the climate. So how much has it reduced carbon dioxide emissions? How much bang for that enormous billion pound buck are we getting? The answer is: a trivial effect. We know that solar power, which is the bulk of the feed-in tariffs, produced 1% of our electricity last year. Therefore, the emissions reduction cannot be more than 1%. It is probably a lot less because of back-up and other issues. We know roughly where it is and we can therefore make a rough calculation as to the costs per tonne of carbon we are buying these omissions at.

The figure for those who were lucky enough to get Ed Miliband’s first tranche of feed-in tariffs is close to £1,000 a tonne. Not even the noble Lord, Lord Stern, thinks the social cost of carbon is anything like that. He says that it is about $29 per tonne. More recent estimates, because of cuts in the feed-in tariff, show that that number has now come down to something like £200 a tonne, but it is still 10 times higher than the social cost of carbon. We do not have a successful policy. We are doing it on the backs of relatively poor people. It surprises me that the two parties opposite should in this case be taking the side of the Sheriff of Nottingham rather than Robin Hood.

[Lord Deben (Con)]

My Lords, as chairman of the climate change committee, I declare an interest. I also declare a clear view that my job is to be entirely independent on these issues. Therefore, it is with care that I am going to try to navigate the discussion that we have had so far.

The climate change committee has clearly stated that we have a requirement, if we are to meet our statutory ends, to meet first of all the fourth carbon budget and then the fifth carbon budget which has been presented to the Government. The Government have committed themselves to the fourth carbon budget, and they must legislate on the fifth before the end of June. That is in the Act. No doubt, Ministers will be thinking very carefully about how they will do that because there is no elbow room in the fifth carbon budget. It is as generous as it is possible to be while still meeting the targets that were laid down—reducing our emissions by 80% by 2050—not by the climate change committee but by the Act itself.

In dealing with the Government’s proposals here today, it is not for the climate change committee to argue that the Government should not do this, should do that, or should do the other. It is for the committee to remind the Minister that the Government are committed to delivering reductions in emissions. The mechanism used must indeed be for the Government—that is the democratic balance we have established in the Climate Change Act.

18:00

It is perfectly possible for the Government to propose a series of changes, as long as they recognise that, by the end of this year, they have to fulfil the promise that they made to bring forward policies that will meet the fourth and, by extension, fifth carbon budgets. The Prime Minister made a specific commitment to the fourth carbon budget, which Ministers have done since. I have no worry about the fact that the Government intend to meet that commitment. It is also perfectly reasonable to accept that one has to vary the way one increases the amount of renewables as their price falls. One can have an argument—we are having it here—about whether that is overdone, but one cannot argue that it has to be done because the costs have fallen very significantly.

I will say just one thing about the progress of this. We rely very much on the cross-party commitment to the Climate Change Act. We have that and we defend it. I say very delicately to the Liberal Democrats that I would have thought that this is not an issue on which one wished in any way to imperil that commitment. I say that to my own party; I think that no one has ever criticised me for being anything other than impartial.

This is an area of considerable delicacy. We have to keep together the vast majority of people who recognise that climate change is happening and that it is the biggest physical threat to us and our whole way of life. We have to find a joint way to deliver it. I say to my noble friend Lord Ridley that many of us will take his comments rather carefully, because he does not have the same urgency about climate change that the science gives us. We have to accept that he will put things in a different way, as will his noble friend who also spoke. It is important for us to recognise that there is a common-sense, common view about all this. I hope that the Government, in defending their case, will be able to reassure us, if this is not the way forward, that there will be a way forward that will attract the support of all of us. The climate change committee has written a very clear letter. I hope the Minister will be able to refer to it in answering the debate.

We have to say that Paris means that the world has made a decision about climate change. We are no longer arguing the case as to whether it is happening, or whether it is terrible or just a bit awful. We are arguing the case that we have not only to keep our emissions down to a 2 degree rise, but to push them below that. We have to keep 1.5 degrees in our vision. That is what we have done. I am afraid that there is no argument about that, not only in the science but in the politics. The world has decided. That is the basis upon which business and all of us will operate.

