Tuesday 3rd December 2024
(1 day, 18 hours ago)
Lords ChamberGreat British Energy Bill 2024-26 View all Great British Energy Bill 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 43-I(b) Amendments for Committee (Supplementary to the Marshalled List) - (3 Dec 2024)
Earl Russell (LD)
My Lords, I rise very briefly. I thank noble Lords for bringing forward these amendments. These are really important issues that are worth examining in Committee. However, on these Benches we do not feel that any of these amendments really provide proper solutions to some of the problems that are contained within this Bill.
We feel that GB Energy is separate and distinct from the National Wealth Fund; as GB Energy grows and develops over time, that will become clearer. We welcome the setting up of GB Energy, and we think it is absolutely essential that Britain has a chance to own and manage part of its energy resources and that we are investing in having our energy security and independence.
I read recently on the old Government’s website a press brief from No. 10 during the Sunak Government, which proudly proclaimed that they had spent £40 billion subsidising home owners and businesses through the energy price crisis that we had in the last few years. Obviously, that cannot continue, and our bill payers are suffering, which is not good for us.
We do not really feel that having minority equity stakes is the answer to these problems either. There are problems in this Bill: the Government have chosen to have a very short Bill; the strategic priorities are not written up and are not ready; Clauses 5 and 6 give more control than the Government should have without adequate parliamentary scrutiny—I recognise that this has been picked up by reports in this House. Those are all matters we can discuss and work constructively with the Government to find solutions to them. Ultimately, this is a useful conversation, but we do not see the answers within these amendments; we see the answers within other amendments that are yet to come.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, we have started our proceedings in Committee with a very interesting discussion about the relationship between Great British Energy and the National Wealth Fund. I certainly agree with the noble Lord, Lord Offord, on the importance of our debates on energy and net zero more generally and with the noble Lord, Lord Howell, about the complexities of our energy system and the challenges that we have undoubtedly set ourselves. The recent report by NESO, the National Energy System Operator, sets out those challenges, but gives us some confidence that we can achieve them.
Amendment 1, in the name of the noble Lord, Lord Offord, seeks to require that Great British Energy must be a subsidiary of the National Wealth Fund. Clearly, he indicated he wanted to explore in more detail the relationship between the two organisations. I should say at once to the noble Lord, Lord Howell, that we are certainly not creating organisations for the sake of it. As someone who has spent most of my life dealing with NHS structures and restructuring, I have learnt over the painful years that simply creating new organisations and merging other ones very rarely leads to a successful outcome. We believe that Great British Energy is a key component of our energy and net-zero strategy; that is why it was a manifesto commitment and why we are determined to plough on with this proposal.
On the relationship and the difference between the National Wealth Fund and Great British Energy, the Government have stated very clearly that we see the National Wealth Fund as the state-owned investment bank and wealth fund. It will invest across clean energy sectors, including green hydrogen, green steel, gigafactories and ports, as well as other sectors central to delivering our industrial strategy. On the other hand, Great British Energy will be the UK’s state-owned energy company. It will own, manage and operate key energy projects across the country, including making investments across the clean energy sector and supporting the development of clean energy technologies. It will also support local power and community energy projects as well as supply chains. This is a distinct role, which is why GBE should be a stand-alone company focused on its important mission.
Lord Hamilton of Epsom (Con)
Is it not the case that the Secretary of State can override the chair of Great British Energy?
Lord Hunt of Kings Heath (Lab)
The noble Lord is referring to a power of direction. We are coming on to relevant amendments later in the Bill, but let me make it clear that this power is often contained in legislation, although we believe it will be used very rarely indeed. I certainly would not expect it to be used. I think the noble Lord is suggesting that the Secretary of State will attempt to micromanage Great British Energy through the power of direction. I simply do not believe that this will happen under any Secretary of State.
I listened to what the noble Lord, Lord Vaux, said about duplication. At the beginning, we think it is sensible for GBE to use the National Wealth Fund’s expertise. He suggested that this is duplication; I think it is a pragmatic, sensible approach. We have certain expertise within the National Wealth Fund that can help as we establish GBE, but they are complementary functions. Having listened to the debate, I can assure noble Lords that my department will work closely with His Majesty’s Treasury to provide clarity to the market on how the two institutions will complement each other, and set out how this relationship will evolve in time.
I turn to Amendments 3, 4, 5, 6 and 7, tabled by the noble Lords, Lord Offord, Lord Vaux and Lord Cameron. There was an interesting discussion about whether GBE could or should be allowed to raise equity through the sale of shares while it remained majority-owned by the Crown. Amendment 3 proposes enabling external equity ownership of Great British Energy without its losing its status as a Crown-owned company. Similarly, Amendments 4, 6 and 7 specify enabling third-party ownership of up to 25% of the shares in Great British Energy without its losing its status as a Crown-owned company. Amendment 5 seeks to specify that Great British Energy is owned by the Secretary of State, rather than by the Crown.
We do not think that it is necessary for Great British Energy to sell its own shares to bring in external equity funding, or any funding, for its projects. In the case of the example which the noble Lord, Lord Cameron, gave, it would, though, be possible for Great British Energy to encourage private sector investment into the scheme to which he referred, or to co-invest with external partners, each taking an equity stake in a project that Great British Energy wished to support. I understand that the model has been used successfully by similar bodies, such as the former Green Investment Bank.
