Grand Committee
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The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bell rings and resume after 10 minutes.
Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023
(1 year, 8 months ago)
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Viscount Younger of Leckie
That the Grand Committee do consider the Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023.
Relevant document: 30th Report by the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)
My Lords, these draft regulations were laid before the House on 30 January. Good investments are central to well-run pension schemes and decisions made by the trustees of those schemes have a significant impact on growing savers’ pension pots. Subject to approval, these regulations will help occupational defined contribution pension schemes—the so-called DC schemes—make greater use of performance-based fees, which are payable to investment fund managers when they deliver healthy returns on their investments. This will put DC schemes on an even playing field with other institutional investors such as insurers, investment companies, defined benefit pension schemes and overseas investors when it comes to accessing the same range of investment choices that come with fees.
The regulations also place new duties on the trustees of most DC schemes to disclose additional information about their investments. They are designed to ensure that trustees reflect on the investment decisions they make, as part of their ongoing fiduciary duty to create a diversified investment strategy that delivers for savers. These regulations continue the Government’s commitment to ensure that millions of hard-working savers in occupational DC pension schemes are receiving the best possible value. I am satisfied that these regulations are compatible with the European Convention on Human Rights.
Let me take a step back and put this in a bit of context. Over the past decade, there has been a significant increase in the use of illiquid asset classes such as infrastructure, real estate and private equity within institutional investment portfolios globally. Meanwhile, DC schemes in the UK have relied on public markets to generate returns and diversify portfolio risk. Pension scheme trustees’ primary focus must always be on delivering an appropriate return to members. But by investing almost wholly in liquid investments such as publicly listed equity and debt, pension savers can miss out on the potential to achieve better returns from being invested for the long term. This is a particular concern in DC schemes, where decisions which reduce long-term returns will affect member incomes in retirement.
Currently, less than 10% of UK DC investments are estimated to be in illiquid assets. The Pension Charges Survey 2020 evidenced that two-thirds of DC schemes had no direct investment in illiquid assets within their default fund arrangements. This is at a time when the UK DC market is growing in scale and in ambition. DC pension schemes currently hold over £500 billion of assets, a figure that is set to double to £1 trillion by 2030. The Australian DC market, in comparison, invests somewhere in the region of 20% of assets, on average. This includes investment in major UK assets such as the King’s Cross redevelopment project and Manchester, Stansted and East Midlands airports.
The DWP has run several consultations to understand the reasons why DC schemes have largely avoided investing in private markets. The feedback received highlighted concerns that performance fees, typically associated with illiquid assets and levied by fund managers, would put schemes at risk of breaching the existing 75 basis-point regulatory charge cap. While the charge cap has successfully reduced costs, it has arguably led to more focus on costs than on the returns that different asset classes can provide. In January, the Minister for Pensions launched a consultation on proposals for a value-for-money framework, which aims to address this. These regulations continue that value-for-money theme. The essence of what we are trying to do here is to make it easier for DC schemes to access a broader range of investment opportunities that could generate higher return outcomes.
I will now say a bit more about the issues highlighted during the consultation. We listened carefully to earlier concerns raised during the consultation that this change to the cap could weaken existing saver protections, and we have acted on this feedback. Regulation 2 of this instrument sets out the criteria that “specified performance-based fees” must meet to be considered outside the charge cap. These include a requirement that fees must be paid only once returns to the scheme have exceeded a pre-agreed rate or amount agreed by trustees and the fund manager prior to investment.
The criteria include additional safeguards that trustees must also agree in advance, and that performance-based fee structures include mechanisms to guard against excessive risk-taking or fund managers being paid repeatedly for the same level of performance. The regulations provide for the use of high-water marks and fee caps, for instance, which are commonly applied in the investment market to give investors this extra level of protection.
The regulations are purposefully silent on what rate of returns or type of fee structure mechanisms must be applied. This is to allow trustees and fund managers to develop and negotiate terms that are in the best interests of savers. Provided that trustees and their advisers apply these terms, such performance fees will not erode retirement pots because they should arise only when savers have received a favourable return on their investments.
The DWP received positive responses to this change, particularly from larger DC pension schemes which said that the ability to remove these fees from their charge cap calculations will make it easier for them to consider new asset classes. The DWP has published statutory guidance to assist trustees with determining the criteria for performance-based fees that can be considered outside the charge cap. The guidance is very clear that trustees should seek professional advice on their investments where performance-based fees are prevalent.
To ensure transparency to members, performance-based fees incurred are required to be disclosed, and the value to members assessed, in the scheme’s annual chair’s statement. To be clear, these changes place no obligation on schemes to agree to investments that come with performance-based fee arrangements if this is not in their members’ best interest.
With any investment there is no guarantee of higher returns. In accordance with existing legal requirements, trustees must invest in a manner calculated to ensure security, liquidity and profitability, and have regard to the need to diversify investments. This provides that trustees are guided on assessing the risk of portfolios and, with this, managing the risk of lower as well as higher returns.
Regulation 3 of this instrument sets out new duties on DC trustees to include an explanation of their policy on investing in illiquid assets in their statement of investment principles. These explanatory statements, covered in the regulations, include whether investments in illiquid assets are held, the types of illiquid assets and why this policy is of advantage to members. Where investments will not include illiquid assets, trustees are expected to give reasons why, along with whether they have plans to invest in the future.
While some of our bigger DC schemes already provide this information, this is not the approach taken by all. Some master trust schemes also disclose information on the asset classes in which the scheme holds investments, but this is not commonplace and most members are not in receipt of this information. The regulations address this by placing a duty on trustees to disclose the percentage of different classes of assets held in the scheme’s default funds. Asset classes covering liquid and illiquid are prescribed in the regulations.
Greater understanding and accountability of the investment decisions made by trustees on behalf of their members will be key to improving value for members across all schemes. The industry’s response to these new duties was that the regulatory burden is reasonable and proportionate while still retaining the wider benefits these changes will bring. It is worth noting that asset allocation disclosure is already mandatory for Australian pension schemes.
The DWP will work with the Pensions Regulator to ensure that trustees are supported with the new duties. Information contained in chairs’ statements and statements of investment principles are monitored by the Pensions Regulator as part of its wider strategy on regulatory compliance.
We will also look closely to monitor the impact of our changes on investment performance. In addition, Regulation 7 of these regulations requires that a review of these regulatory provisions must be undertaken and published within five years of the regulations coming into force.
These regulations also correct a drafting error at cohort 1(b) of the staging profile in Part 1 of Schedule 2 to the Pensions Dashboards Regulations 2022. The error relates to the staging deadline for master trust schemes that provide money-purchase benefits only. While we are not aware of any schemes being affected by this minor error, it is none the less appropriate to amend the Pensions Dashboards Regulations 2022 to resolve this issue as soon as practically possible. With that, I commend this instrument to the Committee and beg to move.
Lord Sharkey (LD)
My Lords, as the Minister has said, this statutory instrument contains seven regulations. The first is to do with timings and commencement. We have no comment on this, except to ask why there will be a delay of 21 days in bringing the correcting dashboard regulation into effect.
Regulation 2 excludes specified performance-based fees from the charge cap, and the Explanatory Memorandum sets out the rationale. In paragraph 10.5, the Explanatory Memorandum speaks of
“sufficient safeguards for schemes and members to protect them from excessive charges”
consequent upon this regulation. This is clearly a critical area. The possibility of excessive charges is an obvious concern and was highlighted in the recent SLSC report on this instrument. Can the Minister set out what these safeguards are and on what basis and by whom they were judged to be satisfactory?
Regulation 3 will require schemes to include an explanation of their policy about investing in illiquid assets in their default statement of investment principles, as the Minister said. The taxonomy of asset classes is explained in detail in paragraph 25 of the statutory guidance and is given in Regulation 4(5). This has eight categories and does not attempt to define “illiquid”. In fact, I could find nothing in the instrument and its accompanying documents that approaches a definition. Of course, it may be that I have overlooked it somewhere; I would be grateful if the Minister could guide me on the matter, point to a definition and perhaps explain how it was arrived it and by whom. The chief purpose of this instrument is to remove barriers to investments in illiquid assets, and it would be rather odd if there were no criteria for assessing whether an asset was to be counted as illiquid.
Regulation 4 also requires trustees or managers to report on specified performance-based fees incurred by the scheme.
Regulation 5 requires such disclosures to be made public. This all seems very sensible, but nowhere is there any sense of an upper bound on these specified performance-based fees. In its report, the SLSC made this point.
Since the EM was produced, the DWP has published extensive statutory guidance—22 pages—which states that the rate or amount of these fees is for the trustees and managers of the scheme with support from their advisers and their fund manager to agree based on the nature of the investment proposed. At first reading, this seems a bit like an invitation to a fleecing. The Government were happy to install the charge cap in the first place. What consideration was given to capping these special performance-based fees? Paragraph 76 of the statutory guidance, “Volatility of returns and performance based fees”, states:
“The 2023 Regulations require that specified performance-based fees structures must include mechanisms that offer protections to pension schemes and their members. This is so fund managers are not taking excessive risk or being paid twice for the same level of performance or for performance which turns out to be impermanent.”
I cannot see where that is spelled out in the instrument as a must, and I would be grateful for the Minister’s help in clarifying the matter.
Regulation 6 corrects an error in the pensions dashboard, and we have no comment on that.
Regulation 7 provides for a review of the impact of Regulations 2 to 5 every five years, which seems sensible. We are particularly interested in seeing whether the modification of the charge gap and the disclosure requirements lead to an increase in investment in illiquid assets. The SLSC made this point in its formal recommendation to the House:
“As the fee changes made by these Regulations aim to encourage pension schemes to increase their investment in illiquid assets, the House may wish to ask the Minister how schemes’ subsequent exposure to an increased risk of lower, as well as higher, returns is to be monitored and how trustees are to be properly guided on assessing the risks to the portfolio.”
Those are very good questions, and I would grateful if the Minister could address them.
Baroness Drake (Lab)
My Lords, I hold pension trustee positions, and refer to my interests as set out in the register.
These pension scheme regulations are being introduced for two reasons. First, the Government believe that they will facilitate greater investment by pension schemes into private markets, securing better returns for savers. Secondly, the Government want to increase DC pension fund investments in UK start-ups, infrastructure, green investment and illiquid asset classes in private markets.
Of course, this is to be welcomed if beneficial alignment is achieved between the best interests of the ordinary citizen and their pension pot, and investments that benefit the UK economy to achieve the win-win. However, there are barriers to be addressed in getting there. The problem with these regulations is that the exclusion of performance fees from the DC charge cap will not be the driver of significant changes of investment in illiquid asset classes, but consumer protections will be weakened where money is invested without the security of that cap. The charge cap was introduced to protect millions of people investing through inertia under auto-enrolment. To achieve the diversification of investments which would benefit the UK economy, the complexities of other barriers to investment in private markets need to be addressed. Overreliance on removing consumer protections from pension savers will not do it.
I will reflect on some of those complexities. The pension regulatory environment, which is in perpetual change, is driven by endless policy initiatives without certainty as to the Government’s underpinning strategy. Recent regulation enabled performance fees to be smoothed over a five-year period, but before even testing the efficacy of those changes the Government proposed reversing them in favour of these. Trustees need greater consistency when considering long-term investment decisions—consistency between not only one Government and the next but one Minister and the next. Also, the complexity of regulation means that government contradicts itself. For example, the Government asked the Productive Finance Working Group to make recommendations on increasing private market investments, while TPR was consulting on prohibiting the schemes from holding more than 20% of assets in unregulated investments.
There is also the need to strengthen confidence in government economic policy and governance, a sentiment captured by the noble Baroness, Lady Lane-Fox of Soho, president of the British Chambers of Commerce, in the FT yesterday, where she warned policymakers that
“businesses are holding off making big investment decisions given the UK’s recent political and economic upheaval”
and that,
“People just don’t feel like taking risks”
in the UK.
Inefficiencies from pension freedoms are weakening the long-term private pension system and the approach to illiquid assets. For example, as savers get to 55 or 57, they can take their pots as cash in a series of lump sums and draw down funds in any combination of timing and amount that they choose. Small pots are growing exponentially. People change jobs more frequently. Pension transfers are increasing, including out of workplace schemes. Trustees have to implement these freedoms, which in turn impact on investment decisions.
Higher costs incurred with illiquid assets need to be borne fairly across the members of the scheme, as they would impact members differently. Those close to retirement or who choose to exit the scheme are at greater risk of paying higher fees without the additional returns.
Then we come to the issue of how to ensure value for members and higher returns when performance fees are outside the charge cap and inert citizens directly bear the investment risk. Achieving that higher value will be very challenging, as will measuring it for the Government to see it, as it is with securing standardised disclosure of performance fees. There is a lot of history here about making fees and charges work effectively for ordinary savers.
Ensuring that fees are payable only for realised outperformance is to rest on a tighter definition of performance fees and the discipline of negotiated agreements between trustees and asset managers. Those are the two big levers that are relied on. The Explanatory Memorandum states that excluding pension fees will encourage innovation on fees, but where is the evidence? It is an assertion, and lots of people assert it in their submissions, but it is difficult to find hard evidence. Exclusion of performance fees might set a precedent for removing other charges. Having removed that hard-fought security for consumers, the gate is open. It can disincentivise innovation because the cap has been removed. It can inhibit the evolution of fee structures and private market products that better accommodate DC pensions to the benefit of the UK economy.
Testing the impact of negotiated agreements between trustees and asset managers needs to be assessed much further before weakening the charge cap, given the challenge of achieving member fairness on performance fees. It is an assertion that those negotiated agreements will produce that beneficial result, but that should be really tested before such a critical consumer protection is removed.
The Government have set up a long-term asset fund, the Productive Finance Working Group is considering recommendations and the FCA and TPR have commenced consideration of value for money. This is work in progress, yet the Government push ahead with amending the cap, increasing the risk to the saver.
Investments that help with transition to net zero, environmental protection, housing or infrastructure which support economic growth and savers’ best interest are to be welcomed. Indeed, ESG and TCFD reporting and governance requirements are nudging schemes more and more in that direction. Several pension providers have indicated that they would no longer agree to traditional performance fees but remain committed to investing in private markets. Some large schemes hold illiquid investments within the existing charge cap. Some fund managers are indicating innovating on growth equity funds, and fee and product structures will evolve from the high-growth prospects of the UK automatic enrolment market—agreements achieved through scheme scale, not by weakening consumer protection.
One of the policy options in the impact assessment was government mandating investment in illiquid assets by pension schemes. Although rejected, this is the second hint at mandation after the joint December 2021 letter from the Prime Minister and the Chancellor. These DC savings are citizens’ private assets. Mandation would replace or undermine the fiduciary duty on trustees, require private assets to be harnessed and directed to meet government policy objectives, and probably risk market distortions. It would risk imposing inappropriate risk appetites on savers and increase uncertainty on liability, consumer protection and duty of care. It would certainly weaken employer engagement, and it could seriously risk undermining public confidence in auto-enrolment. Those are big consequences from mandation.
I have four questions to ask the Minister. Can he confirm that the Government have no intention to mandate how pension schemes must invest? How will value for members assessments be altered in light of the new risks arising to pension savers from these regulations? How will the Government ensure that savers close to retirement or who exit a scheme do not pay higher fees without additional returns from illiquid investments? What new measures will be introduced to enhance the availability of charges and cost information on illiquid investments? What new initiatives are the Government expecting the FCA to take to regulate for fairness and consumer duty in all the private markets that these regulations cover? I am sure that the DWP will say that it is not within its remit to know what the FCA is doing, but to make a decision that lifts such a hard-fought-for and fundamental consumer protection on the level of evidence that is before the Government, without knowing, having considered or having discussed with the FCA its approach, is an omission. It would be helpful to leave those questions.
Baroness Sherlock (Lab)
My Lords, I thank the Minister for introducing these regulations and those noble Lords who have spoken. As we have heard, these regulations cover two distinct issues—one minor and the other rather less so. I will do the minor one first; it is a change to correct a drafting error in the Pensions Dashboards Regulations 2022, amending the line in Part 1 of Schedule 2 that specifies which master trusts are required to connect to the pension dashboard by 30 September this year. I do not want to kick a project when it is down, but, to me, that is not the most pressing problem attached to the Pensions Dashboards Regulations 2022. In fact, the Minister recently announced that the entire timetable, which is hard-wired into these regulations, is being scrapped, so the regulations will presumably need to be either repealed or amended. Could the Minister tell us whether the intention is to repeal them or if they are simply going to be amended and when we will know more about that?
On the major provisions in the regulations, the objective behind them is clearly to push pension schemes into investing more of their members’ money in illiquid assets. As we have heard, they will use two basic levers to do that. First, they will require all pension schemes with more than 100 members to explain their policy on illiquid assets and to disclose their schemes’ investments in them; and, secondly, they will exclude specified performance-based fees from the list of charges that fall within the 0.75% regulatory charge cap.
Just to be clear, these Benches would like to see greater investment in ways that will help the transition to net zero and in infrastructure projects that support economic growth, but we have heard today some important questions about the detail of these regulations, and I hope the Minister has some answers ready. First, the question of risk was raised. The noble Lord, Lord Sharkey, is right: I could not find a definition of illiquid assets either, but they clearly cover a wide range of investments. They are not just buildings or infrastructure but, as the Secondary Legislation Scrutiny Committee pointed out, could include art or intellectual property. Some illiquids clearly carry significant risk. This legislation also targets venture capital investments, which often have a high failure rate.
The noble Lord, Lord Sharkey, mentioned the 30th report from the Secondary Legislation Scrutiny Committee, which drew these regulations to the special attention of the House. It expressed concern that, without limits on the proportion of illiquid assets in a pension scheme, the scheme may not be able to deliver the returns that members anticipate. It pointed out that many of those members, of course, have been auto-enrolled by their employer and therefore had no involvement in the choice of their pension scheme investments.
As the noble Lord, Lord Sharkey, pointed out, the committee asked two specific questions that it thought Members of the House might like to put to the Minister. One was about how schemes’ exposure to increased risk of lower returns would be monitored, and the other was how trustees would be guided on assessing the risks to the portfolio. I may have missed this in the Minister’s comments—I heard him talk about advice to trustees on charges, but I am not sure that he talked about advice on assessing risks—so it would be helpful if he would address that.
I want now to look briefly at the proposal specifically to exclude certain specified performance-based fees from the list of charges that fall within the regulatory charge cap. As my noble friend Lady Drake has reminded us, the charge cap was introduced to protect the millions of people who are saving and investing through inertia, so surely there must be a compelling case for the Government to do anything that might weaken that. It is worth pausing briefly to remember that, in 2013, DWP research showed the impact of higher fees on pension savings. An individual who saves throughout their working life via a scheme with a 0.5%—50 basis points—annual charge cap on the value of their pot could lose 13% of their savings to charges. Push that to 1% and they could lose almost a quarter; push it to 1.5%, the figure is around a third. These basis points may sound small but their impact on the value of a fund is really quite significant.
Viscount Younger of Leckie (Con)
My Lords, I thank the Committee for its input and for the lucid remarks made by the three Peers who spoke. I also thank noble Lords for their interest in this brief debate; I realise that all three Peers have taken a great interest in this issue in the past and are experts at different levels in this sphere. If I may say so, I also thank them for their general support for these regulations. However, I am aware that a number of quite specific and detailed questions have been asked, and I will, as ever, do my best to answer them.
I will start by answering the question about the definition of “illiquid” raised by the noble Lord, Lord Sharkey. Illiquid assets are defined in Regulation 3(2)(d) as those
“which cannot easily or quickly be sold or exchanged for cash”.
I hope that gives him some comfort.
The noble Baroness, Lady Drake, asked about the intention to mandate pension schemes in terms of how they must invest. Throughout the development of these regulations my department, DWP, has been clear that investment decisions, including whether illiquid assets are suitable investments for schemes, remain a matter for trustees, in line with their fiduciary duty to manage risk and reward in their members’ best interests. I alluded to that in my opening speech.
The noble Lord, Lord Sharkey, was the first to delve into the detail of the charging. I hope that I can answer all his questions and the follow-up questions from the noble Baronesses, Lady Drake and Lady Sherlock. The first question was: why amend the charge cap, which has been successful in ensuring that savers are not charged high fees? The charge cap remains an important protector. Our reform is intended to give pension schemes the opportunity to access a wider range of those investment opportunities that can come with fees. We believe that, where higher fees also bring higher total returns, the overall effect will be to grow pension pots—which is surely in the interests of savers.
The noble Lord, Lord Sharkey, further asked how one prevents fund managers taking excessive risk or, as he put it, being paid twice for the same level of performance. To come within the definition of specified performance-based fees in the regulations, a fee structure must be designed between the fund manager and the scheme trustees to mitigate the effects of short-term fluctuations in the investment performance or value of the managed investments. Different mechanisms can be in place within a fee structure that protects from excessive risk or repeated payment, such as so-called high-water marks, whole fund structures, clawback mechanisms, escrows and caps. Statutory guidance explains these mechanisms and trustees are encouraged to seek professional advice on them before they agree to invest. I will come on later to answer the question about protections for trustees. In fact, it was about guidance for trustees, which I will come back to.
The noble Lord, Lord Sharkey, asked further about how performance-based fees might be measured and apportioned fairly, which is linked to the question raised by the noble Baroness, Lady Sherlock, about smaller schemes. We recognise that this is a challenge, and trustees should work with fund managers to consider how performance-based fees should be charged to ensure fair allocation for members. This is particularly important in open-ended funds, where members can enter or exit at various points and may not always benefit from periods in the investment cycle where there is positive performance. Trustees are thus encouraged to review industry guides published in 2022, which provide useful help on member fairness and other challenges for DC pension scheme decision-makers when investing, or considering investing, in illiquid assets.
The noble Lord, Lord Sharkey, asked how the regulations ensure that members are protected against paying high fees for moderate performance, which is an interesting point. The regulations are clear that, for performance-based fees to fall outside the charge cap, scheme trustees must agree with fund managers methods to mitigate the risk of fees increasing due to market volatility and the time period by which any fee will be measured. To ensure transparency to members, payments of performance-based fees are required to be disclosed and the value to members assessed in the scheme’s annual chair’s statement, as I mentioned in my opening speech.
The noble Baronesses, Lady Drake and Lady Sherlock, asked an important question about how the Government will ensure that savers close to retirement or who exit a scheme do not pay higher fees without additional returns from illiquid investments. As I said before about another matter, this is a challenge. DWP statutory guidance sets out that trustees should work with fund managers to consider how performance-based fees should be charged to ensure fair allocation for members. As mentioned earlier, trustees are encouraged to review industry guides published in 2022, which provide useful help in this respect.
The noble Baroness, Lady Drake, asked what the value would be for members in terms of how it is assessed, and how it could be altered in the light of new risks arising from these regulations. Trustees who pay specified performance-based fees will be required to assess the extent to which these represent good value for members. This builds on existing requirements on all DC schemes to assess values for all costs and charges for members. Schemes with under £100 million in assets will not be required to include this as part of their extended value for member comparison against larger schemes. This may help to answer a question raised by the noble Baroness, Lady Sherlock. Moving forward, it is proposed that specified performance-based fees will be included in the costs and charges metric for the new value-for-money framework.
The noble Baroness, Lady Drake, asked further what new initiatives the Government expect the FCA to take up to regulate for fairness and consumer duty in all the private markets that these regulations cover, which is an important question. Existing FCA duties to authorise investment providers and vehicles, and regulate private markets, will apply. The Government expect trustees and their advisers to seek detailed confirmation—
Viscount Younger of Leckie (Con)
My Lords, as I was saying, I will conclude my remarks, although there are a number of questions that I still wish to address.
The first was from the noble Baroness, Lady Drake, concerning what new initiatives the Government expect the FCA to take on to regulate for fairness and consumer duty in all the private markets that these regulations cover. I started to answer this, but I will cover it again. The FCA’s existing duties to authorise investment providers and vehicles and regulate private markets will apply. The Government expect trustees and their advisers to seek detailed confirmation from fund managers as to how a proposed product complies with the charge cap regulations, including in relation to any specified performance-based fees, before assessing whether it is in the best interests of the scheme to invest.
I now turn to the question asked by the noble Baroness, Lady Sherlock, on guidance for trustees, which was a good point. It will be for trustees of pension schemes, considering professional advice, to determine their allocations to illiquid assets subject to their cash-flow obligations and subject to their duty to act in the best interests of their members. Many pension schemes are comfortable with the notion of segmenting their portfolios into a liquid component and an illiquid component. This allows separation of the portion of their assets that will not be needed for liquidity purposes for many years. The Pensions Regulator’s code of practice contains guidance for trustees on their investment approach. This includes how they should evaluate performance, and risk and reward profiles.
The noble Baroness, Lady Drake, asked why we should legislate so soon after the 2021 regulations came in, which gave schemes the option to smooth over multiple years of the presence of performance fees with the charge cap. Feedback from the industry suggests that changes introduced in 2021 would go only so far and were unlikely to move pension schemes away from a focus on cost to one of value, which is one of the key principles of what we are doing in these regulations. We want trustees to have the confidence to invest in illiquid assets that come with fees where it is in their members’ best interests, safe in the knowledge that, in targeting higher returns, they will not fall foul of this charge cap.
The noble Baroness, Lady Sherlock, asked about other challenges that DC schemes face when considering investment in illiquid assets. It is fair to say that our change removes a regulatory barrier. At the same time, we recognise there are other non-regulatory challenges for DC schemes, such as those relating to lack of scale, liquidity and regular pricing. We continue to discuss these with the industry and believe that, with government encouragement, it will be incentivised to come up with solutions to meet those particular challenges.
The noble Lord, Lord Sharkey, asked why there are 21 days before the dashboard regulations are brought into effect. He might know this, but for the benefit of the Committee, this is commensurate with Regulation 1 of the Pensions Dashboard Regulations 2022.
The noble Baroness, Lady Sherlock, asked a number of questions about the timing of dashboards legislation. We are considering legislative options to amend the connection deadlines and will update Parliament, if this is of help, before the Summer Recess. I hope that is not too far away.
The noble Baroness also asked whether the dashboards will ever happen. I was perhaps expecting that question, so I will use this opportunity to say that pensions dashboards will be a vital tool to help savers plan for their retirement, and the Government remain thoroughly committed to their delivery. I know that this commitment is shared across the pensions industry, but it is vital that the foundation upon which the dashboards ecosystem is built is safe, secure and works for both the pensions industry and individuals searching for their pensions. As the noble Baroness knows, more will be coming out on this shortly and I have also pledged to update Members when we think it is right. This could be in advance of the summer, as I think I have said in the past.
Illiquid investments have the potential to bring strong returns, and exempting specified performance-based fees from the charge cap will help to remove a barrier to investment in this area. Placing new duties on trustees to disclose their illiquid investment strategy and their asset classes will also ensure ongoing consideration of a diverse range of assets as part of a more balanced portfolio. Considering the financial challenges that many are facing, it is vital that decision-makers are continually reviewing investment propositions that can deliver the best possible outcomes for the millions of savers in occupational pension schemes. With that, I commend this instrument to the Committee.
Baroness Sherlock (Lab)
I thank the Minister for taking the time to answer those questions. I just want to ask him to explain the definition of an illiquid asset a bit more. He is right to point to Regulation 3(2)(d), which says that they are
“assets of a type which cannot easily or quickly be sold or exchanged for cash”.
I suppose most things can be sold or exchanged for cash reasonably quickly if you do not mind how much you get for them at a fire sale. I have two questions. If that means
“cannot easily or quickly be sold or exchanged for cash”
at a reasonable price, or at least at the price one had paid for them, would that apply to UK gilts last autumn? Secondly, the reason this matters is that there is a lot of money to be made from this definition. Where that is the case, the definition is likely to end up being the subject of some dispute. What is the mechanism to resolve this? Whose decision is it? Does someone just get to do it? Will the regulator push them, or will it end up in court? How will this be litigated?
Viscount Younger of Leckie (Con)
I hope I can be of some help. I think I should write a letter on this quite detailed question, as it takes us further from the question originally asked by the noble Lord, Lord Sharkey. Part of the answer could be—I will need to follow up with a letter—that we do not want to prescribe our approach too much. As I mentioned earlier, it will be very much up to the trustees and pension funds to decide for themselves. It might not be right to have too much prescription here, but I will go no further than that. The noble Baroness, Lady Drake, may know more than me, as one can go only so far with a definition. I will write to clarify further what we mean.
Baroness Drake (Lab)
Trustees cannot make investment decisions now without taking advice. These regulations may be adding a bit of extra detail, but that principle is already there. The department and regulators can mandate trustees to provide more information, and transparency is a great thing; I do not demur from that. The Minister has identified all the other things that need to be done and discussions that are going on.
However, there is an issue about which there is still not a clear answer. Organisations such as the PLSA, which is a trade body representing pension schemes and their administrators, do not think that this is the correct thing to do—and that is not the only one. I do understand why, in the absence of evidence and the presence of many other significant barriers, the Government have chosen to weaken a fundamental consumer protection in the as-yet-unverified belief that it will be a major driver of increased investment in illiquid assets.
That is the bit I cannot find anywhere. I can find assertions of views but the reasoning is, I am afraid, quite weak. What worries me is that this will start encroaching on what was such a fundamental protection. Most schemes come in way below 0.75%—there is so much headroom—and we know that leverage can come from the scale of the scheme master trusts that are coming. So why are you doing this when you cannot yet have confidence—because you have not tested it —that it will actually benefit the saver?
Viscount Younger of Leckie (Con)
I thank the noble Baroness for her further question. I will add some further detailed comments to the letter that I am going to write to the noble Baroness, Lady Sherlock, but let me say this: I am aware of the natural scepticism of the noble Baroness, Lady Drake, for what we are doing in bringing in performance-based fees. Her question is one that we have asked ourselves. I clearly have not managed to convince her about the consumer protections that we believe are there. I spent some time spelling out what those protections are, including the role of trustees, what is expected of trustees, the guidance for trustees and the role of the FCA and the regulator in all this. There is a lot that I would prefer to put down in writing. I am not sure whether I am going to be able to convince the noble Baroness but I hope that I have given her some comfort that I will at least try my best.
Building (Public Bodies and Higher-Risk Building Work) (England) Regulations 2023
(1 year, 8 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Scott of Bybrook
That the Grand Committee do consider the Building (Public Bodies and Higher-Risk Building Work) (England) Regulations 2023.
The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)
My Lords, under the Building Safety Act 2022 and subsequent secondary legislation such as this, the Government are introducing a raft of measures to improve building safety. We are introducing the biggest reforms to the design and construction sectors in a generation, including the introduction of duty-holder and competence requirements for all building work. They also include introducing a more stringent regulatory regime during design and construction for higher-risk building work, to be overseen exclusively by the Building Safety Regulator.
The “higher-risk” definition during design and construction applies to work on buildings with at least two residential units, care homes and hospitals that meet the 18-metre or seven-storey height threshold. Under the current system, there is an exemption available to public bodies where they can obtain partial or full exemption from the building control procedural requirements if this is approved by government. These regulations will ensure that, in future, any exemption allowing public bodies to carry out building control on their own buildings will be limited to non-higher-risk building work only.
The exemption will not apply to higher-risk building work moving forward, as the Building Safety Regulator will be the sole building control authority for all higher-risk buildings, including those owned by public bodies. Although these regulations make only a small change, they are an important part of our ongoing reforms to ensure the safety and standards of all buildings and to ensure a consistent approach by the Building Safety Regulator to all higher-risk building work.
These regulations make three sets of changes. However, I will start by providing some context and background. After the tragedy of the Grenfell Tower fire in 2017 and the deaths of 72 people, the Government committed to fundamental reforms by implementing the recommendations of Dame Judith Hackitt’s independent review and introducing a new building safety regime. The review made significant recommendations, including the need to reform building control as the system which checks that building work complies with building regulation requirements such as fire safety.
Building control is carried out freely across the public and private sectors at present. Anyone commissioning building work, whatever its nature, can choose to use either the local authority—that is, the local council—in the public sector or a private sector approved inspector to carry out the building control. There is then a further option, open specifically to public sector bodies. If approved by Ministers, these bodies can obtain an exemption from some or all of the procedural requirements of building control and then carry out building control on their own buildings. This exemption has very rarely been used and almost all building control is carried out by either local authorities or approved inspectors, as opposed to public bodies self-regulating. In all cases, and irrespective of any exemption, the functional requirements of the building regulations, such as fire safety, continue to apply.
One of Dame Judith Hackitt’s main findings on building control was the lack of a level playing field between public and private sector building control. She recommended that the Building Safety Regulator should carry out building control for higher-risk building work and therefore end the choice of building control for these buildings. The Building Safety Act 2022 contained many reforms related to building control, including implementing a recommendation to end duty-holder choice of building control for higher-risk buildings, as well as strengthening the regulation of the building control profession.
These regulations are only a small part of our building control reforms, which themselves are only a part of wider building safety reforms. However, they are important. They contain measures that support the new system and its operation for higher-risk buildings, led by the Building Safety Regulator. The three sets of changes that these regulations make are as follows. First, the regulations end Ministers’ ability to grant building control procedural exemptions to public bodies for higher-risk building work. Building control on higher-risk buildings will in future be overseen exclusively by the Building Safety Regulator. However, the ministerial ability to grant exemptions for non-higher-risk building work is unaffected.
Secondly, the regulations require any public bodies with a partial exemption under Section 54 of the Building Act 1984 to cancel their public body notice with the local authority if the building work becomes higher-risk building work. Local authorities will also be required to cancel public body notices under the same circumstances. Currently, no public body has a partial exemption and therefore these measures are being introduced for future use as opposed to changing any existing arrangements. Only one public body, the Metropolitan Police, currently has any type of exemption, and separate regulations to be introduced later this year will change that exemption so that it applies to non-higher-risk building work only.
Thirdly, the regulations will allow the Building Safety Regulator to fine public bodies £7,500 if they have not cancelled their public body notice when building work becomes higher-risk building work. This will ensure an equal approach to approved inspectors, who will become registered building control approvers under the new system and who will be liable for sanctions if they fail to cancel an initial notice, which is their equivalent of a public body notice, under the same circumstances. Public bodies will be allowed to contest any fines, first through the Building Safety Regulator and ultimately in the courts.
These regulations support the aim of increased building safety, in particular for higher-risk buildings, by ensuring that the Building Safety Regulator is the sole body carrying out building control on such buildings. It also removes any possibility of this approach being undermined in future by public bodies being given exemptions that circumvent the Building Safety Regulator and the higher-risk building control regime. I hope noble Lords will join me in supporting the draft regulations. I commend them to the Committee, and I beg to move.
Baroness Pinnock (LD)
My Lords, I support the regulations that the Minister has detailed. They are entirely appropriate and another step in the right direction to overhaul and thoroughly improve building safety, particularly as in this case they apply to higher-risk buildings. I have a couple of questions for the Minister which I hope she will be able to answer.
My first question struck me when I was reading the details in the statutory instrument. Why on earth should any public body be exempt from basic building safety? Why is there an exemption? We would not be having this debate if there was no exemption. I did not quite hear what the Minister said, but it is my understanding that, of the higher-risk buildings that are in occupation, care homes, hospitals, secure residential institutions, I think, and military barracks are excluded from the definition of higher-risk buildings—if my memory of when we went through the Bill serves me right—and I have never understood why that should be the case. I would think that many hospitals would fall under this, as they are high enough to comply with the definition of a higher-risk building. I wonder why they are exempt, if I heard correctly and have read the Explanatory Memorandum correctly. Do we know how many public bodies will now be drawn into this? There are not that many that are very high-rise. It would be interesting to know.
I think the reason that care homes and hospitals were excluded from this is that they are already covered by fire safety regulations and legislation, but I am quite in favour of belt and braces. If there are fire safety regulations that control that, let us add to them regulations such as these because the two could work in harmony to ensure that, in this case, quite vulnerable people would have double the protection that we would want to make sure they had. That is another little query in this case.
My next point is about the Met Police. How on earth does it get an exemption? Where did that appear from? Somebody ought to say, “This will not do. You’ve got to be included in this because, as a Government, we are determined to ensure that any higher-risk buildings are totally safeguarded against the risks that were identified by”—as the Minister reminded us—“the Grenfell Tower tragedy nearly six years ago, which was just awful”. Let us get this right. If it means more regulation and better safety for more people, it gets a big tick from me.
Baroness Taylor of Stevenage (Lab)
My Lords, we absolutely support the introduction of these regulations, which are the latest welcome—if somewhat belated—step in establishing a more stringent building safety regime for higher-risk buildings, as recommended in Dame Judith Hackitt’s review as far back as 2018. Although we are going in the right direction, it remains an appalling scandal that tackling the shocking failures in building safety standards has now dragged on for more than five years.
I agree with the noble Baroness, Lady Pinnock, that the push for the deregulation of building control in favour of the private sector providing those services was at least a contributory factor in some cases to non-compliance with building safety regulations. I know that the Minister is aware of the case of Vista Tower in Stevenage and Sophie Bichener, who has fought a long campaign on these matters. We welcome the focus now on ensuring that the Building Safety Regulator is the building control authority for all higher-risk building work carried out on public body buildings.
This SI also removes the power for the Secretary of State to grant exemptions for higher-risk buildings, although, as the Minister told us, the exemption power still remains for non-higher-risk buildings. We will need to be reassured that these definitions are very tight and will be adhered to so that we can be assured that all building work will be correctly categorised in terms of the building’s risk. There will need to be clear criteria for the change when an authority is required to declare that its building has gone from “non-higher-risk” to “higher-risk”.
I have done so before, but I want to pay tribute to the tenacity of the campaigning Grenfell survivors, building safety campaign groups and individuals across the country who have worked tirelessly to bring the seriousness of the issues being dealt with here today to the attention of the Government and the public. I draw the Minister’s attention to a number of questions that have been raised in relation to the Explanatory Memorandum, although, of course, we will be happy to receive responses in written form if she is not able to answer them today; they are questions of clarification and do not change our support for the regulations.
First, when looking at the building safety leaseholder protections regulations, the Secondary Legislation Scrutiny Committee identified the issue of public bodies claiming that their SPVs—special purpose vehicles—are responsible for building safety, rather than the bodies themselves. Would these regulations also apply to SPVs?
