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The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Great British Energy Bill
Wednesday 15th January 2025
(3 days, 10 hours ago)
Grand CommitteeRead Full debate Great British Energy Bill 2024-26 View all Great British Energy Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 43-IV Fourth marshalled list for Committee - (14 Jan 2025)
The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)
My Lords, any noble Lords who were not able to speak on Monday and who wish to speak before the opposition spokesman may now do so.
Viscount Trenchard (Con)
At the point when the Committee decided to adjourn its deliberations on Monday, I was about to make a brief intervention in support of my noble friend Lady Noakes and the noble Lord, Lord Vaux. As my noble friend Lady Noakes explained, GBE will be a private company, which would normally allow it nine months in which to file its accounts. As my noble friend explained on Monday, Amendment 88 changes that to six months, in line with the requirement for public companies. GBE may not be a public company technically, but it certainly is a company of huge interest to the public. It is therefore obviously right that the company should be required to prepare its accounts in accord with the rules applicable to public companies, rather than taking advantage of the more lenient requirement applicable to private companies.
In his remarks in the House yesterday, the Minister said that he recognised that it was the role of the Opposition to scrutinise legislation. But I ask the noble Lord: is it not actually the role of the whole House to scrutinise legislation, including the Government’s own Back-Benchers? He probably did not mean it when he said that it was the role of the Opposition.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
The point was that I was responding to a comment made by the Opposition Chief Whip about scrutiny. But of course I very much take the point that this is a matter for the whole House. The very fact that my noble friend Lady Young spoke to this group shows how effective that scrutiny can be.
Viscount Trenchard (Con)
I thank the Minister for his kind explanation, which certainly clarifies that. As far as my interventions on Monday are concerned— I spoke at length and several times—I take issue with and very much resent being accused of having filibustered. If the noble Lord looks at my contributions, he will find that they were all different.
I suggest that one reason why there have been so many amendments to the Bill is that so little was included in it. It is very thin Bill, but it has £8 billion of public money. Many of us are puzzled that GBE is being established effectively with £8 billion of public money, whereas Great British Nuclear, which has no public money to speak of, continues to operate in a kind of silo. I recognise that the noble Lord attempted to reassure the Committee about how GBN and GBE will work together, but I do not think that they can be described as comparable organisations.
I had intended to support my noble friend Lady Noakes and the noble Lord, Lord Vaux, on Amendment 88, and I added my name to it. I think that it is necessary because although GBE is intended to be structured as a public company, it will have only one shareholder, the Secretary of State. As my noble friend explained on Monday—she is well known as an expert in these matters—we must be sure that GBE will be managed according to the standards that would be expected by shareholders in public companies. That is why changing the nine-month provision for filing accounts to six months is so necessary.
I have also added my name to Amendment 89, in the names of the noble Lords, Lord Vaux and Lord Cameron, and my noble friend Lady Noakes. It is particularly important that the accounts must comply with the stipulation in proposed subsection (d), to provide
“an assessment of the extent to which”
any investments made or partnerships entered into
“have encouraged additional investment by the private sector”.
It is clear that the very long incubation period for nuclear projects places them outside the criteria for many private sector investors, but some public investment can be effective in unlocking private investment through match funding, as the Rolls-Royce SMR programme has already shown.
I also support Amendment 92, in the name of my noble friend Lady Noakes and that of the noble Lord, Lord Vaux, which would ensure that the Comptroller and Auditor-General must audit GBE’s accounts.
Lord Roborough (Con)
My Lords, Amendment 88, in the name of my noble friend Lady Noakes, would require more timely publication of GB Energy’s accounts, in line with public rather than private company reporting. I also support Amendment 89, in the name of the noble Lord, Lord Vaux of Harrowden. On earlier groups I have addressed the limitations of private and public company reporting versus that of listed companies. I made that argument, given that taxpayers’ money, raised at great cost through tax increases impacting pensioners, farmers and all businesses in this country, is being invested. All this appears to have fallen on somewhat deaf ears with the Minister, who seems determined to avoid anything but the lowest level of scrutiny, transparency or accountability as to how GB Energy invests this, at least, £8.3 billion.
I also alluded to my comments in the debate on the King’s Gracious Speech and I remind the Committee of exactly what I said:
“it is private capital that has driven the rollout of renewables and infrastructure in our country, and it appears that Great British Energy will be targeting investments that private capital alone will not finance. That does not fill our Benches with confidence that these investments will necessarily be judicious. Please can the Minister assure the House that GB Energy will report on the performance of its investments regularly and in detail and that the Government will be held accountable in this House for the performance of those investments?”.—[Official Report, 18/7/24; col. 36.]
In response to this question, I received the following reply from the Minister, the noble Baroness, Lady Hayman of Ullock:
“The cost to the taxpayer of its set-up and investments will be carefully managed and monitored through Parliament, and investments will be subject to safeguards and risk assessments, similar to established public finance institutions”.—[Official Report, 18/7/24; col. 126.]
That answer may not have been the answer that I was looking for, nor the answer that I may be seeking today, which many amendments tabled to the Bill have also sought, but it does seem to offer at least some scrutiny through Parliament. It does not appear to me that the Minister here today is offering even that level of scrutiny in the Bill. His response in previous groups to amendments seeking this transparency and accountability has been:
“the existing reporting requirements are set out in the Bill, which makes provision for GBE to produce and publish an annual report and accounts”.—[Official Report, 13/1/25; col. 942.]