Clause 4 enables the Secretary of State to provide financial assistance to Great British Energy. This is so it can take action to meet its objectives. To be clear, our intention is for Great British Energy to become financially self-sufficient in the long term. It will invest in projects that expect a return on investments, but it would be prudent to ensure that the Secretary of State has the power to provide further financial support, if required.
Just as private sector companies would rely on the financial strength of their corporate group to raise funds, that could be the case for providing GBE with further financial support for specific projects in the future. However, we believe that any such financial assistance should be provided by the Secretary of State and, as such, be subject to the usual governance and control principles applicable to public sector bodies, such as His Majesty’s Treasury’s Managing Public Money.
It is also unnecessary to specify that Great British Energy is owned by the Secretary of State rather than the Crown. The Bill simply follows normal legislative practice in its drafting. For instance, Section 317 of the Energy Act 2023, which the Government of the noble Lord, Lord Offord, took through, expresses the ownership requirement for Great British Nuclear in the same way. Other legislation, including Section 6 of the Freedom of Information Act 2000, uses the same formulation. Clause 1(6) of the Bill explains that
“wholly owned by the Crown”
means that each share is held by a Minister of the Crown, which includes the Secretary of State, or a company wholly owned by the Crown, or a nominee of either of those categories.
We also think that it is entirely appropriate for the Secretary of State to be the sole shareholder in Great British Energy. I very much agree with the noble Baroness, Lady Noakes, on this. Introducing minority third party ownership, whether held by one minority shareholder or several, would add unnecessary complexity to its governance. A shareholder agreement or agreements would need to be put in place. They would need to cover elements relating to the control of Great British Energy, setting out which matters required approval of a simple majority of shareholders and which might require unanimous consent. For an organisation such as Great British Energy, playing such a key part in our mission to deploy clean energy—I take note of what noble Lords have said about parliamentary accountability—is it not surely right that Ministers both are accountable for their actions and can exercise full shareholder rights?
This has been an interesting debate. I am aware of noble Lords’ issues around the role of Great British Energy and the National Wealth Fund and its ability to draw in private sector investments, but we think—and it was a manifesto commitment—that this is a very important body that should stand alone. We are grateful that the National Wealth Fund is able to provide some support at the moment, but we think that this is the right way forward.
Lord Offord of Garvel (Con)
I thank noble Lords for their insightful contributions on the designation of a company as Great British Energy and the ownership of such a company. I welcome the amendments from the noble Lords, Lord Vaux and Lord Cameron—Amendments 4, 6 and 7. They were designed to probe the benefits of having flexibility to allow minority external equity ownership of Great British Energy. However, I cannot disagree with anything that the noble Baroness, Lady Noakes, said about introducing private equity into what is, in effect, government-underwritten risk, which means that it really should be debt.
The fact we are debating this indicates that there is no clarity about the substance and purpose of the Bill or about the exact ownership of Great British Energy. Given that we are debating £8.3 billion of taxpayers’ money, and that there is no limitation on how that financial assistance can be given or structured, we have a concern that will continue through Committee.
The experience of the House was brought into the debate by the noble Lords, Lord Howell and Lord Hamilton, who looked back over previous generations to instances of how overarching powers given to Secretaries of State can be used if not abused, sometimes with the best of intentions. Again, it speaks to how there could be more clarity in the Bill about how those powers will be allocated. We believe that accounting and reporting measures are absent from the Bill and that we need further detail and clarity on the priorities and plans of Great British Energy. I expect that we will return to those matters on Report but, in the meantime, I beg leave to withdraw the amendment.
Lord Frost
(1A) The objectives which the Secretary of State must seek to advance in designating a company as Great British Energy are—(a) reducing household energy costs in a sustainable way, and(b) promoting the United Kingdom’s energy security.”
Lord Frost (Con)
My Lords, I rise to move Amendment 2 in my name, and I thank my noble friend Lord Offord for his Front-Bench support for it. I draw noble Lords’ attention to my interests as set out in the register, and I note my regret that I could not be here for Second Reading.
The purpose of my amendment is to establish why the Government are creating Great British Energy and what its underlining objectives and purposes are. Ideally, this would be clear from the Bill or the related documentation, but it is such a thin Bill that calling it a “skeleton” Bill really does not do it justice. Its rather evanescent, wraith-like provisions provide no solidity other than giving a fig leaf of cover to the willed actions of the Secretary of State. I think that we as legislators and the British people are owed a bit more than that from the Bill.
Before I come to the detail, I note that the Bill includes a requirement for the articles of association to contain a statement of “objects”. Of course, objects are not the same as objectives, and what is now Clause 3(2) bears that out. The objects there described are process requirements on the company and limits on where it may spend its very generous taxpayer funding: production of energy, reduction of carbon emissions, energy efficiency, security of supply and so on. They are a “what”; they not the “why”.