The Explanatory Memorandum to the earlier Higher-Risk Buildings (Key Building Information etc.) (England) Regulations 2023 quoted a number of 13,000 higher-risk buildings in the UK. Do we know how many of them are the responsibility of public bodies?
What estimate has been made of the resources needed by the Building Safety Regulator to assess and carry out this building control work? I am aware that, earlier this month, the Government announced a welcome £42 million to recruit building control inspectors and fire inspectors for the Building Safety Regulator. Do we know the timeline for their recruitment and how quickly that will move forward?
Has any thought been given to the possibility that public bodies may have to pass on charges to tenants for retrospective building safety work? Have the Government specifically prohibited public bodies from doing so? Once the Building Safety Regulator starts looking at buildings, it may well identify further causes of work and that charge may be passed on to tenants; they can be very substantial bills.
The Explanatory Memorandum refers to a separate instrument that will limit the Metropolitan Police’s existing exemption and ensure that the Building Safety Regulator is the sole building control body for its buildings. I agree with the noble Baroness, Lady Pinnock: I cannot think of any reason why it is exempt from this in the first place but, clearly, that needs a separate instrument. How many buildings are affected by this and when will the instrument be introduced? Do we have a date yet?
The Explanatory Memorandum refers to a “for information” letter that has been sent to all government departments. Will the Minister please lay a copy of it in the Library?
The impact statement on this SI, as on other similar regulations relating to building safety, states:
“There is no, or no significant, impact on the public sector.”
Surely the assessment and collation of information, particularly where public bodies such as housing authorities have significant property holdings, will present a resource issue. If the Building Safety Regulator identifies significant issues, that, too, will result in potentially expensive remedial works. I am thinking particularly but not exclusively of local authorities, whose resources are already stretched to breaking point. Has the Local Government Association been consulted on this or asked for a view on the impact of safety regulations such as these on public bodies?
This is my last question; I am sure the Minister will be pleased to know that. Does Section 32 of the Building Safety Act apply similar provisions to those in this SI to buildings in the private sector? Does this mean that the framework for building control of higher-risk buildings is now complete, or are there still other regulations to be laid before the House?
In conclusion, we are pleased to see this suite of building safety regulations come forward and that this SI puts building control back into the hands of a regulator who will, we hope, ensure that the highest standards are met. We welcome the Government’s commitment, as stated by the Minister. We have some concerns about the resources and capacity of the Building Safety Regulator, on which it would be helpful to have some reassurance from the Minister; about the potential impact on resources for the public sector; and about whether this can be passed on to tenants. However, with those caveats, we welcome this better regulation overall and hope that it will give some further reassurance to those who occupy the buildings belonging to public bodies.
Baroness Scott of Bybrook (Con)
My Lords, I thank the Committee and the two noble Baronesses opposite for their support of these regulations. This marks another step for building safety reform and the introduction of a higher-risk building control regime overseen by the Building Safety Regulator. I will go through a few of the questions that were asked.
The noble Baroness, Lady Pinnock, asked why a public body would be exempt. I have to say that these are just procedural exemptions; public bodies still have to comply with building regulation. They provided public bodies with some flexibility, if the Government agreed, but no more bodies will be drawn in; we are at the end of that now.
The noble Baronesses, Lady Pinnock and Lady Taylor of Stevenage, asked why the Met Police got an exemption. The Met Police will be included from October for all its higher-risk buildings. We will have a separate SI for the Met Police so it is not going to get away with it; this will cover it as well.
The noble Baroness, Lady Pinnock, asked how many public bodies with existing exemptions are affected. As I said, all public bodies interested in getting a building control procedural exemption, either partly or wholly for higher-risk building work, are affected. They will no longer be considered for an exemption as these will be unlawful. Interest in using this exemption has been very low: there is currently only one public body with an exemption and only one exemption has been granted since 2000. We are talking about one body and no public bodies are currently requesting a new exemption. As I said, the one public body that has that exemption is the Metropolitan Police. It covers all its building work but it was agreed that, from October 2023, it will be limited to non-higher-risk building work only. This change will be included in separate regulations later in the year, as I said.
The noble Baroness, Lady Pinnock, asked about the definition of higher-risk buildings. She is quite right that this is about residential buildings—they must have at least two residential units in them—and care homes and hospitals. They also have to meet the 18-metre or seven-storey height threshold. The other areas that she was talking about are non-residential and are therefore subject to separate fire regulations.
I think it was the noble Baroness, Lady Taylor of Stevenage, who asked about the recruitment of building control officers. This is important. We have put £42 million into this and we have started a programme of recruitment over three years, before we have to recharge it. That work is already happening; I will ask if there are any further details or updates on that as well.
I might have to look in Hansard for the details of some of the further questions from the noble Baroness, Lady Taylor of Stevenage, but I have noted some. I will write a letter on SPVs; the overarching answer is no but I want to make sure that I give the noble Baroness the details of why.
We talked about the 13,000 properties and how many the SI affects. It is one; that has been answered. As I have said, we have put in £42 million to help with recruitment. There was also something about retrospective charges in the public sector but I will look at the details of the noble Baroness’s question and send her something. We have discussed the Met Police.
The noble Baroness mentioned a letter. I am not aware of it but we will look into that and, if possible, put it in the Library for all noble Lords. We will also give the noble Baroness more detail about the private sector and local authorities in a letter, and make sure that both noble Baronesses get that letter and a copy is put in the Library.
As noble Lords know, these regulations are an important part of this Government’s reforms to ensure that residents are safe and feel safe in their homes. Before I sit down, I once again pay tribute to the Grenfell community. Without them and their sad loss, we would not be discussing these things. They are always in our thoughts. I once again thank noble Lords for their contributions today.
Treasure (Designation) (Amendment) Order 2023
Lord Parkinson of Whitley Bay
That the Grand Committee do consider the Treasure (Designation) (Amendment) Order 2023.
Relevant document: 32nd Report from the Secondary Legislation Scrutiny Committee.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, I am very pleased to move this order, which was laid before your Lordships’ House in draft on 20 February. The revised code of practice was laid before your Lordships’ House in draft on 23 February.
The order designates an additional class of treasure, based on the outstanding historical, archaeological or cultural significance of a find that would not otherwise fall under the Act. The order further exempts from treasure legislation finds that also fall under the Church of England’s legal processes for dealing with moveable objects. The revised code contains clear information about the treasure process, clarifies the time limits for each part of the process, and provides guidance on the new definition and exemption.
During 2019, DCMS carried out an extensive consultation on the Treasure Act. The 32 questions covered issues ranging from practical administrative procedures to views on the future of treasure. Over 1,400 responses were received from a variety of individuals and organisations. These included detectorists, who make up 95% of treasure finders, commercial and community archaeologists, landowners, and cultural and archaeological organisations. The many thoughtful and considered responses have been fundamental to our work on these proposed changes, and we are very grateful to everyone who took part.
In addition to the consultation responses, we drew on the expertise of the treasure registry at the British Museum—which administers the process on behalf of DCMS—Amgueddfa Cymru and National Museums NI, and officials in Wales and Northern Ireland. We also commissioned full and detailed research from Heyworth Heritage on the options and impacts of extending the definition of treasure. We aim to simplify the treasure process and to strengthen its capacity to preserve important and significant finds for public access. To explain how the order and the revised code will do this, it may be helpful if I outline the background to the Treasure Act.
The Treasure Act 1996 replaced the common law of treasure trove in England, Wales and Northern Ireland. I am very pleased to see the noble Lord, Lord Inglewood, in his place, for he played a key role in bringing the Act on to the statute book. The Act essentially retained the definition of treasure as being composed of gold or silver, with the addition of an age limit of 300 years or older. The Act removed the common law condition that a treasure find had to have been hidden with an evident intention by the owner to return to recover it. The removal of this condition brought under the treasure process objects associated with Christian burials, meaning that such finds would be subject to the new Treasure Act and the Church of England’s legal processes. In 2002, an order was made extending the definition of treasure to include hoards of prehistoric base-metal objects and individual prehistoric objects with very low precious metal content. This draft order will amend that order.
Under the Act, a finder has 14 days to report a treasure find to a coroner, who will decide whether the find meets the definition of treasure. Treasure belongs to the Crown. Treasure finds are offered to museums which, if they wish to acquire them, will fund a discretionary reward for the finder and landowner. The amount and division of the reward is decided by the Secretary of State, advised by the experts of the Treasure Valuation Committee. This process is expertly delivered by our partners at the British Museum, Amgueddfa Cymru and National Museums NI.
In England and Wales, the Portable Antiquities Scheme, the voluntary recording scheme for archaeological finds made by the public, is managed by the British Museum and Amgueddfa Cymru in partnership. The scheme plays a key role in facilitating the reporting of treasure cases and their acquisition by museums. Aside from being the gateway to the treasure process, its role in ensuring that over 1.5 million archaeological finds made by the public have been recorded has added significantly to our archaeological knowledge. It has provided the data for nearly 800 research projects, including 161 doctoral theses. We have provided additional funding to support the scheme, including for a new Portable Antiquities Scheme database. This will include a treasure tracking system, which will noticeably improve the efficiency of the treasure process.
National Museums NI plays an equally important role, administering not only the treasure process but the reporting of archaeological objects, which is mandatory in Northern Ireland. It was part of the group which redrafted the code, along with its colleagues and officials from England and Wales—a demonstration of this partnership in action.
The Act has undoubtedly been successful at preserving finds for public access. Over 17,500 finds have been reported, 95% by metal detectorists, and of these 6,000 have been acquired by 200 museums across England, Wales and Northern Ireland. These 6,000 finds include the Shropshire bulla, the extraordinary golden pendant found in 2018, which was a star exhibit in the recent Stonehenge exhibition at the British Museum—it dazzled that Shropshire lad, my noble friend Lord Harlech, who has admired it online—and the Corrard torc, an equally singular piece of Bronze Age jewellery, now at Enniskillen Castle Museums.
Although I am not allowed to pick favourites, as a Northumbrian I have been particularly pleased to have two encounters with the eighth-century cross pendant found in Berwick-upon-Tweed in 2019. It is marked with a runic inscription of a previously unknown Anglo-Saxon name, perhaps its owner or a loved one. I had the pleasure of seeing it at the launch of the annual treasure report at the British Museum and then back at home in Northumberland at Berwick Museum and Art Gallery. That cross reflects the dual purpose of the Act, which is to preserve finds for the public which give them a personal and often tangible connection to the people who made and used these objects, and to provide material for academics and researchers, leading to new insights into our shared history.
The Treasure Act gives museums the first option on acquiring important and significant finds. It is a fundamental part of the UK’s cultural protection legislation, but there have been several times when the Act has not been able to secure important finds. The Crosby Garrett helmet, a unique Roman ritual object found in Cumbria, did not meet the definition of treasure because it is made of base metal. It was sold to a private owner, despite the great efforts of museums, including the brilliant Tullie House Museum in Carlisle, which I visited earlier this year, to raise funds to purchase it at auction. I am pleased to say that York Museums Trust was more successful in its bid to buy the Roman Ryedale hoard, and we are very grateful to the public and private donors who helped to fund that process so that the hoard can be admired by the public. But apart from the uncertainty of the sales process, museums acquiring finds on the open market may find that they are subject to premia and other costs.
The export licence deferral process, for cultural objects recognised as national treasures, can keep treasure finds in the UK, as happened with the bronze birrus Britannicus figure, which I had the pleasure of seeing at a bustling Chelmsford Museum in half term. But we should not need to rely on this system, which is triggered only when an owner wishes to take or sell an important cultural object abroad, to protect important finds which are made of base metal. The designation of the new class of treasure is intended to address this situation.
Finds will fall under the new class if they have any metal element, are older than 200 years old and meet the very specific wording in the order. They will have to demonstrate an exceptional insight into an aspect of national or regional history, archaeology or culture by virtue of their rarity, location or connection with a person or event. Where the coroner agrees that the find, either individually or in combination with other objects in the same find, meets one or more of these conditions, it will be defined as treasure. This new class will include finds which, despite being made of silver or gold, are currently not defined as treasure. Potentially, this includes gold or silver finds which are between 200 and 300 years old and single gold coins, such as the extremely rare Henry III penny found in Devon in 2022. Currently, these do not fall under the Act. It is worth emphasising that finds such as these will be defined as treasure only where they meet the new significance definition.
This additional class of treasure is limited to metal finds. I am aware that the Government are being urged to widen the definition of treasure further to include non-metal finds. Consideration was given to including other materials, such as stone and ceramic, in this statutory instrument, but we decided that doing so would be premature for several reasons. First, there would be significant implications for the resources of the Portable Antiquities Scheme in England and Wales, where there is no mandatory reporting of archaeological objects. There would also be an impact on archaeological excavations and archives and, potentially, on the planning conditions for some building development. Our view is that all these are important issues that need to be fully considered and canvassed before the definition of treasure is extended to non-metal finds. We will be monitoring the effect of the new class of treasure on museums, the work of treasure administrators and coroners and their staff. This information will support further consideration of the definition of treasure, including the possibility of widening it to include other materials.
We are also aware of concerns that this class may lead to the treasure process being overwhelmed. The wording of the order has been drafted to limit the definition of “significance” to only the most archaeologically, culturally and historically outstanding finds and, as I previously mentioned, we have increased funding for the administration of the treasure process. The order before the Committee is designed to provide a mechanism to acquire exceptional finds when they are recognised, but it does not impose upon finders, curators or administrators the duty of considering, at length, the possible significance of every single find.
The order also exempts from the definition of treasure finds which currently fall under both the Treasure Act and the Church of England’s statutory controls for moveable objects. The exemption will remove the confusion of having two overlapping legislative regimes and satisfies the undertaking the Government made during the passage of the Act. We have worked with the Church of England and believe that exempt finds will have a sufficient level of protection under the Church’s statutory processes. Equally, finds relating to other faiths and to Anglican congregations in Wales and Northern Ireland retain the protection that they have under the Treasure Act.
In addition to the order, we are also considering the revised code of practice, which contains guidance for users of the treasure process as well as the fundamental principles by which the process operates. The code has been revised to bring it up to date and to make it easier to use and more comprehensible. It introduces a more efficient process, with defined deadlines to reduce uncertainty about the responsibilities of all the parties in the treasure process. The process is almost unique in its capability to balance the differing interests of finders, landowners, archaeologists and curators to enable magnificent finds, such as the recently discovered Tudor pendant, to be preserved for the public to enjoy. It is that public interest which is the overriding principle of the treasure process, and we believe that the new class of treasure, the exemption and the revised code support that fundamental principle. I commend these changes to the Committee and look forward to hearing noble Lords’ views on them. I beg to move.
Lord Inglewood (Non-Afl)
My Lords, I must begin by stating unequivocally that I am a supporter of the statutory instrument and the code of practice. I should bracket that with a reference to my interests as set out in the register. As the Minister said, the SI and the code of practice are the logical evolution of the earlier statutory instruments and codes of practice which are all based on the Treasure Act 1996, for which, as the Minister said, I had ministerial responsibility. Interestingly, that Act was the result of 25 years’ lobbying by the late Earl of Perth, about whom a close personal friend, who was a director of one the main London museums, said to me “The great point about the Earl of Perth is that he never gives up”.
The policy on which the Act was based was taken on by the subsequent Labour Administration in very much the same way as we envisaged when it was put on the statute book. It seems to me a very good example of how sensible, pragmatic public administration can be achieved if dogma is not allowed to intrude too far.
The other thing the Minister said is that this legislation has been a success in what it has brought about. That is not only to the credit of politicians; indeed, it may have happened despite politicians. It also reflects well on both the work done at the British Museum through the Portable Antiquities Scheme, then led by Roger Bland, and the finds liaison offices scattered across the country. Indeed, I dare say that, had we known what we know now then, in 1995-96, we might have done what we are seeing take place here this afternoon.
Lord Vaizey of Didcot (Con)
It is a great pleasure to follow the noble Lord, who, as we have heard, was responsible for this important legislation when he was the Heritage Minister.
The debate has prompted me to recall my early days as a Minister in the Department for Culture, Media and Sport in 2010. The Crosby Garrett helmet, which the noble Lord referred to, was discovered in May 2010 as we came into office and became a bit of a cause célèbre. As he was speaking, I googled the helmet and discovered that it was the most popular subject in an obscure tradition that has fallen into abeyance, “Ask Ed Vaizey”, where I had the idiotic idea of asking members of the public to send me questions as DCMS Minister, which I then promptly answered on a YouTube channel. I have no idea what the answer was because I did not want to play YouTube loudly in the Moses Room while the noble Lord was speaking. However, although there were only two sessions, I think, the most popular question was about the reform of the Treasure Act. Of course, that reform never happened under my watch. It took a dynamic, forward-thinking and energetic Minister to bring these important reforms before us today.
The Treasure Act and the Portable Antiquities Scheme were one of my first headaches when I was the Minister in 2010 because, at that time, the Treasury was asking all departments to find savings. I have to say, I was not strongly aware of the Portable Antiquities Scheme but I soon came to understand its importance, its value and, dare I say it, its value for money. It is that classic British institution: a win-win for all parties involved. In the great scheme of things, it costs very little money indeed; its impact is absolutely enormous; and it brings together two communities that are, in theory, diametrically opposed to each other—metal detectorists and archaeologists.
There are many other countries where the stand-off between archaeologists and metal detectorists can be very detrimental to heritage but I am glad to say that, because, as the noble Lord pointed out, the Portable Antiquities Scheme works so effectively and is stewarded so well, it has brought these two communities together. The archaeologists understand that metal-detecting is a huge passion. There are 40,000 metal detectorists in the UK who go about their business every weekend. They have been immortalised in an award-winning television series, “Detectorists”, which has taken the culture of British metal-detecting all around the world. Detectorists will find things in the ground, but thanks to this scheme, they now know exactly to whom they can take the find. They can have it recorded and catalogued and, if it is of importance, they can potentially expect to receive a reward. Also, because the landowner potentially benefits as well, there is an incentive for them to work with metal detectorists to organise official metal-detecting days to discover objects.
The scheme works extremely well. This subtle but important change will extend the opportunity to record and acquire more treasure finds. I know that there is some debate in the archaeological community about pushing the reform even further to mimic the scheme that exists on the Isle of Man, where worked stone and pottery can also be considered treasure if it is of a unique character and deemed important enough for our cultural heritage. However, I understand the department’s position; they want to see whether this change works as effectively as possible.
The Portable Antiquities Scheme is an unsung but important part of our heritage ecosystem. The only time that I ever managed to get any publicity for it was when I went religiously every year to the British Museum’s exhibition of finds discovered in the previous year under the scheme. As a Minister, it was one of my highlights of my year. One year, I picked up an object, having forgotten to put on the white gloves required to handle an object of such beauty and fragility, and at last I found a way to get the Portable Antiquities Scheme on to the front page of the Daily Mail.
I commend these changes.
Lord Redesdale (LD)
My Lords, I must start by declaring an interest as patron of the Redesdale Archaeology Group, which was formed recently after the excavations in Northumberland of High Rochester. I raise this because I spent last summer happily shifting vast amounts of dirt—that seems to be what archaeologists do more than anything else. We had two very keen metal detectorists as part of that archaeological dig, Richard Wilson and Alan Grey. Through their immense work, going after every single ping in the ground, we found one silver denarius after two weeks. Happily, we extended our knowledge of High Rochester, a Roman fort, and found two phases of an occupation that we did not know about before, but talking to them summed up how difficult it is to be a detectorist. The wonders of the hoards that we talk about are something most detectorists do not find.
One aspect of the Portable Antiquities Scheme that is rarely raised is that millions of objects that are reported will never find their way into a museum but, without that scheme, we would not know of those objects in the first place. Following the two previous speakers, I can say that I have never been a Minister and probably never will be but, as one of the founders of the All-Party Archaeology Group, I have spent years lobbying on behalf of the Portable Antiquities Scheme.
What is unusual is that this is a debate where we are not asking for more money or to carry on the existence of the scheme. This is one of the areas I would like to raise because it is difficult to see how the provisions of the Treasure Act could be implemented without the scheme. The scheme started via the work of Roger Bland and is carried on by Dr Michael Lewis under the auspices of the British Museum but its survival should not be taken for granted. There were a number of occasions when it looked like the scheme would not be able to go forward because of budgetary constraints. I ask the Minister: is it not time to start thinking about whether the scheme should be put on a statutory footing? Although the DCMS has been generous in its provision, that does not automatically mean that the scheme would survive if a different Administration came in with different priorities.
On the new code of conduct, which is set out very well in a new video on the Portable Antiquities Scheme’s website, there is one area that causes most concern to detectorists: the time it takes objects to go through the process of being assessed as to whether they are treasure. The new code of conduct sets out a timescale by which that should happen but the major block—it always has been the major block—is time in the coroners’ courts. Getting to the coroners’ court, and the coroner having the requisite knowledge, has been a major issue.
In the past, it has been mooted that a specialist coroner could be appointed specifically to deal with treasure, which would massively reduce the time taken and introduce a level of expertise that would cut down significantly the questions being raised about the objects themselves because there would be a knowledge base. That would help detectorists come to a conclusion about whether objects are treasure. Are the Government thinking along these lines? It would not only save time; time no longer being taken up in coroners’ courts means that it could also save a great deal of money.
On that basis, these statutory instruments are to be welcomed. I thank the Government for their support of the Portable Antiquities Scheme but I very much hope that, looking forward, it will be understood that the Treasure Act will be difficult to maintain if that scheme is not in existence.
Lord Bassam of Brighton (Lab)
My Lords, this has been a fascinating debate so far, and I will try to add a little bit to it. I always know it is an important debate when the noble Lord, Lord Vaizey, turns up to entertain us for the afternoon. We welcome the bringing forward of this statutory instrument and the accompanying guidance, which is a fascinating document. We can see that it is the result of a lengthy consultation process, as the Minister said, which was started back in 2019.
As he outlined in the supporting documentation, there has been a growth in detectorism and the number of detectorists. In fact, as the Minister was speaking of his many visits to museums and places, I was thinking that perhaps he sees a future for himself as a detectorist, out there at the weekends with his metal-detecting device, because he is clearly very enthusiastic for it, and rightly so. As he said, more than 95% of finds since 1996 have been made by metal detectorists and the annual number of cases of treasure has climbed in the intervening period. It is clear that there is no shortage of treasure, enthusiasm or talent in this country and there is a desire to satisfy ourselves about our heritage, as a nation with a rich history. There is clearly an increasing urge to be connected to the past. For some, this takes the form of researching their family history, while for others it is a more active pursuit which takes place on our fields, beaches, riverbanks and other places where detectorists gather.
As noble Lords have already said, the Treasure Act has helped to put many important finds in the hands of museums, providing another important means for people to be informed about the history of their local area. As the Minister hinted, several significant finds in recent years have not been protected under the law, leaving artefacts at risk of falling into private hands, unless museums were able to rely on other methods, such as securing export bans. There is obviously a ready market for finds overseas, and I suspect particularly in the USA.
The step-by-step approach proposed by the Government, making changes so that metallic items are captured by the Act but not yet extending it to non-metal objects, appears a sensible way forward. While we support the order, the consultation underpinning it was launched a long time ago in 2019 and we wonder why it has taken quite so long to bring this change forward. If any further changes are deemed desirable, such as extending it to non-metal objects, we would like to see a more rigorous timeframe so that there can be greater certainty. Clearly this is a growing area of interest.
Can the Minister talk about the role of local museums and whether such institutions will be at the front of the queue to claim items found in their area? Previous research by the Museums Association shows that local authority funding cuts have resulted in a drastic scaling back of support for local museums. Are any steps being taken to address that issue? I know the Minister will be familiar with concerns raised by stakeholders and in another place about the potential for these changes to lead to underreporting of treasure finds. Will he comment on those fears?
Finally, I think the Minister’s Commons colleague volunteered him to address the exemption granted to items that fall under Church of England processes. Perhaps he can say a bit more about this and on that decision to ensure the record is complete.
Although these questions need answering, we hope this order and the accompanying changes to guidance will further increase interest in finding treasure, help protect those items for the future and, in doing so, make a positive contribution to the telling of important local and national historic stories.
Lord Parkinson of Whitley Bay (Con)
My Lords, this has indeed been an entertaining and informative debate, and I am glad that two of my predecessors have excavated themselves to join us. I can see why they speak so fondly of their time engaging with this process because it is a highlight for any Minister at DCMS to be involved. I am glad that the noble Lord, Lord Inglewood, shared the tribute that I paid to him for his work, with the late noble Earl, Lord Perth, and all those who urged the important change. He is right to highlight what a success the Act has been and the number of items that it has saved for the nation to be shared with the public and to highlight the way that it has inspired people to discover more or to shed new insights into the past, sometimes including obscure practices, such as why people would ask my noble friend Lord Vaizey any questions. That practice is no longer continued.
The noble Lord, Lord Inglewood, is right to point to the fact that this is not because of the work of any legislators or Ministers but because of the many dedicated experts who are engaged in the process. I am glad that, in our debate, Roger Bland, chairman of the Treasure Valuation Committee, and Dr Michael Lewis, head of the Portable Antiquities Scheme, received the credit that is due to them.
The noble Lord is right to talk about the disappointment that can ensue when these items are not shared with the public. One of the most wonderful things about this is that items often end up in a museum close to where they were found. They help us to understand local and regional history as well as our shared national history. The noble Lord, Lord Bassam of Brighton, is right to point to the important role of local museums in sharing these items and giving credit to those who have found them and generously donated to support them.
The noble Lord, Lord Inglewood, is right to point out that these items are not always expensive. Their value lies in their importance and in the fact that they have been lost to human view for so long. They can quite often be purchased for reasonable sums, and there are many generous grant-making bodies, such as the Art Fund, the National Heritage Memorial Fund, the V&A, Arts Council England and many more, which help to keep these items in public collections and shared with museums and local visitors around the country.
The noble Lord, Lord Redesdale, asked whether we had thought about putting part of this process on a statutory footing. I will take that point away and discuss it with colleagues, but I underline the point that I made in my opening remarks about the resources that we have given to ensure that the process is well administered. In 2022-23, we gave the British Museum £365,000 for the administration of the Portable Antiquities Scheme, £150,000 to support the treasure process and £808,000 to support a new Portable Antiquities Scheme database. The scheme in England now employs 40 full- time and part-time finds liaison officers and 12 part-time liaison officers. We will be monitoring the impact of these changes on the scheme’s resources, but I will take away the noble Lord’s point about statutory support.
The question that the noble Lord asked about whether a specialist coroner would help speed up the process has been looked at before. I will discuss that with officials as we monitor the impact of the changes that the statutory instrument brings about. We have certainly assessed the additional work that we know this will cause coroners and we are aware that some parts of the country may be more affected than others. We have engaged with the Chief Coroner’s office, with coroners themselves and with colleagues across government on the order and the revised code, and we will be providing opportunities for training and advice for coroners and their staff, as well as monitoring the impact of these changes.
The noble Lord, Lord Bassam, invited me to say a bit more about the Church of England exemption. I explained the history to it in my opening remarks: as the established Church, the Church of England is the only Church that is officially recognised and that has a formal relationship with the state. It is therefore the only Church that has its own specific legislation, including a system of controls on the protection and disposal of moveable objects associated with its buildings and land.
Before the 1996 Act, the common law of treasure trove required that treasure had to have been hidden with an evident intention by the person who hid it to return and find it, which meant that objects related to Christian burials were not treasure. The 1996 Act removed that requirement, bringing these objects into the treasure process, while they also remained under the statutory processes of the Church of England. It highlighted the possibility that other treasure objects might be found, not in association with burials, which could be subject to both of those statutory regimes. It was to remove this confusion that these finds have been exempted from the definition of treasure. Our view is that the Church of England’s statutory processes provide sufficient protection for these finds. Equally, finds associated with other faiths and the Anglican Communion in Wales and Northern Ireland are protected by the treasure process.
I am grateful to noble Lords who have taken part in our debate today. As I said, we will keep the impact of these changes very much under review. Each year, we publish a Treasure Act statistical release and an annual report. Seeing its publication and some of the items found over the previous calendar year at the British Museum is indeed a highlight for us all. Because of that report, we will be able to monitor how many additional cases go through the process. In addition, we will speak to all those involved in the process, whether administrators or acquirers or finders of treasure, to see how effective the change is and how it has affected them. With renewed thanks to noble Lords who have taken part in the debate, I commend this instrument to the Committee.
Revised Code of Practice laid under the Treasure Act 1996
Lord Parkinson of Whitley Bay
That the Grand Committee do consider the Revised Code of Practice laid under the Treasure Act 1996.
Relevant document: 32nd Report from the Secondary Legislation Scrutiny Committee
Local Government and Elections (Wales) Act 2021 (Corporate Joint Committees) (Consequential Amendments) Order 2023
Baroness Bloomfield of Hinton Waldrist
That the Grand Committee do consider the Local Government and Elections (Wales) Act 2021 (Corporate Joint Committees) (Consequential Amendments) Order 2023.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, the draft order we are considering will make changes to UK legislation arising from the establishment of corporate joint committees in Wales, under powers in the Senedd’s Local Government and Elections (Wales) Act 2021. The 2021 Act established a new framework for regional collaboration between local authorities in Wales called corporate joint committees—CJCs. I am aware that the noble Baroness, Lady Wilcox—who is the only other Member here in Committee—was an architect of these very structures, as leader of the Welsh Local Government Association.
For the benefit of Hansard, and the others here present, these committees can exercise functions transferred from principal councils on a regional basis. They can be established either at the request of two or more principal councils or, in relation to some functions, at the instigation of Welsh Ministers.
The Welsh Government have established four CJCs in Wales—north Wales, mid-Wales, south-east Wales and south-west Wales—reflecting the four existing city and growth deal areas. Each CJC is comprised of the leaders of its constituent county and county borough councils, and eligible officeholders from national park authorities located in that CJC area. As a corporate body, a CJC is able to directly employ staff, hold assets and manage budgets.
The CJCs began operating formally on 1 April 2021. From June last year, they came under duties to prepare strategic development plans and regional transport plans in their regions. They also have the power to do anything to enhance or promote the economic well-being of their areas. As CJCs further develop, Welsh Ministers may decide to increase their functions in future through regulations, although the Welsh Government have said that there are no current plans to do so.
Baroness Wilcox of Newport (Lab)
My Lords, I have great pleasure in speaking on behalf of the Opposition regarding this statutory instrument and thank the Minister for her kind words. When I was leader of the Welsh Local Government Association, I spent a great deal of time in discussion with Welsh Government Ministers over this change to current legislation to ensure that it resulted in the best fit for local authorities to enable effective joint working on specific projects to benefit the people of Wales. Therefore, it gives me immense pleasure, in my current role in your Lordships’ House, to be the Member who speaks for the Labour Party with this legislation as it proceeds into law. One does not often see something through its entire process in political life, but this is one of those rare occasions, and I am delighted to be able to do so.
Let me give some appropriate context. We began discussing these changes in detail during 2018. Initial reservations and relevant concerns were raised by council leaders, but through careful consideration and adjustments from the Welsh Government and local government, a suitable agreement was finally reached. In legislative terms, the Local Government and Elections (Wales) Act 2021 provided for the establishment of corporate joint committees, which enable and support the delivery of important local government functions regionally. A small number of outstanding technical issues emerged during the implementation of the CJCs, including their relation to taxation status and pensions. As your Lordships are aware, when issues arising from Senedd legislation require amendment of UK-wide legislation in a way that is beyond the Senedd’s legislative competence, an order under Section 150—power to make consequential provision—of the Government of Wales Act 2006, can be developed in partnership with the UK Government in Westminster.
These changes will resolve key operational issues that CJCs have raised and allow them to plan with confidence in future financial years. Section 150 supports the delivery of the commitment in the Welsh Government’s programme for government to ensure that each region in Wales—north, south, east and west—has effective and democratically accountable means of developing its economy. The Welsh Government, in liaison with local government, have established CJCs to support and encourage regional working through a coherent, consistent, simplified and democratically accountable and controlled mechanism.
CJCs will allow local government partners to deliver their regional ambitions, develop successful regional economies, and ensure local growth in a collaborative and strategic way. As the order has been developed with the Welsh Government, and makes technical amendments that result in a coherent, democratically controlled mechanism that operates regionally, we fully support it. Diolch yn fawr.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank the noble Baroness for her supportive comments. I too am delighted to take part in this move to unblock the UK legislation to allow the Welsh Government to progress these exciting plans. I close by offering my thanks for the productive manner in which the UK and Welsh Governments have worked in preparing this order, which I commend to the Committee.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, I think that may be the fastest passing of a statutory instrument that I have yet witnessed.
House of Lords
Ports and Airports: Queues
(1 year, 8 months ago)
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The Parliamentary Under-Secretary of State, Home Office (Lord Murray of Blidworth) (Con)
The Government have an ambitious vision for the future UK border, which will put in place the world’s most effective and secure border system. We are already using automation and trialling other technologies to improve fluidity and minimise queues for all arriving passengers, without compromising on our number one priority: the security of the border.
Lord Mann (Non-Afl)
Last year we had the absurdity, particularly at holiday times, of having to queue to get back into our own country. Can the Government guarantee that this year at holiday times we will not have that indignity?
Lord Murray of Blidworth (Con)
I am afraid I simply do not agree with the picture that the noble Lord paints. Border Force plans extensively at both local and regional levels to ensure the smoothest possible journey for all passengers, with over 90% of passengers processing through the UK border in 30 minutes or less. I remind the noble Lord that there are, on average, 144 million crossings each year at the UK border. An estimated 86% of those passengers who travel through the UK border are eligible to use the automated e-passport gates, which are currently our automated solution for processing arriving passengers.
Lord Lancaster of Kimbolton (Con)
My Lords, it was impossible not to notice what an efficient job members of the Armed Forces did when they replaced members of Border Force during the recent strike period. Indeed, some passengers are rather hoping there might be more strikes over the busy summer period. But that to one side, this is not a job for members of our Armed Forces. The MACA—military aid to the civil authorities—rules are very clear that members of the Armed Forces should be used only in extremis. Can my noble friend reassure me that contingency plans are in place to ensure that this does not happen again?
Lord Murray of Blidworth (Con)
Well, I thank the noble Lord for his generous remarks about the effectiveness with which the contingency plans to deal with strikes in the Border Force succeeded in ensuring adequate—indeed, efficient—flow through the border. I can reassure him that there are certainly no plans, in a non-strike scenario, for members of the Armed Forces to replace members of Border Force. It might assist the noble Lord to know that we have in place plans to further digitise and automate the border, such that in due course the operation of e-gates will be completed solely by facial recognition and there should be no need to place your passport on the e-gate. Ultimately, we wish to simply use facial recognition alone, without the need for an e-gate. But these are, of course, all in the future.
Baroness Deech (CB)
A week ago, I suggested to the Minister that a short-term fix, at least, would be to have a separate fast-track queue for British citizens, as distinct from EU citizens. The Minister said they were included because they were “our friends”. However, the friendship is not reciprocated, and we have many friends around the world. I put it to the Minister again: why can we not have a separate fast-track line for British citizens?
Lord Murray of Blidworth (Con)
As I say, and as I said to the noble Baroness on the last occasion, we take the view that it is more efficient in terms of flow for all the categories that are allowed to use the e-gate to do so. That includes our friends in America, the Five Eyes nations, Japan, Singapore and South Korea. They may all use the e-gates and this accelerates the flow through our airports. There is nothing to be gained in the view of the Home Office by providing lanes on the basis that the noble Baroness adumbrates. I can reassure her that we are not in the business of retaliating when countries wish to include British nationals in a separate queue.
Lord German (LD)
My Lords, in the meantime, while we wait for the nirvana which the Minister has outlined—I have waited for well over an hour just to get through an e-gate—one of the things that could be done is to improve the software so that you do not have to attempt once, twice, three times in order to get your passport to work. The number of failures in that system is so great that it is, in fact, creating queues artificially. As the Minister will know, now that 10 year- olds can use the e-gates, we are going to have more people queueing, more second attempts, and more third attempts. Will the Government do something about the software while we wait for this nirvana?
Lord Murray of Blidworth (Con)
I hate to point out to the noble Lord that in many cases a failure of the passport to be read by the e-gate is often due to a lack of care taken with the passport by the owner. In many cases, I am afraid the e-gate works perfectly well. In due course, we plan for the e-gates to open simply on recognition of the noble Lord’s face.
Lord Watts (Lab)
If the system is so good, why have airports introduced a system for people to pay extra to get through quickly, because they experience long delays and the only way they can get through quickly is by paying extra charges to the airport?
Lord Murray of Blidworth (Con)
I do not know about that; I will look into it. As far as I know, the airport layout is a matter for the owner of the airport. If one pays for some sort of particular access to the border gates, that is something that the airport will do. It is certainly not the case that you can pay Border Force for quicker access across the border.
The Earl of Kinnoull (CB)
My Lords, does the Minister accept that at least some of the problems are caused by people with pre-settled and settled status under the EU settlement scheme and that they are exacerbated because there is no physical proof of that; there is only electronic proof, which causes problems with the borders? There is a lot of anecdotal evidence and we hope to report on that relatively soon. Does he accept that that is part of the problem?
Lord Murray of Blidworth (Con)
It should not be a problem, in that holders of EU settled status obviously are entitled to an EU passport, which is capable of being read by our e-gates. Of itself, the existence of EU status is not an issue. The issue arises in only those cases where those people who are entitled to EU settled status do not hold a valid EU passport—and that is a small cohort, but one which we are looking into.
The Lord Bishop of Derby
My Lords, whatever the causes may be for queues as they arise at ports and airports, the people working there can come under great pressure as those queues and stress levels rise. Can the Minister say what support is being given to those who work at our borders to safeguard their well-being in the midst of all this pressure?
Lord Murray of Blidworth (Con)
I can certainly reassure the right reverend Prelate that the Home Office takes very seriously its obligations for the well-being of its staff both in Border Force and Immigration Enforcement. I will write to her with the detail of that.