I fear to say to those who are still fighting the backward view that it is not happening, it does not matter and we can put it all off, that they are putting Britain at a disadvantage. One of their organisations said this week that they are thrilled to find that most people in Britain are not worried about climate change. They should be ashamed of themselves because they have done that. They have made sure that they are not worried when they ought to be. If they are not worried, their children will receive wages that are the result of human greed and human refusal to accept the realities of the science.

Therefore, as chairman of the climate change committee, I merely say to the Minister that I will not comment on whether this is the way forward that I would have led. I merely say that I hope he recognises that before the end of this year, we will have to have very clear guidance from the Government on how they will meet their commitments both under the Act and, indeed, under their own promises. I ask those who are unhappy about this change to concentrate not on the means but on the end. This is not about renewables or particular mechanisms; it is about achieving a reduction in our emissions consequent upon the damage we are doing to the planet, and as a result of the figures which we put into our Act. Let us be more concerned about keeping the Government to meeting that, than about pushing particular mechanisms, some of which may need change and some of which perhaps ought to continue. However, in the end, it is what we do rather than the means of doing it that really matters.

[Baroness Worthington (Lab)]

My Lords, I follow the comments of the noble Lord, Lord Deben, by saying that, obviously, the most important thing we have to focus on is finding the lowest-cost ways to decarbonise our economy. As someone who worked very hard on the Climate Change Act to make it a flexible and technology-neutral approach to tackling climate change, I think it is very important that we focus on the things that really matter: greenhouse gas emissions and carbon intensity, which we do not talk about enough, because renewables help us only in so far as they reduce the carbon intensity of the electricity we use. That is something we need to keep focusing on. Therefore, although I completely understand the sentiment behind the approach the Liberal Democrats are taking today, in my view the fatal Motion goes a little too far. That is not to say, however, that there is not a very important job that this new Government need to do, which is to restore investor confidence, because a whole host of their policies have severely damaged that confidence.

I totally understand the sentiment behind some of the actions taken: the desire to make sure that we get the best value for money and do not put costs on people who cannot afford to bear them. However, we have behaved in a rather cavalier manner in our interaction with the renewables sector, which is an important sector for this country; its growth is bucking trends in other parts of the economy. Noble Lords may say that that is purely to do with subsidy but it is not true: it is growing because there is an urgent need to find a cleaner and better way of powering our homes and businesses. The renewables sector and other clean technologies have a big role to play in moving us to an energy system that is fit for this century. The Government must deal with that industry seriously and give it all due respect when they introduce changes and try to manage the transition from a system that relies on subsidy to one that can stand on its own two feet and compete in the marketplace.

I want to pick up on something the noble Lord, Lord Deben, said about carbon budgets. We have had conversations about this and I declare an interest in having helped to bring these about. He said that the carbon budgets, though brilliant, have a fatal flaw in their interpretation to date: emissions in the electricity sector are based not on actual emissions in the UK, but on a traded allowance that is calculated from a European system. That has to change. Noble Lords will remember that we passed an amendment to the Energy Bill that changed the counting system for carbon budgets, from the fifth carbon budget on, to one that counts actual emissions in this country. That is a very important principle.

I know the Government are not persuaded that they should keep that amendment. However, I urge all noble Lords who consider that climate change is real and that we need to do something about it, but who are also concerned about cost-effective ways of doing this and technology-neutral approaches, to accept that carbon budgets are our friend but will work only if they are full carbon budgets. If they are half-budgets, with half being set by Europe, they do not do the job for us and do not give the clarity that investors need to invest in decarbonising our electricity sector beyond 2020. That is really important, as 2020 is fast approaching. We will have no more European legal targets for renewables beyond that date. I happen to think that is a good thing, but we need something that replaces that and that gives confidence. The carbon budget could be it, but only if we change the counting rules, as we successfully did during our debates on the Energy Bill. I look forward to returning to this issue, and I hope that between now and then we can persuade the Government that this is the right approach.