It is hard to disagree that the reporting requirements as determined by the Government are set out in the Bill. However, the point that these amendments, and many others already debated, make is that this is simply not adequate. One set of accounts published annually up to nine months after the year end, with the potential for minimal levels of detailed reporting, is effectively writing GB Energy a blank cheque, with next to no external oversight.
As other noble Lords have suggested to the Minister, if the Government were willing to table amendments to allow for greater scrutiny in a timely manner of the financial performance of investments, and the progress in achieving the overall objectives of increasing employment, reducing household electricity bills and reducing carbon emissions, I am sure that the Committee could be satisfied, without taking so much time making similar points. On previous groups the Minister has called this filibustering. That is an unfair characterisation, at least of the groups that I have taken part in. The Government have proven deaf to the Committee’s reasonable requests, but that will not make them go away.
I am particularly taken by Amendment 89 in the name of the noble Lord, Lord Vaux, and not in the least surprised to see that it has so many supporters. It avoids amendments to Clause 6, which the Minister has pointed out is the wrong place in the Bill for such amendments, and to which my noble friend Lady Noakes has given authoritative support, but it addresses key reporting requirements around the receipt of subsidies, reporting on individual investments, achievement of objectives and strategic priorities, and impacts on the wider financial ecosystem. For these reasons, I believe it is an excellent amendment. However, it may still be lacking by relying on the relatively lax Companies House requirements for limited companies, so I also support Amendment 88 in the name of my noble friend Lady Noakes to make reporting in line with that for public companies.
As I have argued in previous groups, in support of my noble friend Lord Petitgas, who is in his place, there is a strong argument that quarterly reporting should also be required, in line with the listing requirements for publicly traded companies. As I have pointed out, if companies worth less than £100 million can comply with this, I do not believe it is a challenge for the £8.3 billion-plus GB Energy. This would also impose more disciplined reporting on GB Energy’s investees.
Why is it that the Government are so resistant to GB Energy showing proper transparency and accountability, even less than the modest commitments that I read in my response to the King’s Speech? What do the Government fear, if they are so convinced that it is worth while taking so much taxpayers’ money and investing it in energy, which in theory will be a good financial deal for the taxpayer? Last year’s business-unfriendly Budget, despite the protestations that it was pro-business and pro-growth, fills us all with concern that this Government do not understand business.
Lord Cromwell (CB)
My Lords, I am not sure what the opposite of a filibuster is, but I am going to try. I add my support to Amendments 88 and 92. They are both simple, timely, consistent and robust: elements of good housekeeping, quite frankly.
I also add my support to Amendment 89. We need to draw lessons from the experience with the water industry, whose reporting was opaque. It simply was not transparent enough on key areas of its financial structuring. This amendment would tease out the things that people need to know—people who are not forensic accountants going through the balance sheets reported by companies. Therefore, I thoroughly endorse Amendment 89.
Lord Petitgas (Con)
My Lords, I too would like to voice my support for Amendments 88 and 89. I will be brief. The timing and regularity of this reporting seems to be normal, standard housekeeping. It is not onerous, and it is legitimate. On the substance, as I said on the previous day in Committee, this is not an operating company which would report, like Ørsted or others; this is a portfolio of investments. It would be a number of minority investments; this company will not be operating assets. The Member opposite seems to be sceptical, but it will be a collection of small investments. Therefore, it will be more complex to track, and it will be important that it is clearly stated in the accounts. Amendment 89 states that.
Lord Macpherson of Earl’s Court (CB)
My Lords, I add my support for Amendment 92. It is an important principle of public audit that institutions within the public sector are audited by the National Audit Office. Indeed, when I was at the Treasury, I spent many years trying to get the Royal Household and the Bank of England within the ambit of the National Audit Office, and finally I succeeded. Long may that continue.
Lord Offord of Garvel (Con)
My Lords, I speak in support of Amendments 88, 89 and 92, which stand in the names of my noble friends Lady Noakes and Lord Trenchard and other distinguished colleagues, including the noble Lords, Lord Vaux of Harrowden and Lord Cameron of Dillington. These amendments, although technical in nature, are vital to ensure that Great British Energy operates with the highest standards of transparency, accountability and good governance. This is not simply a matter of administrative precision; it is the fundamental issue of public trust.
Amendment 88 ensures that GBE files its reporting accounts within the same timeframe required of public companies under Section 442 of the Companies Act 2006. This alignment with established statutory requirements is essential. It demonstrates that GBE, although a public body, will not be afforded preferential treatment or lesser obligations than private enterprises. The public expect and deserve this parity, especially given GBE’s role as a steward of taxpayers’ funds.
Amendment 89 introduces additional requirements for GBE’s annual reporting accounts. Crucially, it provides the Treasury with the flexibility to define additional reporting requirements over time. This ensures that GBE can adapt to evolving priorities and maintain accountability as it grows. It is worth emphasising that comprehensive and transparent reporting is not an administrative burden; it is a cornerstone of effective governance. This amendment guarantees that GBE will meet not only the letter of the law but the spirit of public accountability. By ensuring this level of scrutiny, we are demonstrating a commitment to good governance that transcends political or ideological divides but sends a clear message that public funds and the public interest will always be protected.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to noble Lords who spoke in this debate, both today and in our deliberations on Monday. It seems quite a long time ago since then, and I am looking forward to a very constructive engagement today and welcome the contributions that all noble Lords are going to make.