The Bill also includes a requirement, in Clause 5, for Great British Energy to have strategic priorities and plans but, again, there is absolutely no constraint on the Secretary of State as to what those strategic priorities may be. Really, this is not good enough for a vehicle for £8 billion of taxpayers’ cash. It is important to have a clear idea of why Great British Energy exists and what its purposes are. That is what my amendment is there to secure and why it is written as it is.
My amendment sets out two objectives for Great British Energy:
“reducing household energy costs in a sustainable way”
and
“promoting the United Kingdom’s energy security”.
In putting those two objectives forward, I am not inserting my own view to substitute for that of the Government. Rather, I am ventriloquising into the Bill, looking at the political statements, spoken and in writing, of the Government and the party opposite and trying to use them to ascertain why they feel this Bill and this company are necessary.
I will briefly take noble Lords through this. I look first, of course, at the Labour Party manifesto— a document whose probative status has been quite significantly weakened in recent months, one might say, but it is all that we have. Number four of the six priorities of the party says:
“Set up Great British Energy, a publicly-owned clean power company, to cut bills for good and boost energy security”.
Those are the two purposes set out in my amendment. Similarly, the launch document for Great British Energy, which was published on 25 July, says that:
“In an unstable world, the only way to guarantee our energy security and protect billpayers permanently is to speed up the transition away from fossil fuels”,
et cetera. At Second Reading in the Commons on 5 September, the Secretary of State said that the Bill would “protect family finances”. The Energy Minister said that it would
“guarantee our energy security and protect bill payers”—[Official Report, Commons, 5/9/24; col. 529.]
once again.
It seems a fair reading to see these as the underlying purposes of Great British Energy and to see them reflected in the Bill. If the Minister, speaking for the Government, thinks differently on this, then perhaps in winding up he could explain what the Government see as the objectives of Great British Energy instead and why they should be different from those in this amendment.
Noble Lords may ask why, if those purposes are understood by all concerned to be the objectives of Great British Energy, they need to be reflected explicitly in the Bill. There are a few reasons. The first, which I have touched on, is simple transparency. The hard-pressed British taxpayer needs to know why they are being asked to stump up over £8 billion.
Lord Hunt of Kings Heath (Lab)
My Lords, that was an interesting debate, led by the noble Lord, Lord Frost, proposing an addition to Clause 1 which would set Great British Energy’s objectives as
“reducing household energy costs in a sustainable way, and … promoting the United Kingdom’s energy security”.
The noble Lord asked why we are doing this. He then, to be fair, referred to the—I think three—debates we have had on energy policy in the last few weeks, in which we clearly set out our aims and drive towards clean power and net zero. We see Great British Energy, with the provision of financial assistance from the Secretary of State, as being at the heart of our clean power mission. It will speed up the deployment of mature and new technologies, as well as local energy projects. It will support the Government’s aim of decarbonising our electricity system by 2030, while ensuring we can meet future demand as we further decarbonise the economy.
I noted the intervention from the noble Lord, Lord Hamilton, and I thought I detected some scepticism about net zero. I remind him that his party, over 14 years, has made various statements in support of net zero. I note that Mrs Thatcher, at the UN General-Assembly in November 1989, said:
“the environmental challenge which confronts the whole world”—
Lord Hamilton of Epsom (Con)
I thank the noble Lord for giving way again. I think he will be the first to acknowledge that two wrongs do not make a right.
Lord Hunt of Kings Heath (Lab)
My Lords, it was more than two. I can quote Prime Minister May, and I acknowledge her leadership in this country being the first to enshrine the 2050 net-zero carbon target. Prime Minister Johnson only recently addressed COP 26 in Glasgow; I think we all acknowledge the leadership the noble Lord, Lord Sharma, showed there. The noble Lord, Lord Ahmad, announced to the UN the £11.6 billion in international climate finance for the period 2021-22. Although we are having this friendly discussion about future energy policy, there is still some consensus on the need to decarbonise our energy supply, and Great British Energy is part of the way we are going to do it.
The key thing in the structure of the Bill is the objectives set in Clause 3. They will be informed by the statement of strategic priorities that Great British Energy will operate in, making sure that it will be aligned with the Government’s priorities. We have been clear that the first statement, which will be published in 2025—after due consultation and discussion with the devolved Governments and with Jürgen Maier, the chair of Great British Energy—will ensure that GBE is focused on driving clean energy deployment to boost energy independence, create jobs and ensure that UK taxpayers, bill payers and communities reap the benefits of clean, secure, home-grown energy.
Of course, the issue of energy bills is very important. We are relying strongly on the advice of the Climate Change Committee, of which the noble Lord, Lord Hamilton, is probably not a great fan—but none the less, over 14 years his party listened to it. The committee said that a clean energy future is the best way to make Britain energy independent, protecting bill payers, creating good jobs and tackling the climate crisis.
The independent National Energy System Operator confirmed a few weeks ago that our 2030 clean power goal is achievable and can create a cheaper, more secure energy system. More broadly, the OBR—another body to which the previous Government paid great attention; they ran into trouble when they did not—highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts. The Committee on Climate Change has said that the net costs of the transition, including upfront investment, ongoing running costs and costs of financing, will be less than 1% of GDP over the entirety of 2020 to 2050—lower, it said, than it concluded in its 2019 Net Zero report.