Lord Polak (Con)
My Lords, I would like to support the comments of the noble Baroness, Lady Deech. I visited Washington last week and, while waiting in the queues, the whole line of US citizens was being marched through and looked after. We ought to be looking after our citizens in the UK in the same way. I finish by saying that, when I came back to the UK, I waited about two minutes to get through the automatic gates and did not have to wait at all.
Lord Murray of Blidworth (Con)
I am grateful to my noble friend. The issue as I understand it is that the legal framework for border crossing in America requires a face-to-face interaction with every passenger; that is the reason for the generation of queues on the other side of the Atlantic. That is not the case here. We use automation and believe that it delivers a faster and more secure border. As for the Americans allowing their own nationals to circumvent the face-to-face interview, that seems to be the logical corollary of their legal scenario; but that would not be relevant here, given the presence of automation.
Lord Coaker (Lab)
The Minister has told us that border security is the Government’s number one priority, which, of course, is right. Will he comment on media reports that an email was sent to Customs staff asking them to prioritise passports over checks for drugs and other such illegal items?
Lord Murray of Blidworth (Con)
I have not seen those press reports, but I will certainly look into that and write to the noble Lord.
Lord Mackenzie of Framwellgate (Non-Afl)
My Lords, is there any intention of restricting the right to strike of Border Force officers in the interests of security?
Lord Murray of Blidworth (Con)
I thank the noble Lord for that question—yes, under the Strikes (Minimum Service Levels) Bill, Border Force is envisaged as being subject to the legislation and regulations could be made requiring minimum service levels on the part of Border Force staff.
Jurors: Mental Health Impact
(1 year, 8 months ago)
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Baroness Berridge
To ask His Majesty’s Government what assessment they have made of the emotional, psychological and mental health impact on jurors of sitting in serious criminal trials.
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bellamy) (Con)
My Lords, research into the impact of jury service has found that most people enjoy their service and find the experience interesting and informative. We know that some people can find it distressing. Anyone feeling this way is encouraged to contact their GP, who can put them in touch with the necessary support services. We are currently looking at options, including providing guidance to courts, to explore what more can be done.
Baroness Berridge (Con)
I am grateful to my noble and learned friend for that Answer but there are now increasing reports in the media of those having adverse reactions to the evidence that they are hearing, and the type of evidence they are having to hear is more graphic and often video footage. Will my noble and learned friend outline whether there are plans to have a proper systemic review of a court centre and talk to jurors before, and particularly after, their experience to see whether people are being adversely impacted by doing jury service?
Lord Bellamy (Con)
My Lords, the latest research was done by Professor Cheryl Thomas in 2020: 81% of those who had served on a jury said that they would be “happy to serve again”; 78% found it “interesting”. At the same time, it is quite true that 42% found the experience “stressful”. It is an issue, and the department is exploring options. What shape those options will take—whether there should be some sort of counselling service, whether it should be authorised by a judge and who would provide it—are all questions currently under consideration.
Lord Pannick (CB)
Does the Minister agree that everything depends on the nature of the trial? If you are asking jurors to hear a case involving graphic evidence of sex abuse, it really is not good enough to say that, if they are troubled, they can go to their GP. The same is surely true of the judges who have to hear such cases on a regular basis, it is true of the court staff and it is also true of the counsel and solicitors who specialise in this area. Really, something needs to be done about this.
Lord Bellamy (Con)
My Lords, as I say, the Government are exploring options. Sometimes a judge will warn jurors in advance that it is distressing and ask whether any of them wish to be discharged. There is a post-trial leaflet and an interesting video, which I watched yesterday, for jurors after the trial, which suggests what they should do if they feel stressed. Some courts of their own volition make references to local charities, and we are providing further guidance to courts on what to do in those circumstances.
Baroness Kennedy of The Shaws (Lab)
My Lords, I will come to the assistance of the Minister because he has been a practitioner in the courts, as I have. I know that the noble Lord, Lord Pannick, is not someone who practises in front of juries—
Baroness Kennedy of The Shaws (Lab)
—but it is commonplace now for judges to say to a jury that a case is of a sexual nature or involves homicide or murder where the facts are particularly troubling and gruesome, and to ask: “If any of you have any reason why you feel could not sit on such a case, then please come forward and tell me”. You can have a juror say, “I have had an experience in my past which will make this particularly difficult”. Judges will take the opportunity to say that the juror does not have to sit. That is commonplace in serious cases now. I ask the Minister: should it not be an obligation on the Crown to inform a court and the judge who is sitting that a case may be very disturbing for jurors, so that they can step forward and withdraw from sitting as a juror on that particular case?
Lord Bellamy (Con)
My Lords, I am entirely in agreement with the noble Baroness that in most cases of this kind judges will warn jurors in advance. That should generally be done, and I think it is for the judge to decide.
Lord Marks of Henley-on-Thames (LD)
My Lords, the noble Baroness, Lady Berridge, raises a very important issue. We ask citizens to perform this important public service and increasingly, as she said, it can be harrowing and traumatic. At present, as the Minister said, HM Courts & Tribunals Service tells jurors only that they can consult their GP or the Samaritans, who counsel potential suicides. The noble Baroness is right that professional counselling must be available where necessary. Will the Minister arrange such counselling and ensure that its availability is known to potential jurors at the time they are summoned so that they can see what the potential dangers are and consider their position, and have the information available throughout?
Lord Bellamy (Con)
My Lords, I do not think that I can add to my earlier Answer that the Government are currently considering all options. Roughly 100,000 people serve on a jury every year; most, as I have just said, find the experience interesting and informative, and the Government will keep this under close review.
Lord Hope of Craighead (CB)
My Lords, it is helpful to see what happens in Scotland. The Scottish Courts and Tribunals Service provides specialist assistance in cases of particularly violent and distressing crimes. It is available in the court. It is available to jurors, who may not realise, even given the warnings that have been referred to, that the scenes they are going to have to view repeatedly as a juror as the evidence goes on are particularly distressing. Will the Minister have a look at what happens in Scotland and perhaps follow its example?
Lord Bellamy (Con)
My Lords, I will gladly look at what happens in Scotland—I believe there is a service provided through NHS Lothian. I am not sure I can undertake to follow a Scottish example; Northern Ireland has a counselling association associated with its employee assistance programme. We are exploring a number of options.
Lord Wolfson of Tredegar (Con)
My Lords, is not the criminal justice system unusual among public services because it depends on volunteers, or at least non-professionals, for the vast majority of the work? Jurors are present in our most serious cases and magistrates hear the overwhelming number of criminal cases. Will my noble and learned friend the Minister therefore ensure that His Majesty’s Government look at both these groups of non-professionals and ensure that they are given the financial and non-financial support they need?
Lord Bellamy (Con)
My Lords, lay participation in justice, whether through the jury, the magistracy or, I would add, membership of tribunals, is at the heart of the common-law system and the Government will fully support that participation.
Lord Ponsonby of Shulbrede (Lab)
My Lords, judicial officeholders, their partners and their children are offered helpline support 24/7 for 365 days a year through the Ministry of Justice. There is no equivalent for jurors. Arguably, judicial officeholders are better placed to withstand the pressures of their role because they have the support of their peer group. When jurors leave the court, they are on their own. Does the Minister think that this should change and the Government should offer the same support to jurors as is offered to judicial officeholders?
Lord Bellamy (Con)
My Lords, the Government can accept that there is a case for offering further support for jurors who have been through very distressing cases. I should perhaps observe that jurors have been trying distressing cases now for hundreds of years so we are not in a new situation. A 24-hour helpline may be one of the options that we should explore.
Baroness Butler-Sloss (CB)
I ask the Minister that those who look at whether or not jurors should be helped are shown some of the sorts of photographs that jurors may have to see, because they would be pretty shocked.
Lord Mackenzie of Framwellgate (Non-Afl)
My Lords, does the Minister share my concern and surprise that no one has mentioned the welfare of police officers who have to sit through hours of usually pornographic material involving children, which can have a tremendous effect on their stress levels?
Lord Bellamy (Con)
I entirely share the sentiment expressed by the noble Lord.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, the noble Lord, Lord Pannick, makes me think: if Boris Johnson is brought to trial, would it be possible to volunteer for the jury?
Lord Bellamy (Con)
My Lords, how on earth is one supposed to answer that question? Fortunately, as far as I know, that does not arise—or it certainly does not arise yet.
Lord Kamall (Con)
My Lords, following the question from the noble Lord opposite, would counselling also be offered?
Lord Bellamy (Con)
Would it be offered to jurors who served on a jury in relation to the late Prime Minister? I do not think I can answer that question.
Lord West of Spithead (Lab)
My Lords, many horrible things happen in life and have done so for decades and decades. Does the Minister believe that we need to think that people need to be a little more robust? I certainly found in the Navy when things had happened that if you asked people whether they had been affected, they would tell you they had been affected, but if you did not ask them, they just got on with their job.
Lord Bellamy (Con)
My Lords, it is unusual to have so many opportunities to agree with noble Lords opposite. I entirely agree with the noble Lord, Lord West. Although we have had a moment of levity in this Question, I respectfully remind your Lordships of what the late Lord Devlin famously said:
“Trial by jury is … the lamp that shows that freedom lives”.
The Government entirely agree with that and will support juries as much as is needed.
Respiratory Syncytial Virus Immunisation
(1 year, 8 months ago)
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Baroness Ritchie of Downpatrick
To ask His Majesty’s Government what discussions they have had with the NHS and vaccine manufacturers regarding expanding the Respiratory Syncytial Virus immunisation programme for winter 2023/24, and the potential for making a universal offer of that vaccine.
Lord Evans of Rainow (Con)
My Lords, the Joint Committee on Immunisation and Vaccination has advised that the existing targeted RSV immunisation offer should move to a more effective and longer-lasting monoclonal antibody. The Government are in conversation with the manufacturer and the NHS to support this change in time for the 2023-24 winter season. The JCVI is actively reviewing the evidence around other available products and the potential for universal RSV offers as soon as practicable.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I thank the Minister for his Answer. He will be aware that the Joint Committee on Vaccination and Immunisation has recently recognised the importance of a universal immunisation programme to help protect all infants from RSV. There is an issue around the budget, so will the Minister clarify for your Lordships’ House what discussions he and his colleagues have had with the Chancellor about the budget for a universal RSV immunisation programme for the 2023-24 winter programme?
Lord Evans of Rainow (Con)
My Lords, I have not discussed the universal RSV immunisation programme for 2023-24 with the Chancellor. However, the independent expert committee, the JCVI, provides the Government with advice on all immunisation programmes, including RSV. For the current year, this advice is to improve the existing targeted programme for children at high risk. Once the JCVI has concluded its robust review of evidence for an expanded or universal programme, I will support the implementation of any changes advised as soon as practicable. This would include talking to the Chancellor to seek budgetary support for a potential programme. I offer the noble Baroness a meeting with the relevant officials following this Question to discuss this important matter further, if that would be helpful.
Baroness Manzoor (Con)
My Lords, as my noble friend will be aware, the RSV vaccine was mostly given to pre-term and premature babies. As he said, a new vaccine is available that will last longer than the previous one. Therefore, can my noble friend the Minister say exactly how the Government will improve the uptake across all immunisation programmes and age groups?
Lord Evans of Rainow (Con)
The Government are committed to child health. After clean water, vaccination is the most effective public health intervention for saving lives and promoting good health. The Government work with the NHS and the UK Health Security Agency to support accurate and up-to-date information on the benefits of vaccines to be available to parents, carers and patients. The NHS has recently concluded a call and recall campaign, where parents, carers and anyone aged one to six who has missed their measles, mumps and rubella vaccine for any reason were invited to their GP to catch up with vaccinations.
Lord Alton of Liverpool (CB)
My Lords, in thanking the Minister for his positive and constructive response to the noble Baroness, Lady Ritchie, I press him further on talks he might have with the Treasury and whether he has seen the data that suggests that up to 30,000 paediatric hospital admissions are attributable to RSV each year, while nearly 500,000 GP visits cost the NHS almost £16 million annually and there could be a saving of £80 million to the wider UK economy each year if there were a universal immunisation programme. Does the Treasury not need to hear those kinds of figures?
Lord Evans of Rainow (Con)
I am grateful to the noble Lord, whose figures are entirely correct. There are currently no specific treatments for RSV once contracted, and management of infection is purely supportive. Cancellation of surgery such as that for heart disorders, a common consequence of paediatric intensive care pressures from RSV, is a very big issue for the NHS because it adds pressure during the winter. The noble Lord is exactly right to highlight that, and we are doing all we can to relieve this. As I said to the noble Baroness, we hope to have some good news later in the year.
Baroness Blackwood of North Oxford (Con)
My Lords, I welcome the £277 million announced today by the Government for innovative life sciences manufacturing, which includes vaccines. Can the Minister update us on the implementation of other steps in the life sciences vision, including more rapid uptake of innovative therapeutics in the NHS?
Lord Evans of Rainow (Con)
My noble friend is clearly up to date. She is absolutely right that the NHS constantly looks for innovations. For RSV, the offer in place for 2023-24 is for the specialised commissioning for NHS purchases of monoclonal antibodies directly from the manufacturers. The NHS delegates price and delivery with the manufacturers. For national immunisation programmes, the UK Health Security Agency procures immunisation products centrally, but I reassure the House that the NHS does all it can to make sure that it is aware of new developments to incorporate in the vaccination programmes.
Baroness Pinnock (LD)
My Lords, in the last week, the Minister may have seen financial reports about the challenges facing some vaccine manufacturers, now that the Covid demand is much reduced. What do the Government intend to do to ensure that we have capacity in the UK to develop new vaccines at scale in response to this and any other future challenge?
Lord Evans of Rainow (Con)
There are ongoing conversations with the manufacturers of various antibodies and vaccines for the year 2023-24. I am not familiar with the companies that the noble Baroness referred to, but I am very happy to look into them.
Baroness Wheeler (Lab)
My Lords, maximising new vaccinations for RSV for babies and older people in the next winter season is vital, given that it will be just one of the many similar respiratory and related illnesses facing patients and the health service during this winter and the next. Can the Minister reassure the House that the Government are making full use of the public information budget to raise awareness of RSV, Covid, flu and strep A, in particular the differences between them and the steps that people do and do not need to take in each case?
Lord Evans of Rainow (Con)
The noble Baroness raises a very good point. She is absolutely right that the Government and the NHS have to use all media channels to make sure that people are aware of what is available. We have some new products coming through, one example of which is nirsevimab, which provides longer-term protection than its recently used predecessor of five months compared to one month. We try to communicate these, so that people do not have to go so regularly for immunisation. We hope that that one immunisation can cope with the winter season.
Lord Patel (CB)
My Lords, can the Minister clarify that no vaccine is currently available for RSV and that the only available preventive measure for the disease is, as he mentioned, monoclonal antibodies, particularly for children? Does he agree that the disadvantages include that it requires multiple injections, and therefore will be administered only to higher-risk children at this stage, and that we will have to wait until a vaccine is developed before we can move the programme to all children?
Lord Evans of Rainow (Con)
The noble Lord is exactly right. Unfortunately, I cannot report to the House that we have a new vaccine, but my understanding is that they are working on it. As I said in my previous answer, nirsevimab lasts five times longer, so you do not have to have those injections as regularly—but I am afraid that you do still need to have them.
United Nations World Water Development Report
(1 year, 8 months ago)
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The Lord Bishop of St Albans
To ask His Majesty’s Government what assessment they have made of the United Nations World Water Development Report, published on 15 March.
The Minister of State, Foreign, Commonwealth and Development Office (Lord Goldsmith of Richmond Park) (Con)
My Lords, the UK supports the findings of the UN World Water Development Report 2023. We agree that partnership and co-operation are key to achieving sustainable development goal 6: equitable access to water and sanitation for all. However, delivery is far off track, particularly on accountability, political leadership and finance. At last week’s UN water conference I called for increased action in these areas and announced a new £18.5 million water sanitation and hygiene—WASH—system for health programme, as well as seed funding for a new £38 million water programme.
The Lord Bishop of St Albans
I thank the Minister for his reply. The report shows that where a country’s access to water is under threat, it can quickly lead to security issues, sometimes war, and eventually even higher levels of migration, so it is a subject that affects our country and every country in the world. One of the asks of the report is for partnerships to
“accelerate the development and uptake of innovative technologies through knowledge transfer, entrepreneurship and applied research.”
What are His Majesty’s Government doing to further the partnerships called for in the report?
Lord Goldsmith of Richmond Park (Con)
The right reverend Prelate is exactly right on both counts, and our approach focuses very much on partnership and co-operation. The figures are huge: 2 billion people lacked access to safely managed water services in 2020, and 3.5 billion people lacked access to safely managed sanitation. He is also right about the link between water shortage and conflict. I think the House will find it as shocking as I do that children under five in protracted conflict zones are more likely to die as a consequence of unsafe water than from violence, so the link is absolutely there.
Baroness McIntosh of Pickering (Con)
My Lords, will my noble friend encourage Ofwat and UK water companies to enter into a partnership programme with countries such as those identified by the right reverend Prelate? Can he explain why we are importing so much fruit and vegetables from countries in areas challenged by water stress, when we could grow much more at home?
Lord Goldsmith of Richmond Park (Con)
I would love to see us produce more fruit and veg here in the UK. We produce wonderful fruit and veg. I suspect that the answer is that water is not priced correctly. Water is essential to all lifeforms on earth, yet we regard it as an expendable, infinite source. I suspect that is the reason why water footprints so rarely feature in prices.
Lord Collins of Highbury (Lab)
My Lords, the simple fact is that fully functional WASH services are absolutely essential in healthcare facilities, as we heard from the noble Lord. The report highlighted gaps in co-ordinating provision with different agencies and NGOs. Can the Minister reassure the House that, when the Government attend the UN high-level panel meeting on universal health coverage, we will take up this question to ensure that those basic facilities are there to support health globally?
Lord Goldsmith of Richmond Park (Con)
I absolutely can make that commitment. The water conference that I have just returned from was the first such conference in 46 years, which is a reflection of the lack of importance that has been attached to this critical issue for far too long. Over the course of the conference, between big business and Governments, 700 new commitments were made; if even half those commitments are seen through, it will have a life-changing impact for a very large number of people.
Lord Purvis of Tweed (LD)
My Lords, last month I visited rural Malawi, where the source of water for the families in villages was a filthy stream, collected by hand, primarily by women and young girls. That area has been so badly affected by the horrific typhoon, and most of the victims have been women and girls. The Government have cut UK aid development assistance by 21% overall, but they have cut water and sanitary health support by 80%. Given what the Minister just said about the vital need for extra support, can he explain in clear terms, so we all understand, why there have been disproportionate cuts for water and sanitary health, affecting women and girls, most particularly in Africa?
Lord Goldsmith of Richmond Park (Con)
The noble Lord makes the point about ODA cuts on most occasions when we debate. He is absolutely right to and, like him, I would very much like to see a return to the 0.7% spending—but that is something over which I am afraid I have no control. I do not think it is the case that water has been disproportionately cut. It may well be that the noble Lord is not aware of some of the programmes that directly overlap with this agenda but would not necessarily be described as water projects—not least, a whole new range of nature-based solutions that the Government are focusing on.
Lord Balfe (Con)
My Lords, does the Minister recognise that the expansion of population has not been marked by an expansion of water availability? One way in which that could be tackled is by putting more money into desalination programmes of the United Nations and other agencies to try to get more water processed from salinated water to drinkable water.
Lord Goldsmith of Richmond Park (Con)
My noble friend makes an important point. There are lots of ways in which we can alleviate that problem. I add to his suggestion that the most important focus is to concentrate on the environmental link between water shortage and environmental degradation. To put that in context, the Congo Basin provides around two-thirds of Africa’s rain, so if we allow it to continue to be cut down at the rate it is currently being cut down—half a million hectares a year—one only needs to imagine the humanitarian crisis that would follow.
Lord Berkeley of Knighton (CB)
My Lords, is our influence in the world not somewhat diminished by the fact that we are pumping so much sewage into the sea and polluting our rivers, such as the Wye, with effluent from chicken farms?
Lord Goldsmith of Richmond Park (Con)
The noble Lord is right to highlight this issue, despite the Question being on the international situation. The treatment by water companies of our waterways is and has been abominable. The British people expect much more, and so do the Government.
Baroness Hooper (Con)
My Lords, given that only 54% of the world’s population are using safely managed sanitation services, as we have heard, what priority are the Government giving to our UK water companies to export their expertise and services, either through overseas development projects or via normal commercial channels?
Lord Goldsmith of Richmond Park (Con)
My noble friend makes a very important point. We have a lot of partnerships. For example, since 2020 with Unilever we have supported 14,800 healthcare facilities with critical WASH supplies and services. We have trained nearly half a million health and other key workers on hygiene practices to help tackle the threat of Covid in 37 countries. I am afraid I cannot think offhand of such a partnership with one of our water companies, but I know that partnerships are core to how we approach this issue.
Lord Sikka (Lab)
My Lords, on the theme of water scarcity and quality, can the Minister address two issues much closer to home? Can he tell the House how many new reservoirs have been built in England since 1991, when the population was 47.8 million, compared with nearly 56 million now? Secondly, can he provide data on the damage to human health caused by consumption of seafood taken from UK rivers and seas polluted by the discharge of raw sewage?
Lord Goldsmith of Richmond Park (Con)
My Lords, I am afraid I do not know how many reservoirs have been built since 1991. I am sure that another department of government will provide that answer, but I am afraid I have no idea. I suspect that the answer is “not enough”. On the noble Lord’s question about the quality of seafood, to my knowledge the seafood captured by British fishing communities is of a higher quality than we find in most parts of the world. I am willing to be proven wrong if the noble Lord knows otherwise.
Lord Lancaster of Kimbolton (Con)
My Lords, I was recently in Nepal in my capacity as Colonel Commandant of the Brigade of Gurkhas and had the pleasure of visiting a WASH programme delivered by the Gurkha Welfare Trust. Such programmes have been delivered by the GWT for nearly 30 years, and just two years ago the GWT signed a new five-year contract. Unfortunately, while I was there I discovered that the five-year contract has now been cancelled after next year, and as a result the Gurkha Welfare Trust is going to have to make redundant some 300 employees who were delivering that programme at their own cost. I appreciate the cuts in ODA, but it rather proves the point that we have challenges. I simply ask my noble friend to look into this case.
Lord Goldsmith of Richmond Park (Con)
It is not a case I know, but I will certainly look into it. The Gurkha Welfare Trust sounds like a very valuable organisation and I will be sure to raise this with colleagues in the Foreign Office.
Pensions Dashboards (Prohibition of Indemnification) Bill
Tuesday 28th March 2023
(1 year, 8 months ago)
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Lord Young of Cookham (Con)
My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.
Public Order Bill
Tuesday 28th March 2023
(1 year, 8 months ago)
Lords ChamberRead Full debate Public Order Act 2023 View all Public Order Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 123-I Marshalled list for Consideration of Commons Reason - (27 Mar 2023)
16:25 - Division on Motion A1 - Ayes: 246 / Noes: 201 - Motion A1 agreed.
Lord Sharpe of Epsom
That this House do not insist on its Amendments 6B, 6C, 6D, 6E and 6F to which the Commons have disagreed for their Reason 6G.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, the Public Order Bill is about giving the police the tools they need to tackle the highly disruptive protest tactics we have seen in recent months which have blocked ambulances, delayed passengers from making important journeys and held the capital to ransom. We have had a fruitful debate over the course of the last few months about the contents of the Bill. Your Lordships have undoubtedly given the Bill the scrutiny the British public want and expect, and important compromises have been made along the way which I hope have satisfied the House. I do not intend to detain noble Lords for longer than necessary by repeating those debates. The British people are fed up with inaction and it is time that the Bill became law.
As your Lordships will be aware, this House voted to amend Clause 11—
“Powers to stop and search without suspicion”—
in a variety of ways. As I explained when those amendments were first considered, we cannot support them. This has been reiterated by the other place, and it is why we have brought Motion A. The amendments, among other things, vary the timescale and authorisation threshold for the powers, thereby creating inconsistency with the Section 60 stop and search powers which the Bill’s measures are modelled on.
I understand the argument put forward by the noble Lord, Lord Coaker, in seeking these changes—that by limiting the scope of the power you can attempt to address the disproportionality attached to it—but as the noble Lord, Lord Hogan-Howe, pointed out during the previous debates, this power “has to be practical”. With respect, I cannot see how not establishing parity with existing Section 60 powers supports that, with the unintended consequence likely to be confusion for the officers who will be using them.
Turning to Motion A1 in the name of the noble Lord, Lord Coaker, which seeks to further alter the Bill’s powers to stop and search without permission, first, I remind the House about the legal framework that already exists for all stop and search powers. Under Section 3.8 of PACE Code A, the code of practice for powers to stop and search, officers have to give their name or identification number, police station to which they are attached and grounds for every search. These criteria are also covered in the “GOWISELY” mnemonic drilled into every officer.
Secondly, concerning the requirement for police forces to establish a charter on the use of powers, it is our view that this would cause unnecessary burden on police forces and officers. Plenty of long-established safeguards already exist for stop and search powers. Additionally, we have supported the National Police Chiefs’ Council in its publication of national guidance on the use of body-worn video. This includes encouraging forces to share footage with external scrutiny groups to support transparency and reflective practice and learning.
On the reporting on the use of stop and search powers, I reassure all noble Lords that the Home Office already publishes an annual statistical bulletin. This outlines in detail the information gathered during each stop and search incident. This reporting will be conducted for the use of the new stop and search powers, both suspicion-led and suspicionless, so I would argue that such a measure is unnecessary.
Finally, on publishing a statement giving reasons for the use of powers, as I said in our last debate, the Government recognise that communication on their use is a fundamental element of building trust and confidence between a force and the community it serves. The majority of forces, including the Metropolitan Police Service, already communicate their Section 60 authorisations, and I know that communities appreciate knowing detail on the geographical area, time limits and justification for the authorisation. Those forces will continue this practice for these new powers. Nevertheless, I recognise the merits that establishing this communication requirement in statute could bring. I commit now, on the Floor of the House, that the Government will amend PACE Code A to require that, where it is operationally practical to do so, forces communicate the extent of the area authorised for the suspicionless stop and search, the duration of an order and the reasons for the order.
The Home Office already publishes an annual statistics bulletin which analyses the data from forces across England and Wales. We will also amend PACE Code A to place data collection within the legislative framework. This will include a breakdown of both suspicion-led and suspicionless searches, cross-referenced with protected characteristics such as age, sex and ethnicity. I hope that will satisfy the noble Lord, Lord Coaker, and—respectfully—persuade him to withdraw Motion A1.
The other place voted to disagree with this House’s previous amendments to Clause 11. This matter has been considered and the other place has expressed its will. I believe it is now time that this Bill becomes law.
Motion A1 (as an amendment to Motion A)
“(7A) Officers exercising the powers conferred by subsection (6) must give to the subject of a search—
(a) their name,
(b) their badge or shoulder number, and
(c) any details of the stop the officer considers relevant.”
“(9A) Within one year of the passage of this Act, all police forces must establish a charter on the use of the powers in this section, setting out how, when and why they will be used.
(9B) The charter must—
(a) be drawn up in consultation with local communities,
(b) be evaluated independently, and
(c) explain how Body Worn Video footage will be used.
(9C) Each police force must produce an annual report on the use of the powers over the year, broken down by location.
(9D) Within one month of the powers in this section being used, the authorising officer must publish a statement giving reasons.””
Lord Coaker (Lab)
My Lords, I thank the noble Lord, Lord Sharpe, for his continued engagement over this difficult issue and indeed the further concessions that he has clearly made. I am sure they are very welcome as part of the deliberations between us.
We need to start by considering why we are here and what today’s debate is about. First, it is not about not having suspicionless stop and search. We believed, as did many in this Chamber, that the whole of Clause 11 should have been taken out—that suspicionless stop and search for protests should have been taken out of the Bill. But we lost that; that vote was lost. With this being a revising Chamber, we believed it was necessary to consider whether further mitigation of Clause 11 was therefore needed, given that it was going to stay in the Bill.
But the Government threw out our mitigation completely, although the Minister has now come back with some words about communication. We wanted that point about communication in the Bill and said that the seniority of the officer allowing the suspicionless stop and search should be increased, but that was thrown out. The noble Lord, Lord Hogan-Howe, can no doubt speak for himself but I remind the Minister, who prayed him in aid, that the noble Lord voted for my amendment at our last debate—the Minister can check Hansard. He ought to recognise that. After the Government threw out our mitigation, the Casey review and the report from the Children’s Commissioner into stop and search of children came along.
Let me deal with some of the things that I think the Minister will say in response. He will throw up smoke—when in trouble, the Government always do. I suspect there has been a huge debate in the Home Office on suspicionless stop and search at protests, and the Government have conceded that they perhaps ought to communicate a bit better. As he has said when we have debated this before, the Minister will no doubt say that the public support stop and search for knife crime, gun crime and so on. This Bill has nothing to do with that at all. Of course I support suspicionless stop and search if it stops stabbings, murders and serious violence, but Section 60 of the 1994 Act is completely irrelevant to the Bill. Yet the Minister in the other place used the public support for stop and search because it stops serious violence as a reason for including suspicionless stop and search in the Bill. It is completely irrelevant.
As was raised in a previous debate, even the Conservative- led Government in 2012 changed suspicionless stop and search in respect of terrorism because they believed that the power in the 2000 Act went too far. To their credit, the then Prime Minister Cameron and Home Secretary Theresa May said that it had gone too far and that they would restrict it, narrowing the criteria even for terrorism. I have not checked who was in the Committee that passed it, but some noble Lords sitting on the Conservative Benches will have voted for it in the other place—quite rightly; it should be a matter of pride that they did so, even for terrorism.
This suspicionless stop and search power does not relate to terrorism or serious violence. It relates to protest —whether someone has a padlock or some glue. If it has been agreed by an inspector, not the chief superintendent, you can search people without suspicion on the basis that they may have those things in their pockets. It is a complete overreach of the law, one of the most serious powers that this Parliament can give the police to use on the streets. I cannot believe that anybody thought it would be used for protests. If the British public, all of sudden, not just around Parliament but in the middle of another city or wherever, find themselves being searched on the basis of suspicionless stop and search, they will just not believe that it is because they are at a protest, and neither will their friends, parents or family.
The Minister will no doubt say that this is all covered by PACE Code A, and indeed he has said that there will be some changes to that code. That is a complacent response to the scale of what we are facing. It ignores the evidence that those two recent reports have put before your Lordships; it flies in the face of those reports.
Lord Sentamu (CB)
My Lords, I stand only to amplify what the noble Lord, Lord Coaker, has said. Anybody who reads the Baroness Casey Review: Final Report will find it a great shock. The noble Lord, Lord Coaker, has tried to put her words very simply. Paragraph 10 in one of her recommendations says:
“The use of stop and search in London by the Met needs a fundamental reset.”
We cannot simply go back and say, “We’ve been doing it this way”. She goes on:
“The Met should establish a charter with Londoners on how and when stop and search is used, with an agreed rationale, and provide an annual account of its use by area, and by team undertaking stop and searches. Compliance with the charter should be measured independently, including the viewing of Body Worn Video footage. As a minimum, Met officers should be required to give their name, their shoulder number, the grounds for the stop and a receipt confirming the details of the stop.”
At the end of our Stephen Lawrence inquiry, we talked about stop and search. We said that stop and search should be retained because it is a useful tool for preventing crime, but we had a similar attitude and gave similar statements to the noble Baroness, Lady Casey. John Grieve was tasked by the then commissioner of the Met to carry out work on how this could be done. There was a pilot. It worked, but of course some newspapers did not like it and saw it as bureaucracy that prevented the police’s work too much, and it was then stopped. This has now come home to roost. Had we sustained what was started by Sir Paul Condon, we would be in a very different place, but we are not. We have a review suggesting that what is in Motion A1 would be a good thing. I do not see how that could go wrong.
Finally, as I said in the last debate on this, if the Bill is about public order, we have extended stop and search beyond belief. People are protesting—let us say young people—about climate change, injustice and unfairness. There is really no need for it; I cannot see why they should be stopped and searched. Most of all, these protests are at the heart of being in a free society. Most of us did not want Clause 11 but, now that it is in there, these provisions would be a safeguard so that the extension of stop and search does not do greater damage and hurt to our young people, who really want to protest.
Remember when they left school for a day to protest about global warming. If you stopped and searched them because you believed there was a reason to do so, most parents would have been offended. I would have been. Stop and search has been extended in the Public Order Bill and not for the rest of crimes, which I would wholeheartedly support. In many ways this amendment would limit the abuse that could occur because we went for believing as opposed to having grounds to suspect.
Baroness Chakrabarti (Lab)
My Lords, this Bill was always about political signals, not sensible policy. Finally, even signals must change. I respect the Minister, but others in the Home Office have been slow to respond to the concerns of the British public about abuses of broad police powers.
Much has happened and even more has been exposed since this Bill began its passage last May. Last July Wayne Couzens lost an appeal against a whole life sentence for the abduction, rape and murder of Sarah Everard while he was a serving police officer, after a purported stop and arrest for breach of lockdown laws in March 2021. Last month David Carrick was imprisoned for 30 years for an unrestrained 18-year campaign of rape and abuse while he was a serving police officer.
Also last month, YouGov reported that 51% of Londoners do not trust the Metropolitan Police very much or at all. Last week, as we have heard, the noble Baroness, Lady Casey, called for a “fundamental reset” of the use of stop and search, which she said is
“currently deployed by the Met at the cost of legitimacy, trust and, therefore, consent.”
Just yesterday the Children’s Commissioner, Dame Rachel de Souza, found that nearly 3,000 children aged between eight and 17 had been strip-searched under stop and search powers between 2018 and 2022. Nearly 40% of them were black. Half of those strip searches had no appropriate adult present.
All this relates to the use and abuse of current police powers. Still, today we are being asked yet again to green-light new powers to stop and search peaceful protesters without even a reasonable suspicion of criminality. When trust in policing and the rule of law is in jeopardy, if this House does not exercise its constitutional duty to say “enough”—no more power without at least the modest statutory responsibilities set out in Motion A1 in the name of my noble friend Lord Coaker—what are we for?
Lord Sandhurst (Con)
My Lords, I had not planned to speak, but it is important to remember that we are not dealing simply with peaceful protests. I remind the House of what I said on a previous occasion in respect of these amendments. We are dealing with organised, large-scale disruption, using implements. The purpose of the disruption, as the disrupters make plain, is not simply to protest but to stop citizens going about their lawful business for a disproportionate length of time. As I reminded the House previously, the European Court of Justice in Strasbourg has said more than once that such activity is unlawful and that protests that go beyond merely protesting can legitimately be stopped by government.
Baroness Jones of Moulsecoomb (GP)
My Lords, what a pity the noble Lord does not care about what the Government are doing to the country, because I say that what they are doing is a lot more illegal than what these protesters are doing. The noble Lord has to understand that disruption is part of protest and that, as we have heard throughout the debate, the police have enough powers to arrest people who do anything that is not peaceful. Disruption on the roads and within our cities does not necessarily stop people going to hospitals or schools; it is the Government who are stopping people going to hospital because they are underfunding the NHS and stripping out our doctors and nurses by not paying them properly. They are responsible for a lot more damage to our society than these protesters are. Thank goodness the noble Lord, Lord Coaker, has brought this back so that we can say to the Government that they do not know what they are talking about.
The Lord Bishop of Manchester
My Lords, I declare my interest as co-chair of the national police ethics committee, but obviously I am not speaking on behalf of it today. I had hoped not to have to speak at all this afternoon but after the contributions of other noble Lords I feel I must say a few words.
I want to get us back to the focus of this amendment. Although I have much sympathy for what I have heard around the Chamber of late, this is an amendment around how police use suspicionless stop and search powers. I wish we had had the Casey report and the report we have just received on the strip-searching of children earlier in the consideration of the Bill. They would have informed our deliberations very helpfully at that stage. However, we have them now. I feel that we need to put something in the Bill that recognises that we have heard what was said by the noble Baroness, Lady Casey, and in the other report that came out in these last few weeks. We need something to say that we are putting down a marker—a signal, as the noble Lord, Lord Coaker, said a few moments ago—that, whatever we have done in other legislation, now we are in a different world.
I am passionate about the confidence that we have as the citizens of this land in our police force, about good and effective policing, and about the country having respect for its police. However, I worry that, if passed unamended, this legislation will further damage that relationship. It will not lead to public order but to further public disorder. Therefore, I support the amendment in the name of the noble Lord, Lord Coaker.
Baroness Fox of Buckley (Non-Afl)
My Lords, the noble Lord, Lord Sandhurst, gave us a passionate reminder of the reason why there is so much public hostility to a lot of the types of tactics that have been used by protesters over the last year, which have undoubtedly fuelled support for the headlines associated with this legislation. As it happens, those arguments have been well rehearsed in this Chamber by all sides. It seems that, despite that, the demand for stop and search without suspicion will do absolutely nothing to tackle the problems that are described. I want to state that again: stop and search without suspicion. It seems extraordinary to me that anyone would imagine that that would have any impact whatever on the protesters that the noble Lord, Lord Sandhurst, described, but it will definitely have a chilling impact on protest in general.
As it happens, the amendment of the noble Lord, Lord Coaker, is incredibly reasonable. It does not fly in the face of anything the Government are trying to do. It asks for some checks and balances, which, having read the report of the noble Baroness, Lady Casey, you would think that the Government would welcome. In all seriousness, anyone reading that would have to think, “Oh my goodness—what happened?” To have a balancing amendment, which is what Motion A1 is, seems very sensible.
Finally, on Sunday, a group of women, some of whom I know, went to Speakers’ Corner as part of the Let Women Speak campaign. They were kettled and mobbed by hostile opponents. Regardless of what you think of that event, I mention it because the police stood by and did nothing. At one point, when things got really hairy, they walked off, leaving those women facing a lot of aggression.
The difficulty is that the police have acted inconsistently, erratically and almost in a politicised fashion when policing different demonstrations. I would like the police to use the powers they have—goodness knows, they have plenty of them—to police this country and protect those under attack. We do not need to give them new powers that they do not need to police this country or to police any aggressive demonstration that disrupts the lives of everyone, as noble Lords have said. We just need the police to do the job that they are paid to do. They do not appear to be doing so, and that is what the Casey report shows.