[The Lord Bishop of Salisbury]

My Lords, I am very grateful for this debate. When I joined this House last year, I was really struck by how it was possible to work with Members from all parts of the House in preparation for Paris and by the strong sense of common purpose with which we could work together. I am grateful for the contribution from the noble Lord, Lord Deben, in terms of what now happens, post-Paris, and how we move on. However, I am unable to support a fatal Motion. On the other hand, it is really important that the House discusses where the Government are with their energy policy, and that is what this debate is able to do.

My contribution is simple: I have two points. There is an extraordinary gap between rhetoric and reality in what is happening at the moment with government policy, and there is no consistent overall strategic energy policy. Both those things need to be addressed. As reported by the Hastings and St Leonards Observer in May 2015—presumably just after the election and her appointment as Secretary of State—Amber Rudd said:

“I want to unleash a new solar revolution”.

In February 2015, the Prime Minister pledged to,

“accelerate the transition to a competitive, energy efficient low carbon economy”.

In Paris, he brilliantly said that we are going to be judged by what our grandchildren will say to us when we are asked what we did at this stage in our history, in response to what we knew about climate change.

The noble Baroness, Lady Featherstone, quoted DECC’s own figures about the impact of cuts in feed-in tariffs. She cited the loss of jobs in a successful industry. Renewable energy is crucial to the present and the future. We are at a transitional stage in technology; things are changing very fast. However, it is still an industry that requires support. On its own assessment, the feed-in tariffs could be phased out within the life of this Government, but the speed of change has undermined its success. I do not agree with the noble Lords behind me that this is about rewarding the rich at the cost of the poor. The average household saving from this cut in feed-in tariffs will be £6 per year. That is not a huge amount on something which we agree is an important goal. Surely it is not good enough to meet targets in this area: it would be really good to overshoot them. However, the concern is the Secretary of State’s own admission that it looks as though, by 2020, we will be 3.5% below the aim of 15% renewables which is our responsibility.

There were a pretty extraordinary number of responses to the DECC consultation on feed-in tariffs—over 54,000. The Church of England’s own Shrinking the Footprint project fed in one of those responses. We have 400 churches with solar panels at the moment: three of them are carbon neutral. Many churches are taking a holistic approach to energy use and efficiency, but churches are just an example of people’s commitment. However, this is made out of an understanding that there is a consistent, reliable policy approach which allows one to make longer-term, costly investments. I would have thought that the solar panels feed-in tariff initiative had produced a very successful public/private partnership, one which needs to be incentivised at the front end and then reduced gradually as it becomes more successful, the technology becomes cheaper and more people use it.

[Lord Vinson (Con)]

Perhaps the right reverend Prelate was not here earlier, but the noble Viscount, Lord Ridley, made the point that solar panels are currently reducing CO₂ output by only 1% in this country alone. That is an even tinier fraction of the world’s CO₂ and we are talking about a world problem, not just the UK’s CO₂ level. Even if the number of solar panels were tripled, it still reduces our CO₂ output by only 3%. Perhaps we are pushing at the wrong solutions. That is the point the noble Viscount was trying to make. Perhaps the right reverend Prelate should consider it.

18:15

[The Lord Bishop of Salisbury]

I thank the noble Lord for his contribution. Of course, I have been here through the whole debate and I did hear what was said at each stage. I agree with the noble Lord, Lord Deben, about the need to focus on the larger picture as well. But the information that was given was a particular description of the problem, as the noble Lord, Lord Deben, pointed out.

In addition to my points about the importance of the rather more gradual change in feed-in tariff reductions and the gap between rhetoric and reality that is emerging in what we are seeing of government policy, there is also a problem with the Government’s strategic approach. It is not clear how all these individual decisions fit within an overall energy policy framework. There are very different approaches being taken to continuing the use and extraction of fossil fuels; shale gas and fracking; nuclear; and renewables. There is no indication yet as to what will be in the national energy-efficiency policy. So this debate is a really good opportunity post-Paris for us to gather again and try to hold the Government to account, when there are some very mixed messages being given by a variety of initiatives, and to ask that we begin to see more clearly the strategic energy policy which would help us all have more confidence in the way in which we can engage with this.