Let me say at once that I very much understand the importance of information being provided in order to judge the performance of GBE and of it being held to effective account. There is no disagreement at all between me and other noble Lords on this. Noble Lords will know, as the noble Baroness, Lady Noakes, explained very clearly in her remarks on Monday, that her Amendment 88 requires GBE to file its annual reports and accounts within six months from the end of its accounting reference period. As she said then, and as noble Lords have repeated, this aligns with the Companies Act 2006 for public companies whose shares are publicly traded. Of course I agree that a six-month filing period is appropriate for public companies. Financial markets need up-to-date and timely information on the performance of a company, as do its range of stakeholders and shareholders, to help them make informed decisions when companies are seeking to raise capital.
I also understand why noble Lords wish this discipline to be applied to GBE, but it is a private limited company owned wholly by the Crown. It is not unreasonable for the Government to say that, on that basis, we should be in line with the Companies Acts requirements, which set a nine-month filing period for private limited companies. I should also say that this is an arrangement applied to most government-owned companies: for example, the National Wealth Fund, the National Energy System Operator and the Low Carbon Contracts Company. I know that the noble Baroness, Lady Noakes, was concerned about the filing deadline, but it is also the case that the vast majority of these organisations, government-owned companies, file their accounts well in advance of the statutory requirement.
I understand the point that the noble Viscount, Lord Trenchard, made about public interest in Great British Energy, and I welcome that. Indeed, I want GBE to be well-known and seen as spearheading the drive we wish to see in relation to Clause 3 and the statement of priorities in Clause 5. We wish GBE to be as successful as possible.
My point is that, in a sense, what is in statute in relation to the Companies Act is a minimum requirement because, as GBE is owned by the Secretary of State, it will be subject to the usual mechanisms that apply in the public sector. They are put in place to ensure that the public interest is discharged and proper public accountabilities are in place.
On Monday, the noble Lord, Lord Teverson, made an interesting point: one of the concerns some people have is that, because of GBE’s structure and because it is publicly accountable, it will be subject to a considerable number of the controls put in place for bodies that fall within public accountability. The key question is: can we ensure that GBE has sufficient operational independence to perform effectively in its work? There are a number of issues here around the way it will work in future.
I should also say that the annual report and accounts are not the only means of scrutinising the funding allocated to GBE. All funding to GBE must be voted on by Parliament; because of that, it will be scrutinised through the supply and appropriations debates in the other place.
Amendment 89 in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Noakes, proposes specific topics to be included in the annual reports and accounts of Great British Energy, as well as the granting of an additional power to His Majesty’s Treasury to require further information. I can confirm that much of the proposed content will already be included and publicly available in the annual report and accounts, as required by Clause 7, and will be laid before Parliament. As an example, the financial assistance details under new paragraph (a), proposed by this amendment, will be included in the accounts of GBE. Details are likely to include issued share capital and items on the balance sheet of the company, such as borrowing from government if that method has been utilised.
The noble Lord, Lord Vaux, and my noble friend Lady Young of Old Scone were concerned that Great British Energy would need only to follow the provisions of the Companies Act in preparing its annual report and accounts. However, I can assure them that that is not the case. GBE will adhere to the additional reporting requirements for government-owned companies over and above the reporting requirements under the Companies Act. These include the obligation to follow the Treasury’s directions on accounts through the powers extended in the Government Resources and Accounts Act 2000, laid out in the government financial reporting manual and related “Dear Accounting Officer” letters. The most recent of these account direction letters requires bodies to give a true and fair view of the state of affairs, including net resource outturn, the application of resources, changes in taxpayers’ equity and cash flows for the financial year.
Furthermore, GBE will be required to report on its governance around exposure to and risk of climate-related scenarios in its operations, as set out by the Task Force on Climate-Related Financial Disclosures. Finally, any future funding of GBE will be subject to agreement through a government spending review, or another mechanism, as the Government see fit.
Amendment 92 in the name of the noble Baroness, Lady Noakes, proposes to require the Comptroller and Auditor-General to be the external auditor of Great British Energy; I think she said on Monday that it is a probing amendment. I am very happy to reassure noble Lords in this case. It is already the case that the Comptroller and Auditor-General will be the external auditor of Great British Energy. The company will also need to comply with the provisions set out in the Treasury’s Managing Public Money document, which requires the Comptroller and Auditor-General to be the external auditor for non-departmental public bodies such as Great British Energy. The requirement will also be set out in the framework document for Great British Energy, which we will debate shortly.
Amendment 90A, in the name of my noble friend Lady Young, seeks to require additional reporting from Great British Energy. Again, I assure her that much of the information that she seeks will be provided in GBE’s annual report and accounts, as a matter of course. The annual report and accounts will include key achievements and milestones, general business information relating to its strategic direction, a review of the company’s performance, challenges and future outlook, as well as financial statements and resourcing levels. It will also include reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures.
GBE may also make more information available through reporting, such as when projects or investments are announced. We want to set this company up to be transparent and accountable, with a reporting regime appropriate to its company basis and status. The accountability of Ministers to Parliament for its performance will also be in place.
We very much take the point about the need for this organisation to be transparent and accountable. In the light of this debate, I will set out how this all comes together in detail and send a note to noble Lords. I hope that provides some greater reassurance.
Lord Vaux of Harrowden (CB)
I realise that Monday is quite a long time ago now and that the noble Lord has probably forgotten this, but I asked a specific question then. The impact assessment for the Bill says that, because the Bill does nothing but create the company, “no quantification of benefits” and costs
“has been provided at this stage”,
and that those benefits and costs
“will be subject to future spending reviews and business cases”.
I asked whether those future spending reviews and business cases would be made public.
Lord Hunt of Kings Heath (Lab)
I am not sure that I can answer that point in detail. The impact assessment is built around the legislation, rather than the future activities of GBE. May I take that specific question away? Clearly, the funding that the Government provide Great British Energy will have to be in the public domain and part of the normal process of dealing with a spending review and the financial consequences and flows of money that follow it. I am happy to look into that in more detail, if the noble Lord would like.