I have already said that we will publish the statement of priorities in 2025. How will GBE be judged? It will be judged on its performance against the statement of priorities within the context of the objectives set by Clause 3.
Lord Vaux of Harrowden (CB)
The Minister has said again that the objectives of the company are set out in Clause 3. I am afraid that is not correct. The objects of the company are set out in Clause 3. As the noble Baroness, Lady Noakes, said, those objects restrict the activities—they do not set out the objectives. Nowhere in the Bill are the objectives of the company—what it is trying to achieve—laid out. I have not yet heard an argument from the Minister as to why that is.
Lord Hunt of Kings Heath (Lab)
I really do not read Clause 3 in that way. Subsection (2) says:
“The statement must provide that Great British Energy’s objects are restricted to facilitating, encouraging and participating in”.
One way to read that is that Great British Energy’s objects are around the following four paragraphs, informed by the strategic priorities and plans that the Secretary of State will prepare over the next few months.
Lord Vaux of Harrowden (CB)
There is only one way to read the words the “objects are restricted to”. That is what the clause says.
Baroness Noakes (Con)
My Lords, the noble Lord, Lord Hunt, may not be as familiar with company law as the noble Lord, Lord Vaux. The object of a company, which is what the clause refers to, is a constitution document, and it restricts what a company can do. That is what company law sets up for it. The Minister is trying to read “objects” in a broader sense. It is very clear that the clause refers to the legal documentation that will surround the full legal implementation of Great British Energy as a company. It does not have any other meaning.
Lord Hunt of Kings Heath (Lab)
My Lords, it is always helpful to have that kind of clarification, because I certainly was not intending to mislead the Committee in any way. From what I see in Clause 3, I am clear that GBE can participate in, encourage and facilitate the production, distribution, et cetera—informed, as I say, by the strategic plans and priorities. But I will obviously look at that and, if I have got myself confused, I will certainly reflect on it.
Lord Frost (Con)
My Lords, I am most grateful to the Minister for his response and to all those who contributed to our discussion, including the mini-discussion at the end about the difference between objectives and objects, which is important and I am sure we will return to it. I do not want to detain noble Lords long but, as the Minister repeated the words of Lady Thatcher on this subject, I cannot forbear repeating her words in her final work on it:
“By the end of my time as Prime Minister I was also becoming seriously concerned about the anti-capitalist arguments which the campaigners against global warming were deploying”.
She—rightly, in my view—added:
“We should be suspicious of plans for global regulation that all too clearly fit in with other preconceived agendas. We should demand of politicians that they apply the same criteria of commonsense and a sense of proportion to their pronouncements on the environment as to anything else”.
Those wise words are worth bearing in mind today when we discuss this issue.
I am not sure that we have entirely got to the bottom of this issue, and I suspect that we will have to return to it in some form on Report, because it is so fundamental to what the Bill is about. For now, I beg leave to withdraw my amendment.
Lord Offord of Garvel (Con)
My Lords, I rise to speak in favour of my noble friend Lady Noakes’s stand part notice. This clause deals with the Crown status—or more accurately, the lack of Crown status—of Great British Energy, and it is imperative that we probe the Government’s reasoning and consider the implications of this approach.
Clause 2 states clearly:
“Great British Energy is not to be regarded as a servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown”.
Additionally, it specifies that the property of Great British Energy
“is not to be regarded as property of, or property held on behalf of, the Crown”.
Let us pause and consider what this means. Great British Energy is envisaged as a significant player in the energy sector, with the Government making it central to our net-zero ambitions and national energy security. It may well handle substantial public funds, represent the UK’s interests domestically and internationally, and carry out critical projects on behalf of the Government. Yet the Government have deliberately chosen to sever this body from the legal, financial and symbolic framework provided by Crown status.
I pose the question: why? Why has this decision been taken, and what are the potential consequences? There are three areas of concern I wish to highlight; the first is accountability and oversight. Without Crown status, Great British Energy sits outside the constitutional framework that traditionally governs Crown bodies. Will this weaken Parliament’s ability to scrutinise its actions? Will the Comptroller and Auditor-General have clear access to audit its books? In an age of heightened public interest in corporate governance and transparency, these questions should be considered.
Secondly, on legal implications, by denying Crown status, Great British Energy forfeits the legal immunities and privileges that might ordinarily protect a public body in its dealings. Does this leave it more vulnerable to litigation? Could it become ensnared in disputes that detract from its primary mission?
Thirdly, this is a public body intended to work for the public good. Denying it Crown status might send a message—rightly or wrongly—that it is not fully embedded within the public sector, raising questions about its mission and accountability to the public interest. I do not suggest that Crown status is a necessity in all circumstances. Indeed, there may be good reasons for taking this route, such as granting Great British Energy greater operational flexibility or shielding the Government from certain liabilities—but these reasons have not been clearly articulated by the Government, and they deserve to be.
As we face unprecedented challenges in energy policy, the creation of Great British Energy is a momentous step. Its structure and status must instil public confidence, ensure robust accountability, and align seamlessly with the broader aims of our national strategy. Clause 2, as it stands, leaves too many unanswered questions.