It is worse than that. We will do damage to the reputation of the police if this House, just for headlines, thinks that the Government will improve things—they will not. I urge your Lordships to support the police by not being disproportionate, and to support the public by asking the police to do their job without bringing in suspicionless stop and search, which is draconian in any country.
Lord Hogan-Howe (CB)
My Lords, having been mentioned by both Front Benches, I thought I ought to speak for myself, just to make clear my position.
We are not debating whether there is suspicionless stop and search but the amendment proposed by the noble Lord, Lord Coaker. To make clear my position, I support smart, effective stop and search, done according to the law, but it can cause problems, as the noble and right reverend Lord, Lord Sentamu, mentioned, and sometimes it causes a problem disproportionate to the benefit it produces. For as long as I was involved—certainly in London, but wherever I have worked—I have always supported its being used wisely.
In 2017, after the riots London experienced, one of my conclusions was that one of the causes or aggravating factors was the amount of stop and search being carried out. Over the two preceding years, people had either been stopped and searched or, as the noble and right reverend Lord, Lord Sentamu, mentioned, stopped and accounted around 2.6 million times. Bearing in mind that, at the time, there were only 8.4 million people in London and the vast majority stopped were men, that was an awful lot of times that some people were getting stopped. For that reason, we reduced stop and search by about two-thirds, and Section 60 searches—the suspicionless option—by 90%, and yet we arrested more people and reduced crime. So it is entirely possible to do it better and less. I support stop and search when done properly; that is my broad point.
On the back of what I just described, I introduced 23,000 officers with body-worn video. It can make a difference. It reduces complaints and proves that either the officer was performing badly or there was a lie being told about the officer. Either way, it should improve police behaviour, and on the whole it has. I go on to say that, at the moment, it is being switched on when there is an event to be filmed. I think there is a growing argument for it to be on all the time.
There are consequences to that, not least in cost and intrusion into privacy, particularly, perhaps, when an officer talks to a family or anybody with a child. The first thing they have to say is just that straightforward discussion that they are going to film it. It is not the best introduction anybody could have, but I think that the wider use of body-worn video is probably wise.
On a point that the Minister raised, I am glad to see the acknowledgement that there might be more communication of this suspicionless stop and search at protests. I do not support suspicionless stop and search in the Bill, and I voted against it, but that was not the amendment that was brought back, so I could not do anything about that. My point in that debate was that the communication should happen at the border of an area that people are about to enter where suspicionless stop and search is about to be exercised. Currently, whether it is a Section 60 or a protest, if you walk into that area, you just do not know. I do not think it is good enough to say, “Well, if you’d consulted the website, you’d have found out. Somebody has published a notice”. It is entirely possible, either digitally or by putting up posters—there are any number of ways. If you say to someone, “If you go into this area, there’s a protest or we have got Section 60 as there’s a lot of violence, and you run the risk of a without-cause stop and search”, I think you assist the officer in carrying out their job. So my point is about communication at the boundary at which you cross and where the suspicionless stop and search might be exercised.
That said, I do not entirely agree with the amendment of the noble Lord, Lord Coaker. There is one part of it which I do, but I am really not sure that this is the right way. I take the point of the noble Baroness, Lady Fox, that this might be a way to send a signal, but I am not sure that this is the way for me.
In terms of officers exercising the powers conferred by subsection (6), the noble Baroness, Lady Casey, has made the point that she would prefer these particular amendments. Actually, within the Bill and the code, I think there is a stronger set of rules for the officer. They have to say what they expect to find, give a reason, explain why they are legally allowed to use the searches—Section 1 or Section 60—and that you can have a record of that search at that time or subsequently, within a year. Now, it seems to me that these are strong powers, and if you want to amend the things the Government have said they want to, the way is to amend the code. If you put these conditions in the Bill, you will end up with Section 1 and Section 60 searches going by the code and the protest ones being covered by the Bill. I think that there is at least a risk of confusion, and there needs to be consistency. The code might be amended in the way described but I am not sure that these powers alone form an awful lot of additional powers or, frankly, reassurance compared with what is already in the code.
The amendment says:
“Within one year of the passage of this Act, all police forces must establish a charter on the use of the powers in this section”
and that must
“be drawn up in consultation with local communities”.
My concern is that that runs the risk that it will be inconsistent across the 43 police forces that cover this country. Then you are going to end up with confusion: if you protest in Birmingham or London, you end up with a different set of charters. I do not think that is a very wise thing; if there is to be a charter, it is perhaps wise to have a national charter. But to have different circumstances in different parts of the country about protest, I just do not understand how that is going to work for the protesters or the police officers.
The amendment also says:
“Each police force must produce an annual report on the use of the powers”.
I think that could be put into the police’s annual report, which is produced each year anyway, but it could be more bureaucracy if we have another report to publish every year. What I do think is a good idea is:
“Within one month of the powers in this section being used, the authorising officer must publish a statement giving reasons”.
That seems entirely reasonable and something that I do not think anybody could object to. In fact, I think it should be published at the time that the power is declared. If you are going to tell the public that this power is going to be used, you can explain why you are going to use it. I think that is a perfectly reasonable thing, but I do not necessarily think that this amendment enhances what is already in place. I accept that it could send a signal, but I am not sure that it is a wise signal to send at the moment.
Lord Morgan (Lab)
My Lords, I had not intended to intervene in this fascinating discussion, but I will make one point and one point only. We are talking about the possible dangers of stop and search.
We have every opportunity of examining what is happening right now, not in this country—although we would if we proceeded with this Bill—but in France. In France, the use of extreme stop and search by an undisciplined police force, somewhat similar to our own, has accelerated and accentuated the problems that they have had, with the result that what were in themselves perhaps not objectionable practices turned into something very much worse—gender conflict, class conflict and, of course, very sadly, racial and religious conflict. So we do have on this continent examples of the dangers that could occur. We are choosing, in effect, the most extreme option of how to deal with civil disturbances and, indeed, with the exercise of human rights. I urge the House to act wisely and temperately and show the restraint and scrutiny for which it is justly honoured.
Baroness Meacher (CB)
My Lords, I did not plan to speak and do not have notes to speak from, and I will speak briefly, but I want to express my strongest possible support for the amendment in the name of the noble Lord, Lord Coaker. I regret that the noble Lord, Lord Hogan-Howe, who I respect a lot, has nitpicked through the amendment. The principle of the amendment is that stop and search without suspicion is a completely exceptional step to be taken in a democracy. If we were standing here in Moscow, or Beijing, we might well expect this sort of power to be given to the police in relation to public demonstrations. It is not for this country to be introducing these powers for the police, and I am so shocked, frankly, that our Government are attempting to do that.
The amendment is incredibly modest. It is saying that police officers do not take these powers and use them thoughtlessly without proper care, attention and, ideally, consultation with the community. This is an incredibly serious step for any police officer to take. That is the point of this amendment. Yes, we can say it should say this or that or something else. That is not the point. The point is that this power is outrageous; the police already have the powers they need to deal with demonstrations—they really do. Those police officers need the commitment of the community and to work with the community. This power will interfere with policing and reduce the safety of our communities up and down the country.
I hope that the House will support the amendment in the name of the noble Lord, Lord Coaker, as a clear statement that we know this power to be the dangerous step that it is and that police officers need to take the most extreme care in using it.
Baroness Butler-Sloss (CB)
My Lords, I say briefly that I am concerned about the use of these powers and I support the amendment in the name of the noble Lord, Lord Coaker.
Lord Paddick (LD)
My Lords, I will not repeat what I said last time, but since last time, as the right reverend Prelate the Bishop of Manchester, said, we have had the Casey review. The noble Baroness, Lady Casey of Blackstock, is quite clear about what she thinks about stop and search. In that review, she says, as the noble and right reverend Lord, Lord Sentamu, has already said:
“The use of stop and search in London by the Met needs a fundamental reset. The Met should establish a charter with Londoners on how and when stop and search is used, with an agreed rationale, and provide an annual account of its use by area, and by team undertaking stop and searches”.
It is unfortunate that the noble Lord, Lord Hogan-Howe, disagrees with the noble Baroness, Lady Casey, in coming to that conclusion. Elsewhere in the report she says:
“Stop and search—”
Lord Hogan-Howe (CB)
I think I am entitled to my opinion and to make the point which I made. I explained that I could live with a national charter, but I dispute the need for a local one, which ends up with the possibility, even if it is nitpicking, of inconsistency across the country, where we expect consistency. That was merely my point.
Lord Paddick (LD)
The noble Lord is of course entitled to his opinion, and so am I. I said it was unfortunate that the noble Lord disagreed with the noble Baroness, Lady Casey. That is my opinion.
Elsewhere in the report, the noble Baroness says:
“Stop and search and vehicle stops are justified
—she meant by the police—
“through their compliance with the law, ignoring how such incidents are perceived, the impact on individuals, and the wider corrosive impact of trust in the police.”
The Minister mentioned body-worn video and so does the noble Baroness, Lady Casey. She says that the police want to use body-worn video to justify continuing to do what they have done in the past rather than what she says is needed, which is a fundamental reset. Body-worn video is not the answer. That should not be used by the police to justify continued disproportionality in their use of the power.
The noble Baroness further states:
“Black Londoners are under-protected—disproportionately the victims of homicides and domestic abuse; and over-policed—facing disproportionate use of stop and search and use of force by the Met. A huge and radical step is required to regain police legitimacy and trust among London’s Black communities.”
“Overpoliced and underprotected” is what a black policeman said to the Macpherson inquiry 25 years ago. It was not the noble and right reverend Lord, Lord Sentamu, but another black churchman giving evidence to that inquiry; here we are with another inquiry saying exactly the same thing 25 years later.
The noble Baroness, Lady Casey, cites a Home Affairs Select Committee report from 2021, which reported that, in the previous year, the equivalent of one in four black males aged 15 to 24 in London were stopped and searched in a three-month period. The noble Baroness says:
“The facts relating to stop and search are … around 70 to 80% lead to no further action … the more stop and searches are done, the greater the proportion of no further actions.”
The noble Baroness cites a 2019 research study that questioned the efficacy of stop and search as a tactic of policing. She quotes from that report, as do I. It says:
“Overall, our analysis of ten years’ worth of London-wide data suggests that, although stop and search had a weak association with some forms of crime, this effect was at the outer margins of statistical and social significance.”
The Minister repeatedly says that the power that we are debating today—the power to stop and search without suspicion—is based on the existing power under Section 60 of the Criminal Justice and Public Order Act 1994. The 2019 research goes on to say:
“When we looked separately at S. 60 searches, it did not appear that a sudden surge in use had any effect on the underlying trend in … violent crime.”
The noble Baroness, Lady Casey, concludes:
“Stop and search is currently deployed by the Met at the cost of legitimacy, trust and, therefore consent. … It has damaged trust. If the Met is unable to explain and justify its disproportionate use and the impacts of these, then it needs a fundamental reset.”
The majority of stop and search nationally—between 50% and 60%—is carried out in London. The majority—over 60%—of protests happen in London. The majority of times these powers are used will be in London. Stop and search in London needs a fundamental reset, and yet this Government have ignored this House and are giving the police even more opportunity to undermine their legitimacy, trust and, therefore, consent, by giving the police more powers to stop and search.
Without consent, the whole system of policing in this country is undermined, and that is what this Government risk with this legislation. We support the Motion in the name of the noble Lord, Lord Coaker, and will vote for it, but we believe these new stop and search powers should not be part of the Bill. That is what we have always said and what we maintain.
The noble Lord, Lord Sandhurst, cited various examples of what I think he called “disproportionate protests”. All the examples he gave are of criminal offences for which people can be arrested. The police do not need stop and search powers in addition to those powers of arrest.
The noble Lord, Lord Hogan-Howe, cited the 2017 riots and his view, his opinion, was that they were aggravated by the police use of stop and search. Lord Scarman said exactly the same thing about the 1981 Brixton riots. Will we never learn? I urge this House to vote for Motion A1.
Lord Dear (CB)
My Lords, I had not intended to speak in this debate today, but I find myself totally in agreement with the noble Lord, Lord Coaker, and with the last remark about Lord Scarman. I worked very closely with him in 1981 and after that and agreed wholeheartedly with his findings then. They are still good today.
The noble Baroness, Lady Meacher, spoke very eloquently and I found myself nodding all the way through her speech. I agree entirely with what she said and will not weary this House by repeating those very wise words, save to say that I think that this is the wrong time for this projected policy. What we need now is temperate and measured policing and this is not going to help that. I support the noble Lord, Lord Coaker.
Lord Sharpe of Epsom (Con)
My Lords, I thank all noble Lords for another fruitful debate. As I said at the beginning, this Bill has undoubtedly been given the scrutiny the British public want and expect.
Before I go on to more substantive remarks, I should say that I fully support the Casey report. The Government and the Met Police have taken this report very seriously. Guidance on the use of stop and search is statutory and is set out in PACE. It is the law. That is the place for it, as the noble Lord, Lord Hogan-Howe, pointed out, if nothing else to ensure consistency. There are safeguards and considerable scrutiny of stop and search and I will come back to that.
The noble Lord, Lord Coaker, and others will no doubt accuse me of semantics but as my noble friend Lord Sandhurst reminded us, these powers relate to serious disruption—ambulances should not be stopped from getting to hospital, as the leader of the Opposition has pointed out in the past.
On the comments from the noble Lord, Lord Paddick, about the effectiveness of stop and search, I was reminded of a pack that I still have in my folder. I was giving some statistics yesterday, and every knife seized through stop and search, I think, is a potential life saved. In 2021-22, stop and search removed around 14,900 weapons and firearms from our streets and resulted in almost 67,000 arrests. I appreciate that we are on a slightly different subject, but none the less this is an important and powerful illustration that, used appropriately, stop and search can work.
Recent protests have been clear in their aim of causing as much disruption as possible through the use of guerrilla tactics. These measures give the police the proactive powers necessary to respond to those dangerous and disruptive tactics quickly. We will work closely with our partners in the police to ensure that they have the support and resources in place to use these powers.
I have heard what the House has said about the potential disproportionality involved in this and we acknowledge that nobody should be stopped and searched because of their race. Extensive safeguards such as the statutory codes of practice to which I have referred and the use of body-worn video exist to ensure that this does not happen. The Home Office publishes extensive data on police use of stop and search in the interest of transparency and we will expand the publication to the use of the new powers provided for in this Bill, as I have already outlined.
I referred to GOWISELY earlier, which is a mnemonic. This follows, and frankly supports, many of the recommendations from the noble Baroness, Lady Casey. I will go through them. The G stands for grounds for the search. These are the minimum bits of information which should be given to the person detained for the purpose of the search. O stands for the object of the search. W is for the warrant card to be shown to the person searched. I is for the identity of the officer—that is usually the officer’s name unless the officer thinks that giving their name would put them in danger, in which case an identification number can be given. S is the station to which the officer is attached. E is the entitlement to a copy of the search form. L is the legal search power being exercised. Y means that you, the officer, must tell the person stopped that they are being detained for the purpose of the search.
The noble Lord, Lord Morgan, referred to the situation in Paris. As I understand it, much of that is a consequence of the activities of the gendarmerie, which is not a police force with any equivalent in this country.
Lord Baker of Dorking (Con)
Would the Minister answer a question? In a situation where there is a protest preventing traffic, which is very grave and serious, and there are two people young people involved in it, if the police decided to use their power to strip and search, what would they expect to find on those two young people?
Lord Sharpe of Epsom (Con)
My Lords, we are debating stop and search. I am not quite sure where strip and search came into this, I am sorry.
Baroness McIntosh of Hudnall (Lab)
With respect to the Minister, that was not an entirely adequate answer. He was probably quite clear on what the noble Lord, Lord Baker, was asking him.
That said, the Minister has relied very heavily in what he has said to the House this afternoon on existing protocols that the police are expected to use. We have just been told through the Casey report, using very recent evidence, that those protocols are substantially ignored by the police. Does he have an answer for that?
Lord Sharpe of Epsom (Con)
I apologise if I misunderstood my noble friend. I was basing my answer on the fact that a report was published yesterday by the Children’s Commissioner that specifically related to young people and strip search. If I misunderstood, I apologise. With regard to stop and search, I would argue that all the criteria for establishing the cordon and the area and so on would mean that the circumstances described by my noble friend would be highly unlikely.
With regard to the Casey report, as I have already said, both the Government and the Met police are taking it very seriously. These are rules that we expect to be followed.
Lord Coaker (Lab)
My Lords, I thank the Minister for his response and also thank all noble Lords who have participated in this further discussion between us on this incredibly important matter. For the avoidance of doubt, I will be testing the opinion of the House on my amending Motion A1.
At the very beginning, I said to the Minister that one of the things he would do in his remarks was send up smoke. What did he do in his reply? He sent up smoke. What on earth has praying in aid that 14,900 weapons were seized under existing legislation got to do with the legislation we are currently debating? I am delighted that 14,900 weapons have been seized under stop and search powers—as every single Member in this Chamber will be—but they are nothing to do with suspicionless stop and search under Clause 11; I guess they are probably to do either with stop and search with reasonable suspicion, or with Section 60 suspicionless powers, where needed. I said that I support those powers, and I suspect that nearly everybody, if not everybody, here supports them. What I object to, and what is wrong, is using that to somehow speak against my amendments, because it is irrelevant: we are talking not about weapons or terrorism but about protests and using suspicionless stop and search with respect to protests.
I say to the noble Lord, Lord Sandhurst, that we lost the debate about taking Clause 11 out: it is in the Bill. So the things that he wants to do—confiscate without suspicion various objects that are used for protest—are not what this debate is about: people continue to be able to do that. We lost that debate: we agreed it here, but it was put back in in the other place, and, given that we respect the will of the elected House, I revised what we were doing to seek to mitigate. That is what my amendment seeks to do: to mitigate this further. It does not stop it in any way.
However, I say to the noble Lord, Lord Sandhurst, that the bigger problem is that the police do not have the confidence to use the existing powers to do the things he wants. Nobody in this House supports the protests we have seen on our streets in the last couple of years. But the Government put up this sort of mirage of “This is what people who oppose what we are suggesting are for”. So people who are for the sort of amendment I am talking about are somehow on the side of protesters who are stopping ambulances, or on the side of people who want to take protests too far. That is a nonsense. What I am against is allowing the unmitigated use of Clause 11 without the safeguards needed.
Every single report from the inspectorate, the police complaints authority or whoever says that, if you are going to use this sort of power, which is the most severe power you can give the police, to stop people without suspicion going about their lawful business—that is the power you are going to give to these people—you have to build in safeguards. My contention is that, even with the concessions that the Minister made, the Government’s safeguards are not sufficient and need to be in the Bill. Why do I say that? I use the evidence in the Casey review. I do not just make it up and say, “Oh, that’d be a good idea”; I use the evidence from somebody who has researched and understood this, talked to people, been out to communities, and said, “This is what needs to be included. If you don’t, you risk carrying on with some of the problems that we’ve got”. The noble and right reverend Lord, Lord Sentamu, talked about disproportionality, and my noble friend Lady Lawrence and others with experience of this are here. The disproportionality is, frankly, a scar on our society, and now we are now going to extend that suspicionless power, with all that that may entail, without the necessary safeguards in the Bill.
It is not people like you and me who will be stopped and searched; it will be some of the most deprived people in some of the most difficult communities, who already have problems with trust and confidence in the police. We have the opportunity here, through the Casey review, to draw a line in the sand and set the agenda to support our police by saying that we will help them regain the trust and confidence they need. But we cannot do that if the Government are hiding behind saying, “Oh well, we are in favour of getting weapons off the street and stopping these awful protests”. We are all in favour of that, but this is an overreach of legislation which will potentially have very serious consequences for our society.
My amendment simply seeks to mitigate the impact of the suspicionless stop and search power. I agree with the noble Lord, Lord Paddick, that it should not be in the Bill anyway, but, as we have lost that argument, all we are seeking to do is to mitigate its impact. That is a perfectly sensible and reasonable thing to do.
I finish by saying that we are giving our police the most severe power that they can be given: suspicionless stop and search. Just by walking down the street, you could be stopped and searched. We have said that the power is fine with respect to terrorism—but even there we have mitigated it—and we accept that it is fine if it stops murder, gang warfare and all those sorts of things. But it is a totally different set of circumstances to talk about using suspicionless stop and search for protests. That is a step too far and, as such, we should at least mitigate its impact by supporting the amending Motion I have put forward.
Energy Bill [HL]
Tuesday 28th March 2023
(1 year, 8 months ago)
Lords ChamberRead Full debate Energy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 86-I(a) Amendment for Report (Supplementary to the Marshalled List) - (27 Mar 2023)
18:50 - Division on Amendment 18 - Ayes: 170 / Noes: 160 - Amendment 18 agreed.
Lord Ravensdale
“Principal purpose(1) The principal purpose of this Act is—(a) to increase the resilience and reliability of energy systems across the United Kingdom,(b) to support the delivery of the United Kingdom’s climate change commitments,(c) to reform the United Kingdom’s energy system while minimising costs to consumers and protecting them from unfair pricing, and(d) to improve the overall efficiency of the United Kingdom energy system and economy.(2) The Secretary of State must report to Parliament annually on—(a) how the resilience and reliability of energy systems across the United Kingdom are being increased;(b) how the United Kingdom’s climate change commitments in relation to energy are being delivered, including updates on—(i) the decarbonisation of existing electricity usage, and(ii) the electrification of processes in the United Kingdom so that they are powered by electricity rather than other primary energy sources;(c) how costs to consumers are being minimised and how unfair pricing is being avoided.(3) In performing functions under this Act, the Secretary of State and any public authority must have regard to the principal purpose set out in subsection (1).”
Lord Ravensdale (CB)
My Lords, the Bill has had a protracted journey through this House. I make it around eight months since Second Reading, and the global energy system and its impact on households has never been far from the top of the headlines over that whole tumultuous period. So although we may not see some of the passions we saw on display in the previous debate on the Public Order Bill, it underscores the vital importance of many of the issues we are going to talk about today. As Vaclav Smil said in his excellent work Energy and Civilisation:
“Energy is the only universal currency: one of its many forms must be transformed to get anything done.”
It is a pleasure to open the debate on Report and I look forward to this really important legislation making its way to the other place and, I hope, on to the statute book very soon.
I thank the noble Baroness, Lady Worthington, for her support of my Amendments 1 and 136 in this group and for her help in developing them. I declare my interests as an engineer and project director with Atkins, working on the energy system, and as a director of Peers for the Planet. Upfront, I thank the Minister and his team for meeting me and for all their engagement on these issues.
I was keen to come back to this issue on Report due to the number of developments in this area since Committee. Without repeating much of what I said then, back in September last year—again, it has been a long journey on the Bill—it is worth coming back to the headline concern I raised and that I want to progress with this amendment. Electrical generation and distribution is at the core of the net-zero energy system, being the enabler for ambitions in so many other areas.
We are not building electrical generating capacity or network capacity anywhere near quickly enough to meet the Government’s aspirations—and not just the 2035 decarbonisation target. Setting it aside for one moment: if we do not manage to vastly increase our generating and network capacity over the coming decade, all the other aspirations, in terms of energy security, decarbonising heating, the uptake of electric vehicles and hydrogen production, will simply not be possible at scale. That is why Amendment 1 places the electrical generating system at the core of what the Bill is trying to achieve by setting out its principal purpose.
What is missing as a first step to give industry direction is a clear delivery plan for how we are going to achieve targets for our power-generating system. Amendment 136 achieves this by requiring this plan to be produced and setting a clear, measurable pathway for what needs to be achieved each year to 2035. The need for such a plan has been set out clearly in two recent reports published since Committee: the NAO report, Decarbonising the Power Sector, and the CCC report, Delivering a Reliable Decarbonised Power System. Both of these starkly highlight the challenge the Government have in meeting that 2035 target. The CCC and previous BEIS analysis state that we need to get to approximately 250 gigawatts of installed capacity by 2035 from a current base of around 108 gigawatts. Imagine the huge complexity and scale of our current energy-generating system. We need to build it all over again, and more, in 12 years. We have not, historically, come close to the build rates that would be needed to achieve that.
If we look at all the risks in terms of achieving our energy security and decarbonisation ambitions, the one that should really be flashing red on the Government’s dashboard is the risk of not achieving sufficient low-carbon generating and network capacity by 2035. But the important point made in the NAO report is that we cannot even make an adequate assessment of that risk, because we do not have a coherent delivery plan to back up the Government’s ambitions. I know that BEIS and now DESNZ have perhaps had one or two distractions in terms of the energy system over the past year, so the position we are in is understandable. But now the Government need to come back to this issue with real urgency.
As the National Audit Office states:
“The longer DESNZ goes without a critical path bringing together different aspects of power decarbonisation, the higher the risk that it does not achieve its ambitions, or it does so at greater than necessary cost to taxpayers and consumers”.
The Government have individual targets for solar, wind and nuclear, but these need to be brought together into a coherent, system-level plan, the delivery of which will see so many attendant benefits for the country in economic growth, energy security, decarbonisation and the health and well-being of the population.
Baroness Hayman (CB)
My Lords, I declare my interest as co-chair of Peers for the Planet. I will speak to my Amendment 133. I am grateful for the support of my co-signatories: the noble Lords, Lord Hollick and Lord Teverson, and the noble Baroness, Lady Altmann.
I also very much support the case for Amendment 1 made by the noble Lord, Lord Ravensdale. One phrase stuck out for me: his advocation of a “coherent, system- level plan”. In so many of the areas around energy efficiency that we will deal with later in the Bill, this is what we have been missing—not individual initiatives but a strategic approach, with time limits, timescales and targets to be met, so that we can see delivery.
I also support Amendment 130 from the noble Lord, Lord Teverson—which is a different approach to achieving the same goal as my Amendment 133—and Amendment 132 in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake of Leeds, which would finally ensure that the long-awaited strategy and policy statement setting out the Government’s priorities would be published within six months. I very much hope that the Minister can respond positively to that and say that that statement is imminent.
Ofgem’s current remit pre-dates the 2050 net-zero target set by Parliament in 2019. Amendment 133 gives Ofgem a specific statutory net-zero objective linked to our climate change targets, in so doing mirroring the remit that the Government are giving the future systems operator. In Committee, the Minister said of similar amendments updating Ofgem’s remit that the Government “agreed with their intent” but did not consider them necessary because of the existing decarbonisation objective, referring to the 2010 change to Ofgem’s remit, which included a non-specific greenhouse gas reduction objective.
However, this existing duty is limited and related to the reduction of electricity and gas supply emissions of targeted greenhouse gases only—in other words, to reduce greenhouse gas emissions by an unspecified amount over an unspecified timescale. It does not link to our net-zero targets and as a result is less specific and ambitious than what the Government are legislating for the future systems operator.
The change advocated in Amendment 133 has broad support, as was recognised by the Government in their consultation on the future systems operator. The Government themselves noted that
“there were several strong calls for Ofgem’s remit to be reformed to focus on enabling net zero”.
The change was recommended in a report by your Lordships’ Industry and Regulators Committee, chaired by the noble Lord, Lord Hollick, and was also recommended this year by the Skidmore review and the Climate Change Committee. The latter argued that:
“Giving Ofgem a net zero responsibility”
will help it to
“think … strategically about the changes that lie ahead so that we can minimise the cost to the consumer in the long run.”
Just yesterday, the National Infrastructure Commission, in a fairly coruscating report on the Government’s progress towards reaching net zero, recommended the change in its Infrastructure Progress Review.
Support does not end there. The new duty is strongly endorsed by the main industry trade bodies: Energy UK, whose 100 members deliver nearly 80% of the UK’s power generation and over 95% of the energy supply; RenewableUK, which represents 1,000 businesses employing 250,000 people in the UK; and the Energy Networks Association, whose members include every major electricity and gas network operator in the UK and which employs 40,000 people in Great Britain.
This is not just a matter of semantics. The reason all these organisations and bodies support this change is that they believe it essential for increasing the pace and scale of investment in the UK’s electricity grid, which we were hearing about earlier, in order to deliver net zero and ensure that long-term planning happens at the pace needed. As the noble Lord, Lord Hollick, who cannot be with us today, said when we were debating a similar amendment in Committee:
“Many of our witnesses”
at the Select Committee
“told us that the net zero target should be included explicitly within Ofgem’s strategic duties … If there is no explicit reference to net zero, there is a danger that the decisions will be very short-term in nature, focusing on short-term costs for consumers and not the long-term costs of failing to achieve net zero and invest in the infrastructure necessary to achieve that.”—[Official Report, 16/1/23; col. GC 418.]
The trade bodies that represent the industry have been clear that they consider the lack of a clear duty that specifically refers to our net-zero targets as a reason why there has been historic underinvestment in the grid. Ofgem is not currently empowered to consider the benefit of long-term investments with sufficient weight, meaning that new renewable infrastructure is having to wait years to connect to the grid in some cases. This is not a case of it saving the consumer money, as it will cost more in the long term if we continually, but only slowly and incrementally, improve localised energy grid infrastructure. To put it colloquially, it will mean repeatedly digging up the road many times over, rather than digging it up once and for ever.
As RenewableUK has commented to us, at present
“grid development only takes place when there is overwhelming demand for it”,
rather than in future anticipation. That would make sense in a situation where there were uncertainties, but we are certain that we are going to have vastly increased demand for electricity in the near future and that the grid will be decarbonised. We know that every street in every town is going to need to be able to install EV charging points, and we hope that new developments will need to install solar panels and heat pumps, which will all need to connect to the grid. This is something we all know we need to do, but as things stand, by the time there is what is seen as overwhelming demand for grid expansion, it is very hard for grid development to catch up.
Responding to this amendment in Committee, the Minster also said that Ofgem would be keen to avoid any confusion over the need to balance decarbonisation, affordability and security of supply. I agree: Ofgem has repeatedly made it clear that it would welcome such clarification. My amendment does not alter those other aspects of Ofgem’s remit or weaken them in any way. It is for the Government to clarify to Ofgem how those various trade-offs can be balanced.
As I said, Amendment 132 in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake of Leeds, would ensure that the long-awaited strategy and policy statement setting out the Government’s priorities is published within six months—something that is overdue and badly needed. But as all the committees and trade bodies I have cited make clear, doing this does not detract from the need for legislative change to reflect our 2050 targets.
We should not miss the opportunity given by the Bill to update the consumer interests that must be protected when Ofgem carries out its functions to include our statutory responsibilities to achieve net zero by 2050. I end by reminding the House of the contribution from the noble Lord, Lord Hollick, in Committee. He said that it would be ironic if the regulator most responsible for regulating the journey to net zero is one of the only regulators which does not have a specific responsibility in its remit. I hope we can persuade the Minister to agree.
Baroness Altmann (Con)
My Lords, I declare my interest as a member of Peers for the Planet. I am speaking specifically to Amendment 133—so excellently spoken to by the noble Baroness, Lady Hayman—to which I have added my name. I also support the other amendments in this group.
As the noble Baroness, Lady Hayman, has made clear, the future systems operator, which will regulate under the terms of the Bill in future, will have a statutory net-zero objective linked specifically to our climate change targets. Currently, Ofgem does not have that, and this amendment simply seeks to bring it into line. The consequences of an ill-defined and time-limited free objective to reduce greenhouse gas emissions is that Ofgem is not giving sufficient weight to net zero and focusing instead on near-term energy costs, which do not properly recognise the cost impacts for future consumers of delaying specific action to achieve net zero.
The network companies are therefore currently incentivised not to plan ahead. Instead, they are encouraged to defer investment to the last possible moment, and not to anticipate the increases in long-term demand that we are all aware are coming. This has discouraged future-proofing of our energy infrastructure and left us with an ageing network infrastructure that is not really fit for purpose now, let alone for 2050, with constraints and delayed reinforcements being a barrier to connections for housing developments and to the connection of low-carbon power, transport and heating. The reality is that we will need much more grid infrastructure due to the decarbonisation of heat—which is commendably legislated for in the Bill—and of transport through the increased take-up of electric vehicles.
The Financial Times reported last year that renewable energy developers are being told that they will have to wait six to 10 years to connect to regional distribution networks. RenewableUK has highlighted that, in Scotland, a significant number of offshore wind farms that were granted leases last year by the Crown Estate Scotland will not be able to get a grid connection until the mid-2030s. Clearly, there is not a sufficient sense of urgency. Indeed, part of this is likely to be due to the non-specificity of the timescale for achieving net zero that Ofgem currently has.
There is a specific example of a 3-gigawatt east coast offshore wind farm being developed by RWE. This will be instrumental in meeting the Government’s 2030 net-zero target, but it has a grid connection date of 2032.
Baroness Bennett of Manor Castle (GP)
My Lords, I am aware of the desire to get to votes, so I shall be brief. It is a great pleasure to follow the noble Baronesses, Lady Altmann and Lady Hayman. They have overwhelmingly made the case for Amendment 133 and the need for the systems operator to have that net-zero duty.
I shall briefly address Amendment 1, which sets the tone and direction of this debate in an important way. The noble Lord, Lord Ravensdale, and the noble Baroness, Lady Hayman, made the case for the need for an energy system to deliver for net zero. I want to focus on one word in Amendment 1—“resilience” and the need to increase it. We are now in the age of shocks. So many shocks have hit the world and our country, whether they be climatic, health or economic. There is a need for resilience. There is an idea that we can pick off these new, shiny technologies and say, “Great, we will chase after this or after that”. We should look at the basics, starting with an energy system which understands that the cleanest, greenest, cheapest, best possible energy is the one you do not need to use.
I am not sure that the report is out yet, but it is worth noting anecdotally the interesting experiments in energy demand that have happened during the winter. They will ensure that we can manage the peaks of demand and have less need for generation overall. I wanted to set out that focus on resilience because, in later amendments, we will get to the issue of community energy—local energy generation systems in local communities, spread around our islands. These will give us a real foundation of resilience and security that we desperately need for the future.
Lord Teverson (LD)
My Lords, perhaps for the purpose of the whole of Report, I should declare my interest at chair of Aldustria Ltd, which is concerned with battery storage.
I liked the speech by the noble Lord, Lord Ravensdale, today, as well as the speeches he gave on the levelling-up Bill debate yesterday evening. There is an important need for an understandable programme that moves us forward—a route map that works, rather than just targets and slogans. Of course, we will have Green Day on Thursday. When the Minister replies, could he give us a few clues as to what will be said then? The House would be all ears and grateful for the advance information. I thought that the net-zero report, commissioned by the Government and produced by his honourable colleague, Chris Skidmore MP, was an excellent document. I hope that the Government can say that we will be moving ahead in a comprehensive way in much of the area under discussion.
I will speak mainly about the three amendments that we have around Ofgem. It is just stark staringly obvious that Ofgem, our regulator for the energy industry, should have a net-zero objective. I cannot see how you can argue against that, for all the reasons that the noble Baronesses, Lady Hayman and Lady Altmann, have gone through so well. If there was one example of that to me, it is that Ofgem has clearly been very effective in its own mind at making decisions for customers of today but has been utterly unable to make decisions for customers of future generations. That area of the grid is now utterly incapable of delivering; whether it is offshore, onshore or developments on the residential side, those connections and that grid are unable to help us to move towards those net-zero objectives. On connection dates, I know one of 2035, which just happens to be the year when the Government’s target is to have finished decarbonising the electricity grid. Clearly we are not going to make that unless we move it forward very quickly, and I have concerns that we will already not be able to meet it.
The Minister and others in his position have said, all the time, “This is not necessary—it is already covered.” However, those examples already given by the noble Baronesses in the debate show that the directions and the objectives that the Government now have are not sufficient, and that this needs to change. We need to change it now, otherwise our decarbonisation of the grid by 2035, let alone net zero by 2050, will be missed. That cannot be allowed; these amendments must be part of the Bill.
Lord Lennie (Lab)
My Lords, my thanks to noble Lords who have spoken in the debate: the noble Lords, Lord Ravensdale and Lord Teverson, and the noble Baronesses, Lady Hayman, Lady Altmann and Lady Bennett. I will quickly review what I think they said and set out our amendment.
The noble Lord, Lord Ravensdale, set out the principal purpose for the Bill. Split in four ways, it will: increase energy systems’
“resilience and reliability … support the delivery of the UK’s climate change commitments … reform the UK’s energy system while minimising costs to consumers and protecting them from unfair pricing”,
and improve the overall efficiency of the UK energy system and economy. It also requires an annual report to Parliament on the above. The first three of those points are lifted directly from the opening paragraph of the Explanatory Notes, while the fourth is also an objective of the ISOP simply made wider.
Labour tabled an amendment in Committee, and I will remind noble Lords of its contents. The context of that was, at that time, the cost of living crisis; the energy price cap was going up to £3,549 per year. National Energy Action predicted that the number of UK households in fuel poverty would rise to 8.9 million. Tory leadership candidates at that time were vying for leadership to be Prime Minister but were running away from the issue of net zero; the High Court found that the net-zero climate strategy was inadequate, and the Climate Change Committee found that credible plans existed for only 39% of emissions, citing “major policy failures” and “scant evidence of delivery”. As regards energy security at that time, gas prices were expected to surge to record highs the week after the Nord Stream 1 pipeline was shut down, and European prices had risen by nearly 400% over the past year. The UK relies on gas for about 40% of its power generation, and even more on the coldest days when demand is high and wind generation tends to be low. In 2017, a BEIS report included a scenario for a complete cut-off of Russian gas and found that the UK could see “significant unmet demand” if the cut was prolonged and continental European countries paid whatever was necessary.
However, the Bill is a hotchpotch of things thrown together, lacking an overarching theme to tackle these issues. Our amendments would have set out a purpose for the Act, increasing resilience and reliability; supporting the delivery of UK’s climate change commitments; reforming energy systems; binding the Secretary of State and public authorities to these purposes; requiring the Secretary of State to designate a statement as a strategy and policy statement with regard to the purpose of the Act; and requiring the Secretary of State to review the strategy and policy statement on a five-year basis. That would have forced successive Governments into long-term thinking about the specific purpose, not limiting the impact and ambition of the Bill to what has been tacked together, which simply does not go far enough or tackle the immediate problems.