Lord Vaux of Harrowden (CB)
That would be very kind. The issue is that, if the Bill had been done in the normal way and included the detail of what GBE was going to do, the impact assessment would have covered those activities. However, those things are not included in the Bill so are not covered by the impact assessment. When the statement of strategic priorities and the detail of what the company will do are published, there will be no impact assessment on them, other than the spending reviews and business cases. It is important that they are made public, as if they had been part of the impact assessment that would have happened if this had been done in the usual way.
Lord Hunt of Kings Heath (Lab)
My Lords, as I said, I think we have acted properly with the impact assessment, which is based on the Bill. GBE has yet to commence its work. I have said that I will write to noble Lords detailing how we see GBE being held to account, in terms of its reporting and accountability, and I will add some more information about how that relates to the statement of strategic priorities in Clause 5.
Baroness Young of Old Scone (Lab)
I hope that in writing this note, which I welcome, the Minister will give us an account of how GBE will report on the strategic priorities set by the Government, and that they will include not just climate but environmental and biodiversity targets. They are the twin crises that GBE is helping to solve.
Lord Roborough (Con)
The noble Lord mentioned that the minimum requirement was the nine-month reporting window under the Companies Act. Could he give us an idea now of what he sees as a desirable reporting timeframe? If he would like to reflect, perhaps he could include those thoughts in his letter.
Lord Hunt of Kings Heath (Lab)
I do not think so. Clearly, there is a statutory requirement. All I was saying is that our experience in my department is that the bodies that have a similar discipline have generally reported well within that figure. I am certainly happy to say that one would always hope that an organisation such as this would report in a timely fashion, but I cannot go any further than that.
Lord Vaux of Harrowden (CB)
My Lords, the noble Baroness, Lady Noakes, regrets that she is not able to be here today, because this was scheduled after she already had other commitments, so, with the leave of the Committee, I will channel the noble Baroness to wrap up. I thank all noble Lords who have taken part in this constructive debate and the Minister for his constructive response.
Common themes are emerging throughout our discussions on the Bill, and the subject of transparency and accountability is probably the major one. I know that the noble Baroness will be disappointed by the response to shortening the reporting deadline to six months, which does not seem overly onerous. I was encouraged, I think, by what the Minister said about the reporting requirements and I look forward to receiving the letter he has spoken about. However, he did not refer in his answer to a couple of things that were in the amendment and are really important.
First, it is important that GBE reports on the investments it has made, and I do not think he mentioned that. Secondly, as a number of noble Lords mentioned, the key issue is that of additionality—in other words, what impact GBE is having on crowding-in private investment alongside the public investment. As I said on Monday, anyone can spend money. If this is to be in any way positive, it needs to attract private investment that would not otherwise have happened. It is really important that that is measured in the same way as it has to be by the National Wealth Fund. I think it is true to say that the National Wealth Fund, because it has the obligation to report on additionality, is actually performing rather well on additionality.
Lord Hunt of Kings Heath (Lab)
My Lords, I think I said by implication that I consider those matters that I would expect the company to report on.
Lord Vaux of Harrowden (CB)
I am reassured to hear that and I look forward to receiving the letter. We may need to come back to this, and I hope the noble Lord will be willing to sit down, discuss the overall questions around accountability and transparency and, I hope, put something forward himself that will strengthen what is, if I am honest, a somewhat thin Bill. With that, I beg leave to withdraw the amendment.
Lord Vaux of Harrowden
“Framework document(1) The Secretary of State must prepare a framework document which sets out the principles underpinning the relationship between the Secretary of State, Great British Energy and any other relevant public sector bodies.(2) The framework document must cover the operating and financial principles through which Great British Energy will pursue its strategic objectives and may include such other matters as the Secretary of State determines.(3) Relevant public sector bodies are public sector bodies and government departments which the Secretary of State considers will or may have a relationship with Great British Energy.(4) The Secretary of State may amend the framework document at any time.(5) The Secretary of State must consult Great British Energy before preparing or amending the framework document.(6) The Secretary of State must lay a copy of the framework document or any amended framework document before Parliament as soon as practical after it is finalised.”Member’s explanatory statement
This amendment requires the Secretary of State to prepare and publish a document setting out the operating and financial principles which Great British Energy will use.
Lord Vaux of Harrowden (CB)
My Lords, with the leave of the Committee I shall move Amendment 93 at the request of the noble Baroness, Lady Noakes, who, as I say, is unable to attend today. I will speak also to Amendment 121A, also in her name.
Amendment 93 says:
“The Secretary of State must prepare a framework document”
to cover
“the relationship between the Secretary of State, Great British Energy and any other relevant public sector bodies … The framework document must cover the operating and financial principles”,
at least, to be adopted by Great British Energy. Once finalised, the framework document must be laid before Parliament.
Amendment 121A goes a little further and would defer commencement of the Act until the framework document has been laid before Parliament. The noble Baroness, Lady Noakes, and I have several times contrasted the parliamentary passage of the UK Infrastructure Bank Bill with that of this Bill. In particular, she has raised the absence of a draft framework document for Great British Energy. All we know in relation to GBE is that the founding statement published for it last July said that a framework document would be established in due course. The Minister has not yet given any indication of the timing for that framework document.
I would not normally expect a Bill establishing a public sector body to contain a requirement for a framework document. That is because it is a document routinely put in place between the Government and public bodies, and there should be no question of a body commencing operation until all the details are in place. Hence, when we scrutinised the UK Infrastructure Bank Bill, an advanced draft was made available to those of us taking part in the Bill, which was extremely helpful in our debates. We knew the detail of what the Government were planning, and how they were intending to deliver it, which is missing from this Bill.