Lord Hunt of Kings Heath (Lab)
My Lords, we think Clause 2 is very important. It ensures that Great British Energy will serve the public as an independent company and operate in the same way as other UK companies. Before I come on to the main body of the argument, I say to the noble Lord, Lord Howell, that he had some interesting points to make about the role of advanced nuclear reactors tied into industrial processes and data centres. We are watching very carefully what is happening in the US and we are in discussion with some of the companies themselves. I very much take his point about that.
The clause ensures that Great British Energy will not have any special status, immunity or privilege normally associated with the Crown, nor will its property be seen as the property of the Crown. It will also be subject to the same legal requirements as other companies. This is in line with the vision we have had for Great British Energy from the beginning: that it should be an operationally independent and agile market player, and we want to ensure it remains that way. If we were to leave out the clause, either Great British Energy would be regarded as a servant or agent of the Crown and have the immunity or privilege associated with that status; or, at least, there would be ambiguity as to whether it has that status.
I understand that the courts in recent years have been faced with questions about whether certain persons or bodies had Crown immunity, and the issue was not clear in the legislation—for example, the Commissioners of Customs and Excise, and the Commissioners of Prisons. The clause avoids that ambiguity and the possibility of any litigation arising regarding Great British Energy’s status. Examples of how this might arise in the context of Great British Energy, are, first, that Crown bodies are generally not covered by the requirements of the Employers’ Liability (Compulsory Insurance) Act 1969; and, secondly, that parts of the Health and Safety at Work etc. Act 1974 do not bind the Crown. We would not want Great British Energy to be exempt from that legislation or for it to be unclear whether it is bound by such legislation.
As I mentioned earlier in response to the noble Baroness, Lady Noakes, we expect Great British Energy and the National Wealth Fund to work well together. It is while Great British Energy is being established that it will utilise the National Wealth Fund’s existing expertise, which I think has been widely acknowledged. This is work in progress, and I cannot say very much more than that at the moment. We are not making it up as we are going along. There are earnest discussions between ourselves, His Majesty’s Treasury and Jürgen Maier, the chair of Great British Energy, and we will work closely with His Majesty’s Treasury to provide clarity to the market on how the two institutions will complement each other and how their relationship will evolve over time.
I also acknowledge that the partnership with the Crown Estate will be hugely valuable. On the question of the Crown Estate’s own position, I will have to seek further advice and write to the noble Baroness, Lady Noakes, because I do not have the answer at the moment.
Lord Offord of Garvel (Con)
My Lords, I thank my noble friend Lord Naseby for introducing his thoughtful and technical amendments, which no doubt would improve the quality of the Bill should they pass. I also thank all noble Lords who have spoken on this group. Each amendment contributes meaningfully to the Bill’s ultimate aim by ensuring that governance reflects accountability, fairness and long-term sustainability.
I will limit my remarks to Amendments 8, 9, 12 and 13. Amendment 8 proposes the addition of “investing in” alongside “encouraging”. This is quite important, because it seeks a balance between fostering enterprise and ensuring strategic government investment to safeguard our national energy. We want a partnership between government and the private sector. By explicitly including “investing in”, the amendment aligns with our commitment to a dynamic and sustainable energy sector.
Amendment 9, by adding “one or more of”, would bring clarity and flexibility to the Government’s strategic objectives in advancing energy policies. It would ensure that the Government could prioritise specific energy initiatives based on strategic needs without being overburdened by one limiting obligation. It reflects the core principles of pragmatism and efficiency, ensuring that resources can be allocated where they can deliver the greatest impact.
We know that energy security and innovation in this area—referred to by my noble friend Lord Howell as bigger perhaps than the Industrial Revolution—require adaptability. Whether we are investing in offshore wind, nuclear power or emerging technologies, the amendment would allow for a tailored approach that maximised value for taxpayers’ money and strengthened our energy independence. I urge colleagues to support it to make sure that we have smart, effective and flexible governance in the Bill.
My noble friend Lord Naseby’s Amendment 12 is again quite technical. It seeks to insert the phrase “directly or indirectly” into Clause 3, which would again enhance the Bill by acknowledging the interconnected nature of emissions reductions and energy initiatives. This addition would ensure a pragmatic approach to addressing climate goals. Emissions reductions often involve complex supply chains and secondary impacts. Recognising these indirect contributions reflects our understanding of the broader economic and technological dynamics that drive innovation and decarbonisation. For example, investments in nuclear power or advanced grid infrastructure may not lower emissions immediately but they create the conditions for sustainable reductions in the long term, towards 2050 net zero. The amendment therefore provides the flexibility needed to pursue bold initiatives while holding true to the principle of cost-effectiveness for taxpayers. By adopting it, we would make the Bill more robust, practical and reflective of real-world energy systems. I urge my colleagues to support it.
Finally, my noble friend Lord Naseby’s Amendment 13 proposes the substitution of the word “produced” with “derived” in Clause 3. Again, this is a technical and seemingly small change, but it holds significant importance for our energy policy. “Derived” more accurately captures the diverse and evolving sources of energy in our transition to a low-carbon future. Energy comes increasingly from various integrated systems, including renewable sources, nuclear, tidal—as we have heard in great detail—and hydrogen. The term “produced” can be limiting, whereas “derived” acknowledges the broader, more dynamic approach needed to secure our energy future. The amendment provides the flexibility to encompass a wide range of energy sources and technologies, ensuring that our energy policies remain adaptable and forward thinking. It should reflect our commitment not only to reduce emissions but to foster innovation and maintain energy security in the face of global challenges.