[Lord Haskins (CB)]

My Lords, as chairman of the Humber Local Enterprise Partnership, I am very interested in this debate because the Humber area generates 25% of the country’s electricity and provides 25% of the country’s oil and petrol. We have every type of energy activity short of nuclear and hydro. We are very diverse. It is a very important part of our history—and future.

In the past 10 years we have had considerable support from the Government in moving towards a change in the nature of our industry away from coal towards renewables. In the past six months, however, partly because of the volatility of the markets, the Government have appeared to be a little less sure about where they are going than they were a few months ago. My particular interest is offshore wind, where, thanks to the Government, a huge investment from Siemens is now under way to produce substantial quantities of offshore wind for the nation.

There is a hiccup at present because people are not too sure where they are going. The plan, for Siemens and for all of us, is that by 2024-25 offshore wind will be competitive with any other form of energy. But for that to happen, we need undertakings that the support will be given during that period and a commitment from the industry that substantial research and development will take place to lower those costs. It is very important from our point of view that there is clarity about the Government’s energy policy going forward so that people who are sitting on their hands at the moment waiting to invest can have the confidence to invest in the future, which they want to do.

[Lord Donoughue (Lab)]

My Lords, I will be brief but I have to say that I regret—although I am not surprised—that the Liberal Democrats have brought forward this Motion. I think it is the first time in 31 years in this House that I have publicly supported a Conservative proposal but on this occasion we should acknowledge that the Conservative Secretary of State has at last done something not to halt but to slow what has been going on for some years, which has been rightly described as a massive transfer of wealth from the poor to the rich.

As a member of the Labour Party for 62 years, I have always opposed that kind of approach, and for some time I have been rather surprised that my own party seems not only to connive at it but to have initiated much of it. It is a massive transfer. It is the ordinary working families that pay the higher energy prices that come from green taxes. They pay through their income taxes, supporting subsidies—I have to say that there are people here who seem to be subsidy addicts. It is employers and those giving jobs to working people who suffer from these higher energy prices. The decent working men of Redcar and Port Talbot have suffered from having higher costs, although mainly because of the Chinese moves. I recently met an employer in heavy manufacturing who demonstrated to me how his high energy costs were a major factor in putting his business at risk and where he, too, might have to make working men unemployed.

There is a major issue for me, as a Labour person, about how my party supports such measures to transfer massive wealth from the poor to the rich. There are one or two in this House who make millions from renting wind turbines, having solar panels and so forth. I am sure that they will declare their interests when they speak but that troubles me in particular. The right reverend Prelate said that it is only a little. Well, for many people a little is a lot. I notice that nobody supporting this Motion, other than him, appears even to defend the fact that this imposes such a burden on the working people. It is a small amount but it is part of a process that produces a massive burden on them.

I understand the desires to go for a green environment, where possible. I should point out to the noble Lord, Lord Deben, that while I very much enjoyed his contribution I was reminded that his father was an Anglican vicar. I think that he would have been proud of that speech, which could well have come from many of the pulpits that I have enjoyed. I noted that he claimed to be independent. I totally accept that, as I am independent in my lifelong support for Northampton Town Football Club and the Northampton rugby club, but it is a certain kind of independence. When the noble Lord very impressively and emotionally attacks those who question his position, of whom I am one although I question only part of it, he says that we do not accept climate change and all that goes with it. I have to tell him that I accept climate change; I do not know a single sceptic who does not. For me, climate change is what has always happened, in cycles. It is happening now and we accept that. I accept that the globe is warming and that human activities play a part in it. I do not know where these straw men are who seem to agitate the noble Lord so much. We wish to question—

[Lord Deben]

My Lords—

[Lord Donoughue]

The noble Lord spoke for a long while.

[Lord Deben]

If the noble Lord accepts climate change, why has he opposed every single measure to try to do something about it?

[Lord Donoughue]

It is the old problem: I do not know what evidence the noble Lord bases that on. He does not know what I have supported in the past, so I will not accept that, but we will not delay the House for longer on this. It is about querying arguments in the true Enlightenment tradition and questioning where the burden of the price goes. What we object to, although nobody proposing the Motion seems to have reservations about it, is that the less well-off in this country pay through regressive green taxes—

[Baroness Worthington]

It is a lovely speech but I point out that, on a global scale, the people suffering the most from climate change are the global poor. We have a moral responsibility to show leadership in this country. We can afford to do this and we will benefit from doing it. We will have jobs and inward investment from doing this. To use the hard-working people of Britain as an excuse not to do it is a real shame.