Although framework documents have no legal force, they set out in some detail what the Government expect of the new body. Sometimes they cover detail that could have been included in primary legislation, but usually the detail is of a nature likely to change over time and, hence, is inappropriate for statute. The important point, however, is that considerable thought and work are put into the contents of that document.
As we have discussed, it is clear that with GBE, the Government have not yet put in all the hard work on how it is to operate in practice, and what rules and restrictions will be necessary. The Minister has confirmed that this is under way and explained the thinness of the Bill on the basis that the Government had to get on with legislating, and that details would follow. That is not a sound basis for legislating, and failure to provide fuller details on things such as the framework document or strategic priorities treats the process of legislative scrutiny in a somewhat disrespectful manner. We have already discussed the concerns raised in that respect by the Constitution Committee.
I will quickly run through the key contents of the framework document for what is now the National Wealth Fund—what was the UK Infrastructure Bank—which will illustrate the things that we should have expected to see advanced drafts of by now. It sets out the strategic objectives for the National Wealth Fund. These might, or might not, be the same as required by Clause 5 of this Bill. We have seen no draft or even an outline of the strategic priorities that the Secretary of State will set under Clause 5, so we do not know whether to expect strategic objectives in the framework document. Objectives and priorities ought to be different things, but we are completely in the dark at the moment.
There are a number of operating principles, which are extremely important. They include the requirement to make a positive financial return over time, and a double bottom line—a phrase used frequently during passage of the UK Infrastructure Bank Bill, another complicated Bill—of achieving both the strategic objectives and financial return. We ought to know the financial objectives of GBE by now, especially in view of the open-ended financial assistance power in Clause 4, which might mean that GBE will not be required to make a financial return.
Another operating principle is that of additionality, by prioritising investments where there is an undersupply of private sector finance. The noble Baroness, Lady Noakes, asked whether additionality applied to GBE at Second Reading but did not receive a suitable answer, and I have raised this principle a number of times, including in the previous group. It would be helpful if the Minister spoke a little about the expectations for additionality for GBE. It is another fundamental question that Parliament ought to be informed about before allowing this Bill to become law.
Another section of the framework document sets out investment principles. It describes the kinds of investment that are to be undertaken and those which are not allowed. Not only must individual investments support its core objectives, they must also be intended to deliver a positive financial return, and to crowd in significant private capital. We have no idea what the guiding principles for investments made by GBE are. There is also a lot in the framework document on governance and other matters.
The key questions are whether we will see a framework document and when. I would not go as far as the noble Baroness, Lady Noakes, in Amendment 121A, which would delay commencement, but it is essential that we see a framework document as early as possible. Given the lack of detail in the Bill, it is important that the company should have to do that. I beg to move.
Viscount Trenchard (Con)
My Lords, I rise to follow the noble Lord, Lord Vaux, in speaking to Amendment 93, which he moved on behalf on my noble friend Lady Noakes. I have also added my name to this amendment.
As has been said several times in our debates, this is in essence a framework or enabling Bill but one that gives a large number of Henry VIII powers to the Secretary of State. A requirement to produce a framework document setting out the operating and financial principles that GBE will use would be a significant improvement to the Bill, as the noble Lord, Lord Vaux, explained so eloquently. It is essential that the principles underpinning the relationship between the Secretary of State and GBE should be publicly understood and supported. The arguments that I have previously used in relation to my Amendment 86A also apply here; other relevant public bodies, as mentioned in that amendment, clearly include GBN, NWF, NESO, Ofgem and Mission Control.
I also support my noble friend Lady Noakes in her Amendment 121A, which I think is justified in the circumstances, but I would certainly like to hear the Minister’s view on it. Amendment 121A would ensure that the framework document is laid before Parliament before the Act comes into force.
Earl Russell (LD)
My Lords, I shall speak briefly on this group of amendments.
I generally give my support to Amendment 93. I understand that these things are being done quickly and urgently to get GBE established and that the Government need to get that done, but there is a general lack of detail in the Bill and we do not have the framework agreement. If the Minister could update the Committee on where that framework document is and what stage it is at, that would be useful. In the interests of trying to find a compromise and a way forward on these issues, I do not know whether it might be possible for the Minister to provide the equivalent of heads of terms or to say something from the Dispatch Box about what he would expect the framework document to cover or to send us an outline of what is likely to be in that document. We are keen to support the principles of this Bill, but the Bill is extremely short and lacks detail.
On the other side of the fence, there is a slight feeling that we are being asked to approve things without knowing what it is we are approving. If it were possible to find a way forward on these issues before Report, that would be appreciated, but I am interested to hear from the Minister what stage these documents are at and what impediments there may be beyond the Minister’s control in these matters.
Lord Offord of Garvel (Con)
My Lords, I thank my noble friend Lady Noakes, in her absence, for her amendments in this group. In fact, this amendment, Amendment 93, ties closely with Amendment 125 in my name, which would ensure that this Bill does not come into force until a financial framework document has been published. Together, these amendments address an essential issue in the governance of GBE: the need for proper financial oversight and clear frameworks that ensure that this body is held accountable. That is the reason why I support Amendment 93 and why it is so critical to the Bill—because it would require the Secretary of State to prepare a framework document that sets out not just the operating principles but the financial principles through which GBE will pursue its strategic objectives.