Lord Hunt of Kings Heath (Lab)
My Lords, this was a very interesting group. It clearly refers to a range of technologies in which Great British Energy could invest. I should start by saying that we intend GBE to be operationally independent and it is not for us to rigidly define what it should do or in which technologies it should invest.
The noble Baroness, Lady Hayman, of course anticipated my list argument because she has used it herself a number of times, but I take her point about ensuring long-term certainty and a stable environment for some of these crucial sectors. I recognise that GBE has great potential so to do, particularly in sectors where investment from the private sector may initially be difficult. I also take her point about how this has to be aligned with planning reform, enhanced grid connections and infrastructure.
Amendments 8, 9, 12, 13, 14, 23, 31 and 32, in essence, relate to technologies specific to GBE’s objects in Clause 3. Amendment 23 from the noble Earl, Lord Russell, would prevent Great British Energy being involved in CCUS projects, whereas the amendments from the noble Lord, Lord Naseby, would ensure that both carbon capture and storage and hydrogen fell within the scope of the Bill. The Government view both hydrogen and CCUS as vital to our drive towards net zero and to ensuring a just transition for industries based in the North Sea.
Lord Howell of Guildford (Con)
My Lords, I am sorry to interrupt again—the Minister has been very patient—but can we be very clear on what he just said? Is he saying that GBE can involve itself and will be involved one way or another in part of the nuclear sector or not? This is very important: we need about 500 SMRs or AMRs to have the slightest hope of getting anywhere near net zero. At the moment we are plodding along, not very fast at all, and it requires all hands to the helm. So far, I understand that GBE is supposed to stand quite clear of nuclear. That does not make sense, because it is all one ball of wax, frankly. We have to get nuclear right, and only then will we get any hope of net zero.
Lord Hunt of Kings Heath (Lab)
Yes, I want to be absolutely clear: nuclear clearly falls within the definition of clean power, so it would be within the competence of Great British Energy to invest and do the other things in the Bill in relation to nuclear. However, we have Great British Nuclear, which I believe will continue. We are still finalising discussions, but GBN is focusing at the moment on small modular reactors. The department is involved in major funding of the nuclear developments, but GBE could also invest in nuclear energy. I hope that is clear.
I turn to oil and gas. Amendment 25 from the noble Earl, Lord Russell—and the noble Lord, Lord Bruce, who was not able to be present—would require Great British Energy to consider oil and gas supply chains and a reduction in and decarbonisation of oil and gas production. I say to the noble Earl that I understand the need for a just transition and acknowledge the skills of people working in oil and gas in the North Sea.
The Bill is focused on making the minimum necessary provisions to enable the establishment of this operationally independent company. Clause 3 provides the framework for Great British Energy’s functions and limits the areas where it can act, but it does not say how Great British Energy should deliver its functions or objectives. One of the worries about the noble Earl’s amendment is that it would widen the intention of this clause, perhaps unnecessarily. I say to him that, as we invest in the UK’s energy potential, we want to rebuild supply chains at home, of course. In relation to oil and gas, we want to help the transition and use the skilled workers in the most effective way possible. Oil and gas production in the North Sea will be with us for decades to come, so we want to manage the North Sea in a way that ensures continued support for that sector but enables some of the workers there to transition to other sectors, particularly in energy where they have such expertise.
Amendments 30 and 33 in the name of the noble Baroness, Lady Boycott, wish the Government to confirm or state that biomass is not included in the definition of clean energy in the Bill. Although I understand that many noble Lords share her viewpoint, as was clear from the Oral Question we had a few weeks ago, the Government believe that biomass plays a role in balancing the energy grid when intermittent renewables are not available. It is well evidenced that sustainably sourced biomass can provide a low-carbon and renewable energy source. That view is supported by both the Inter- governmental Panel on Climate Change and the Climate Change Committee.
Biomass sourced in line with strict sustainability criteria can be used as a low-carbon source of energy. Woody biomass that is sustainably sourced from well-managed forests is a renewable, low-carbon source of energy, as carbon dioxide emissions released during combustion are absorbed continuously by new forest growth.
The noble Baroness mentioned the Ofgem investigation, which she will know was about incorrect data being provided. It would be fair to say that Ofgem did not find the process at fault; it was the data provided. She asked me what visits officials in my department had made to the US. Officials have been in contact with US regulators but I would be happy to provide her with more details on what we have been doing.
The noble Baroness also mentioned BECCS, as it is known, or bioenergy with carbon capture and storage. Again, the Committee on Climate Change and the International Energy Agency recognise that BECCS can play a significant role in supporting net-zero targets through the delivery of negative carbon emissions with the co-benefit of producing low-carbon energy.