The amendment from the noble Lord, Lord Teverson, would place gas and electricity markets under a duty to assist in the delivery of net zero, and our amendment would require the Secretary of State to designate a statement giving GEMA a mandate for considering the role of energy in supporting government policy in achieving net zero. The amendment from the noble Baroness, Lady Hayman, would include in Ofgem’s general duties a specific requirement to have regard to meeting the UK’s net-zero emissions.
Briefing from RenewableUK sets out the argument for Ofgem remit reform. It states:
“Ofgem’s remit has not changed since its establishment in 2000, and does not prioritise electricity decarbonisation”—
in line with recent government legislation or stated ambitions. It has only a consideration of greenhouse reduction. It continues:
“As a result, Ofgem has been unable to substantially reform its working practices and regulatory frameworks in response to the 2008 Climate Change Act and the UK’s subsequent net zero ambition, to detriment of renewable energy investment and decarbonisation pace.”
It goes on to say that the Government have an opportunity to reform Ofgem’s remit in the Bill we are addressing today.
There is some key evidence for that. Mike Thompson, the Climate Change Committee’s chief economist, noted the integration of energy with transport and heat, including the potential for
“cars sitting on driveways acting as batteries and putting electricity back into the grid”.
He argued that there is a
“need for real integration and a regulator that can think from a systems perspective”,
suggesting that hydrogen and heat networks should be within Ofgem’s remit.
Jonathan Brearley, chief executive of Ofgem, said:
“Planning the system and setting how it evolves should not really be done by the regulator. The regulator’s job is to make sure that that is done efficiently and effectively by the companies concerned.”
We appreciate that argument.
A number of witnesses told the committee that the net-zero target should be included explicitly within Ofgem’s statutory duties. Dr Hardy said that he would
“put net zero up top”,
balancing out its other duties against the context of
“hitting that legislated carbon target”.
Professor Mitchell said that
“net zero has to be the raison d’être of Ofgem”
and argued that
“delivering on legally enshrined commitments to decarbonise”
should form part of Ofgem’s principal duty.
The committee concluded:
“To ensure that, on an enduring basis, the appropriate focus is given to net zero within its competing priorities, we recommend that Ofgem’s duties should be amended to include explicit reference to having due regard to the net zero target. While Ofgem maintains that net zero considerations already factor into its decision-making, adding net zero explicitly to its statutory duties will serve to make this clear.”
We feel that the UK needs not to be left behind but to show similar ambition in its plans for the future of the electricity industry, including Ofgem’s remit.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
First, I thank the noble Baroness, Lady Worthington, and the noble Lord, Lord Ravensdale, for bringing forward Amendments 1 and 136 and the noble Lord, Lord Teverson, for his contribution to the debate. As I set out in Committee, although the Government believe these amendments are well intentioned, ultimately, they are unnecessary. First, the Bill has a clear purpose, so I do not think any introductory clauses are necessary. Where appropriate, the Bill already sets out fairly clear objectives and general duties for the Secretary of State and other specified bodies in carrying out their functions under the relevant parts.
Secondly, in regard to an annual report, I assume noble Lords are aware that the Energy Act 2013 introduced the power for the designation of a strategy and policy statement that sets out the Government’s strategic priorities for energy policy, the roles and responsibilities of those implementing such policy, and the policy outcomes that we want to see achieved. We have committed to a second statutory consultation this spring. I therefore believe that an annual report to Parliament would cause unnecessary duplication of the existing strategy and policy statement.
Baroness Hayman (CB)
Before the noble Lord sits down, I would be very grateful if he can tell me why he thinks so many other people disagree with him on this—so many people who are regulated by the regulator, and so many reports, from your Lordships’ House, the Skidmore report, and from the CCC. Why does the rest of the world not get it?
Lord Callanan (Con)
I think it is very easy for other people who are not directly engaged in the business of regulation to think that adding a statutory duty will be the magical cause of all the different elements of the energy system that they want to contribute to. But, of course, what we should also remember is that placing a duty in primary legislation also makes it justiciable.
I am sure there are plenty of lawyers in this House, and lots of litigation is already flying around on net-zero duties—the Government, indeed, need to respond to further litigation by the end of the week. If the House wants to give yet more work to their learned friends—of course, all the costs of that are ultimately borne by consumers—then the House is free to do that. We continue to keep the matter under review, but we are very clear, as is Ofgem, that Ofgem feels as though it already has this responsibility. I hope that Peers will think again.
Baroness Altmann (Con)
Before my noble friend sits down, is there any chance that the Government might reconsider this? Will he consider that the future system operator will have this remit? The FCA, the PRA under the current Financial Services and Markets Bill, the NHS, and the Advanced Research and Invention Agency will all have this specific remit written in. Why do the Government so reject putting it in the Bill for Ofgem?
Lord Callanan (Con)
Because the other bodies do not have the responsibility for regulating the energy system. I do not see why that is so difficult for my noble friend to understand.
Lord Ravensdale (CB)
My Lords, to sum up my Amendments 1 and 136, the important part of the whole Bill for me is to bring into being the future system operator, which will be a key enabler for much of what we have been talking about today. In the end, it will provide advice to the Government, and it is the responsibility of the DESNZ to own the development of a plan for our future electricity-generating system.
The amendments proposed by the noble Baroness, Lady Hayman, and the noble Lord, Lord Lennie, align with what I am talking about around linking up the duty for Ofgem. They pointed out the links between it and the future system operator, and talked about making sure that it is coherent and that we think more strategically to reduce costs to the consumer in the long term.
Another important point is tackling long-term under- investment in the grid, as brought out by the noble Lord, Lord Teverson, and the noble Baroness, Lady Altmann. Alongside the increase in generating capacity that we require, there is just as much of a challenge in our grid infrastructure and ensuring that the grid connections are there to make use of that.
The Minister gave me some reassurance with the announcements that he said were due later this week on the energy system and on the electricity system in particular. I look forward to that event with great interest and, for now, beg leave to withdraw my amendment.
“(d) assist the delivery of greenhouse gas emission targets as set out in the Climate Change Act 2008, including any carbon budgets set under that Act and climate targets specified in subsection (8).”Member's explanatory statement
This amendment places an equivalent principal duty on the Gas and Electricity Markets Authority to assist in the delivery of Net Zero, alongside protecting the interests of current and future transport and storage network users. This would enable Ofgem to better justify and evidence decisions enabling strategic anticipatory investment.
Baroness Liddell of Coatdyke (Lab)
Ironically, I am also going to talk about some of the responsibilities for Ofgem in among other issues. If noble Lords look at the Explanatory Statement, they will see that we are talking about how to put in place a setting within which Ofgem can better justify and evidence decisions enabling strategic anticipatory investment.
I make the point that I am the honorary president of the Carbon Capture and Storage Association. The CCSA has grown considerably in the past two years, because of all the interest in carbon capture. We have been marched up to the top of the hill more than once, but this time we hope that we will be able to deliver.
Amendment 2 talks about the importance of enabling rapid network expansion. For us to meet the emissions reduction targets, carbon capture and storage will need to be rolled out rapidly across the UK during the rest of the decade. One role of the CCSA that I find extremely interesting is its interchange with the industry. There are some big companies in it but there are also small, cutting-edge companies involved in the development of how we cope with carbon capture, storage and utilisation.
I ask the Minister to bear in mind that it is not just Ofgem that needs to understands its remit; we need to look further and ensure that, throughout the industry, there is confidence, consistency and certainty, because the amount of money that will have to be invested in this is very considerable. To capture and store 30 million tonnes a year by 2030, as per the net-zero strategy, we will need to go from absolutely nothing to building significant CO2 infrastructure in a very short space of time, connecting capture projects continually throughout the 2020s. The industry wholeheartedly welcomes the Government’s recent commitment of £20 billion to build the industry up from scratch. It is therefore vital that Ofgem has updated duties that enable it to justify investment to allow for the rapid network expansion to connect more carbon sites to a growing suite of storage sites.
A lot of this is being done elsewhere. We have an opportunity to be leaders in carbon capture, utilisation and storage, but we need help from the Government, and signals need to be given out. Twenty billion pounds is a very large sum of money but it is not enough; it is estimated that around £50 billion will be needed. Some of that can come from private investment—indeed, it is important that it does—but there needs to be the degree of certainty that I spoke about a couple of seconds ago.
In Committee we debated Ofgem’s powers and whether its role in delivering net zero while protecting current and future users of the network is sufficiently clear. My noble friend Lord Foulkes, who is also a signatory to this amendment, stressed this time and again during those debates. The point was also made much more dramatically by the noble Baroness, Lady Hayman. How is it that so many people out there do not think that Ofgem has the right environment, role or powers to deal with the complexity of these issues?
Ofgem’s current set of duties makes it difficult to justify strategic investment in networks, as this would increase costs to current users in the short term. This is the dilemma that has to be got across. This has been an ongoing issue of concern, as raised in the National Infrastructure Commission’s 2019 regulation review, Strategic Investment and Public Confidence, which recommended that economic regulators’ duties be updated to facilitate long-term investment in networks, and, more recently—referred to by the noble Lord, Lord Teverson —in the Skidmore review.
While the Government should be commended—and I do commend them—for proposing that the duties of the economic regulator should include consideration of the needs of existing and future users, a principal duty to deliver net zero by 2050 would help the regulator to effectively balance these two equally important factors. However, it should be noted that, outside of the regulator’s core duties, the Bill includes a further requirement for the regulator to support the Secretary of State in having regard to the Climate Change Act 2008 and the new CCUS strategy and policy statement. That should go some way to addressing this.
However, it is not enough that these mechanisms are not as strong as the regulator’s own duties. This amendment is essential to give the regulator the necessary powers to make decisions that enable the required strategic anticipatory investment on the network. Ofgem will need to be empowered to make well-justified decisions, balancing the interests of current and future transport and storage network users with delivering net zero.
Lord Teverson (LD)
My Lords, I will speak to my Amendment 33, which is around the decommissioning costs of carbon capture and storage installations. First, I will read what is in Clause 85(1) about financing costs:
“The Secretary of State may by regulations make provision for requiring relevant persons to provide security for the performance of obligations relating to the future abandonment or decommissioning of carbon dioxide-related sites, pipelines or installations.”
It is not often that one is shocked in Grand Committee in the Moses Room. Normally it is a feeling of impotence when you are going through SIs, rather than some sort of greater emotion, but I was shocked when we discussed this. I asked the Minister how we protect the funds that are for decommissioning at some point way into the future. How are we sure that they are not like the dodgy builder who takes your deposit and then, when you ask him or her to decorate your house, the phone is no longer answered and the money has disappeared? How do we know, in this rather difficult area of energy, that those “relevant persons”, and more importantly their banks accounts, will still be there so that in some distant future, maybe decades ahead, this money is available?
If I am honest, when I had the answer from the Minister—which I cannot quote as I have not looked it up—I was shocked that there did not seem to be any provision for protection of the rather large sums that I expect to be there. That is why I have introduced this amendment. It is very simple and demands that when these payments are made they are effectively put into an escrow account, or at least a ring-fenced fund of some sort, so that they are there when these facilities need to be decommissioned. It is then up to the Secretary of State to agree when that money can be disbursed so that decommissioning can take place or disbursed because the funds are no longer needed.
It is as simple as that. It is about protecting that money that we as taxpayers and citizens of the UK are owed when that decommissioning happens and making sure that the money really is paid rather than having disappeared at the time. I see no guarantee within the three pages of other details about how these funds should work. I hope the Minister can come back to me and reassure me that, if he is not going to accept this amendment, the Government will ensure that this money is ring-fenced and is there for us and future generations when we reach that decommissioning point.
Baroness Sheehan (LD)
My Lords, I declare my interest in the register as a director of Peers for the Planet.
I shall speak to only one amendment in this group, Amendment 33, in the name of my noble friend Lord Teverson, to which I have added my name. It aims to ensure that decommissioning funds, as the noble Lord has explained, are available for decommissioning when the time comes. I support it not least because it complements Amendment 222A, which I tabled in Committee, on transparency of decommissioning, particularly with respect to future taxpayer liability for decommissioning relief deeds, which are agreements between the individual oil and gas companies and the Treasury. The National Audit Office and the Public Accounts Committee have both expressed concern about this public liability. I quote from the 2019 NAO report on decommissioning:
“With decommissioning activity increasing, the government is paying out more in tax reliefs for decommissioning at the same time as tax revenues have fallen due to a combination of lower production rates, a reduction in oil and gas prices and operators incurring high tax-deductible expenditure.”
That represents a triple whammy for UK taxpayers since, as the report says, for the first time ever, in 2016-17,
“the government paid out more to oil and gas operators in tax reliefs than it received from them.”
The scenario under which that public subsidy of oil and gas production took place in 2016-17—that is, the triple whammy of lower production rates, a reduction in oil and gas prices and operators incurring high tax-deductible expenditure—is the future outlook for the gas and oil sector as the world moves ever more rapidly towards decarbonisation. The USA’s inflation reduction Acts and the imminent EU response via the green deal industrial plan will turbocharge that transition, and rapid transformative change is very visible on the horizon.
While oil and gas expansion currently looks secure, it is only artificially so, given the very generous tax reliefs, subsidies and other support that the Government continue to provide, not least via decommissioning relief deeds. With over 100 new licences for exploration and production on offer, the risk of stranded assets is compounded hugely. Why do the Government persist in giving preferential treatment to fossil fuel producers? That is a question that I have put to the Minister before on several occasions, and I hope that this time there might be an answer.
It used to be that a ceiling of sorts was kept on the overall cost to the taxpayer by the fact that a firm could not claim back more in decommissioning tax relief than it had previously paid in tax. That makes sense but, since 2017, the Government have explicitly said that when firms default the partner firms that pick up the bill can claim back more in tax relief than they have ever paid. That certainly needs some digesting.
It cannot be right to put on life support an industry that has had its day—life support that is publicly funded. The amendment asks the Government to take precautions with the public purse, uphold the “polluter pays” principle and ensure that operators of new fields and buyers of existing ones accept that they cannot escape their responsibility to our planet, the one and only planet that we have.
Baroness Blake of Leeds (Lab)
My Lords, in speaking to the amendments in this group, I particularly thank my noble friend Lady Liddell for the well-informed and detailed explanation of why the amendments in her name and that of my noble friend Lord Foulkes are so important and relevant. What we heard was the crossover between the considerations within these amendments and the discussions that we had on the previous group regarding the work that we believe needs to be done to strengthen the hand of Ofgem, particularly to justify and evidence decisions, as we heard, enabling strategic anticipatory investment.
Lord Callanan (Con)
I thank everyone who contributed to the debate. If the House will have a little patience, I will first take some time to set out and explain the government amendments in this group, before I come on to the non-government amendments.
Amendment 4 to Clause 9 ensures that, ahead of making any regulations under this power, there should first be consultation with the economic regulator and the appropriate devolved authorities.
Amendments 5 and 6 to Clause 19 preserve the independence of the economic regulator by removing the power for the Secretary of State to direct the economic regulator not to impose conditions in consenting to the transfer of a licence.
Amendment 7 clarifies that the requirement to provide information to the Secretary of State or the CMA under Clause 28 is in relation only to Ofgem’s functions under Part 1 of the Bill, not to any of its other functions.
Amendment 8 clarifies that, under Clause 29, disclosure of information to the economic regulator does not breach any obligation of confidence owed by the licence holder making the disclosure, or any other restriction on the disclosure of information. It also clarifies that this provision does not authorise a contravention of data protection legislation.
Amendment 9 provides updated definitions of a “final order” and “provisional order” in Clause 31—these are consequential on amendments made to Clause 32 in Committee, which inserted a new Schedule 3, setting out the enforcement measures in the Bill.
Amendments 10 to 12 and 15 concern the list of persons whom the Secretary of State must consult under Clause 46 before modifying the terms of a company’s licence in relation to a transport and storage administration order. These amendments make it clear that there should be consultation with the relevant storage licensing authority where a carbon storage licence is in place.
On Amendment 35, we must mitigate the risk that decommissioning liabilities fall to the taxpayer, given that the Government ultimately sit as the decommissioner of last resort. Section 29 of the Petroleum Act 1998 enables the Secretary of State to serve notices that require the recipient to submit a decommissioning programme for an installation or pipeline. The Section 29 regime is therefore a key lever in mitigating that risk.
Amendment 35 proposes amendments to Section 30 of the Energy Act 2008, which would enable modifications to Sections 30, 31 and 45 of the Petroleum Act 1998, in its application to the decommissioning of carbon storage installations. These modifications seek to ensure that the Secretary of State can issue a Section 29 decommissioning notice on entities with a licence for CCUS activities, under Section 18 of the Energy Act 2008. This will enable the Secretary of State to impose decommissioning obligations on CCUS licensees, among other persons.
Amendment 36 proposes an amendment to Section 29 of the Petroleum Act 1998. Under current legislation, a new Section 29 notice cannot be issued on assets that have already been included in a decommissioning programme, unless that programme is rejected or approval for it is withdrawn. This would mean that, if an oil and gas asset were subsequently repurposed for use in a CCUS network, the Secretary of State may not be able to serve a new Section 29 notice on the CCUS operators of that asset without first rejecting, or withdrawing approval for, the existing decommissioning programme. This could lead to a gap in liability for decommissioning a repurposed asset, which of course increases the risk to the taxpayer. The amendment seeks to ensure that the Secretary of State can issue a new Section 29 notice on assets that are already within an approved decommissioning programme, thus mitigating the risks.
Amendments 37 to 39 clarify the duties in Clause 92 for the Secretary of State and the economic regulator to carry out their respective functions with regard to considerations in a CCUS strategy and policy statement. The amendments clarify that these duties apply only to functions relevant to the strategic priorities set out in the statement, and related to carbon dioxide capture, usage and storage policy. The amendments seek to exclude other functions set out in Part 2, which relate to hydrogen production that may not rely on CCUS, such as hydrogen produced via electrolysis. They seek to expressly exclude hydrogen levy functions.
Amendments 41 to 47 to Clause 99 ensure that sufficient powers are available to the Secretary of State to be able to update or make new access to infrastructure regulations, should that be appropriate to ensure that access arrangements remain fit for purpose. In particular, updates to the existing regulations may be needed in light of the new economic licensing framework established in Part 1. These amendments are necessary because the existing regulations were made using the powers in Section 2(2) of the European Communities Act 1972, and there are currently no domestic powers to update, replace or make new access to infrastructure regulations.
Amendment 14 to Schedule 5 ensures that, where appeals are made to the Competition and Markets Authority in respect of a decision made by the economic regulator for carbon dioxide transport and storage, a “specialist utility” group is convened to hear such an appeal. This is consistent with provisions for licence modification appeals in the Gas Act 1986, the Electricity Act 1989 and the Water Industry Act 1991, as I am sure the House is aware.
I move to the non-government amendments. Amendment 33 requires CCUS decommissioning funds to be ring-fenced. I thank the noble Lord, Lord Teverson, for his contribution. The Government’s view is that the primary purpose of a funded decommissioning regime is to provide assurance that decommissioning liabilities for CCUS assets will be paid, mitigating the risk that these liabilities fall to the taxpayer—we share the noble Lord’s concern about this. The noble Lord asked me for reassurance that the funds will be ring-fenced. The Government agree that appropriate safeguards will need to be put in place to ensure that the funds carry out the desired function.
The Government’s 2021 consultation on establishing a funded CCUS decommissioning regime set out our proposals for access to the decommissioning funds and, in particular, the expectations for ring-fencing and regulatory authorisation for any withdrawals. The Government expect that the decommissioning funds will be overseen by the economic regulator, to ensure that the funds are accruing appropriately. In addition, the intention is that the Offshore Petroleum Regulator for Environment and Decommissioning will need to authorise any withdrawal requests made by the operator to ensure that use of the funds is restricted to decommissioning-related purposes.
The noble Lord will be pleased to know that the Government plan shortly to publish an update document, which will include further detail on regulatory oversight of the decommissioning funds, the holding arrangements and, crucially, the protection against insolvency. The Government intend to set out the requirements for appropriate restrictions and safeguards for the fund in regulations and guidance. These requirements will be essentially technical in nature, so it is the Government’s view that it would be more appropriate to set these out in secondary legislation.
I move to Amendment 2, from the noble Baroness, Lady Liddell, and the noble Lord, Lord Foulkes, who is not in his place, sadly—I was looking forward to debating with him. It is the Government’s view that this amendment is not necessary. The Secretary of State is already bound by law under the Climate Change Act to ensure that targets to reduce greenhouse gas emissions are met. Under Clause 1(6), the economic regulator is required to have regard to the need to assist the Secretary of State in complying with his statutory duties under Sections 1 and 4 of the Climate Change Act 2008, and to have regard to the statutory emissions-reduction targets in each of the devolved Administrations.
Anticipatory investment will be essential to scale up CO2 transport and storage networks to meet our CCUS ambitions and net-zero targets. However, this investment must be driven by the needs of the users of the network, both those already connected to a network and, of course, those wanting to connect.
Baroness Sheehan (LD)
Before the Minister sits down, I will ask him to clarify a couple of things. First, I welcome his statements on decommissioning, but can he confirm whether the safeguarding of decommissioning funds will include all fields, both existing and new? Secondly, can he confirm that it is the FCA that will provide the regulatory oversight for decommissioning funds?
Lord Callanan (Con)
It would depend on what the noble Baroness means by “decommissioning funds”. What would the decommissioning funds be for? In response to the noble Lord, Lord Teverson, I outlined our intention to ring-fence the CCUS decommissioning funds.
Baroness Liddell of Coatdyke (Lab)
I beg leave to withdraw my amendment.
Lord Callanan
Member's explanatory statement
This amendment requires proposed regulations under subsection (6) to be consulted on in the same way as regulations under subsection (2).
Lord Callanan
Member's explanatory statement
This amendment removes a provision that would have authorised the Secretary of State to direct the economic regulator not to impose conditions on consent to the transfer of a licence. Lord Callanan’s amendment at page 21, line 19 is consequential on this amendment.
Member's explanatory statement
See the explanatory statement for Lord Callanan’s amendment at page 21, line 9.
Lord Callanan
Member's explanatory statement
This amendment clarifies that the duties under subsection (3) relate only to functions under Part 1 of the Bill, not to other functions of the Gas and Electricity Markets Authority.
Lord Callanan
“(5) Except as provided by subsection (6), the disclosure of information under this section does not breach—(a) any obligation of confidence owed by the person making the disclosure, or(b) any other restriction on the disclosure of information (however imposed).(6) This section does not authorise or require a disclosure of information if the disclosure would contravene the data protection legislation (but in determining whether a disclosure would do so, a requirement imposed by virtue of subsection (2) is to be taken into account).”Member's explanatory statement
In this amendment new subsection (5) clarifies that disclosure of information under the Clause would not amount to a breach of any other legal restrictions and new subsection (6) clarifies the relationship between the power to require information under the Clause and requirements in data protection legislation.
Lord Callanan
Member's explanatory statement
This amendment updates subsection (4) to take account of amendments made in Committee which affected the way “final order” and “provisional order” are defined in Part 1.
Lord Callanan
Member's explanatory statement
This amendment is supplementary to Lord Callanan’s amendment at page 43, line 4.
“(b) if the section 7 licence authorises activities within section 2(2)(a), the person who granted any associated licence under section 18 of the Energy Act 2008, and”Member's explanatory statement
This amendment, which is supplemented by Lord Callanan’s amendments at page 42 line 29, page 43 line 12 and page 49 line 27, amends the list of persons whom the Secretary of State must consult before exercising the powers under subsection (1).
“(6) For the purposes of this section, a licence under section 18 of the Energy Act 2008 (“the carbon storage licence”) is an “associated licence” in relation to the section 7 licence if—(a) the carbon storage licence is in respect of activities within section 17(2)(a) of that Act, and(b) any part of the site to which the section 7 licence relates is within any place to which the carbon storage licence relates.”Member's explanatory statement
See Lord Callanan’s amendment at page 43, line 4.
Lord Callanan
Member's explanatory statement
This amendment takes account of the passing of the Energy Prices Act 2022, which inserted a reference to that Act in section 105(1)(a) of the Utilities Act 2000, since this Bill was introduced.
Lord Callanan (Con)
My Lords, in moving Amendment 13, I will also speak to Amendments 58, 63, 75, 78, 79, 95 and 143 in my name.
Turning first to Amendments 58 and 143, I thank the noble Lord, Lord Ravensdale, for bringing forward his original amendment on the classification of nuclear-derived fuels in Committee. While we believe that we should not categorise nuclear-derived fuels as renewable, I have welcomed the constructive discussion with noble Lords since Committee, and, in response to that, the Government are pleased to bring to forward these amendments.
Amendment 58 will enable the renewable transport fuel obligation and the forthcoming sustainable aviation fuel mandate to support two types of low-carbon fuel, helping the UK to decarbonise transport further, thereby achieving, I think, the noble Lord’s objective. First, it will enable the support of recycled carbon fuels. These are produced from otherwise unrecyclable waste plastics or industrial waste gases that cannot be avoided, reused or recycled. Secondly, it extends support to fuels derived from nuclear energy. Both fuel types have the potential to deliver significant carbon savings over traditional fossil fuels and are a vital replacement for sectors that are difficult to decarbonise, such as commercial aviation and heavy goods vehicles. Amendment 143 sets the timing on which the power comes into force at two months after Royal Assent.
I turn now to Amendment 95, which relates to Part 8 on the regulation of energy smart appliances, specifically under Clause 191, which deals with how energy smart regulations will be enforced. It will enable the regulator to agree an enforcement undertaking with an economic actor, where appropriate, and, if required, it will still issue a penalty on a separate non-compliance issue to the same economic actor. The ability to agree an enforcement undertaking with a business is a useful tool for a regulator. It allows it to work with a business to bring it into compliance without the need for potentially harsher penalties. This will be particularly important in the regulation of energy smart appliances, which is a nascent and evolving market at the moment. Should other, unrelated instances of non-compliance arise while an enforcement undertaking is in place, the regulator still has the power to issue a penalty. The amendment will put that ability beyond any doubt by clarifying that the regulator can issue a penalty against a business with which it has agreed an enforcement undertaking, providing that the two relate to separate issues. The amendment will help to enable the implementation of a consistent and fair enforcement regime for the energy smart appliances market.
Amendments 13 and 63 simply take account of the Energy Prices Act 2022, which has been passed since the Bill was introduced.
Amendments 75, 78 and 79 are minor and technical amendments relating to Schedule 16 on heat networks regulation. Amendment 75 corrects an error in relation to installation and maintenance licences for heat networks by removing the reference to Scotland, where the licensing regime will not apply. The licensing regime will apply in England and Wales, and the Northern Ireland Executive will have powers to introduce an equivalent regime. The regime will not apply in Scotland, as the Scottish Government, I am told, will introduce their own regime.
Amendment 78 simply corrects a typographical error in paragraph 40 of Schedule 16, replacing a reference to “a penalty” with “compensation”.
Finally, Part 9 of the schedule provides for regulations introducing a special administration regime for the heat network sector. It provides for the appropriate authority to modify existing legislation relating to the special administration regime for energy companies to allow for the equivalent introduction of an energy regime for heat networks. Amendment 79 provides a definition of the appropriate authority for paragraph 50 of the schedule, to match the definition in paragraph 61 of that schedule. The appropriate authority in this case is defined as the Secretary of State for England and Wales and Scotland, and the Department for the Economy in Northern Ireland. I beg to move.
Lord Ravensdale (CB)
My Lords, I shall speak to Amendment 58, to which I have added my name. First, I thank the Minister for his constructive approach, and for listening to my amendments in Committee and responding by introducing this amendment, which addresses all of the points in my Committee amendments. I am most grateful. I must also thank his officials for the work that they have put into drafting and finding an acceptable way forward, and for engaging with me throughout the process. I also thank the noble Baroness, Lady Worthington for her support throughout.
I break down the benefits of this amendment into three broad areas. First, it continues the work that the Government are doing to create a level playing field for low-carbon technologies. We heard the welcome news in the recent Budget Statement that nuclear will be considered as environmentally sustainable, or taxonomy aligned, under the UK green taxonomy. In a similar vein, the renewable transport fuels obligation amendment will allow nuclear to benefit from a subsidy scheme that is already available to renewable operators. This sends a clear message to investors that the Government sit squarely behind nuclear as an environmentally sustainable energy source. It also brings out the important principle of technological independence—to let the market do its job to find the most efficient solutions, but also because for net zero we need to throw the kitchen sink at the problem, if we are going to achieve it.
Secondly, the amendment directly enables a whole range of near-term projects that will help to kick-start the green hydrogen and recycled carbon fuel industries within the UK. With recycled carbon fuels, there are a number of industrial projects being scoped that will be enabled by this amendment—for example, Project Dragon, to use industrial waste gases from Port Talbot to produce ethanol from which recycled carbon fuels, including sustainable aviation fuels, can be derived. By setting strict rules for how to account for emissions, savings of around 70% can be generated when compared with the baseline of using fossil fuels. Those projects, enabled by this amendment, will be an important enabler for decarbonising transport fuels and moving towards a circular economy, saving significant amounts of greenhouse gas emissions in future.
For nuclear, there are near-term plans to produce hydrogen from Sizewell B for use in Sizewell C construction, and also in other nuclear projects, including SMRs and AMRs. Particular economic benefits may be gained through using nuclear power to produce hydrogen—for example, high temperature electrolysis, using heat from the nuclear reaction to produce hydrogen much more efficiently than cold electrolysis. Further down the line, using the heat from high temperature reactors to produce hydrogen directly through the sulfur-iodine cycle has the potential to increase efficiency further beyond traditional electrolysis techniques. If the Government are to meet their ambitious hydrogen production targets, nuclear needs to be part of the picture, which will be enabled by this amendment and help kick- start green, or pink, hydrogen production—I sometimes lose track of the colours—in the UK.
Thirdly, the amendment enables these fuel sources to be eligible for the sustainable aviation fuels, or SAF, mandate. Both recycled carbon fuels and nuclear will have a key role to play here. RCF has the potential to produce large volumes of SAF in the near term; in the longer term, the combination of direct air capture and hydrogen production from nuclear could allow power-to-liquid sustainable aviation fuel to be produced economically.
As I said, I am very grateful to the Minister and his officials for working together to make this important change to the Bill.
Baroness Worthington (CB)
I shall speak briefly to Amendment 58, which the noble Lord, Lord Ravensdale, has so eloquently spoken to. I definitely support the nuclear element of this amendment, and I am grateful to the noble Lord for bringing this to our attention, as well as to the Minister for taking it on proactively. However, I have a question around the inclusion of fossil-derived sources of energy in this approach. I am not one to rule things out, and I think that we need to use all the tools available to us, but there is a material difference when you are using a fuel derived from fossil fuels, in that once it is combusted the CO2—the greenhouse gases—will be readmitted to the atmosphere. Can the Minister say a bit more about how something derived from nuclear electricity, which is intrinsically clean, to create a fuel, is different from the waste derived from a fossil source of energy? I just want clarification on that point.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Baroness, Lady Worthington, and to partly agree and partly disagree with her comments. I speak in strong opposition to government Amendment 58, which is the substantive amendment in this group, buried in the depths of a whole lot of technical detail.
It is worth focusing on what Amendment 58 actually does. The Minister said this in his introduction, but it deserves to be highlighted. The Minister acknowledged that these are not renewable sources of energy, but what we are doing here is to treat them as though they are renewable. That is an important distinction, which clearly needs to be made. It is quite significant.
As the noble Lord, Lord Ravensdale, said earlier, we have been debating this Bill for eight months or so. The second element of the government amendment, referring to nuclear-derived fuels, reflects something that the noble Lord brought to Committee but, so far as I can recollect across those eight months, recycled carbon fuels have suddenly popped here at Report, without any previous debate at all. That is something that presents an issue when it comes to scrutiny and examination—an issue which the other place, when this Bill reaches it, may well need to look at and consider in some detail, given that your Lordships’ House has not had the opportunity to look at recycled carbon fuels along with some of the issues that the noble Baroness, Lady Worthington, raised and which I am going to expand on.
It is worth highlighting that nuclear-derived fuel is now an extremely hot political issue—no pun intended—in Europe. Germany, Spain and Denmark are among the countries opposed to nuclear-derived fuel being classed as a renewable there, in a debate that is going on this very week, as we are meeting now in your Lordships’ House. The opposition from those states says that nuclear energy does not belong within renewable targets and that there is a risk that treating it as though it was renewable will undermine the massive expansion of renewables that we need to hit our climate goals. So this is a replacement-type issue—and that raises a very important point.
When I speak in opposition to this amendment, I am not necessarily saying that we should not, in a limited way, be using recycled carbon fuel of the industrial waste type to which the noble Lord, Lord Ravensdale, referred, or even, while we have the nuclear plants, nuclear-derived fuel. The question is whether it receives treatment as though it was a renewable when it is not a renewable—that is the question that arises from this amendment.
On recycled carbon fuel, as the noble Baroness, Lady Worthington, said, there are some grave concerns about burning fossil fuel wastes, particularly plastics, in incinerators or hydrolysis processes to produce fuels. I can quote some figures on this. When municipal solid waste containing 65% of non-biogenic waste, which is usually mostly plastic, is turned into fuel, the emissions range between 52.6 and 124 grams of carbon dioxide equivalent per megajoule. When the waste is all non-renewable, the impact is actually worse than conventional diesel, petrol or kerosene. Even when there are some reductions, at best they are 1% to 14%.
We come to a broader issue, and here I mention the noble Lord, Lord Lansley, who I see is not in his place. Yesterday, on the levelling-up Bill, he was expounding the virtues of the circular economy. Of course, in a circular economy, and thinking about the waste pyramid, the best thing we can possibly do is reduce the amount of waste. There is a risk if we are providing a way out at the other end for plastics, subsidising them as though they were renewables: this could encourage the production of more plastics, which is absolutely the last thing this planet needs, both for climate reasons and for all the other reasons of human health and well-being, microplastics and all the issues we have on a planet that is choked with the stuff already.
There is also the problem, of course, that while recycling is the third-best option—a bad option but not as bad as the others on the waste pyramid—anything that encourages the production of more plastics is an issue. I am aware that the Minister, when we were debating methane earlier this month, complained that people keep quoting scientists at him. I am afraid I am going to do that again, and I make no apology for continuing to do so, because I believe that we should have evidence-based policy that relies on the science. A study was published in Energy in 2017, “The utilisation of oils produced from plastic waste at different pyrolysis temperatures in a DI diesel engine”. I apologise that that is a bit of a mouthful. To boil down the point of this study, there are different ways of doing pyrolysis with fuels made from plastic, but whichever way you do it the air pollution results are worse than diesel.
Many Members of your Lordships’ House will be aware that my noble friend Lady Jones of Moulsecoomb has taken the Clean Air (Human Rights) Bill right through the House and has received very wide backing. There is a real issue here: climate is only one of the many threats we face. Air pollution is a very serious issue. Essentially, we are in a position where it is very clear that we have to stop burning stuff and polluting our planet, whether that is carbon dioxide pollution or other pollutants that come from burning fossil fuels or organic materials. There is a very grave danger in this amendment, I suggest.
Given that we are where we are, I am not going to call for a vote on this; I do not think your Lordships’ House is ready. I do not think we have had sufficient debate on this issue to do that, but I very much hope that today’s debate—and others may contribute as well—will be taken on board when the Bill gets to the other place.
Lord Teverson (LD)
My Lords, I also have great concern about this amendment. It seems to me that, on renewable transport fuels, we have a government amendment, in a group of some 20 amendments or more, that changes the taxonomy in the UK, exactly as was said by the noble Baroness, Lady Bennett, and the definition of a renewable fuel. I do not think that is particularly good practice; it is the wrong way to do this. I hope that the Commons, when this goes down the other end, will debate it rather more, because it requires a lot more thought.
I can get my head around the nuclear bit with hydrogen, which has now been well explained to me. I was trying to understand this amendment, I must admit, before the noble Lord, Lord Ravensdale, spoke, but whether it is renewable or not is a debate to be had. I do not have quite such an issue over that, maybe, but it needs to be debated fully. What I have a problem with is more the carbon side, because what we are talking about is no different from energy from waste. Energy from waste is one of the dirtiest forms of energy that is produced. It has other benefits—it does not produce landfill and all that sort of side—but it is not, in any description, a renewable fuel. So I too have great reservations about this amendment. Clearly I am not going to oppose it here today, but I very much hope that the other end of the building will give this much greater scrutiny and see it as a major decision around the taxonomy of renewable fuels and renewable energy when the Bill reaches there.
Lord Lennie (Lab)
My Lords, this amendment would allow two other low-carbon fuels to be supported under the existing and forthcoming renewable transport fuel schemes. As we have heard, these are recycled carbon fuels and nuclear-derived fuels. While the noble Lord has created a degree of happiness with the noble Lord, Lord Ravensdale, some unhappiness still exists around the Chamber. These fuels can provide similar carbon emissions savings to the renewable fuels already considered under these schemes. Furthermore, these fuels are crucial for the production of sustainable aviation fuel, which is imperative to achieving the jet zero strategy and fulfilling the forthcoming sustainable aviation fuel mandate.
I will not speak for long on this, because we want to move on, but this amendment would insert a new clause in Chapter 3 of Part 3 of the Bill, providing for recycled carbon fuel and fuel derived from nuclear energy to be treated as renewable transport fuel. Amendment 74, in the name of my noble friend Lord Whitty, would make it clear that the regulator needs to ensure that consumers of heat networks have equivalent consumer protection to those of other suppliers. The Explanatory Notes say of Clause 166:
“This clause provides that GEMA will be the regulator for heat networks in England, Wales and Scotland. The Secretary of State may introduce regulations to appoint a different regulator by affirmative procedure. The regulator in Northern Ireland will be the Northern Ireland Authority for Utility Regulation (NIAUR) subject to a similar power to make changes by secondary legislation.”
I think that is something we can all agree with.
Lord Callanan (Con)
I thank all noble Lords who have taken part in this debate. Before I engage in the detail of the amendments, let me respond to the noble Baroness, Lady Bennett. I am sure I have never said that we should not listen to scientists; of course we should, but we should accept that there are sometimes different scientific opinions. I notice that the noble Baroness is very keen to listen to scientists on some occasions, but the Greens are totally opposed to listening to the vast majority of scientists who say that nuclear should provide an essential way of decarbonising the country’s economy.