[Lord Donoughue]

I have read much of the evidence about who suffers in the world from this but I do not accept what the noble Baroness says. The Secretary of State should be encouraged to do more looking at who pays for so much of this burden. It is understandable if the Secretary of State is concerned about this country’s massive debt, which does not appear to concern many Members in this House. I dissent from this Regret Motion and trust that it will go no further.

[Viscount Ridley]

My Lords, I omitted to mention my interests and I apologise to the House for that. I do not have interests in solar power, which is what I mostly spoke about—mainly because I have turned away solar developers—but I do have other interests in energy, including coal.

[Lord Berkeley of Knighton (CB)]

My Lords, I crave the indulgence of the House, as I missed the opening of this debate, but I did take part in the last one.

[Noble Lords]

Minister!

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, this has been a very wide-ranging debate, which has interested the whole House, and there have been differences within parties as well as across the Floor of the House.

The Government are committed to cost-effective decarbonisation of the United Kingdom’s electricity supply—let me nail that straight at the start. In recent years, we have made huge progress in encouraging the development and deployment of renewable energy and in building a successful renewables industry. The feed-in tariff, or FIT, scheme has been a vital part of this. The FIT scheme now supports more than 830,000 small-scale renewable installations—a figure far in excess of what we expected to deploy when the scheme was first set up.

In 2010, when the FIT scheme was set up, the then Government estimated that it would cost £490 million per year in 2020. That was the estimate. Without the changes that we are seeking to introduce today, we estimate that by 2020 it would cost £1,740 million per year; with the changes, it will still cost £1,300 million per year. Let me just repeat that: £1,300 million per year. There has been a slight tendency in the debate to suggest that the Government are walking away from the renewables sector and not spending anything on FITs, but we will be spending £1,300 million per year, via the LCF. Of course it is not direct—it is via the levy control framework—but it is still a cost for bill payers. We need to establish that at the start.

The noble Baroness, in opening the debate, quite fairly said that subsidies must end—that nobody wants subsidies and that we must do this in a controlled way. I agree, but she did not then suggest how we should do it; she just opposed everything that we were seeking to do. It is a mode of proceeding, but if you are going to be taken seriously about ending subsidies, you should suggest how you are going to do it.

We have of course also made changes as a result of the consultation. The Government were elected with a clear manifesto commitment to keep bills as low as possible as well as to decarbonise. It is a judgment call, and we have been criticised from both sides, by those who think we should not be doing anything at all and by those who think that we should be doing more for the renewables sector. Clearly, the more you increase the subsidy, the more will be deployed. The noble Baroness suggested during her speech that renewables were cheaper than conventional forms of electricity. That is not remotely true. If it were true, we would not need to do anything at all. It was David Attenborough who said that as soon as you have the cost of renewables below the cost of fossil fuels, the problem goes away. We are not at that stage: if we were, we would not need to be doing what we are doing in terms of continuing a subsidy.

What we are doing is responsible. If this order were annulled, we would have to consider closing the scheme altogether, so I welcome the stance taken by the opposition Labour Party on this—I know it is not happy with what we are doing but the right course of action is to regret this rather than to seek, any time there is a policy you do not like, to overturn it by voting strength. That is not what this House should be about. I will say no more about that, but it really is not the right way to proceed.

In response to the noble Lord, Lord Grantchester, who asked why we are bringing it forward in this way, nobody at the start of this Parliament could have foreseen that we would be in this position of having votes all the while against government policies which were being lost in a way that has not happened previously—at least not on this scale, as he himself indicated. I was grateful for what he said on that.

We have listened carefully to the views of industry in the consultation—in particular, the Solar Trade Association’s £1 plan—and took account of its responses in redesigning our scheme. We revised tariffs upwards to reflect evidence that it provided, we allocated more budget to solar under the £100 million cap to reflect its asks and we are implementing a cap system which allows us to recycle underspend and consider the balance of caps between years.