The noble Lord, Lord Alton, spoke eloquently and passionately to Amendment 91 on tidal barrages. I listened to the noble Lord, Lord Cameron, too, who suggested that tidal barrage and, in particular, lagoons play to the UK’s strength. The noble Lord, Lord Wigley, also spoke. The National Energy System Operator—NESO—is leading a network innovation allowance project aimed at establishing a holistic knowledge base on the potential development and impacts of tidal barrage in Great Britain within the context of grid operability. That is a very important development that I hope picks up the point that noble Lords have raised—the situation may have changed over the past 10 or 20 years.
I look forward to discussing the Mersey barrage with the noble Lord, Lord Alton. When I did this job at the Department of Energy and Climate Change from 2008 to 2010, I chaired a forum that we established on the Severn estuary potential, so I would certainly be interested in taking discussions forward on the Mersey barrage.
I hope that I have reassured most noble Lords that the energy technologies they wish to see supported can be covered in the Bill, but Great British Energy must be allowed to make its own decisions within the context of the objectives and strategic priorities the Secretary of State will set.
Earl Russell (LD)
I thank the Minister for his detailed response to all the amendments in this group. I want to follow up with a quick question. I and the noble Baroness, Lady Grender, asked the Minister whether any consideration will be given to rolling the warm homes plan into GB Energy. The answer might be that no consideration will be given, or that the Minister does not have an answer—though he could possibly have one in a minute. I am happy to take a written response or come back to it at a later stage.
Lord Hunt of Kings Heath (Lab)
My Lords, I am not aware of any intention. I will certainly write to him if I have got that wrong but I am not aware of any intention to do it. The whole issue of home insulation and heating is crucial to getting to net zero and we are giving it a huge amount of attention.
The Earl of Effingham (Con)
My Lords, I thank the noble Lord, Lord Vaux of Harrowden, for his valuable contributions to this group. The amendments noted are crucial for ensuring that Great British Energy remains aligned with its goals of promoting energy security, affordability and sustainability. This fifth group of amendments focuses on the objectives and duties of Great British Energy.
I begin with Amendment 10, which turns the focus on the trading element of GBE. By explicitly including trading, the amendment demonstrates a forward-thinking approach to GBE’s role. While market dynamics naturally encourage competition and efficiency, active participation in energy trading enables GBE to enhance price stability, bolster supply resilience and reduce market volatility. This strategic involvement not only fosters a more competitive energy landscape but empowers consumers by offering greater choice and flexibility. In doing so, it strengthens the UK’s energy security, ensuring the system remains adaptable to both domestic demands and global shifts, while at the same time promoting long-term sustainability and cost effectiveness free from overreliance on dominant energy providers.
Furthermore, on Amendment 11 to Clause 3, the insertion of the line
“including from schemes owned, or part owned, by community organisations”
is important when addressing the need for a more inclusive energy system that empowers local communities. By specifically including community energy schemes, this amendment acknowledges the growing role of grass-roots initiatives in the energy transition. It ensures that GBE will actively support, facilitate and encourage energy generation models that are owned or part-owned by local and community organisations. This naturally leads us to Amendment 15 to Clause 3, which outlines measures to increase low-carbon and renewable energy schemes owned or part-owned by community organisations.
This approach not only helps democratise energy production but empowers communities to take control of their energy future, fostering a more decentralised and resilient energy system. Community-led schemes have proven essential in driving local economic growth, creating jobs and promoting energy independence. By ensuring that GBE is aligned with these objectives, we not only advance environmental sustainability but cultivate a more equitable and diverse energy landscape, one that shifts power back into the hands of local communities.
Amendment 19 proposes important
“measures for reducing the cost of the supply of energy”.
This is a critical step in aligning GBE with the Government’s key missions for this Parliament. The Labour Government committed not only to
“make Britain a clean energy superpower”
but to deliver cheaper bills for British households. The amendment is a fair and necessary step to ensure that the Government deliver on their promises. By incorporating the reduction of energy costs into Great British Energy’s legislated objectives, it would ensure that affordability, alongside security and sustainability, remained a core consideration in its operations.
This leads us seamlessly to Amendment 34 to Clause 3, which would insert a definition of
“security of the supply of energy”
into the objects of GBE. The inclusion of system reliability, price predictability, fuel security and cybersecurity is vital to fully encompass the concept of energy security. This clear and detailed definition ensures that GBE’s mission is comprehensive and aligned with the broader goal of delivering a secure and sustainable energy future for all.
Amendment 27 would ensure that GBE took no action that risked the sustainability of commercial shipping. This is a key consideration in the broader context of balancing the development of renewable energy sites with other vital sectors, such as fishing and shipping. As we know, 90% of goods in the UK are transported here by sea. Ports, often specialising in certain goods, are essential to our economy, and well-established shipping lanes must remain open to ensure the smooth operation of this vital sector. If we are to invest in offshore energy infrastructure, we must not overlook the potential risks posed to these critical maritime routes.
The amendment draws a parallel with the Crown Estate amendments. It specifically aims to ensure that GBE does not take any action that could jeopardise the sustainability of commercial shipping. With offshore energy production, particularly offshore wind, continuing to grow, it is crucial that this growth is balanced with the needs of commercial shipping. If we are to meet our energy goals, we must not undermine the sector that is responsible for bringing nearly all the goods we rely on.