By way of example, perhaps she would like to look at the mess her Green friends have got themselves into in Germany by their irrational objections to nuclear policy: they have ended up, now that they are in government, supporting the eradication of villages to open more lignite mines, the dirtiest form of coal production, because they got rid of all their nuclear capacity. Obviously they could not have predicted the gas shortages that would come along, but this is the problem you get yourself into with idealistic policies without any practical effect in the real world. Thankfully, I do not think there is any chance of the noble Baroness or her party being in government in the UK to make similar errors and mistakes.
Baroness Bennett of Manor Castle (GP)
I have to correct the noble Lord and point out that there are Green Ministers in government in the UK.
Lord Callanan (Con)
I accept the noble Baroness’s point—yes, that was an error on my behalf. Of course, Patrick Harvie is my opposite number in Scotland and I discuss these matters with him quite often, although we have never had a nuclear discussion yet.
Turning to the amendments, I thank the noble Lords, Lord Ravensdale, Lord Teverson and Lord Lennie, and the noble Baroness, Lady Worthington, for their contributions on Amendment 58. I thank the noble Lord, Lord Ravensdale, for his engagement and pay tribute to the excellent work of my officials in drafting the amendments. In response to the very appropriate request by the noble Baroness, Lady Worthington, for clarification on fossil fuel waste, both the renewable transport fuel obligation and the forthcoming sustainable aviation fuel mandate are underpinned by strict sustainability and eligibility criteria. This includes requiring qualifying fuels to provide minimum greenhouse gas savings when compared with the fossil fuels they displace.
Fuels produced from nuclear energy are considered to be zero carbon; however, it will be important that we do not incentivise the diversion of electricity generated by nuclear power stations from current uses. The RTFO already includes criteria to ensure that renewable energy—
Baroness Bennett of Manor Castle (GP)
Perhaps the Minister might wish to correct himself. He just referred to nuclear energy as zero carbon. It is of course, as under the Government’s own classification, low carbon.
Lord Callanan (Con)
I think I said fuels produced from nuclear energy, but never mind.
The RTFO already includes criteria to ensure that renewable energy used for fuel production is additional to that which would otherwise be supplied, and the same principles would be developed for nuclear power.
With regards to the waste hierarchy, this policy makes effective use of what otherwise would be difficult to manage waste. RCFs are non-recyclable fossil wastes. Utilising these types of wastes to synthesise fuel is a better end-of-life fate than landfill or incineration. It will be important to mitigate risks and ensure adherence to the UK waste hierarchy, so we are in the process of concluding a consultation on detailed policy proposals to ensure that RCFs contribute to and meet our wider objective of effectively reducing the greenhouse gas emissions of fuels. Sustainability criteria are being carefully formulated in consultation with a wide range of scientists, technical experts, other government departments, fuel suppliers and wider stakeholders to ensure that the risks are carefully managed and mitigated. I hope that provides appropriate reassurance to the noble Baroness.
Lord Callanan
“Enterprise and Regulatory Reform Act 2013
9 In Schedule 4 to the Enterprise and Regulatory Reform Act 2013, in paragraph 35(3) (membership of CMA panel), in the definition of “specialist utility functions”, after paragraph (b) insert—“(ba) an appeal under section 20 of the Energy Act 2023;”Member's explanatory statement
This amendment provides for appeals under Clause 20 to be “specialist utility functions”. This will attract special provisions relating to the composition of groups constituted to carry out such functions.
Lord Callanan
Member's explanatory statement
This amendment is consequential on Lord Callanan’s amendment at page 43, line 4.
Lord Callanan
Member's explanatory statement
This amendment provides for the Parliamentary procedure to which regulations under new Clause (Payments to relevant market participants) are to be subject.
Lord Callanan (Con)
My Lords, in moving Amendment 16 I will speak also to Amendments 20, 21 and 30 standing in my name.
Amendment 30 further clarifies the scope of the modifications that the Secretary of State can make to certain licences for the purposes of facilitating or supporting the enforcement and/or administration of the hydrogen levy. Before making a proposed modification, the Secretary of State is required to consult the holder of any licence being modified. This will help to ensure that relevant bodies are engaged on proposed modifications. To ensure sufficient scrutiny of proposed modifications, the Secretary of State must also lay a draft of the modifications before Parliament, where they will be subject to a procedure similar to the draft negative resolution procedures used for statutory instruments.
I turn to Amendments 21, 20, and 16. I thank the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, again for their amendments in Committee. Having considered those amendments, the Government are introducing a new clause on the hydrogen levy provisions, which I hope noble Lords will find satisfying. The new clause will enable revenue support regulations to make provisions for amounts to be paid to levied market participants by a hydrogen production counterparty or hydrogen levy administrator. This includes the pass through of payments received by a hydrogen production counterparty from hydrogen producers under revenue support contracts, such as payments made to the counterparty when the market price of hydrogen is higher than the strike price. This will help to ensure that regulations can make provisions for fair and efficient payments and reconciliation arrangements.
Subsection (3) of this new clause was prompted specifically by consideration of Amendment 62 from the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, in Committee. This provision enables the Secretary of State to make regulations requiring that customers of levied market participants benefit in accordance with these regulations from payments made to levied market participants by a hydrogen production counterparty or levy administrator. I beg to move.
Baroness Liddell of Coatdyke (Lab)
My Lords, I will speak to Amendment 17. I will not take up much of the House’s time, because this is just about consistency.
The Government have defined a UK low-carbon hydrogen standard, which was updated in July this year, and it includes guidance and a calculator tool for hydrogen producers to use for greenhouse gas emissions reporting and sustainability criteria. It has been designed to demonstrate that low-carbon hydrogen production methods can meet a greenhouse gas emissions test and threshold, and this amendment would require the regulations to have regard to that standard when assessing the eligibility of low-carbon hydrogen production. Using the low-carbon hydrogen standard will ensure that there is consistency for the industry and its users, and will provide them with the degree of certainty that they are looking for when developing their projects.
Baroness Worthington (CB)
My Lords, I added my name to Amendment 18 in respect of who should be paying a hydrogen levy. I do not consider that hydrogen is going to play a large role in our broader economy. I think it will have specialised uses: it will be used where it is already used, in the production of fertilisers and in certain chemical processes, and it may well be used as a back-up fuel in extremis when we have no other forms of storage. I say that because it is going to be a relatively expensive commodity, it is not going to be easy to handle and it is not necessarily going to be very safe. For those reasons, I think we are overexcited about hydrogen in general, and the Bill is overexcited about hydrogen—and probably, as a result, about carbon capture and storage, which will also be quite expensive.
The reason I lent my name to this amendment is that it seems particularly egregious to expect electricity billpayers to be picking up the price of this expensive commodity, which is not very safe and quite unlikely to be very useful. Therefore, I think it is really important that the Government listen, and listen to everyone outside this Chamber who is saying that we should not be loading any more costs on to electricity consumers but should be doing the opposite. I am looking forward to the Government taking on this issue to redress the balance of how we are tackling climate change and who is paying. At the moment, the electricity consumer is paying nearly everything and the gas consumer almost nothing.
It is time that we started to recognise the value of electricity. It is hugely efficient, and it can be indigenously produced from our nuclear and homegrown renewables and offshore wind. It is that which we should be supporting, not necessarily this rather expensive alternative. Gas, oil and coal companies will continue to promote it, but it is not for the electricity billpayer to pick up the tab. So I fully support Amendment 18.
I would love to hear a little more from the Minister on new subsection (3) inserted by Amendment 20 in relation to the regulations. It is my understanding that that will enable payments to be made back to consumers, but could those regulations also decide not to impose any hydrogen levies on electricity consumers? I would like to understand the extent to which those regulations could solve this problem.
Baroness Blake of Leeds (Lab)
I make reference to the Minister’s amendments, particularly the issue he highlighted of including the new subsection that would allow regulations to make provisions requiring that energy consumers benefit. I want to ask just one question on that. While we welcome that provision, there is a concern. If we are allowing regulations to make this provision, what guarantee is there that they will actually be used? Are the Government committing to using them, if they use Clause 66 powers?
I support all of my noble friend Lady Liddell’s comments on her amendment. The main amendment for me is that just referenced by the noble Baroness, Lady Worthington. We spent a significant amount of time talking about this area in Committee, so I will not go through all the detail. However, as the noble Baroness mentioned, in the circumstances we are in, with the extra pressure on the cost of living from energy bills, why are we looking at a situation where we could be asking householders to pay more money? I acknowledge that there will be further consultation but I hope that, as well as it being done thoroughly, its conclusions will lead to the spirit of our amendment. As shown in our amendments, we believe that the Secretary of State could put a levy on gas shippers but not on gas and electricity suppliers, thus preventing responsibility for the levies falling on households.
We need to reflect on the spirit of the Bill—the whole idea is that, while reforming energy systems, we do everything we can to protect consumers and their ability to pay their bills. Every possible action should be taken to minimise the impact on consumers, focusing always on affordability. I am disappointed that the Minister has not gone further on this point. Unless he indicates a willingness to do so, due to the strong feelings surrounding the protection of consumers from inflated bills, I am minded to test the opinion of the House.
Lord Callanan (Con)
My Lords, I will start by addressing Amendments 18 and 19, which the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, have retabled from Committee. I thank the noble Baroness, Lady Worthington, for her contribution. She requested further detail; I will provide clarification in writing, if that is okay with her.
These amendments seek to ensure that funding for the hydrogen production business model can be provided through the Consolidated Fund. They also seek to restrict where a levy may be placed, removing the option for levying energy suppliers and requiring that a levy could be placed only on gas shippers. They are intended, I assume, to take responsibility for levies away from households.
The powers in the Bill already enable Exchequer funding of the hydrogen production business model, which will initially be Exchequer-funded. It is therefore unnecessary to include additional provisions that enable the business model to be funded through the Exchequer.
The proposal in these amendments to require that the levy could be placed only on gas shippers will limit options for the levy design, with possible implications for its costs and ultimate impact on consumers. There is no such thing as a free lunch. A gas shipper levy would be a completely novel scheme, with administration and set-up costs that could be considerably higher than those required to implement a supplier levy; this is well understood.
The Government have set out their intention not to levy gas shippers in the near term. Levies on energy suppliers have been used in the past to support the deployment of low-carbon electricity and increase the proportion of green gas in the gas grid. These levies are well understood by the private sector. By taking a similar approach with the hydrogen levy, we can help provide investors with the confidence they need to invest in low-carbon hydrogen production projects and support the delivery of our 10-gigawatt production capacity ambition.
By seeking to ensure that the levy could be placed only on gas shippers, these amendments appear to try to protect energy consumers from the costs of a levy. However, as I outlined when they were tabled previously, we anticipate that any costs associated with a levy on gas shippers would ultimately be passed on to energy consumers in a very similar way to levies on energy suppliers. As I say, there is no such thing as a free lunch. It is the opinion of all the policy analysts that it is unlikely that the amendments would have their intended effect.
Baroness Blake of Leeds
Member's explanatory statement
This amendment means the Secretary of State may put a levy on gas shippers, but may not put it on gas or electricity suppliers, thus taking responsibility for levies away from households.
Baroness Blake of Leeds (Lab)
My Lords, on behalf of consumers I express my disappointment in the Minister’s response, and I would like to test the opinion of the House.
Lord Callanan
“Payments to relevant market participants(1) Revenue support regulations may make provision about amounts which must be paid—(a) by a hydrogen levy administrator to relevant market participants, or(b) by a hydrogen production counterparty—(i) to relevant market participants, or(ii) to a hydrogen levy administrator for the purpose of enabling payments to be made to relevant market participants.(2) Regulations by virtue of subsection (1) may make provision—(a) for a hydrogen levy administrator to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by—(i) the hydrogen levy administrator, or(ii) a hydrogen production counterparty;(b) for a hydrogen production counterparty to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by—(i) the hydrogen production counterparty, or(ii) a hydrogen levy administrator;(c) for the issuing of notices by a hydrogen levy administrator to require the payment by a hydrogen production counterparty of amounts calculated or determined by the hydrogen levy administrator in accordance with paragraph (a)(ii);(d) for the issuing of notices by a hydrogen production counterparty to require the payment by a hydrogen levy administrator of amounts calculated or determined by the hydrogen production counterparty in accordance with paragraph (b)(ii); (e) for the provision of copies of notices such as are mentioned in paragraph (c) or (d) to persons specified in the regulations, or the publication of such notices.(3) Revenue support regulations may make provision imposing on a relevant market participant who receives a payment from a hydrogen levy administrator or a hydrogen production counterparty a requirement to secure that customers of the relevant market participant receive, by a time specified in the regulations, such benefit from the payment as may be specified in or determined in accordance with the regulations.”Member's explanatory statement
This amendment enables regulations to require payments to be made to levy payers and to require benefits from such payments to be passed on to customers of levy payers. Lord Callanan’s amendments at page 52, line 2 and page 59, line 23 are consequential on this amendment.
Lord Callanan
Member's explanatory statement
See the explanatory statement for new Clause (Payments to relevant market participants).
“(4A) Provision made by virtue of subsection (3)(d) for the imposition of a financial penalty must include provision for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 67(3)(d) (functions of hydrogen levy administrator) that make provision for the imposition of financial penalties to include provision for a right of appeal.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I rise to speak to the amendments standing in the name of my noble friend, which address recommendations made by the Delegated Powers and Regulatory Reform Committee on the Energy Bill. We are grateful to the committee for its detailed scrutiny of the provisions in the Bill. The committee provided a range of comments and recommendations which the Government have carefully considered. The Minister was pleased to confirm in his response to the committee that the Government have accepted nine recommendations. He also provided further clarification, as requested, in response to the majority of the committee’s other comments. These amendments address the recommendations the Government have accepted, and I hope they will be welcomed by noble Lords.
Turning first to Amendments 22, 34, 48, 49, 50, 51, 52, 55, 64, 76, 77, 92, 93, 99 to 103, 105 and 106, the committee highlighted that certain clauses of the Bill confer powers to make provision for the imposition of civil penalties without mandating a requirement for the regulations to provide for a right of appeal. While it was absolutely the Government’s intention that regulations under such clauses would provide for a right to appeal, we have taken on board the committee’s comments.
These amendments clarify this point and ensure that regulations made under these clauses, which make provision for a civil or financial penalty, must also include provision for a right of appeal to a court or tribunal against the imposition of such a penalty. The committee’s recommendations referred to three specific instances in the Bill. To ensure consistency across the Bill, we have tabled similar amendments to a number of other clauses which make provision for a civil or financial penalty.
Amendments 73, 80 to 90, 96, 107 to 123 and 139 to 142 address the committee’s recommendations relating to changing the procedure to which regulations made under powers in the Bill are subject. The Government agree with the committee on the importance of parliamentary scrutiny. As such, we have tabled amendments to address the committee’s recommendations relating to changing the parliamentary procedure. These amendments will facilitate detailed scrutiny of the powers, when used.
Amendment 91 responds to the committee’s recommendation regarding subsections (3) and (4) of Clause 180, on heat network zoning. The committee had concerns that these provisions would confer powers allowing non-statutory documents to make requirements in relation to the methodology for identifying areas as potential heat network zones. We welcome the committee’s comments, and this amendment will ensure that any non-statutory documents do not have legislative effect. The amendment omits from Clause 180 subsection (3), which provides for the heat network zones authority to publish documents elaborating on one or more aspects of the zoning methodology. It also omits from the same clause subsection (4), which provides that regulations may require the authority and zone co-ordinators to comply with any requirements set out in these documents.
I reiterate my thanks to the Delegated Powers and Regulatory Reform Committee for its engagement and reports on the Bill, and I hope its members will be pleased with the amendments discussed today. I beg to move Amendment 22.
Lord McLoughlin (Con)
My Lords, on behalf of the committee, I thank the Government for responding favourably to the report. I hope this is something that other departments will follow through in their subsequent considerations.
Lord Lennie (Lab)
My Lords, as we have heard, these amendments relate to ensuring that regulations which make provision for a civil penalty must include the provision of a right of appeal to a court or tribunal against the imposition of such a penalty in a number of instances in the Bill, as recommended by the DPRRC. It is good news that the Government have accepted these recommendations. These amendments have been tabled to make changes to the procedure of regulations under several powers, as recommended by the committee, and to clarify that non-statutory documents do not have legislative effect in relation to heat network zoning methodology. We support these amendments.
Lord Callanan
“(1A) The power under each paragraph of subsection (1) may be exercised so that more than one appointment has effect under that paragraph at the same time.”Member's explanatory statement
This amendment makes it clear that more than one appointment of a hydrogen production allocation body or carbon capture allocation body may have effect at the same time.
Member's explanatory statement
This amendment is about regulations that treat a person whose appointment as an allocation body has ceased as if they were still so appointed, and enables such regulations to specify for what purposes the body is to be so treated.
Lord Callanan
“Licence conditions regarding functions of certain allocation bodies(1) In section 7B of the Gas Act 1986, after subsection (5) insert—“(5ZA) Without prejudice to the generality of paragraph (a) of subsection (4), conditions for or in connection with the purpose set out in subsection (5ZB) may be included in a licence under section 7AA by virtue of that paragraph.(5ZB) The purpose is to facilitate or ensure the effective performance (whether in relation to Northern Ireland or any other part of the United Kingdom), at relevant times, of functions of a hydrogen production allocation body under Chapter 1 of Part 2 of the Energy Act 2023.(5ZC) In subsection (5ZB) “relevant times” means times when the hydrogen production allocation body holds a licence under section 7AA.”(2) Where—(a) the GEMA proposes by a modification under section 23 of the Gas Act 1986 of a licence under section 7AA of that Act to add, remove or alter a condition such as is mentioned in section 7B(5ZA) of that Act, and(b) that condition relates to functions of a hydrogen production allocation body that are exercisable in relation to Northern Ireland,section 23 of that Act has effect as if the persons listed in subsection (4)(b) of that section included the Department for the Economy in Northern Ireland.”Member's explanatory statement
This new Clause makes it clear that licences under section 7AA of the Gas Act 1986 may include certain conditions relating to functions of certain bodies appointed under Part 2 of the Bill, and makes related provision about proposed licence modifications.
Lord Callanan
“(ca) for a revenue support counterparty to require a person specified, or of a description specified, in the regulations to provide information to it;”Member's explanatory statement
This amendment enables regulations to provide for a revenue support counterparty to require a person or description of persons to provide information to it.
Lord Callanan
“(3) Revenue support regulations may make provision for special allocation body requirements (or a subset of such requirements) to be enforceable by the GEMA as if they were relevant requirements within the meaning of sections 28 to 30O of the Gas Act 1986.(4) In this section “special allocation body requirements” means requirements imposed by or under revenue support regulations or regulations under section 68 on a hydrogen production allocation body, so far as the requirements relate to times when the body holds a licence under section 7AA of the Gas Act 1986 (including requirements in respect of functions of the body that relate to Northern Ireland).”Member's explanatory statement
This amendment provides for requirements imposed on a hydrogen production allocation body which holds a gas system planner licence to be able to be enforced by the application of provisions of the Gas Act 1986.
Lord Callanan
“(ba) a person in accordance with whose directions or instructions the members of a Chapter 1 entity which is a limited liability partnership are accustomed to act;”Member's explanatory statement
This amendment ensures that the Secretary of State will not, by virtue of exercising functions under Chapter 1 in relation to an entity which is a limited liability partnership, be treated (for the purposes of any relevant rule of law) as a person in accordance with whose directions etc the members of a limited liability partnership are accustomed to act.
“(ba) a person in accordance with whose directions or instructions the members of a revenue support counterparty which is a limited liability partnership are accustomed to act;”Member's explanatory statement
This amendment ensures that an allocation body will not, by virtue of exercising functions under Chapter 1 in relation to a revenue support counterparty which is a limited liability partnership, be treated (for the purposes of any relevant rule of law) as a person in accordance with whose directions etc the members of a limited liability partnership are accustomed to act.
Lord Callanan
“(6A) Provision included in a licence, or in a document or agreement relating to licences, by virtue of a power conferred by this section may do anything authorised for licences of that type by—(a) section 7(2A), (3), (4), (5) or (6A) of the Electricity Act 1989,(b) section 7B(5)(a), (6) or (7) of the Gas Act 1986,(c) Article 11(3), (4), (5), (6A) or (6B) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)), or(d) Article 10(3)(a) to (d), (4), (5) or (6A) of the Gas (Northern Ireland) Order 1996 (S.I. 1996/275 (N.I. 2)).(6B) For the purposes of subsection (6A)(c) and (d), the provisions referred to in those sub-paragraphs are to be read as if references to the Northern Ireland Authority for Utility Regulation included the Secretary of State.”Member's explanatory statement
This amendment further supplements the Secretary of State’s powers under clause 83 to modify certain licences and related documents.
Lord Callanan
“Electricity system operator and gas system planner licences: modifications(1) The Secretary of State may, for the purpose of facilitating or ensuring the effective performance of functions specified in subsection (3), modify—(a) the conditions of a licence under section 6(1)(da) of the Electricity Act 1989 (electricity system operator licence);(b) a document maintained in accordance with the conditions of such a licence, or an agreement that gives effect to a document so maintained.(2) The Secretary of State may, for the purpose of facilitating or ensuring the effective performance of functions specified in subsection (3), modify—(a) the conditions of a licence under section 7AA of the Gas Act 1986 (gas system planner licence);(b) a document maintained in accordance with the conditions of such a licence, or an agreement that gives effect to a document so maintained.(3) The functions referred to in subsections (1) and (2) are—(a) functions of hydrogen production allocation bodies, and(b) other functions under this Chapter which are related to such functions.(4) Modifications under subsections (1) and (2) may only make provision in relation to times when the person holding the licence is a hydrogen production allocation body.(5) The provision referred to in subsection (4) includes consequential or transitional provision in relation to times when it is no longer the case that the person holding the licence is a hydrogen production allocation body. (6) Provision included in a licence, or in a document or agreement relating to licences, by virtue of a power under this section may in particular—(a) include provision of any kind that may be included in revenue support regulations or regulations under section 68;(b) do any of the things authorised for licences of that type by—(i) section 7B(5)(a), (5ZA), (6) or (7) of the Gas Act 1986, or(ii) section 7(3), (4), (5) or (6A) of the Electricity Act 1989.(7) Before making a modification under this section the Secretary of State must consult—(a) the holder of any licence being modified;(b) the GEMA;(c) such other persons as the Secretary of State considers it appropriate to consult.(8) Subsection (7) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.”Member's explanatory statement
This amendment enables the Secretary of State to modify electricity system operator licences and gas system planner licences, and related codes etc, for the purpose of facilitating etc the effective performance of certain functions relating to hydrogen production allocation bodies.
Lord Callanan
(b) section (Electricity system operator and gas system planner licences: modifications).”Member's explanatory statement
This amendment is supplementary to new Clause (Electricity system operator and gas system planner licences: modifications)
Lord Teverson
“(7A) Any decommissioning fund must be ring-fenced and held in an escrow account, or similarly ring- fenced fund.(7B) The funds may be released only when—(a) decommissioning work takes place;(b) it is determined by the Secretary of State that the funds are no longer required for the purpose of decommissioning.”Member's explanatory statement
This amendment ensures that funds for decommissioning are still available when required for decommissioning.
Lord Teverson (LD)
I am very happy with the Minister’s reply, and I will not move Amendment 33.
Lord Callanan
“(3A) Where regulations under section 85(1) provide for the imposition of a civil penalty, they must also provide for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 85(1) (financing costs of decommissioning etc) that make provision for the imposition of civil penalties to include provision for a right of appeal.
Lord Callanan
“(1) Section 30 of the Energy Act 2008 (abandonment of installations) is amended in accordance with subsections (1A) to (1D).(1A) In subsection (1), for “, (2)” substitute “to (2)”.(1B) After subsection (1A) insert—“(1AA) Part 4 of the 1998 Act, in its application in relation to carbon storage installations, has effect with the modifications set out in subsection (1AB).(1AB) The modifications are as follows—(a) in section 30 of the 1998 Act, for subsections (5) and (6) substitute—“(5) This subsection applies to a person in relation to a carbon storage installation if—(a) the person has the right—(i) to use a controlled place for the storage of carbon dioxide (with a view to its permanent disposal, or as an interim measure prior to its permanent disposal),(ii) to convert any natural feature in a controlled place for the purpose of storing carbon dioxide (with a view to its permanent disposal, or as an interim measure prior to its permanent disposal), or(iii) to explore a controlled place with a view to, or in connection with, the carrying on of the activities within sub-paragraph (i) or (ii), and(b) either—(i) any activity mentioned in subsection (6) is carried on from, by means of or on the installation, or(ii) the person intends to carry on an activity mentioned in that subsection from, by means of or on the installation,or if the person had such a right when any such activity was last so carried on.(6) The activities referred to in subsection (5) are—(a) the use of a controlled place for the storage of carbon dioxide (with a view to its permanent disposal, or as an interim measure prior to its permanent disposal) in the exercise of the right mentioned in subsection (5)(a);(b) the conversion of any natural feature in a controlled place for the purpose of storing carbon dioxide (with a view to its permanent disposal, or as an interim measure prior to its permanent disposal) in the exercise of the right mentioned in subsection (5)(a);(c) the exploration of a controlled place in the exercise of the right mentioned in subsection (5)(a) with a view to, or in connection with, the carrying on of activities within paragraph (a) or (b) of this subsection; (d) the conveyance in the controlled place mentioned in subsection (5)(a) of carbon dioxide by means of a pipe or system of pipes, in the exercise of the right mentioned in subsection (5)(a); and(e) the provision of accommodation for persons who work on or from an installation which is or has been maintained, or is intended to be established, for the carrying on of an activity falling within any of paragraphs (a) to (d) of this subsection.”(b) in section 30(7) of that Act, in the words before paragraph (a), for “(c)” substitute “(e)”;(c) in section 31 of that Act, for subsection (B1) substitute—“(B1) This subsection applies to an activity if—(a) where the activity is within paragraph (a), (b) or (c) of section 30(6), the controlled place mentioned in that paragraph is one for which the installation is, or is to be, established or maintained;(b) where the activity is within paragraph (d) of section 30(6), the conveyance of the carbon dioxide relates to a controlled place for which the installation is, or is to be, established;(c) where the activity is within paragraph (e) of section 30(6), the installation is in a controlled place in respect of which P has a licence under section 18 of the Energy Act 2008.”(d) in section 31 of that Act, omit subsection (C1);(e) in section 45 of that Act, in the appropriate place insert—““controlled place” has the same meaning as in section 17 of the Energy Act 2008;”.”(1C) After subsection (4A) insert—“(4B) The powers in subsections (2)(b) and (4) include power to amend or repeal subsections (1AA) and (1AB).”(1D) In subsection (5) for “established or maintained” substitute “or has been maintained, or is intended to be or has been established,”.”Member's explanatory statement
This amendment sets out modifications of Part 4 of the Petroleum Act 1998 as it applies to carbon storage installations and extends the definition of “carbon storage installation” in section 30 of the Energy Act 2008.
“(3A) In section 29 of the Petroleum Act 1998 (preparation of programmes), in subsection (6), for the words from “in question,” to the end substitute “in question if the Secretary of State has under section 32—(a) rejected that programme, or(b) approved it (whether or not the approval has been withdrawn).”Member's explanatory statement
This amendment abolishes the rule that where an abandonment programme has been approved in relation to an installation or pipe-line the Secretary of State may not serve a further notice under section 29 of the Petroleum Act 1998 in relation to the installation or pipeline unless the approval has been withdrawn.
Lord Callanan
Member's explanatory statement
This amendment and Lord Callanan’s amendments at page 83 line 27 and page 84 line 9 make it clear that the duties in subsections (1) and (2) of this Clause only affect functions related to carbon dioxide capture, usage and storage policy.
Member's explanatory statement
See Lord Callanan’s amendment at page 83, line 24.
“CCUS-related functions” means functions to which the strategic priorities are relevant (not including functions under sections 65 to 67, 78(1) or (2) or 83, or other functions so far as carried out in connection with those functions);”Member's explanatory statement
See Lord Callanan’s amendment at page 83, line 24.
Baroness Worthington
“Chapter 4ACarbon take back obligationClimate policy for fossil fuel extraction(1) No licence for exploration or extraction of oil, gas, coal or peat (“fossil fuels”) may be granted unless the condition in subsection (2) is met.(2) The condition is that the licensee must agree to produce certification to the economic regulator that the percentage of carbon dioxide which would be emitted when the fossil fuels are extracted and completely oxidised set out in subsection (4) has in each year of operation been captured and disposed of by way of permanent geological storage.(3) The carbon dioxide captured and disposed of under subsection (2) must be either—(a) carbon dioxide removed from the atmosphere, or(b) carbon dioxide that otherwise would have been emitted to the atmosphere under normal business practice.(4) The percentage referred to in subsection (2) is—(a) for years starting from 2025 and ending in 2034, prescribed in regulations;(b) 100 per cent for subsequent years.(5) Where the condition in subsection (2) is not met, the licensee must pay a penalty of £200 per tonne of the carbon dioxide which is not captured.(6) In relation to existing licences for extraction of fossil fuels, no new fossil fuels may be extracted from 2045 without certified evidence that 100 per cent of carbon dioxide emissions which would be emitted when the extracted fossil fuels are extracted and completely combusted are captured and disposed of by way of permanent geological storage.(7) In this section—“emissions” has the meaning set out in section 97 of the Climate Change Act 2008;“permanent geological storage” means storage of carbon dioxide in geological and chemical formations with a view to the permanent containment of carbon dioxide.”Member's explanatory statement
This amendment sets an escalating proportion of carbon dioxide for new fossil fuel extraction licences which must be permanently geologically stored, whilst setting a 2045 requirement for 100% geological storage in relation to existing fossil fuel extraction licences.
Baroness Worthington (CB)
My Lords, Amendment 40 relates to the carbon take-back obligation. We had an excellent debate towards the end of Committee about the question of what government policy is on the supply side of the equation of tackling climate change and environmental impact. On one hand, we had a group of Peers who were talking about the need to increase our extraction of fossil fuels and to move into fracking and other types of exotic extraction. On the other hand, we had an amendment which said, “Absolutely no more—turn off the licensing completely”.
It struck me that there needs to be a path through those two positions. We need to start making this industry responsible for the impact of its product. When we look back, we will wonder how we allowed ourselves to carry on extracting fossil fuels in an unlimited way and putting them into the market without the Government having a policy on that aspect of the problem.
This amendment is designed to introduce a policy that would make the extractors of fossil fuels—the oil, gas and coal producers—responsible for the greenhouse gas impact of their product. A requirement to bury back the greenhouse gases arising from those products would be phased in over time. If the industry cannot find sufficient carbon capture and storage opportunities to permanently store those greenhouse gases, it should be paying a buyout price of £200 per tonne of CO2, representing what is expected to be the social impact price of carrying on this unlimited extraction.
Should the UK be seeking to do this in what is essentially a global market? The international dimensions are at the core of why we need to do it. At the moment, as individual countries and companies, we all tell ourselves that it is important to extract every last gram, ounce or therm of gas, oil and coal out of our economy because others are going to have not to use theirs. Everyone is incentivised to think that they will be the one burning the last therm and the last tonne. Continuing with that approach is a collective international suicide pact. If every country carries on extracting to the very last atom of carbon left in our oil and gas fields, we will go well beyond 1.5 or 2 degrees. In doing so, we will remain hooked on this commodity. It will remain cheap, affordable and available. We will not make the break from fossil fuels that we know we need to in order to address not just climate change but the security, resilience and efficiency of our energy systems.
It is important that we start the debate about government policy on the continued extraction of fossil fuels in this way. At the moment there is no policy. That is why it falls to the planning inspectors to decide whether we should have a new coal mine and to other regulators to keep exploiting the economic value of the North Sea for oil and gas without reference to its future unsustainability. It is not sustainable now. We need to signal a move and acknowledge that this industry needs to adapt. If it wants to pursue carbon capture and storage, let us oblige it to do so.
I am perfectly happy with the Government supporting the first carbon capture and storage projects to get them started and for cost discovery, but there should not be a continued subsidy of that solution. We should oblige the industry to do it. In making it responsible for the impact of its products, it will discover whether it is cost effective, whether it can be done cheaply and whether carbon capture and storage is real. Let us allow industry to discover that. If we give it the obligation, everyone will move forward together on an equal playing field. We could take the responsibility away from the taxpayer and the bill payer and give it to the industry. Quite frankly, at the moment it has more than enough resources and profits to be able to invest in that and to find the least-cost solutions.
Admittedly, Amendment 40 is a big thing to introduce on Report. I am simply seeking to start a debate about this. I hope that I receive some support and that it will be considered in the other place. I look forward to the Minister’s comments. I beg to move.
Baroness Sheehan (LD)
My Lords, I have added my name to Amendment 40 tabled by the noble Baroness, Lady Worthington—I hope I can refer to her as my noble friend. I have done so in solidarity with her and in acknowledgement of her dexterity and expertise in handling the excesses of the oil and gas sector, rather than from a steadfast conviction that the carbon take-back scheme is the deterrent needed to curtail the enthusiasm of the financial markets in their continuing and increasing support for the sector.
I want to find out more about the scheme and to raise some questions posed by it. I get that this novel scheme is cleverly devised, accounting for not just the carbon neutrality of the production of fossil fuels but their deployment, subsequent combustion and release into the atmosphere as greenhouse gases. I support that, but I also have concerns.
Baroness Blake of Leeds (Lab)
I will speak to Amendment 40 in the name of the noble Baroness, Lady Worthington. I acknowledge that this will be her last meeting for some time; I think I am allowed to say that. In my relatively short time here, I have come to value her passionate interjections and her incredible knowledge on the subjects on which she has spoken. I wish the noble Baroness well in her temporary visit overseas and look forward to when she is able to come back and join us. I hope that we can keep in contact in the meantime.
While we do not support new fossil fuel extraction licences, we have to be mindful of existing licences and renewals. We have to take these issues seriously.
It is fair to say that we do not want to turn off the taps, so there will be merit in reducing carbon emissions from those existing licences. To what extent are the Government considering geological storage as a solution? I am sure we have all received briefings giving us the background on how successfully CO2 has been stored over many years. There is an opportunity, but how much can be stored, and can we make full potential of the opportunities that are presented to us off the shores of this island?
Lord Callanan (Con)
I also pay tribute to all the work that the noble Baroness, Lady Worthington, has done. It is indeed a great mystery to all of us why she seemingly wishes to swap the lovely, warm, calm weather of southern England for California, but I suppose that will become clearer over time. I thank her for the contribution she has made, and I am sure that we will hear a lot more from her in the future.
I am happy to contribute to this debate on Amendment 40 and the issue of the carbon take-back obligation for fossil fuel extraction. The concept of such an obligation is indeed worthy of debate, but the noble Baroness will understand when I say that its inclusion in the Bill is a little premature. Our primary instrument to decarbonise the UK economy is the emissions trading scheme, which provides a market price for emissions of carbon dioxide, incentivising investment in decarbonisation and ensuring that it happens wherever—and however—it is most cost effective to do so.
Introducing a carbon take-back obligation now, at such a pivotal time for the development of CCUS in the UK, could create uncertainty for industry and have a detrimental delaying effect on investment, resulting in investors looking to opportunities that exist in many other countries—perhaps even in California; one never knows. Such an obligation could also increase the costs of CCUS, making UK production of steel, chemicals, refinery products and other industrial products more expensive than that of their competitors, potentially impacting on our industrial competitiveness. All these issues need further detailed policy consideration before further legislation can be considered.
As I mentioned to the noble Baroness before the debate, the CCUS Council is the Government’s primary forum for engaging with representatives across the CCUS sector, and we have indeed asked the council to consider and provide advice on carbon take-back obligations. The concept indeed warrants further consideration, but I am sure the noble Baroness will accept that it is not for this Bill at this time. With that explanation, I hope she will feel able to withdraw her amendment.
Baroness Worthington (CB)
My Lords, I am grateful to noble Lords who have spoken in this debate, to the noble Baroness, Lady Sheehan, for adding her name, to the noble Baroness, Lady Blake, for her support, and to the Minister for his comments. This is indeed my last outing before I depart after recess. I want to say thank you to everyone who has made me feel so welcome in the 12 years I have been here on and off, intermittently, on different Benches. It has been a privilege and I will genuinely miss it. When things are coming to an end, often you value them even more. Hopefully, I will be back—in the words of Arnold Schwarzenegger.
On the amendment, I am encouraged that this idea is being picked up by the CCUS Council. It seems that it will be difficult for the oil, gas and coal sector to come forward with this as a united voice, but it would definitely be good for it. It would give it clarity and certainty and enable it to take back control of its choices of projects or investments. It would be able to do it from the private sector, knowing that it is obliged to do it, and it would create a market mechanism through which it could operate, which I believe would reduce costs overall to the consumer and to industrial customers. Industry is very good at finding solutions: give it an obligation, get the engineers on it and it will find solutions. It will determine whether the price will come down or whether indeed it will be better for it to pivot fully into a cleaner system based on electricity and clean electricity rather than continuing to take things out of the ground and burn them.
I have some sympathy with the belief that it is probably high time we stopped burning things and moved on, especially as we—Great Britain, the United Kingdom—have grown rich on the back of the industrial revolution that seems to be dragging on. However, we now know that there are alternatives. There is a cleaner, cheaper, more efficient system available to us using electricity wherever it is possible, and where it cannot be used, deriving clean fuels from that electricity. That is the future. The chemical industry and the chemical-based energy system will decline because it will not be able to compete with that manufactured clean alternative. We have to manage that decline and it is incumbent on Governments to help manage it fairly and transition us out of it. This sort of policy would do that, and the industry should embrace it. I hope that the other place will debate it and that a campaign will emerge around it. I look forward to watching that from sunny California, and I wish your Lordships all the best of luck with the end of the Bill. Thank you. I beg leave to withdraw my amendment.