18:30

An inconsistency seemed to run through a lot of contributions. People were saying that this is killing the renewables sector and then, “Furthermore, we have caps”. The caps kick in only if we have deployment on the considerable scale stated in the statutory instrument: it is a cap against further deployment. I am not sure that noble Lords can have it both ways.

If it appears that deployment is adversely affected, we will look again at the 10% degression and see whether another figure would be more appropriate. That seems entirely reasonable. In response to another Solar Trade Association request—the noble Lord, Lord Grantchester, referred to it in passing—I am certainly prepared to have a close look with Ofgem to give an indication of deployment levels as quickly as possible.

We are happy to work with industry, but let us see what the renewables industries have been saying, because that has not always been reflected in the debate. The Solar Trade Association itself recognised that, after the changes, solar,

“will … remain a great investment for forward-thinking home owners”.

The British Photovoltaic Association stated that,

“this should be a wakeup call for the industry to start working on business models where we don’t rely on subsidies any longer. The combination of solar and energy storage will deliver that in not too distant future”.

The future FIT scheme will support enough new solar installations to power more than 260,000 homes and save more than 687,000 tonnes of carbon dioxide annually. That is not insignificant.

I shall try to cover some of the points made by noble Lords during the debate. The noble Viscount, Lord Hanworth, talked about the cost of gas being high. The cost of gas is actually falling—wholesale costs are dropping. He referred to the cost of solar. It is also falling, as reported in today’s Financial Times.

The noble Lord, Lord Cavendish of Furness, rightly said that we need to speak of consumers as much as—if not more than—producers. It is consumers that we are concerned about. The Government have obviously to balance the interests of bill payers with those of decarbonising. When they were part of the previous Government, the Liberal Democrats recognised that as a challenge: it is, but that is what we must seek to do.

The noble Lord, Lord Steel, rightly referred to the issue of hydro; I know that he has taken a close interest in it. I will write to him in more detail, but I know that even after this all kicks in, hydro will be taking 25% of the budget, which is not insignificant.

The noble Lord, Lord Robathan, rightly said that as costs come down, so should tariffs. That is what this is all about. The noble Lord, Lord Teverson, kindly and generously referred to the success of the Government in the Paris agreement. On his general comments, of course we are committed to the Climate Change Act and to our international obligations as a result of Paris. My noble friend Lord Ridley came from an opposite angle. He said that we must take care of the interests of bill payers; that is absolutely right.

My noble friend Lord Deben rightly said that he would not move from his independent stance. He asked me to acknowledge the letter, which we are studying in detail and will be responding to within the timescale set out, as he would expect. We of course take his advice and that of his committee very seriously and I look forward to discussing it with him shortly.

The noble Baroness, Lady Worthington, raised some issues about the Energy Bill. I was not surprised by that, but this is perhaps not the right time to debate it at length; we can debate it when it comes back to the House.

I have worked closely with the right reverend Prelate the Bishop of Salisbury. I thank him again for his work on the Lambeth declaration, and for saying that he cannot support a fatal Motion. I hope we are setting out a clear position on this. Our clear position is that we must remember the importance of bill payers and keeping them onside. It is perhaps easy for us to forget that £5 is not insignificant for many hard-working families and individuals. We should not lose sight of that. Yes, of course we must recognise that decarbonisation comes with a cost but there is this balancing act to do.

The noble Lord, Lord Haskins, spoke of Humberside, the importance of offshore wind and Siemens. Of course, I recognise that. I met some people from Siemens last week and they did not raise the doubts and issues that he did. If he would care to let me know what those issues are more specifically, I am very happy to look at them.

The noble Lord, Lord Donoughue, spoke in support of the Conservatives. I am grateful for that. We are keen on decarbonising but recognise that bill payers have a part to play as well.