Without this clear framework, GBE would operate without the financial clarity and accountability required to protect public funds and to ensure that GBE’s financial practices align with the UK’s broader energy strategy. A financial framework is not just a bureaucratic detail; it is fundamental because the energy sector is complex and fast-moving. GB Energy will be responsible for substantial public investment. Without this financial framework, there is a risk of financial mismanagement and inefficiency or lack of transparency. The framework simply provides clear guidelines on budgeting, expenditure, revenue generation and risk management; it also ensures that GBE’s financial decisions align with the Government’s energy and climate goals, such as achieving net-zero emissions and maintaining energy security.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Baroness, Lady Noakes, and the noble Lord, Lord Vaux, who spoke in her absence. As the noble Baroness raised earlier on in our debates, her amendment inserts an additional clause requiring the Secretary of State to prepare and publish a framework document setting out the principles underpinning the relationship between the Secretary of State, my department and other relevant public bodies and also requires financial and operating principles to be included in that document.
Lord Vaux of Harrowden (CB)
In effect, under the Bill GB Energy will take a chunk of the activity of the National Wealth Fund—approximately a third of the total value, in fact—and put it into another entity. As I said, the National Wealth Fund’s framework document includes quite a lot of information around requirements to make financial returns and, in particular, the additionality principle. Therefore, because we are, in effect, moving a chunk of the National Wealth Fund’s activities into a different entity, it would presumably be appropriate that that remains subject to fairly similar levels of governance and control. Could the Minister perhaps say a little about the expectation on financial returns and additionality, which he has not mentioned in his response so far?
Lord Hunt of Kings Heath (Lab)
My Lords, by implication, we would expect the organisation to be as transparent as possible and to cover the sort of areas that the noble Lord mentioned. It is also fair to say that, given the comparisons being drawn between Great British Energy and the UK Infrastructure Bank, in the case of the UKIB, the framework document was published before Royal Assent. The point is that the organisation was operational before Royal Assent, but this Bill is being brought to Parliament before we have operationalised the company, so there is a distinction. As I said, noble Lords can be reassured that there will be a stringent framework document to ensure proper accountability. I am searching to find something else to say to give comfort, but I have to say that this is as far as we can go. Having said this from the Dispatch Box, it has to happen.
Returning to the part of the amendment that would require the relationship between GB Energy and other relevant public bodies to be included in the framework agreement, noble Lords will know that that is not typically part of a framework document, but GB Energy’s relationship with relevant public sector bodies will of course be part of delivering its objectives. Again, the partnerships will be undertaken in accordance with GB Energy’s operating principles and, where appropriate, we will provide definition to those relationships in the upcoming statement of strategic priorities. As part of its annual reports and accounts, we will of course expect GB Energy to report on activities undertaken as part of its public sector partnerships. We expect it to enter into a number of partnerships or relationships with other public bodies, but that is not appropriate for the framework document.
The other point to make here is that GBE will be accountable to Parliament, with a statement of strategic priorities laid before Parliament, and the accounting officer of Great British Energy, and Ministers, will be accountable to Parliament for the work and performance of the company. Members of your Lordships’ House will be able to ask questions and debate, and I have no doubt that Select Committees will wish to examine the chair and chief executive of the organisation from time to time, which seems wholly appropriate and will provide the public accountability that needs to go alongside the normal accountability that a private company would expect to operate, within the legislation that it will be covered by. We need to remember that it is also publicly accountable alongside the accountability that it needs to discharge as a private company.
The issue I come back to is that we have to ensure that it has enough operational independence. A push-back from noble Lords might be to ask: will it be overly constrained? We have to get the balance right between proper accountability and reporting and—dare I say it —what I hope will be an entrepreneurial approach to the formidable task it is being given. That is why the appointment of the incoming chair has been so important —to give us that expertise and experience.
As noble Lords will see, it is very difficult for us to agree to Amendment 121A, which would defer commencement of most of the provisions in the Bill until a framework document had been laid before Parliament. We do not think it possible to produce a framework document without the active involvement of the company itself. That is probably as far as I can go on this interesting area, but I can assure noble Lords that there will be a fully fledged framework document, which I think will cover all the issues that noble Lords are concerned about.
Lord Vaux of Harrowden (CB)
My Lords, I thank all noble Lords who have taken part in this short debate, and the Minister for his response, which is helpful and encouraging—I understand his point. However, I think he put his finger on the fundamental problem with the Bill, which is precisely what he said: the company is being established before we really know what it is going to do and before it starts to operate. Therefore, there is no scrutiny of those things at the moment. When he says that there is accountability through, for example, the statement of strategic priorities, it is not strictly true. It gets laid before Parliament, but there is no debate, approval or anything. The framework document will not even be laid before Parliament.
Lord Hunt of Kings Heath (Lab)
My Lords, of course, that is a fair point but, equally, I would say, as a Minister accountable to Parliament, that the opportunity for noble Lords to ask questions and take part in debates is considerable. I would expect that GBE and any statement of priorities will be fully part of the rough and tumble of life in Parliament. Anyone who has been involved in a company organisation such as that will know that parliamentary accountability really does bite and is effective.
Lord Vaux of Harrowden (CB)
The Minister is right on that—I cannot disagree—except, again, that accountability is only as good as the information on which one bases it. If there is no information, or if it is really thin, it is hard—
Lord Hunt of Kings Heath (Lab)
My Lords, I do not want to intervene constantly, but I think noble Lords will be awash with information about GBE, its performance and activities.