Lord Callanan
Member's explanatory statement
This amendment and Lord Callanan’s amendment at page 91 line 6 revise the definition of “relevant infrastructure” for the purposes of Clause 99.
Member's explanatory statement
This amendment and Lord Callanan’s amendment at page 90 line 21 and first amendment at page 90 line 25 revise and clarify the description of the power conferred by subsection (1).
Member's explanatory statement
See the explanatory note for Lord Callanan’s amendment at page 90 line 19.
“(4A) Regulations under subsection (1)—(a) may confer functions (including discretions) on any person;(b) may confer jurisdiction on a court or tribunal;(c) may create criminal offences or impose civil penalties;(d) may make other provision about enforcement;(e) must provide for any offences created by the regulations to be triable —(i) only summarily, or(ii) either summarily or on indictment.”Member's explanatory statement
See the explanatory note for Lord Callanan’s amendment at page 90 line 19.
“(4B) Where regulations under subsection (1) impose a civil penalty, they must also provide for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment provides that regulations under Clause 99(1) that contain provision imposing a civil penalty must also include provision for a right of appeal against the imposition of the penalty.
Member's explanatory statement
This amendment ensures that the correct defined term is used for the Gas and Electricity Markets Authority.
“(7) In this section “relevant infrastructure” means—(a) a site for the geological storage of carbon dioxide that is situated in a regulated place, or(b) a pipeline, situated in a regulated place, which is used or intended to be used to convey carbon dioxide to a site falling within paragraph (a),and any associated installations, apparatus or works.(8) For the purposes of this section a site or pipeline is situated in a “regulated place” if it is situated—(a) in the United Kingdom, or (b) in, under or over—(i) the internal waters of the United Kingdom,(ii) the territorial sea adjacent to United Kingdom, or(iii) waters in a Gas Importation and Storage Zone (within the meaning given by section 1 of the Energy Act 2008).(9) In this section “geological storage” has the same meaning as in Part 1 (see section 55).”Member's explanatory statement
See Lord Callanan’s amendment at page 90, line 10.
Lord Callanan
“(A1) Scheme regulations that, by virtue of section 106(3), provide that a person is liable to a financial penalty must also provide for a person to have a right of appeal to a court or tribunal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 101(1) (low-carbon heat schemes) that make provision for the imposition of financial penalties to include provision for a right of appeal.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 97, line 16, which makes provision about appeals against the imposition of a financial penalty.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 97, line 19, which makes provision about appeals against the imposition of a financial penalty.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 97, line 16.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 97, line 16.
Direct Payments to Farmers (Reductions) (England) Regulations 2023
(1 year, 8 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
20:49 - Division on Baroness Bakewell of Hardington Mandeville’s amendment - Ayes: 47 / Noes: 144 - Division on Baroness Bakewell of Hardington Mandeville’s amendment disagreed.
Lord Benyon
That the draft Regulations laid before the House on 31 January be approved.
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
My Lords, I declare my farming interests as set out in the register.
This instrument is a fundamental part of the vital reforms we are making over the agricultural transition period in England. These reforms support the prosperous long-term future of the sector to produce high-quality, nutritious food, and protect and enhance the environment for future generations. The Government committed to maintain the same budget for farming, totalling £2.4 billion per year, but to move it away from the EU’s common agricultural policy, which did so little for food production or the environment, and towards investing in the foundations of food security: healthy soils, abundant pollinators, and clean and plentiful water.
This instrument applies progressive reductions to direct payments made to farmers in England for the 2023 scheme year. It puts into law the reductions which the Government first announced in their agricultural transition plan in November 2020. The reductions are being applied in a fair way, with higher reductions for amounts in higher payment bands. Therefore, this is a process that favours smaller farmers over larger ones. The reductions are calculated to be replaced pound by pound with investment in our new and existing schemes. This is the third year of the seven-year agricultural transition period, during which direct payments are gradually being phased out as we invest in targeted schemes.
The Labour Party has put a regret amendment before the House, and my concern is that this will send a confusing message to farmers. We are seeing farmers feel less confident about the agricultural transition due to previous political uncertainty, but we have made great progress since then, with the provision of more details about our improved countryside stewardship and sustainable farming incentive offers.
According to the Farmer Tracker Opinion for England, which was published last October, farmers on 81% of holdings said that Defra paying for environmental outcomes would be very or moderately important to their business in future, so this opinion supports the need to continue our agricultural transition.
I turn now to the fatal amendment from the Liberal Democrats. The Government remain convinced that direct payments are not the right way to support farmers and improve the environment. Let me set out clearly what the fatal amendment means and what the Liberal Democrats are asking the House to vote on this evening. First, if the House supports this amendment, it will be voting against the interests of small farming businesses. In England, historically, half the direct payments money went to the largest 10% of recipients. I cannot believe that anyone in this House would want that to continue. Meanwhile, our new schemes benefit small farms with a new management payment under the sustainable farming incentive of £20 a hectare for the first 50 hectares. This means that farmers can receive up to £1,000 extra to cover costs, so that is one way in which we are weighting this budget to smaller farmers. There is no minimum amount of land that can be entered into the scheme.
Secondly, support for this amendment would be a vote against maintaining our food security. The EU’s area-based subsidies were substantially de-linked from food production in 2005. Indeed, they have inhibited productivity improvements. Meanwhile, our schemes invest in the very foundations of food security: from productivity to innovation, soil fertility and beyond. We set out our plan for this very clearly in the Government’s food strategy, and I have yet to see a clear plan from other parties.
Thirdly, supporting this amendment would be against the public’s demand for a better environment. Many in this House want, for example, to see our rivers restored. If the amendment was successful, many measures which directly restore water quality in our rivers would have to be shelved. We would be incentivising farmers to remove herbal leys and habitat-rich pastures that they may have planted alongside watercourses, and that would clearly be a crazy move to have to make because of how the amendment is worded.
Voting for this is not voting just to maintain the status quo; it is voting to stop any direct payments being released for new schemes. This would mean that we would have to stop landscape recovery projects, which are restoring more than 400 miles of river. We would have to stop the slurry infrastructure grant, which helps farmers to utilise their nutrients, which are such a valuable input but, when misused, can cause real pollution. We would need to cancel the existing 30,000 Countryside Stewardship schemes, which saw a 94% increase in uptake since 2020. Last but by no means least, support for the amendment would be a vote to keep farmers locked into a bureaucratic system that has worn them down with endless tedious red tape.
If certain Members of this House—the Liberal Democrats in particular—are serious about addressing urgent matters, such as the decline in our rivers or the crisis of species decline, what on earth is their game? That is the point: it is not a game; it is a desperately serious matter which should not be part of some cheap political campaign. We should be united in the ambition to support and incentivise our farmers to drive real change.
The basic payment system burdened our farmers with complex rules about the maximum width of a gateway or whether a cabbage and cauliflower were the same for the purpose of the three-crop rule. We have already scrapped those draconian rules and the related penalties to work with farmers rather than against them.
Let us be clear. This can be dressed up however noble Lords want, but the British people and our farmers will see straight through this. This amendment would keep rewarding people just on the basis of the land they manage, not what happens to that land, and it cruelly cuts the legs out from those who are doing the right thing. Those who support it do not support the many farmers who are embracing change, investing in their productivity, or building their resilience for the long term from the shocks from drought or pest outbreaks. They do not support the farmer who is putting a buffer of wildflowers alongside the river to protect it from run-off and retain vital nutrients on their farm and being rewarded for any revenue forgone.
I have a healthy respect for the noble Baroness, Lady Bakewell: she is a formidable parliamentarian and a valued member of the Secondary Legislation Scrutiny Committee, and I know that this is probably not of her doing but has probably been pushed by someone at the other end of the building. I hope that she has the decency not to push this to a vote. In my two years in this House, I have seen that this is a place that takes its responsibilities seriously. We know that change is worrying for farmers. On top of this world of change are the effects of international events that have seen spikes in input costs. Let us not play this game: let us leave that to others and show that we want to get on with delivering for farming, our countryside and the millions who mind about it.
We will continue to accelerate the rollout of the sustainable farming incentive, with six additional standards being added this year. We will make it more attractive by introducing a new management payment of up to £1,000 per year, and this will help to drive uptake in the scheme among all farms, but particularly smaller ones. We will continue to simplify Countryside Stewardship, under which there are now more than 30,000 agreements across England, continue our planned increase to payment rates to help farmers who are already enhancing the environment to keep up with rising input costs, continue to offer grants for equipment to increase productivity, boost environmental sustainability and improve animal health and welfare.
Under round 1, the Government have already paid out £31.5 million, supporting more than 3,000 farmers with their investment plan, and a further round of the fund opened last month. We will continue to provide free business advice to help farmers to adapt and build their businesses. These are just some of the ways in which the funding being released from direct payments is being used. Other examples include the slurry infrastructure grant, which helps farmers to invest in better storage, the new entrants’ pilot, which will help to bring new talent into farming and land-based businesses, and the tree health pilot, which helps farmers to tackle tree pests. All these would be at risk if this fatal amendment passed tonight. This instrument is essential so that we can free up funds to continue to support farmers to build and maintain resilient businesses while delivering improved environmental outcomes and supporting sustainable food production. I beg to move.
Amendment to the Motion
Baroness Bakewell of Hardington Mandeville
Leave out all the words after “that” and insert “that this House declines to approve the Direct Payments to Farmers (Reductions) (England) Regulations 2023 as they would reduce the direct payments made to farmers for the 2023 year of the Basic Payments Scheme; considers that the implementation of this reduction in payments, combined with rising input and energy costs to produce food, risks the livelihoods of British farmers as they transition their businesses to producing food and public goods like environmental protection; and calls on His Majesty’s Government to accelerate urgently the roll-out of the Environmental Land Management scheme”.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I thank the Minister for his introduction. Needless to say, I have a different view and feel that he somewhat overstates his case. The statutory instrument reduces the money that farmers get from the CAP through the basic farm payments by at least a further 35%. After Brexit, the then Minister assured the House that as the Government phased out BPS payments on a sliding scale, the environmental land management scheme would replace payments, but on a different basis. The Minister gave assurances that the total sum of money—£2.4 billion, as mentioned—that had been allocated under the CAP would be maintained and reallocated under ELMS during the seven-year transition period.
The Minister at the time believed that, and I believed him. What has actually happened in somewhat different. The money may well be there, but it has not been allocated in a way that farmers can easily access. The Direct Payments to Farmers (Reduction) (England) Regulations 2022, which came into force on 15 April 2022, made the following reductions in direct payments: to those farmers receiving £30,000 or less, 20%; to those receiving more than £30,000 but less than £50,000, 25%; to those receiving between £50,000 and more than £150,000, 35%.
That is what the SI said. I believe it should have read, “those between £50,000 and no more than £150,000”, as the next category is those above £150,000—40%, on top of the previous year’s reductions. The SI we are debating today would make additional reductions as follows: for £30,000 or less, 35%; above £30,000 and no more than £50,000, 40%; above £50,000 and no more than £150,000, 50%; and above £150,000, 55%.
We can see immediately that the cumulative effect is very harsh indeed. Now, this would not matter if farmers were able to replace this lost income through ELMS. There are some excellent ELMS strands which have been rolled out, as the Minister has listed, but many are still in the pilot stage. Others have yet to see the light of day in a form which farmers can easily assimilate and assess how this would fit in with their business plans and models.
Farmers are struggling. They have seen significant cuts to their basic payment already: at least 5% in December 2021 and at least 20% in December 2022. Meanwhile, input costs have increased significantly. Energy bills are sky high, and the costs of fertilisers and animal feeds are also significantly up. Farmers are struggling to recruit people to pick produce, leaving food rotting in the fields, despite Ministers encouraging our population to move to areas where this type of work is available. The avian flu crisis is leading to egg shortages. The weather in Spain has led to major shortages of produce in supermarkets. This latter is clear evidence of climate change and an excellent example of why the UK needs to transition faster.
While farmers are struggling with all these factors, the Government are cutting energy support for them from this April by about 85%. The energy bills support scheme is being replaced by the energy bills discount scheme. Under the support scheme, farmers, like all other businesses, benefited from an absolute cap on the cost of electricity and gas per kilowatt hour. Under the new discount scheme, which starts on 1 April, businesses will get a discount: a small proportion of the bill covered. This means that farmers are likely to see energy support drop by 85%. So not only are farmers losing BPS this year, they are seeing this help cut—all during a food shortage crisis.
Farms are no longer to be classed as energy-intensive businesses, robbing them of more support. Minette Batters, president of the NFU, wrote to the Chancellor ahead of the Budget, asking him to prioritise food production. This request was ignored. Ms Batters said
“the NFU was clear that greater support is needed for the thousands of farm businesses which are trying, but struggling, to keep our nation fed amidst soaring production costs. It’s therefore extremely frustrating that the Energy and Trade Intensive Industries scheme was not extended to include energy intensive sectors such as horticulture and poultry”.
Farmers are being undermined by the new trade deals that allow food to be imported from Australia and New Zealand which, despite ministerial reassurances, is not produced to animal welfare and environmental standards currently existing in the UK. If this SI is agreed and another 35% reduction in farmers’ basic payments goes through, food production is likely to drop even more as farmers make decisions now about what to plant and produce next year. We are seeing the increased cost of both fertiliser and energy leading to tomato plantings in the UK dropping off dramatically.
Farmers should be able to replace the money lost through access to new and better environmental land management schemes. We on these Benches support ELMS. However, the Government have not handled the transition at all well. It has been somewhat botched. There was even a threat back in September, under the premiership of Liz Truss, that ELMS would be dropped altogether.
Cambridgeshire farmer Martin Lines, the chairman of the Nature Friendly Farming Network, which promotes sustainable farming, said that any delay to the ELMS would deny farmers crucial support to adapt to a changing climate. He said:
“If the government is stalling ELMS, it is failing any duty of leadership in maintaining momentum and building resilience”.
No wonder farmers are not rushing to take up those ELMS already launched.
We are six years after the Brexit vote, and two years after the start of the reduction in basic payments. On 5 January this year at the Oxford Farming Conference, Minister Spencer announced more money for farmers and landowners through both the countryside stewardship and the sustainable farming incentive schemes. As the Minister has already said, this change means that farmers could receive up to a further £1,000 per year for taking nature-friendly farming action through the sustainable farming incentive—SFI. This new management payment will be made for the first 50 hectares of farm, at £20 per hectare, in an SFI agreement, to cover the administrative costs of participation and to attract smaller businesses—many of which are tenant farmers—that are currently underrepresented in the scheme.
The Deputy Speaker (Baroness Morris of Bolton) (Con)
My Lords, I inform the House that if this amendment is agreed to, I will be unable to call the amendment in the name of the noble Baroness, Lady Hayman of Ullock, by reason of pre-emption.
Baroness Hayman of Ullock (Lab)
My Lords, I first declare my interest, as set out in the register, as president of the Rare Breeds Survival Trust. The statutory instrument on direct payments that we are considering today is very short, and should be straightforward, but I have tabled an amendment, as we have some reservations about how the agricultural transition is being managed. This was done with no intention to confuse farmers.
Farm businesses have been facing increased volatility, uncertainty and instability and have been expressing concerns about the phase-out of direct payments against a backdrop of huge cost inflation. The noble Baroness, Lady Bakewell of Hardington Mandeville, talked about the huge extra costs being faced. According to the NFU, agricultural inputs have risen by almost 50% since 2019. It says that fertilisers are up by 169%, energy by 79% and animal feed by 57%.
During a time of fresh food shortages, it is worrying that the production of salad ingredients such as tomatoes and cucumbers is expected to fall to the lowest levels since records began back in 1985. Is Defra talking to supermarkets about the need to support British farmers? The NFU survey of livestock producers found that 40% of beef farmers and 36% of sheep farmers are planning to reduce, with input costs given overwhelmingly as the main reason.
Following the survey results, and with the SI reducing payments to farmers by between 35% and 55%, I was perturbed by paragraph 12 of the Explanatory Notes, headlined Impact, which states:
“There is no or no significant impact on business, charities or voluntary bodies”.
How can there not be an impact? I also draw attention to paragraph 7.6 of the Explanatory Memorandum, which indicates that the Government intend this to be last year of the current direct payment scheme in England. It is being replaced by the delinked payment. Will that process require a further SI, or will what is in front of us today be sufficient to make that transition?
I would also appreciate clarification of the claims in paragraph 7.2, which states that direct payments are untargeted, can inflate land rent prices and can stand in the way of new entrants to the farming industry. These are quite sweeping assertions. What is the evidence base for this and what impact has the reduction in basic payments so far had on land prices and new entrants?
As the Minister knows, we have always supported the introduction of new ELM schemes and we clearly want to see them succeed, but between 2018 and 2022, Defra struggled to provide farmers with sufficient information. This unsurprisingly led to concerns, particularly against the backdrop of changes to our trading relationship with Europe, the Covid-19 pandemic, the impact of the war in Ukraine and the cost-of-living crisis.
There has been a huge number of differing pressures and uncertainty. It is no surprise that farmers are concerned and worried about all the changes that are happening. But it was very welcome that in January this year, Defra finally published the details of the three ELM schemes and provided much needed clarity to the farming sector. As we have heard, this includes a sustainable farming incentive, an expanded countryside stewardship scheme and a further round of the landscape recovery pilots.
It is important for the different options to be attractive to farmers, enabling them to produce food while helping to protect and enhance our natural environment. We have heard that this year, Defra has increased countryside stewardship payment rates and removed the caps, so that farmers can access more capital to invest in farm infrastructure, improve air and water quality and restore habitats. This is very welcome, but we believe that Defra could go further in offering support. One way could be to increase access to the higher tier options, including for hill farmers. Currently, only about 300 to 500 farmers a year benefit from this, but it has the potential to provide a flexible, effective and more attractive offer to many more farmers. Is this something the department would perhaps consider? Defra has stated that it will manage the budget in a flexible and transparent way but has not made firm allocations to each scheme. When is that information likely to be available?
We know that the successful rollout of ELMS is critical to meeting our domestic and international commitments to tackle the nature and climate crisis we face. Following COP 15, we now have international commitments to pursue more nature-friendly farming. So, while we have concerns about the lack of long-term certainty about the future that farmers are struggling with, and we still need to know details of how all this will work in practice, we do not support the amendment in the name of the noble Baroness, Lady Bakewell of Hardington Mandeville.
Analysis by the Green Alliance has demonstrated that a two-year delay to the phase-out of direct payments would halve the contribution of ELMS to the fifth carbon budget, leaving a substantial gap in the UK’s net zero plans. The analysis also found that retaining the previous EU scheme for an extra two years would mean that at least £1.2 billion—that is £770 million in 2023—would continue to be spent on the wealthiest farms in England: in other words, those already receiving more than £100,000 each in public subsidy in exchange for carrying out no public goods whatsoever.
Unfortunately, the Government have dithered for a number of years over the future of ELMS, which has been significantly delayed from the original start date of 2020. There was also uncertainty when Liz Truss even looked at axing it. So, January’s announcement was very helpful, but everything has been moving far too slowly, both for farmers and for our environment. Many farmers are also concerned about a gap in funding as they work out which schemes they are eligible to apply for.
My colleague in the other place, Daniel Zeichner MP, said:
“Unfortunately, it’s hard to imagine the money that’s been lost in direct payments will now be replaced through environmental schemes. Farmers are losing thousands and thousands. Labour is committed to making these schemes work and unfortunately it appears there is no such commitment from this government”.
I know that the Minister is personally very committed.
The extra £1,000 that has been mentioned is not exactly a huge sum for struggling farmers, but this SI is part of the next stage in the transition to the “public money for public goods” approach to agricultural support. We strongly support that transition, and we want it to work. We need to move to a more environmentally friendly and nature-positive food production system, but we remain concerned that the complexity of the schemes currently proposed may hamper take-up. The noble Baroness mentioned the slow uptake of the scheme so far. In terms of food supply and environmental gain, that is something we simply cannot afford. We support the Government’s aims, but they just need to get on now with delivering what both our farmers and the environment so badly need.
The Earl of Caithness (Con)
My Lords, this has been an interesting discussion so far. Both noble Baronesses talked about farmers in general, as if all farmers are struggling. That is not the case. A number of farmers in this country are doing very well at the moment because of the nature of the land. There are roughly 45 million acres of farmable land in the UK. Of that, 15 million acres constitute very good land, and its farmers are able to adapt and grow high-value crops at good yields. There are about 15 million acres of moderate land, and they are a serious problem; my noble friend and Defra are tackling it, and ELMS will undoubtedly help. There are 15 million acres of hill land, which again present a very difficult problem. The challenge facing my noble friend and Defra is sorting out the two less productive areas. The way they are going with ELMS is absolutely the right direction.
The noble Baroness, Lady Bakewell of Hardington Mandeville, who up until today has been a great supporter of the farmers, said that the high cost of fertiliser is causing farmers a lot of problems. She is right in one way, but quite wrong in another. It is entirely due to the high cost of fertiliser that more and more farmers are putting in leys and cover crops, and hill farmers are looking, probably for the first time, at soil quality—the most important thing for farmers and for us. So the situation is not all bad.
I share some of the concerns that have been raised. One reason that there has not been greater take-up—although, as my noble friend rightly said, the Countryside Stewardship scheme has just about doubled in the past three years—is that it is quite natural for farmers to think there is a better scheme coming in the next couple of months. That is causing a lot of farmers to sit back and wait to the last possible moment. I hope that my noble friend the Minister will make as clear as possible to farmers what the situation is. If farmers know what the schemes are and what the payments are going to be, they will make a decision. They have to be moved from the position where they think that a better scheme will come in a few weeks’ time.
Baroness Boycott (CB)
My Lords, I too support the ELM scheme, and, broadly, I support everything that the noble Baroness, Lady Hayman of Ullock, said. I understand what the noble Baroness, Lady Bakewell, said, but I do not believe for a second that we should effectively cancel the ELM scheme at this moment.
I think it is important to put another point of view, to do with the food price situation. The noble Earl, Lord Caithness, talked about when we were progressing the then Agriculture Bill and we debated the ELM scheme. It was decided that sustainable food growing would not be classed as something that could get any sort of payment. It was thought that if you grow food, you have a means of making money; that is fundamentally correct but, at that time, the reckoning was that about 8p in every pound got to the farmer; the rest disappeared into supermarket profit, packaging, production, processing and all the different things up the chain. New figures that have come through in the last year—compounded by issues that the noble Baroness, Lady Hayman, set out to do with the war in Ukraine and energy costs—reveal that UK farmers receive less than 1% of the retail price for goods that go through our main supermarkets.
That is not a percentage on the production cost but a percentage of the total price; it is pathetic and tiny. For example—I am referring to the research—for a wrapped, sliced loaf of bread, a cereal farmer will spend 9.03p yet will receive a negligible profit of 0.09p on something sold as a unit for £l.14. If they sold it as a loaf of “real bread” through an independent bakery they would make 0.5p profit; that is not much but it is something. For four beefburgers, the processor gains 10 times the profit of the beef farmer. A carrot grower spending about 14p per bag and selling to the supermarket will get virtually no money in return.
This leaves them with nothing to fund the transition. We all know that we need to have this transition. The agri-food sector currently makes up a third of UK greenhouse gas emissions, while agriculture accounts for 10% or possibly more. Farming drives 70% of terrestrial biodiversity loss. Intensive livestock farming poses a serious threat to climate change—we have debated many times in this House what industrial chicken farming does—and 85% of our land is used to graze livestock or produce crops to feed animals rather than feed us.
Everyone in this House agrees that we have to reform the farming sector, but if we are to reform it through the ELM system, people will need some reason to put in the herbal leys and they need to make some decent money out of food. This is driven by our commercial and rubbish food system dominated by supermarkets, which are driving farmers—especially small farmers—completely out of business.
So I have three small ideas: accelerate ELMS—madly so, putting more money in—introduce a land use framework that supports farm diversity, and support the transition to agroecological farming. Farming can be nature-friendly; it does not need to be industrial. We are pushing big farmers in the middle of England towards being more industrial rather than thinking, “I will grow some hedgerows”.
The Government should set up new, legally binding sector-based supply chain with codes of practice and use data to help farmers deliver more public goods and get supermarkets to help by giving farmers a much fairer deal. Given what we know about the two big supermarkets that recently distributed £1 billion to their shareholders, we could do something; we could have some higher prices paid to the farmers.
Given all that we have learned from recent shortages in fruit and vegetables, the UK must have a coherent and ambitious horticulture strategy to improve our nutritional food security. We are already importing large amounts of fruit and veg from climate and water-stressed countries. As it worsens, this threatens our own food security. As many people have said, we need to support our small and family farmers; but we need also to support our big farmers so that they see a proper advantage in transitioning out of industrial farming methods that cause so much damage.
Lord Taylor of Holbeach (Con)
I ought perhaps to draw the attention of the House to my interests as in the register. I am also president of the Institute of Agricultural Management and I have the good fortune to be involved in a horticultural and farming business. I consider it good fortune because that business has grown. As my noble friend Lord Caithness would say, we are in some of the most fertile parts of England, and we have flexibility available to us that is not available to everybody involved in farming.
It is inevitable that we will talk about farming in general as we talk about this SI. The noble Baroness, Lady Boycott, spoke particularly about the strains that face farmers—the difficulties that they have in marketing their produce—but we can all agree that we want to take the industry forward. We want to see the agricultural and horticultural industries going forward.
There may be a certain amount of frustration in the criticism of this SI. Change is, of course, difficult. Nobody likes change, least of all farmers, but we are blessed in this House in that I always feel that we generally have a consensus on this issue. I am slightly distressed to suddenly find that we are talking about a “fatal Motion” and a “regret Motion”. We have in my noble friend the Minister someone who was a colleague of mine in Defra some 11 years ago and whom we can rely on to make sure that the interests that we express here this evening are expressed within government.
I know that change is a difficult matter, but what are we trying to achieve? We are trying to achieve a diversity in farming that has not existed before. We are trying to induce a situation where farmers realise that what is environmentally beneficial to this country is also part and parcel of the way that the state, the Government, funds farming and gives farmers a chance. This SI is a step on the way. It is only the beginning of a continuing process, but we should support it at this stage. This change will be to the benefit of the country and to the benefit of the industry of which I consider myself through my family connections to be a part, and I consider it to be to the benefit of the world in which the majority of our fellow citizens want to live.
I am sorry that the noble Baroness, Lady Bakewell, has proposed this amendment. I cannot agree with her. I think it is looking backwards when we need to be looking forwards. I know that we and the Labour Party are both anxious to make sure that we have a policy for agriculture and horticulture which builds on where we are and what we want to achieve; it is something that I think we share.
The Duke of Wellington (CB)
My Lords, I declare my farming interest as detailed in the register.
Last week, the environment committee of your Lordships’ House—of which I am a member, as are some other Peers present—heard a very interesting presentation from one of our witnesses. She was a lady farming in the Yorkshire Dales, I think. It was a small family farm, and she was farming with her son. She explained that, in the past, they had received £12,000 per annum in farming support under the basic payment scheme. However, they were now due to receive £5,000, under the new schemes. I tell this story only because it is a very realistic assessment of what is happening to small family farms in the uplands, which are trying to farm in an environmentally sensitive way but not really being supported by the support system to which we are moving.
Like others, of course I support the idea that there should in future be payments that help the environment. In fact, I believe that most farmers already want to farm in a way that is friendly to the environment. Nevertheless, I understand that public money should be directed towards environmentally friendly systems of farming.
We all know that our Minister, who is so widely respected in this House, is not the author of the details of this transition. I do not think he was the Minister when we were debating two or three years ago the then Agriculture Bill. Many Members of this House at the time warned about the effect of phasing out the basic payments before the development of the ELM schemes and how it would affect particularly family farms in the uplands. That is indeed what is happening.
It is an uncomfortable truth for a Member of the United Kingdom Government that the Scottish Government are treating their farmers rather better than the English farmers are being treated by the centrally directed schemes here. In Scotland, they have decided to retain the basic payments until such time as the new environmental schemes properly kick in. We have been told many times in this House and in Grand Committee that there will be alternative ways in which farmers can apply for public money. We all accept that and nobody is disputing the principle. What worries me, and should be of concern to the Minister, is that there is a serious funding gap between the diminution of the basic payments and the access to and development of the new environmental schemes.
Although I of course support the direction in which the Government are taking farming, I do not rate the announcement by the Minister in January of £1,000 for helping all farms to receive advice. I am sure the Minister is aware, even though I have heard him suggest otherwise, that the complexity of the various schemes on offer quite often requires rather expensive advice. I have even been told that the expense of the advice is likely to be as great as the payments that people might possibly receive under some new schemes. It is complex—I think the Minister probably realises that—but I do not think the offer of £1,000 is really very significant or indeed very generous.
The Lord Bishop of St Edmundsbury and Ipswich
My Lords, I shall follow the comments that we have just heard. I declare a new interest as the president-elect of the Suffolk Agricultural Association, where we see the issues that have just been described in the uplands similarly in small family farms in Suffolk.
By and large, the farmers that I speak to want to embrace the ELM scheme and many of them are doing so. What those who are embracing it are saying to me about those who are not yet doing so is that somehow the scheme needs to be made more attractive, the incentives need to be increased—particularly for the smaller family farmers—and the process simplified in some way so that they can gain access to the scheme. I understand that His Majesty’s Government are seeking to achieve 80% take-up of ELMS by 2030. I ask the Minister where we are with that at the moment and what he sees as the possibilities of accelerating and incentivising the take-up by those who, as we heard earlier, might need hand-holding in that process.
Lord Grantchester (Lab)
My Lords, I declare my farming interests as set out in the register, being a farmer in receipt of payments. I shall speak from a grass-roots perspective and perhaps be a little more critical.
On 26 January this year, the Minister in the other place introduced the Government’s agricultural transition plan with the words:
“We will learn from the past”.—[Official Report, Commons, 26/1/23; col. 1191.]
I regret that the Conservatives are slow to do so. The errors of the common agricultural policy will not absolve them of their mistakes, repeatedly made. That is not to say that I am not in favour of the new approach towards payments for environmental benefits; it is the poor way in which they are being introduced that I regret.
I regret that Conservatives still insist on basing environmental payments on the income-foregone model, long discredited since the start of Pillar 2 payments many years ago. I had thought that, under the new post-EU system, farmers were to be rewarded for the value of the benefits for the public good of enhancing the environment. Under the cross-compliance features of the CAP it made some sort of sense, but it makes no sense where schemes replace elements of agricultural production and payments go nowhere near the value of cropping, hence the poor uptake in many of the schemes under Countryside Stewardship.
I regret that the Conservative Government paid little attention during the passage of the Agriculture Act to calls that payments need to be worth while under new ELM schemes and that it would be foolish to reduce payments aggressively during the transition before there were meaningful ELM alternatives that could be understood and planned for in future farm business plans. This approach is not a way to build confidence. Conservatives tend to like to reduce, restrict and restrain rather than to undertake positive provisions for growing the market and providing inclusive initiatives.
Against the background of climate change, energy price rises and the war in Ukraine, food security and the lack of certain products on supermarket shelves have highlighted the reduction of support to, and confidence of, farmers. The disastrous trade deal with Australia and New Zealand, agreed by the discredited Liz Truss as Trade Secretary, is not welcomed.
The CAP was an agricultural policy, not an environmental one. Payments were made only to farmers. NGOs and environmental charities were envious that they did not qualify. The Government will say that the same budget of £2.5 billion is still being maintained, but it no longer goes only to farmers. No wonder the NGOs are enthusiastic in their praise. While the money is cut from BPS payments to farmers, can the Minister give the figure for the amount returned to farmers—as distinct from NGOs—from environmental land schemes? Is he able to break down that amount between farm types to clarify the effect of reductions to the uplands, perhaps the most stressed and vulnerable agricultural sector?
I will use another word beginning with R: could the Minister “refrain” from saying it is up to farmers to apply for the new schemes that were introduced in late January? The Minister’s department set itself the ambition of attracting all 80,000 farmers under the BPS to be involved in environmental land management schemes. The department would also need to include tenants, now able to take part under the Rock reforms. That would show the Government’s full commitment to have the countryside in a better state as we drive our ambition to achieve net zero by 2050. As a baseline, can the Minister say how many farmers—not NGOs—participated in schemes last year?
I urge the Minister to learn from the past and develop schemes that are simple and effective. Farmers do not want 100 pages of bureaucracy. Could communication be improved and directed at each qualifying farm in a determination to be inclusive and encouraging, as part of the 30 by 30 commitment? The ambition must be to include all the farms, with their farmers, in schemes at the end of the transition period that began in the Agriculture Act 2020.
Getting the wider 30% of land well-managed for biodiversity by 2030 is a huge challenge. I draw attention here to the fact that all farmers would want to be included, respond positively to challenges and can bring huge benefits across all types of land, in addition to those already protected under designated protections.
Paragraph 7.6 of the Explanatory Memorandum states that the Government intend the 2023 claim year to be the
“last year of the … Direct Payment scheme”.
In the new system for 2024, will the Government repeat the mistakes they committed previously, with a lack of timely detail, a lack of funding and the same philosophy of reduce, restrict and restrain? Perhaps the Minister can be encouraging this evening
Baroness Bennett of Manor Castle (GP)
My Lords, I find myself in the entirely familiar position of agreeing with everything said by the noble Baroness, Lady Boycott, particularly her reflections on the stranglehold that supermarkets have over farmers’ lives in this country. However, I find myself in the unusual position of disagreeing with both the Liberal Democrats’ fatal amendment and the regret amendment from the Labour Benches. At base, that is because, if we were not to take the steps that this SI delivers, the shift away would see £770 million—as calculated by the RSPB—taken away from helping farmers to take action on climate change, reduce water pollution, plant trees and restore nature.
It is worth noting that, under the Environmental Improvement Plan, 90% of the funding for tree planting —to meet the target of 16.5% of England being covered by trees by 2050—depends on ELMS funding. Some 80% of progress on nitrogen, phosphorus and sediment pollution from agriculture depends on ELMS funding. Of course, that is not to say that there are not huge problems with where we are, as the right reverend Prelate, the noble Duke, the Duke of Wellington, and others pointed out. The Carbon Brief website has a useful interactive table that lists the 270 activities that farmers can undertake to earn payments, particularly from SFI and CS schemes; 39 of those 270 are still at the planning stage, yet the base payments are being cut away.
The Minister will be surprised to hear that I will pass a small bouquet in his direction: the Soil Association has just acknowledged that payments for organic farming are rising by an average of 25% via the Countryside Stewardship scheme, which is a recognition of the benefits of organic production. But, picking up the points about small farms, it is worth noting—perhaps the Minister can write to me about this—that in Wales they are looking to reduce the size of farms eligible for farm payments to three hectares, or, alternatively, to farming businesses that rely on 550 hours of labour per year. Will the Government look at helping those smaller producers, particularly in horticulture, and perhaps small-scale livestock producers, to do that?
But—I suspect the Minister knew there was a “but” coming—my reason for regretting the Labour regret amendment is, as the Minister identified, the fact that farmers and land managers in the UK now need certainty about the future for long-term plans. If you are going to plant trees or herbal leys, you need to know what is happening not just this year or next year but in the long term. Given where we are in the electoral cycle, the Labour regret amendment will deliver to farmers a degree of uncertainty about where they might be in two or three years, in terms of the schemes that the current Conservative Government introduced—
Baroness Hayman of Ullock (Lab)
I honestly do not think that my regret amendment does that at all. We are trying to point out that the transition has not been straightforward and is not working properly for either the environment or farmers, and that the Government need to urgently re-evaluate their approach to the ongoing transition in order to get this to work for everybody.
Baroness Bennett of Manor Castle (GP)
I thank the noble Baroness for the reassurance. I hope that farmers around the country will hear and feel that there is a degree of certainty, because that is what they need, as I said.
I will now get to the part where I criticise the Government. With these kinds of policies, we need a method of policy-making by consensus. In other countries, particularly those with proportional representation electoral systems, there is decision-making that is arrived at by consensus. It would have been better if this had been constructed in a more stable and secure way, in consultation with all parts of our political system, to deliver the certainty that farmers need. As has been said from all sides of your Lordships’ House, that is not the position that farmers are in today.
Lord Roborough (Con)
My Lords, I declare my interest as a farmer and landowner. Despite my position as a loser of financial support under the Government’s current policies, I am against these amendments.
Small farmers in this country, particularly upland farmers, are dependent on predictable government support to plan their businesses and to enable investment to achieve positive environmental outcomes. Many of those farmers are on a financial knife-edge, and these amendments would throw the plans for those embracing change into turmoil. I am familiar with the finances of typical upland farmers in my home county of Devon and their reliance on consistent and predictable government support. Changing that government support now is not helpful.
Lord Lucas (Con)
My Lords, I have two short questions for my noble friend the Minister. First, will he really support what my noble friend Lord Caithness said and up the hand-holding? When I decided, 50 years ago, not to go into farming but to go into the City, I chose the less intellectually challenging option. Secondly, does he share my astonishment at how paper-thin the Liberal Democrats’ commitment to the environment is?
Lord Benyon (Con)
My Lords, I thank everybody for their valuable contributions to the debate. It has been a great opportunity to highlight the important work the Government are doing to invest properly in our farming sector.
Sometimes people refer to farmers as being very conservative with a small “c”. I speak as one, and sometimes we are backwards in coming forwards; but when we get the idea of policy taking us in a certain direction, no group of people in the country can be more dynamic and better embrace change, innovation and all the other factors. Farmers are embracing change. I have seen some remarkable experiences around the country, and no doubt other noble Lords have too.
It is important that we press ahead with our planned reforms. Direct payments have held farmers back and are fundamentally unjust. Continuing to apply reductions to direct payments means that we can fund our other schemes, which deliver better policy outcomes and which we are designing with farmers so that they work on the ground. Our new schemes are designed to support farmers to be profitable and resilient.
We have recently updated the payment rates for Countryside Stewardship to reflect cost increases. There was an average increase of 10% for revenue payment rates for ongoing activity, and an average increase of 48% for capital payment rates. By continuing to invest in our new schemes, we will be providing support to farmers to help them reduce costly inputs and increase productivity.