I hope I have done justice to the contributions made. In conclusion, the changes we are implementing challenge the renewables industry to innovate and reduce costs. The evidence from the Solar Trade Association and others is that they recognise that. Of course, costs are coming down, and coming down quite steeply in some instances. We are making changes that will limit the amount of subsidy. I heard noble Lords on all sides say that they do not think we should subsidise where it is not necessary, so we agree on the principle. I cannot see that that is an ideological stance, as was suggested. It is just that we may differ on what amount the subsidy should be and how we withdraw it. That is a different debate and I have not heard it being entered into. It was more, “We don’t like subsidies either”, but then no suggestion of how much the subsidy should be.

I admit there is a challenge to the renewables industry here. We need these changes. We recognise the importance of ensuring that we decarbonise but, as I indicated, it is not a small amount to spend £1,300 million per year through the FIT scheme on renewables. With that, I ask the noble Baroness to withdraw her Motion. I recognise that there are strong feelings on this but it is not appropriate to table a fatal Motion every time there is a government policy you do not like. That is not the way forward. I hope the Liberal Democrats will see their way to withdraw the fatal Motion, even at this late juncture.

[Baroness Featherstone]

My Lords, I thank all the speakers in this debate. It has been very instructive and informative, and so many of the contributions were knowledgeable. I thank the Minister for the government response.

My purpose in tabling this Motion to Annul was really to persuade the Government to go back and work again with the industry. It is exactly that rate and degree of change that we are discussing. As for it being a fatal Motion, when will the Government stop submitting negative SIs that are unamendable? They did so with this one on 18 December, just before the rising for Christmas, and buried in a slew of SIs, which might have denied us any debate whatever. It is important, given the seriousness of the issues I raise, to say to the Minister, “I want the Government to go back on this”.

I noted the quote from the Solar Trade Association but I would say the same if I were in its position and not wanting to put off investors. The Minister asked how I would reduce the subsidy. My answer is, again, to go with the industry and see whether there could be a new rate of decline of subsidy and an agreed timetable. That is not for me to say as I do not run these industries, but I know from the level of complaint and amount of lobbying I have received that there are genuine and serious concerns.

What I heard generally from this House in the excellent speeches was that most noble Lords agree with the ends and that there needs to be a change, but were not willing to will the means to get to that end. I listened carefully to the Minister’s response. I hoped to hear willingness to make further amendments. Sadly, I heard none. Therefore, I wish to test the opinion of the House.

18:39

Division 1

Ayes: 91

---

Liberal Democrat: 81
Crossbench: 4
Labour: 3
Green Party: 1
Plaid Cymru: 1

Noes: 230

---

Conservative: 186
Crossbench: 33
Independent: 4
Democratic Unionist Party: 2
Labour: 2
Ulster Unionist Party: 2
Bishops: 1

18:55

Motion

Tabled by

[Lord Grantchester]

That this House regrets that the Government intend to implement the Feed-In Tariffs (Amendment) (No. 3) Order 2015 causing significant harm to the renewables sector when there is growing concern at the lack of investment in new energy-generating capacity; and further regrets that the Order sets deployment limits that will severely impact on the size of one of the cheapest low-carbon energy options when there is urgent need for greater deployment of renewables to contribute to the security of United Kingdom power supplies, the decarbonisation of the energy sector, and the attainment of the United Kingdom’s obligations towards climate change mitigation under the Paris Agreement (SI 2015/2045).

[Lord Grantchester]

I thank all contributors to the debate today and thank the noble Lord, Lord Teverson, and my noble friend Lord Hanworth for their support. I was very pleased to hear the contribution of the noble Lord, Lord Robathan. I am tempted to remind the noble Viscount, Lord Ridley, that in his estimation of outcomes he omitted to recall that this measure will also cut community schemes that could help alleviate fuel poverty. However, to talk in terms of transfer from the poor to the rich, as some have done, is to misunderstand the issue and to ignore the huge impact of climate change on the world’s poor. We all want to keep costs down, including subsidies being as low as possible. We needed the wise words of the noble Lord, Lord Deben, to emphasise the bigger picture, along with the contributions from my noble friend Lady Worthington. We have had a full debate, and I detected indications of support from the Minister. I will not move my Regret Motion to a vote.

Motion not moved.

House adjourned at 6.57 pm.