Lord Vaux of Harrowden (CB)
I am very encouraged to hear that but there is nothing in the Bill that says that. If one is honest, what tends to happen is that if something is really successful, we will be awash with information telling us how successful it has been. If it is less than successful, I wonder how much information we will see. Fair enough, but there is a wider discussion to be had between now and Report on transparency and accountability, and I hope the Minister will be open to that. With that, I beg leave to withdraw Amendment 93.
Lord Offord of Garvel
“Review of effective delivery(1) The Secretary of State must appoint an independent person to carry out reviews of the effectiveness of Great British Energy in—(a) delivering its objects under section 3,(b) meeting its strategic priorities under section 5, and(c) complying with any directions given under section 6.(2) After each review, the independent person must—(a) prepare a report of the review, and(b) submit the report to the Secretary of State,as soon as is reasonably practicable after the completion of the review.(3) The independent person must submit to the Secretary of State—(a) the first report under this section within the period of 12 months beginning on the day on which this Act comes into force, and(b) subsequent reports at intervals of no more than 12 months thereafter.(4) On receiving the report, the Secretary of State must, as soon as is reasonably practicable in each case,—(a) publish the report,(b) lay a copy of the report before Parliament, and(c) prepare and lay before Parliament a response to the report’s findings.(5) In this section, references to an “independent person” are to a person who appears to the Secretary of State to be independent of—(a) the Secretary of State, and(b) Great British Energy.”Member’s explanatory statement
This amendment would require that the Secretary of State appoints an independent person to review the effectiveness of Great British Energy in delivering its objects, meeting its strategic priorities, and complying with its directions.
Lord Offord of Garvel (Con)
My Lords, I shall move Amendment 94 and speak to the amendments in this group, which, once again, address the review, scrutiny and governance of a publicly owned company.
It is alarming that so many in this House have had to table so many amendments to ensure that GB Energy undergoes proper independent review and governance. We find ourselves in the unfortunate position in which provisions to ensure the thorough review and governance of GB Energy are missing from the drafting of the legislation. This is rather strange. Why should publicly owned companies, funded by billions of pounds, not be subject to reviews by independent bodies or have to report on their successes or failures? The incoming chair himself has stated that “independently run” will mean “excellent governance” and that he will ensure that this is the case, but how? Although the Minister claims that these amendments, which would indeed ensure excellent governance, do not need to be included in the Bill, I strongly disagree. He claims that there will be many opportunities for review by the Secretary of State and, ultimately, for the usual sort of public scrutiny, but how will this be the case when the Bill does not include a single measure that requires GB Energy to be reviewed or allows for public scrutiny?
I am not alone in questioning the lack of governance to which GB Energy is presently subject. Marc Hedin, head of UK and Ireland research at Aurora Energy Research, also asked:
“what are the governance arrangements to ensure that Great British Energy carries out its duties and focuses on its remit? ”.—[Official Report, Commons, Great British Energy Bill Committee, 8/10/24; cols. 20-21.]
Amendment 94 in my name seeks to address this shortcoming. It requires the Secretary of State to appoint an independent person to review the effectiveness of GBE in delivering its objects, meeting its strategic priorities and complying with its directions. The amendment is closely aligned with Amendment 103, in the names of the noble Lords, Lord Vaux of Harrowden and Lord Cameron of Dillington, and my noble friend Lady Noakes. While demanding an independent review of the success or failure of GB Energy in achieving its objects, the amendment neatly requires a review of the company’s impact on private investment.
I draw your Lordships’ attention to Section 9 of the UK Infrastructure Bank Act, entitled, “Reviews of the Bank’s effectiveness and impact”. Under that section,
“The Chancellor of the Exchequer must appoint an independent person to carry out reviews of … the effectiveness of the Bank in delivering its objectives”,
and the results must be laid before Parliament. If the UK Infrastructure Bank—now known as the National Wealth Fund—has to undergo an independent review of its performance, why should GBE not face the same? It does not make sense. The Great British Energy Bill is almost a carbon copy of the UK Infrastructure Bank Act but with one glaring difference: provisions to ensure sufficient governance.
I hope that the Minister has listened carefully to the concerns I have raised and will be receptive to the worries other noble Lords will undoubtedly raise on this issue. I beg to move.
Lord Vaux of Harrowden (CB)
My Lords, I rise to speak to Amendment 103, and thank the noble Baroness, Lady Noakes, the noble Lord, Lord Cameron of Dillington and the noble Viscount, Lord Trenchard, for their support. As we have heard, once again we are returning to transparency and accountability.
Amendment 103 is similar to Amendment 94, which has just been introduced by the noble Lord, Lord Offord, but with some important differences. As we have discussed before, and as the noble Lord, Lord Offord, has just mentioned, most of this Bill has been copied across from the UK Infrastructure Bank Act, but with most of the transparency and accountability provisions removed. In particular, Section 9 of that Act, which provides for independent reviews of the effectiveness and impact of the bank—now the National Wealth Fund—has been omitted.
The Minister has previously explained that the reason for this omission was that no such reviews were included in the Energy Act in respect of Great British Nuclear, and he feels that this is the precedent which should apply here. That argument holds no water at all. Great British Nuclear is a completely different entity, with completely different activities. It has a clearly defined and specific role initially to administer the process to select which small modular reactor technology the UK will choose. It has a relatively small budget—I think it was £157 million initially—and it is not intended to invest directly in those technologies. Great British Nuclear has an important role, but it is very different to what is apparently planned for GBE.