The noble Baroness, Lady Hayman, asked whether we were talking to the supermarkets—or it may have been the noble Baroness, Lady Boycott, or both. I assure her that we are, on an almost weekly basis. Particularly through the UK Agriculture Market Monitoring Group, we work very closely to make sure that all the supply chain difficulties experienced through Covid and then as a result of the Ukraine war, as well as other lumps in the road such as avian influenza, are dealt with, and we work with them. The point that the noble Baroness, Lady Boycott, made struck home to me. As you drive past my local supermarket, you see photographs of farmers with chickens under their arms, in an idyllic scene. It is very much part of their marketing operation. We want to make sure that this is reflected in the farm gate prices offered and that we have a food supply chain system that reflects the work that has gone into producing that, as well as our need for good food security and the reasonable intention of the retailer to make a margin, but not one that is at the expense of anyone else.
We have a new entrants scheme to encourage new, young and diverse people into the farming industry—but also recognise that, for some people, this transition is not for them. A dignified exit scheme is up and running and allowing people to move on. But I hope that the scheme will bring in a new, younger generation, so that the average farmer is not me, a 62 year-old white man—it is a younger person, bringing new ideas into farming.
We will lay another statutory instrument to deal with payments later this year. I think that that answers another point that was made.
The noble Baroness, Lady Bakewell, talked about Martin Lines of the Nature Friendly Farming Network. I am his greatest fan. He is helping farmers alongside the scheme that we are paying for and alongside the Prince’s Farm Resilience Programme and other organisations. On his farm, he is farming 11% less land, which he has put into environmental schemes, but he is producing more food off the rest; that is an example of where this can be of such benefit.
The noble Baroness, Lady Rock, produced a very good report, which we are working through. We are making sure that these schemes are accessible for the tenants and in the main do not require landlords’ consent—but also making sure that they are freely available to every part of the farming industry. Tenure is, of course, much in our minds.
The noble Baroness, Lady Boycott, talked about accelerating the process of instigating ELMS. We think that we have this about right. We have worked on this on an iterative basis, so we have changed schemes where we have had to, and we have increased payments—such as when the Ukraine war happened and there were spikes in prices. We are working with the Groceries Code Adjudicator to make sure that there is a fair deal for farmers.
On the noble Baroness’s point about the land-use framework, I was always opposed to it. To go back a decade, I thought that it was a sort of Soviet-style, tractor-plan piece of top-down centralisation. I now have the zeal of the convert. The House of Lords report on this is really important; it is driving Defra forward. We will produce a land-use framework, which absolutely is needed, if we are to square the circle of all the different requirements that we need from our land to make sure that that happens.
I thought that the noble Duke, the Duke of Wellington, was uncharacteristically gloomy in his assessment. Farmers in Scotland have no idea what their Government are going to do; they are living in a fog. At least the fog of the transition is starting to clear south of the border, and we are showing farmers here the direction that we are taking and they are embracing it. In Scotland, it is an absolute mess. We are helping farmers here, whereas Scotland is continuing to pay an unfair area payment, whereby 55% of the money goes to the largest 10% of the farmers.
On complexity, I shall just say that, as a former land agent, I do not want this to be something that lines the pockets of land agents. I want it to be as easy as possible. The average time that it takes to sign up to the sustainable farming incentive is between 20 and 40 minutes. It is not something that requires a land agent to do it for you—although perhaps the noble Duke does require a land agent to do it. I am talking about the average farmer. Countryside Stewardship is more complicated, but we are simplifying it and linking it to the sustainable farming incentive, so you do not need different maps. Of course, there are over 200 different options under stewardship.
The right reverend Prelate talked about take-up. The new standards in SFI go live in July and I hope that we will then see farmers embracing it. The free advice we are giving to farmers shows them how they can access it. The noble Lord, Lord Grantchester, talked about Countryside Stewardship as if no one was going into it. We have seen a 96% increase in it and I totally reject his rejection of revenue forgone as a concept: it is vital that farmers see that if they are asked to do something different, if they are asked to reduce the stocking rate, they are rewarded for doing that. Also, we are not just assisting the large landowners, big NGOs, the National Trust and others; this is going into farmers’ pockets.
The noble Baroness, Lady Bennett of Manor Castle, talked about the minimum area. Five hectares is what we are talking about here. I am open to all sorts of ideas for new designations, but horticulture, which was unable to access the basic payment scheme, is able to access a great many areas of these schemes. On the point of my noble friend Lord Lucas, hand-holding sounds a bit patronising, but it is vital to support farmers in this, and that is why we are offering free advice. We will continue to do this. There is not a farmer in this country who could not, if they wanted to, have met a member of the Defra team, at shows, at marts or other agricultural events. They could have gone on a webinar or an event with the NFU or another organisation—we really have tried to do this.
There are roughly 500 actions, grants and advice offers that farmers can access right now to support their profitability, to help them to grow food and to protect the environment. I hope that that person the noble Baroness, Lady Boycott, talked about will be able to access it and see that her level of profitability can be sustained. I urge everyone to take a look at the offer available and the improvements we have made, directly responding to farmer feedback. It can take as little as 20 minutes, as I said, to sign up to the sustainable farming incentive.
We have a comprehensive offer for the uplands, which we have developed in partnership with upland farmers. They have formed the landscape that underpins tourism in these areas and so much more, and we want to see them sustained, we want to see these landscapes farmed and we want to support them in doing so. We include in an expanded offer increased payment rates for Countryside Stewardship. We have significantly increased payments for upland options, such as low-input grassland, which has increased from £16 to £98 a hectare. The SFI has tailored options for the uplands, including the moorland standard, and this goes alongside other options that are applicable to upland farmers. All the standards we are introducing in 2023 are open to upland farmers if they have relevant land and features. Our offer for the uplands also includes the opportunity to apply for landscape recovery funding, farming in protected landscapes grants, animal health and welfare advice and grants, as well as grants to help boost productivity. Most of this offer is already available.
The “income forgone plus costs” approach to sustainable farming incentive payments delivers the largest profit margins on the least productive land. Upland farms, which have typically lower income than the median, are well placed to benefit. This is because the majority of actions for which upland farmers will be able to apply have a single payment rate, which is costed at a national level based on the median farm eligible for the action. Our historic agri-environment schemes use this approach and are popular in the uplands: around three-quarters of commercial upland farmers are already in agri-environment schemes.
To finish, I want to add that in January we updated the offers for schemes. Our Countryside Stewardship increased by 10% on average; the amounts we are offering in our grants in Countryside Stewardship have increased by 46%; our sustainable farming incentive management rate has increased; and the Countryside Stewardship higher tier is getting more farmers involved. We are reflecting the pressures that farmers are feeling because of costs.
We have introduced more flexible rules to allow farmers in legacy higher level stewardship to extend these agreements or to apply for Countryside Stewardship. That flexibility did not exist before. They can also choose to have a Countryside Stewardship agreement alongside their higher level stewardship agreement. Our schemes have been designed to complement each other. Farmers can enter the sustainable farming incentive alongside their Countryside Stewardship agreement, provided that the actions they are taking are compatible and they are not being paid twice for the same actions.
Baroness Bakewell of Hardington Mandeville (LD)
I thank all noble Lords who have taken part in this debate, and I am grateful to the Minister for his response. It is undoubtedly true that the reduction in the BPS was well trailed and consulted on and appeared reasonable. As other noble Lords have said, change is always difficult, but as others have also said, it could have been handled better.
What was not anticipated by farmers was the extremely slow rollout of ELMS. The initial pilots should have been held before the beginning of the reduction of the BPS. Had this been done earlier, there could have been a faster and more efficient rollout of ELMS across the farming community. The noble Earl, Lord Caithness, referred to the uncertainty farmers are currently feeling.
Most farmers are keen to take part and improve their land quality, contribute to net zero, improve biodiversity and restore habitats. However, they need to make a living at the same time. The Minister has extolled the virtue of the SFI, which last year spent only 0.44% of the overall budget on that scheme.
The noble Lord, Lord Grantchester, referred to the many debates we had during the progress of the Agriculture Act, and to the long-term nature of farming. We made those points over and again, but they were not listened to. Energy price hikes and fertiliser shortages have not helped. Changing to a different method of fertiliser takes time, and the shortage of fodder for animals has also had an impact. All this has had a cumulative effect on farm profitability.
Like the noble Baroness, Lady Hayman of Ullock, and the noble Duke, the Duke of Wellington, we fully support the ethos and rollout of ELMS. The noble Baroness, Lady Boycott, made some very important points on the reward that farmers get for their produce, saying that it is so small and unsustainable. She promotes escalating ELMS, and we fully support her in this. What we are asking for is a pause in the reduction of the BPS. ELMS is vital and needs to speed up to catch up with the gap that the BPS has created.
Some 70% of land in the country is managed by either agriculture, horticulture or open countryside. The land needs and deserves to be managed in a sustainable way. We must ensure farmers are still here to achieve this. Some 44,000 farmers have left farming in the last four years; that is an undeniable fact. I do not believe that the whole House is on a very different page; we just do not agree on the way this should go forward. I understand and appreciate that others do not support this amendment. Nevertheless, I would like to test the opinion of the House.
Baroness Hayman of Ullock
At end insert “but that this House regrets that the Direct Payments to Farmers (Reductions) (England) Regulations 2023 introduce significant reductions to the basic payments provided to many farmers at a time when input costs are high, supplies of certain produce are scarce, and His Majesty’s Government have not fully implemented the Environmental Land Management schemes which will replace the Basic Payment Scheme; notes that the latest release of the Farmer Opinion Tracker for England highlighted falling confidence among farmers in His Majesty’s Government’s agricultural policy; further notes that this is the last year that His Majesty’s Government intends to lay these regulations, with payments for 2024 and beyond to be delinked payments administered through alternative means; and calls on His Majesty’s Government to re-evaluate urgently their approach to the ongoing agricultural transition, in order to better support and increase the confidence of domestic producers”.
Energy Bill [HL]
Tuesday 28th March 2023
(1 year, 8 months ago)
Lords ChamberRead Full debate Energy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 86-I(a) Amendment for Report (Supplementary to the Marshalled List) - (27 Mar 2023)
Lord Teverson
Member’s explanatory statement
This amendment, along with the amendment in the name of Lord Teverson to leave out Clause 112, would remove the Hydrogen Grid Conversion Trials from the bill.
Lord Teverson (LD)
My Lords, the intention of my amendment is quite stark and seeks to take out those provisions which allow the so-called hydrogen village experiments to take place. Why? Primarily to save British taxpayers a huge amount of money on something which is clearly, as one would colloquially say, a white elephant. Even if we had the trials—which I suspect might not happen anyway for various reasons—the lessons from those would show us that this should not be rolled out.
In order to have clean hydrogen, it has to be produced by electrolysis. There are other ways of producing hydrogen, as we know, and there are all the different colours, but at the end of the day we have to use electrolysis in the long term to produce hydrogen that is seen as a renewable fuel. The cost of that hydrogen is estimated by scientists to be something like five times the cost of the electricity used to generate an equivalent amount of heat through an efficient heat pump—it is five times more expensive. Even if we talk about economies of scale, there is no way that that cost is going to come down; in fact, it would come down only in relation to the cost of renewable electricity itself, which is its source of energy.
I suggest that we scrap this plan because clearly science says that this is not the way to use hydrogen for heating. I am a great fan of hydrogen, as I am sure most people in this House are, and it needs to be used for certain applications for which it is very difficult to use other renewable resources. We know what those are: they include a number of industrial processes and heavy transport, and it may be used for trains in certain areas and for heavy goods vehicles for some while. It is important that we use hydrogen for those purposes. It can never ever be used as a grid gas as methane is at the present.
Let me give an example of what perhaps is an even better way of achieving what we are doing. Down in my own neck of the woods, in Cornwall, we have a scheme financed by the fag end of ERDF funding. A village called Stithians has put in ground source heat pumps as a street utility, much as you would with a gas grid. I suspect that this is far more economical, and it is also liked by the residents. There have been demands for other streets in the village to have the same application.
This is in contrast to the towns in these experimental areas. As I judge it—my postbag says this to some degree, although I hear it from others as well—there is a mounting resistance to these trials going ahead. There is no great trust in hydrogen as a domestic fuel because of its properties—its ability to escape and its high flammability. These amendments take out Clauses 111 and 112, so that we can stop these trials and use hydrogen far more effectively. The money saved can also be used more effectively for decarbonisation in other areas as well. There is consumer resistance.
Assuming that the Minister is not going to accept this amendment, I have tabled another amendment arising from conversations with people involved in these trials. Many people want to opt out of them, and I fully sympathise with that. In Committee, the Minister said that households could opt out. What would the compensation be in such a case? Will the Government ensure that households can keep gas or methane, as at present? Can they guarantee this? If not, will they provide other forms of heating appliances, either electrical or an alternative form of heat and energy? Can they guarantee that there will not be forced entry into homes to make sure that the conversion takes place? I will be interested to hear from the Minister the alternatives to participating in the trial, as will people in the trial villages.
I cannot see that these trials will go ahead. There is considerable consumer resistance, and all the science genuinely says that this cannot work on a larger scale. Even if the trials do go ahead, there is no way that hydrogen is going to replace methane in the national grid or in large local heating systems. This can be done in far better ways, and the Bill allows for that. Let us call a halt to this now, save money, ease local concern and concentrate hydrogen in the areas where it can contribute and is important for our transition to a net-zero economy. I beg to move.
Baroness Sheehan (LD)
My Lords, I realise that I am a little late arriving for this debate. Having been here from the start of this afternoon’s proceedings, I hope that the House will allow me to make my contribution.
I will speak to Amendments 53, 54 and 57, in the name of my noble friend Lord Teverson. I support Amendment 56 in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake. I will not bore your Lordships’ House with the details of why my name appears on Amendment 56 in the Marshalled List with a line through it. Suffice it to say, I support the measures in it.
However, I support even more strongly Amendments 53, 54 and 57, which aim to get rid of the hydrogen trials altogether. Although hydrogen has a role in decarbonising our future in many sensible ways, domestic heating is categorically not one of them. I would recommend anyone who is not convinced by that statement to look at the work of the Hydrogen Science Coalition, a group of independent academics, scientists and engineers who give their time voluntarily and have no public or private vested interests. Its briefing is very clear on how it arrives at its conclusion that there is overwhelming evidence against the use of hydrogen for heating homes in the UK and in favour of using heat pumps and district heating networks. Equally, it makes a well-argued case against the provisions of Clause 111 that compel consumers to take part in hydrogen heating trials, not least because the introduction of hydrogen into UK homes will significantly increase the risk of serious explosions and fires, as well as increasing exposure to NOx emissions, which pose a significant public health risk.
To back up its own analysis, it cites the overwhelming techno-economic evidence against the use of hydrogen for heating buildings compared with other sources. There have been 37 independent studies on the use of hydrogen for heating since 2019, by organisations such as the IPCC, the IEA, McKinsey, Imperial College London, the Potsdam Institute, the University of Manchester, the Wuppertal Institute, Element Energy, the International Council on Clean Transportation, the Energy Transitions Commission, et cetera. Every one of these studies has ruled out hydrogen playing a major role in heating buildings because it will be too expensive and inefficient compared to other clean alternatives such as heat pumps and district heating. Too expensive is putting it mildly; it will be six times more expensive than going down the heating networks route.
Chris Skidmore, chair of the net zero review, said in a recent article in the Times that he
“did not think the UK should embrace the idea of repurposing gas networks to run hydrogen boilers, a proposal that is being trialled at a pilot project at homes in Ellesmere Port in Cheshire.”
The House of Lords Environment and Climate Change Committee recently said that hydrogen is
“not a realistic replacement for natural gas”
and is “not a serious option” for heating. A House of Commons Science and Technology Committee report in December 2022 said that hydrogen is likely to play only a limited role in home heating and is not a panacea. Lastly, in a report in January 2022, the International Renewable Energy Agency—IRENA—said that residential heating is the lowest-priority application for hydrogen
“because heat pump solutions and district heating options already exist.”
I apologise for labouring the point but it is important for the people in the trial villages of Ellesmere Port and Teesside. The provisions of the Energy Bill that give gas companies a new power of entry into homes to cut residents off the gas network without their consent are particularly worrying. The bottom line is that the Bill should not be promoting hydrogen heating trials that expose consumers to health and safety risks and excessively high energy costs.
Baroness Worthington (CB)
My Lords, I will speak to the amendments in this group but I do not propose to detain the House for long. My views on hydrogen are relatively well known, and we had a good debate in Committee on Clauses 111 and 112. I support the previous speeches and the approaches taken to get the Government to think again about the need for these trials to be included in the Bill.
I welcome government Amendment 55, which would provide for regulations that would make some rules for the trials a “must”, rather than a “may”, which is at least an acceptance that this is a prerequisite. We need clear regulations setting out the rules that must be adopted and followed by anyone involved in these trials. But I do not think that goes far enough, because there are still a number of unaddressed issues. Therefore, I am quite sympathetic to the idea of simply removing this from the Bill and thinking again. I am also sympathetic to the proposal by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, who have suggested that the Government ought to undertake a certain number of measures before they embark on a decision about these trials, including involving statutory agencies such as the Environment Agency in the trials, and the Health and Safety Executive on safety issues, so that we can properly assess their environmental impact—so that we actually are using them to trial something.
Baroness Bennett of Manor Castle (GP)
My Lords, I offer Green support for the amendments in the names of the noble Lord, Lord Teverson, and the noble Baroness, Lady Sheehan. The economic arguments for why hydrogen as a home heating mechanism makes no sense at all have already been very clearly made. I aim not to repeat anything that has been said but simply to add a couple of points to it. I very much agree with the point made by the noble Baroness, Lady Worthington, about prepayment meters; that was written in very large letters on my paper, but I have now crossed it out since it has already been covered.
In this debate we have not perhaps highlighted the degree of physical disruption. The noble Baroness, Lady Worthington, referred to receiving many expressions of distress from the affected villages; I have also received those. In the Government’s own terminology, research shows that it will
“undoubtedly result in some physical disruption to the property.”
Those are the Government’s own words. What that actually means is that we will have to see pipework surveyed and possibly changed; gas meters replaced; boilers, gas hobs and gas cookers replaced, as well as four-inch ventilation holes in the area of the boiler and the appliance to make it compatible for 100% hydrogen. The biggest challenge of all, perhaps, is the small in-house pipes that may frequently be embedded in walls or underneath floors. Think about the kind of disruption in an older house; just tracking those down, finding where they are and establishing whether they are adequate for hydrogen is massively disruptive. Every home will have to be checked and double-checked to make sure it is safe before hydrogen can be piped into it.
The other safety point that has not been raised yet, but I think really should be, is that burning hydrogen in the air produces nitrous oxides, which are a pollutant in their own right. It is often said that when you are using hydrogen, water is the only by-product, but that is the case only when hydrogen is used in fuel cells. Nitrogen dioxide is a key air pollutant that is harmful in its own right and is a precursor to other concerning materials including fine particulate matter and ozone.
I have just one final thought. I understood the considered narrative of the noble Baroness, Lady Worthington, about how we got to where we are, but when I go around your Lordships’ House and see the people who are propounding the idea of hydrogen for home heating, I notice that it is of course the existing industry and the vested industry interests. That cannot be how we decide our energy future, in so many areas but perhaps particularly obviously in this one.
Lord Lennie (Lab)
My Lords, I thank the noble Lord, Lord Teverson, and all other noble Lords and Baronesses who have spoken. While I may agree with the noble Lord, Lord Teverson, that these trials are not a good thing, they are upon us and therefore we have to deal with what we face rather than what we might not have faced had we stopped the trials in the first place. I do not think the Government are about to abandon the plan, and therefore we have some concerns about the plan as it goes ahead.
Clause 111 makes certain modifications to the Gas Act 1986 so that the person running the trial has clear grounds to enter property. That causes me concern that they can carry out essential works and safety checks and disconnect gas supply. Can the Minister deal with some questions? He may not be able to deal with them tonight and may want to write to me later. When can property be entered? What safeguards will be in place? What burden of proof will be applied on entry? When can a property not be entered? Will future guidance be published and, if so, when can we expect it to be with us? The Labour amendment
“requires the Secretary of State to take a number of steps with regard to the areas and people affected by hydrogen grid conversion trials and to make arrangements for Ofgem to provide information, alternative heat sources and offer the right of opt out (which would disapply the right of gas transporters to enter premises to disconnect). It would also require the Environment Agency to monitor and report on hydrogen escape, and the Health and Safety Executive to monitor safety implications.”
Subsection (1) provides the Secretary of State with a power to make regulations by statutory instrument to require a person conducting the trial to follow specified steps to ensure consumers are appropriately informed about the trial and the need for them to be disconnected from their gas supply before it happens. This clause also provides the Secretary of State with a power to make regulations to introduce consumer protections for people who are, or are likely to be, affected by the trial, and a list of examples is provided.
Our amendment sets out a number of reasonable steps, ensures that people are not disadvantaged, whether they participate or take an alternative, and ensures an alternative is offered and they can opt out. The trials are much more popular in Redcar, I am led to believe, than they are in Whitby. An exchange of correspondence took place between Graham Stuart, the Minister at DESNZ, and Justin Madders MP and Louise Gittens, who is the leader of Cheshire West and Chester Council. To quote from the letter from Graham Stuart, he said:
“I fully agree that local support for the trial is essential … However, we will only go ahead with a trial in an area where there is strong local support … I do agree it is very important this context is set out clearly, particularly for the communities in the areas across the country served by the gas networks which the networks are assessing.”
If that is true, certainly in Whitby, I do not think a trial will proceed, but I may be wrong. I would welcome the Minister’s assessment of the correspondence and what he makes of it in relation to the trial. It is not so much about cost, although there is a cost, and it is not so much about safety, although there is a safety issue; it is about local democracy and whether they want the thing to go ahead in the first place.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
I thank all noble Lords who have contributed. I start by addressing the point raised by the noble Lord, Lord Lennie. This is a matter for which I have ministerial responsibility, so I am familiar with all the issues. I too am getting, not a massive stream of correspondence, but a lot of correspondence from the people in the two trial areas. I have met Justin Madders, the MP for the Whitby trial area, Ellesmere Port, and of course I know Jacob Young very well from Redcar. The point that Graham Stuart made in that letter is still absolutely valid. We are waiting for the submissions of the two rival networks, which we should receive later this month. A lot is happening this week; it is a busy week. One of the factors that we will carefully take into consideration is precisely the point that Graham Stuart set out in his letter: the degree to which there is local support. Clearly, one way to measure that is to talk to the local Members of Parliament and the local authorities; that will be critical in any decision-making.
Let me also address the question from the noble Baroness, Lady Worthington, on the costs of the trial. I cannot give the noble Baroness an overall cost yet because we have not received the final submissions from the networks, but I can say that consumers in the trial location will not be expected to pay more for their heating than they would have if they had remained on natural gas. They will also not be expected to pay for the installation and maintenance of either any hydrogen-capable appliances or any alternative heating option that they wish to go for.
Let me now address Amendments 53, 54 and 57, tabled by the noble Lord, Lord Teverson and the noble Baroness, Lady Sheehan. As noble Lords will know, decarbonising heat in buildings and industry is essential if we are to deliver net zero. One of the great things about this country, but also one of our problems, is the massive diversity and age of buildings in the UK, as a product mainly of the industrial revolution, and the diverse consumer needs. I think most reasonable people would accept that no single solution can provide the best option for everyone. I agree with the noble Baroness, Lady Worthington, that the majority of the solution will probably be electrification, but there will be some properties for which it is not suitable.
Baroness Worthington (CB)
I want to press on the question of what is being trialled. The Minister mentioned feasibility, benefits and costs, but what about the environmental impacts of this trial? We are talking here about a global warming gas, and a very slippery gas because it is the smallest element—it escapes everywhere. Will the regulations contain measures to monitor the environmental impact of both the NOx emissions in the home and the greenhouse gas impact of the hydrogen, which will leak when it is distributed that widely? Can that be included in the trial so we can also assess those disbenefits?
Finally, it is true that the only reason really that some houses might not qualify for a heat pump is if they are not very efficient. It is ironic that, for safety reasons, the leakier the house, the more likely it is to then be able to take hydrogen. This precious commodity, which is very expensive to produce and will be very inefficient, is being used in houses which are leaky and being made leakier to be made safer. It seems just so counter to everything we want to achieve on efficiency, resilience and climate change. I hope there will be a trial of the environmental impacts on air quality, climate change and energy efficiency, not just the benefits to the gas industry.
Lord Callanan (Con)
I know the noble Baroness has strong views on electrification but let me reassure her that this is precisely the purpose of the trial. We need to use an existing network to find out what happens to hydrogen in an existing network. Clearly, environmental monitoring and checking for leaks and so on is a crucial part of it. It is one of the reasons we need to do it on an existing network in an existing community, to find out what happens outside of theoretical lab experiments where it is very easy to set up a trial with new pipework, new valves and new equipment. I have visited hydrogen demonstration houses up in Gateshead, my home area. It works very well but these are brand new properties, constructed with hydrogen appliances and new pipework. That is not a very good trial as to how it would work in the real world in existing communities. That is why we need to do the trial. The things that the noble Baroness asked about are exactly what we need to be checking and monitoring to judge the effectiveness of any hydrogen experiments in the real world.
I turn to Amendment 56, tabled by the noble Lords, Lord Lennie and Lord Teverson, and the noble Baroness, Lady Sheehan. This amendment covers several aspects which I fully agree are important for the safe and effective delivery of the village trial. However, I assure noble Lords that the evidence that this amendment seeks to gather through a statutory consultation is already being gathered and will be reviewed by the department as part of our assessment process, following the submission of final proposals at the end of this month. As I said, in May 2022, we sent a joint letter with Ofgem to the gas networks setting out an extensive list of requirements that proposals for the trial should meet. This included requirements mentioned in the amendment, such as local support, costs, environmental impact and consumer protections, as well as many other important areas.
After the gas networks submit their proposals for the trial—later this week, as I said—the department will undertake a thorough assessment against the full list of requirements set out in the letter. That process will involve expert input from the various statutory bodies involved, including the Health and Safety Executive and Ofgem. We will publish the result of that assessment later this year, including the relevant evidence to explain our decision, and that will be available to all noble Lords. I reassure the House that we fully understand the importance of conducting the trial properly.
I touched on this earlier but the noble Lord, Lord Teverson, raised the point about local support for the trial. I reiterate that we will go ahead with a trial only in an area where there is strong local support. The gas networks are working closely with local authorities, communities and Members of Parliament as they develop their trial proposals. My officials also meet regularly with the relevant local authorities. Final proposals for the trial will need to contain evidence of strong support from the local community, validated by an independent external source, such as a local council. Again, I am happy to meet the local Members of Parliament.
The networks are extensively consulting local residents to develop an attractive consumer offer tailored to the community. They have opened drop-in centres in both Whitby and Redcar where anyone can engage directly with them and ask questions about what the project means for them, and have held a number of public events.
Safety is of course fundamental, which is the point made by the noble Baroness, Lady Sheehan. Before any community trial can go ahead, the Health and Safety Executive will need to be satisfied that the trial will be run safely. No trial will go ahead until all necessary safety assessments have been successfully carried out. I hope noble Lords will accept my reassurances on that.
If it goes ahead, the trial will start in 2025 and provide vital evidence that will be required to enable the Government to make decisions in 2026 on any potential future role for hydrogen in decarbonising heat. I hope noble Lords will accept that undertaking another formal consultation would duplicate the work that the department and the gas networks are already doing, and could delay important milestones for ultimately meeting net zero.
I agree that the trial must be conducted properly, and I have already spoken about the additional consumer protections that will be in place for the trial. Those protections, which must be met by the gas networks, also mean that the trial must be delivered with minimal disruption to consumers.
I hope I have been able to reassure noble Lords that the department will carefully consider all these factors in coming to a decision on the trial. Importantly, we will be closely examining the evidence and outcomes of the gas networks’ engagement with local authorities and consumers in the trial areas. I hope that, with the reassurances that I have been able to provide, the noble Lord, Lord Teverson, will consider withdrawing his amendment.
Lord Lennie (Lab)
Could the Minister please write to me about the questions I asked about entering properties and whether further guidance will be published and available?
Lord Callanan (Con)
As I said, the powers that we propose to provide are essentially similar to those that the networks already have on the basis of essential safety works. Still, I am happy to provide the noble Lord with further information and details.
Lord Teverson (LD)
My Lords, when the IPCC report on the global warming challenge came out last week, and it gave a pretty dire view, the Secretary-General of the United Nations, António Guterres, who I think had just been watching the Oscars, said it was
“everything, everywhere, all at once”—
but I do not think he would have included the village hydrogen trials within that broad definition. I understand what the Minister has said, and I welcome all his assurances to local citizens about how the trials will work, but, frankly, the science clearly says that hydrogen sent through the gas pipe network to a range of residential properties does not work, does not make sense and is not going to happen in the future.
Lord Callanan
Member's explanatory statement
This amendment requires regulations under Clause 112 (regulations for the protection of consumers: hydrogen grid conversion trials) that make provision for the imposition of financial penalties to include provision for a right of appeal.
Lord Callanan
“Treatment of recycled carbon fuel and nuclear-derived fuel as renewable transport fuelAfter section 131C of the Energy Act 2004 insert—“131D Recycled carbon fuel and nuclear-derived fuel(1) An RTF order may—(a) designate as recycled carbon fuel a description of liquid or gaseous fuel which is produced wholly from waste derived from a fossil source of energy;(b) designate as nuclear-derived fuel a description of liquid or gaseous fuel which is produced wholly using, or by a process powered wholly by, nuclear fuel.(2) Where a designation under subsection (1) is in force, the recycled carbon fuel or nuclear-derived fuel is to be treated for the purposes of this Chapter and any RTF order as renewable transport fuel.””Member's explanatory statement
This amendment, which inserts a new clause in Chapter 3 of Part 3 of the Bill, provides for recycled carbon fuel and fuel derived from nuclear energy to be treated as a renewable transport fuel for the purposes of renewable transport fuel obligations under Chapter 5 of Part 2 of the Energy Act 2004.
Lord Foster of Bath
“Review into fire risks of photovoltaic panels and lithium-ion batteriesThe Secretary of State must, as soon as reasonably practicable, lay a report before Parliament considering the fire risk of photovoltaic panels, lithium-ion batteries storage facilities and similar technologies that the Secretary of State considers appropriate.”
Lord Foster of Bath (LD)
My Lords, in Committee, I tabled an amendment that proposed to extend the zero VAT that is offered for some green energy items to the batteries used to improve the efficiency of solar panel arrays. Unfortunately, the Minister was non-committal, but, having written to the Chancellor, I found that he was rather more enthusiastic, and I was delighted to see in the recent Budget that that measure will now go ahead, so I have not had to bring that amendment before your Lordships’ House again.
However, because of my involvement with solar panel arrays and batteries, quite a number of people got in touch with me to draw attention to their concern about some safety issues with solar panels and lithium-ion batteries, not least in relation to fire. For example, Zurich Insurance recently did some research that showed that, during the last year, fire crews across England were called out 10 times a month, on average, to deal with solar panel-related fires. It gave an example of a claim that it had to deal with in 2020 for a solar panel fire in a block of flats in Kent which left 30 people temporarily homeless and caused £1.5 million-worth of damage.
But there is a much bigger problem with lithium-ion batteries, which you find in many household products, of course—our mobile phones, for example, and even those singing birthday cards that we sometimes get. Perhaps most significantly, more and more of them are in the increasingly large number of e-scooters and e-bikes. As there is a growing number of those batteries, there are growing fire problems, because lithium batteries provide high energy densities, which mean that they can create severe fires with very high temperatures and exothermic reactions, creating significant challenges for our firefighters. Research, again from Zurich Insurance, found that there has been a 149% increase in the number of e-bike and e-scooter fires since 2021. Research shows that fires resulting from other devices powered by lithium batteries has increased by 63% in that time.
Zurich Insurance has sent me details of several incidents involving lithium batteries, including an £84,000 claim for a scooter that went up in flames in a garage and a £13,000 claim for an e-bike that exploded in a customer’s bedroom. AXA, the insurance company, has given me evidence that shows that, in just the two months of June and July last year, it was involved in claims of around half a million pounds.
The London Fire Brigade and other fire brigades have expressed concern. In June 2021, 60 London firefighters were needed to tackle a blaze on the 12th floor of a tower block in Shepherd’s Bush caused by a faulty e-bike battery. In July of that year, five people in Walthamstow were hospitalised by a fire started by an e-bike.
The other fascinating thing is that, until recently, the number of fires in waste disposal sites had been going down. Sadly, that trend has now been reversed, and the evidence shows that somewhere in the region of 48% of all landfill site fires are now caused by lithium batteries. The cost to the waste disposal people and the fire brigades is something in the region of £158 million a year to deal with just that.
Clearly, there are very significant problems which need to be addressed, but we do not want to stop using these technologies; indeed, we want to move rapidly forward, exploring ways to capitalise on how best we can make use of them as sources of new clean energy. However, as we increasingly use these green energy sources, we have to acknowledge that new and emerging risks are coming down the track.
I accept that there are many rules and regulations that already govern the sale and use of these products, but the warning signs are there that the regulations we currently have—those designed to keep us safe—are not keeping pace with the real-world application of these new technologies.
Interestingly, the National Fire Chiefs Council recently said, very significantly, that
“the problem has ‘blind sided’ conventional systems processes and solutions”.
In other words, we need to look for a new way forward—and that is all that the amendment I am proposing does. It asks the Government to look into the issue and to bring forward a report as soon as possible. Nothing could be simpler than that, but it is what a lot of people would like to see happen. I beg to move.
Baroness Blake of Leeds (Lab)
I thank the noble Lord for bringing this information to our attention. Some interesting reports documenting the risks are available, and I refer particularly to the report from the Institution of Fire Engineers on solar power fire risk and to batteryfiresafety.co.uk.
I have a couple of points to add to the comments already made as to whether it would be worth directing information about the storage of the batteries. It should be highlighted in particular that batteries are often stored in garages next to parked cars, which can have similar battery systems, and will not always be easily accessible.
The risks of lithium ion batteries from a fire safety perspective apparently have been well documented. However, the other element is that the risk with lithium ion batteries is not just fire. Once the battery fails—I think the term is “runs away”—the cells usually start to give off smoke. Thermal runaway is the chemical process within the battery which produces heat, as well as flammable toxic chemical gases, very quickly, often before any flames arise.
I think it is fair to say that, although the information is out there, it has not been properly documented. I wonder whether the health and safety considerations of the increasing use of these batteries and solar panels have been taken on board. Does the Minister think that there is a problem and, if the answer is yes, what does she propose to do about it?
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the noble Lord for his amendment on requesting a report into the fire risks of photovoltaic panels, lithium ion battery storage facilities and similar technologies. I was delighted to hear of his welcome in the Budget for the VAT exemptions.
First, I reassure the noble Lord that the health and safety regimes surrounding net-zero technologies are a priority for the Government. All electrical equipment requires safe installation and use. The Government recognise the importance of net-zero technologies such as electricity storage and solar PV in their ability to help us to use energy more flexibly and decarbonise our electricity system cost-effectively.
The data collected so far indicates that the risk from solar PV fires is low. However, it is right that we work with the industry to understand why any incidents happen and help to stop future occurrences. Over a three-year period and an overall cost of £135,000, the Government commissioned the Building Research Establishment to develop new guidelines for PV system installers, designers and the fire services, with the aim of making solar PV even safer. In February this year, the RISC Authority, the Microgeneration Certification Scheme and Solar Energy UK published an updated joint code of practice on recommendations for fire risk prevention in UK solar systems. Grid-scale lithium ion battery energy storage systems are covered by a robust regulatory framework, which requires manufacturers to ensure that products are safe before they are placed on the market and installed correctly, and that any safety issues found after products are on the market or after installations are dealt with.
In 2018, the Government set up an industry-led electricity storage health and safety governance group, which is responsible for ensuring that an appropriate, robust and future-proofed health and safety framework is sustained as the industry develops and electricity storage deployment increases. The Government are currently working with the group to support the development of a product and installation publicly available standard for domestic small-scale battery storage and guidance for grid-scale storage. They will both be published this year.
Most of the specific issues of e-scooters and bicycles fall within the remit of the Office for Zero Emission Vehicles, and I shall ask it to write to the noble Lord. I can also confirm that Defra will soon publish a consultation on battery recycling.
I do not believe that a specific report on fire risk of photovoltaic panels, lithium ion battery storage facilities and similar technologies mandated by the Secretary of State is necessary. While I welcome the noble Lord’s intention, we believe that working alongside industry and the fire services to manage specific risks is the appropriate way forward. It ensures that these vital technologies are installed, operated and decommissioned in a safe way, while still delivering the best outcomes for consumers. I hope that the noble Lord can recognise the Government’s sustained commitment to enabling the deployment of net-zero technologies in a safe and sustainable way.
In addition, on the concerns expressed by the noble Baroness, Lady Blake, about lithium ion batteries and their ability to combust, I visited last week a very clever packaging firm called Tri-Wall in Monmouth, which has developed packaging specifically for lithium ion batteries to be transported by air safely. The packaging itself will detect any change in heat in the batteries that it contains and change the structure of the packaging into water that will put the fire out before it even gets out of the packaging. Very clever technologies are being developed specifically around lithium ion battery transport and storage.
I hope that, with those few reassuring remarks, we can ask the noble Lord to withdraw his amendment.
Lord Foster of Bath (LD)
My Lords, the time is late; I shall be very quick indeed. I was well aware, of course, of the work that has been done looking at the package of arrangements around solar panels and their batteries. I really wanted to use it as a peg on which to hang the wider issue of all forms of lithium batteries, in particular. I am pleased to hear about the 2018 established group. It would be very helpful if we could see some of the output of that. I am grateful, too, to hear that there are going to be new standards, but the truth is very simple: you can have all the standards you like, and the products may be okay, but if they are not used appropriately and not decommissioned appropriately, then real problems exist, and that is what is happening. There are a huge number of fires in our landfill sites because people are not doing what they are meant to do in disposing of batteries. We have to find a way forward. That is why I wanted a report. I am disappointed that the Minister is not prepared to go further, but at this stage I beg leave to withdraw the amendment.