While offshore wind is undoubtedly a critical part of the UK’s energy future, accounting for 17% of our electricity in 2023, up from 14% in 2022, we must recognise the impact that the siting of wind farms and other offshore developments could have on existing industries. GBE has a responsibility to ensure that the growth of sustainable energy does not come at the expense of shipping lanes, port operations or coastal communities.
Amendments 20, 28 and 29 are designed to protect local communities. Amendment 20 would clarify the role of GBE in local area energy planning and governance, ensuring that decisions regarding energy infrastructure were made in collaboration with local authorities. As the energy landscape evolves, it is essential that local communities are not only kept informed but are actively involved in shaping their energy future.
By explicitly requiring GBE to engage with local authorities, the amendment fosters a more inclusive and transparent approach to energy planning, enabling communities to have a say in how energy systems are developed, managed and integrated at the local level. Such involvement is critical for addressing region-specific needs, ensuring that energy solutions are tailored to the unique characteristics and priorities of different areas, from rural communities to urban centres. The amendment supports the broader goal of decentralising energy governance, empowering local authorities to take a more proactive role in shaping the energy systems that affect their residents. It would also ensure that local insights were considered in the development of energy infrastructure, from renewable energy projects to the distribution and storage of energy.
Amendments 28 and 29 address the wider concerns that may be raised by local coastal communities. As we continue to develop renewable energy infrastructure, it is crucial that we consider the impact of such development on the very communities that depend on the seas for their livelihoods and way of life, including the tourism sector, which many coastal areas rely on. I hope the Minister will acknowledge that to achieve the Government’s 2030 renewable energy targets it is essential to balance the need for sustainable energy development with the preservation of those communities. Their voices must be heard; they are important working people, and their livelihoods must not be unduly impacted by offshore energy projects. The presence of offshore developments, particularly wind farms, can have significant consequences for local tourism, which is often a key economic driver for those communities. We must ensure that any developments do not disrupt the natural beauty or accessibility of those areas, which attract visitors year round. This is an additional consideration, not directly addressed by these amendments but worth highlighting.
We may return to this on Report, as I believe that a review and/or an annual report might go some way to reassuring Parliament that GBE is making decisions that truly benefit all stakeholders. Such a mechanism would ensure that potential trade-offs were identified, quantified and fully considered, especially as we navigate the complexities of offshore energy and its impact on local communities.
I trust that the Minister has listened carefully to the concerns raised by all noble Lords and hope that the Government will consider improving the Bill to ensure that GBE properly considers the impacts of its activities on fishing, shipping, coastal communities and the environment. We must not lose sight of the importance of those local industries and the people whose livelihoods depend on them.
Lord Hunt of Kings Heath (Lab)
My Lords, I thank all noble Lords who have taken part in this debate. I agree with the noble Lord, Lord Vaux, and the noble Baroness, Lady Noakes, in relation to Clause 3. It does set statutory limits on Great British Energy’s objects, and these must be reflected in the company’s articles of association. However, the four objects in Clause 3 have been broadly drafted, so although they impose a restriction, it is very wide and intended to cover all the conceivable activities that Great British Energy may engage in. If I have confused the Committee by loose terms, I apologise.
In Amendment 10, the noble Lord, Lord Vaux, proposes adding “trading” to Clause 3(2)(a). I will resist this because, although trading is not explicitly referenced, the current objects in the Bill allow Great British Energy to facilitate or encourage the supply of clean energy. We see no reason why that activity could not include the encouragement or facilitation of a trade in clean energy. But, if the noble Lord has examples of schemes that are operating, we would be interested in the details.
Lord Ravensdale (CB)
My Lords, I thank the noble Lord for his response to my amendments. I wanted briefly to clarify something he said in responding to my Amendment 19. He essentially made a link between a clean energy system and price stability, therefore making the argument that “costs” was not required in the objects. But there are of course wide variations in the costs of a clean energy system: there are expensive clean energy systems, and cheaper ones. NESO is developing a wide range of scenarios here. So I argue that we cannot rely purely on making that link—the organisation needs to take costs into account more broadly as well.
Lord Hunt of Kings Heath (Lab)
I very much take that point. Clearly, my department is cognisant of costs. Much of our discussion with His Majesty’s Treasury on the resources made available obviously takes in those constraints. The point I made earlier is simply that we believe—and we are supported by NESO, the Committee on Climate Change and the OBR—that the best way to secure stable prices in the future is to charge on to clean power net zero.
Lord Wigley (PC)
Could the Minister give some comfort to those waiting to invest in pumped storage schemes about the timescale on which information will be available to enable them to do so?
Lord Hunt of Kings Heath (Lab)
My Lords, I cannot give the noble Lord chapter and verse today but will certainly write to him with what we can say in public.
Lord Vaux of Harrowden (CB)
My Lords, I thank all noble Lords who took part in this interesting debate and the Minister for his fairly fulsome answer. On Amendment 10, I am not totally convinced that trading is covered by the objects as they stand but I will read his answer in Hansard to see whether I can convince myself that he is right. As he says, the issue is that if it is not in the objects, it is not allowed. I want to make sure that it is allowed—not that it has to happen—in the same way that he argued the other way around on the security definition. That said, I beg leave to withdraw my amendment.