GBE will, in effect, take over a substantial and important area of the National Wealth Fund’s activity, investing directly in projects and businesses. It has an initial budget of £8.3 billion, which is nearly a third of the National Wealth Fund’s budget. It is worth reminding noble Lords that there is no limit in the Bill on how much public money GBE can spend. Indeed, the activities of GBE and the National Wealth Fund are so close that, initially, the National Wealth Fund will carry out the activities of GBE on its behalf, so let us drop this pretence that GBE is like Great British Nuclear; it is not. GBE is taking over a part of the National Wealth Fund’s activities and has a substantial budget. A body with the ability to spend billions of pounds of public money should be subject to rigorous transparency and accountability, and not just to the Treasury and the Secretary of State. It must, therefore, be appropriate for GBE to have to follow at least equivalent accountability disciplines to the National Wealth Fund. It is doing very similar things.
Amendment 103 is an almost direct copy of the independent review process that the National Wealth Fund is subject to. That arose from lengthy debate during the passage of the UK Infrastructure Bank Act and was supported by the Minister’s party at the time. It is not clear why, in government, they have decided to omit it from the Bill. Accountability seems to be a good thing, so long as it does not apply to them.
For GBE, I have changed the provision slightly from how it is in the UK Infrastructure Bank Act, in two ways. I have limited the scope to reporting only on how GBE has met its objectives and how well it has encouraged private sector investment alongside its activities. This latter point—additionality—is critical, as I have mentioned before. I do not have time to get into the details of crowding-in and crowding-out theory, but if all that GBE does is invest in projects which could easily have been financed by the private sector, that would be a complete waste of taxpayers’ money. Indeed, it would be actively damaging, as it would undermine the emergence and growth of a thriving industry providing the finance for our move to net zero.
We had lengthy discussions around the additionality principle during the passage of the UK Infrastructure Bank Act. I asked the Minister to comment on it in a previous group. He has still not commented in any detail, but it is critical. I would like to hear from the Minister what the expectations of GBE are in that respect. The Government have stressed the importance of it, and I have referred previously to the £1 of public money capitalising £3 of private investment that has been claimed. Crowding in is fundamental to its success, so it should be part of the measurement and review of GBE’s performance.
The second tweak I have made to the section from the UK Infrastructure Bank Act is on timing. The 2023 Act requires that the first independent report should be after seven years and then every five years. Infrastructure is by nature long-term, so those timeframes made sense in that context. However, GBE is intending to have decarbonised the power sector by 2030, in just five years’ time, so we should logically be reviewing progress before then. I have suggested reporting every three years; that is probably the major difference between my Amendment 103 and Amendment 94 of the noble Lord Offord, which proposes an independent report every year. I think an annual independent review is probably unduly onerous, but we need an independent progress review before the end of the target period of 2030, so I hope that three years is an acceptable compromise. However we do it, as currently drafted, the Bill falls woefully short on transparency and accountability.
I hope that the Government look seriously at having an independent review of effectiveness. It was hard-wired into the UK Infrastructure Bank Act for good reason: routine annual reports and accounts are simply not a good vehicle for a deep dive into the effectiveness of what are often quite complex investments and other financial activities. A separate, independent review was a good idea for what is now the National Wealth Fund, and I cannot see how a valid distinction can be made between the two organisations. The Government should want to ensure that they both operate equally effectively. Again, I would be very happy to discuss this further with the Minister and I hope that he is receptive to strengthening these aspects of the Bill, just as he and his party, when sitting on the other side of the Chamber, were on other Bills including the UK Infrastructure Bank Bill.
I say in passing that I support Amendment 102 of the noble Earl, Lord Russell, which requires a biennial report on GBE’s relationship with other public sector bodies. We have talked about this previously and it is another example of the opacity that currently surrounds GBE. In particular, I have no idea what its relationship with the Crown Estate means in practice, as well as that with Great British Nuclear and the UK Infrastructure Bank. It would be very desirable to have reports on how those relationships would work.
Viscount Trenchard (Con)
My Lords, I support my noble friend Lord Offord’s Amendment 94, to which I have added my name. I have also added my name to Amendment 103 in the names of the noble Lords, Lord Vaux and Lord Cameron, and my noble friend Lady Noakes.
The noble Lord, Lord Vaux, made the same point that I tried to make on Monday much more eloquently than I did: GBE and GBN are not comparable institutions. Unfortunately, it seems that the Minister’s department does not recognise that. I refer to the Explanatory Notes at page 6, paragraph 22. The power to give directions in the hands of the Secretary of State
“is consistent with the power that the Government has to direct comparable institutions, for example: the Department for Energy Security and Net Zero has a statutory power to direct Great British Nuclear, although, to date, this has never been used”.
I repeat the point made by the noble Lord, Lord Vaux, that, despite what this says, I cannot think that they are comparable institutions.
Both Amendments 94 and 103 require an independent person to carry out a review of GBE’s effectiveness. Of the two, I prefer Amendment 103, which requires the independent person to review the extent to which investments by GBE have encouraged private sector investment in those projects. Amendment 94 requires an annual independent review, whereas Amendment 103 requires such a review only once every three years. Perhaps we could compromise at two years.
I have also added my name to Amendment 102, in the name of the noble Earl, Lord Russell. This requires GBE to report on its relationships with other connected bodies and is, to some extent, similar to some of the other amendments we have debated. It is obviously a requirement of working together on strategic objectives and directions that GBE should maintain excellent relationships with its stakeholders. One of the ways to achieve that would be by adopting the noble Earl’s amendment, and I look forward to hearing him speak to it and to hearing the Minister’s response.
Earl Russell (LD)
My Lords, I rise to speak to my Amendment 102 in this group, which concerns independent review and governance. It would insert a new clause after Clause 7 on Great British Energy stakeholder relationships. To be honest, it is a bit of a probing amendment and one that is looking for a bit of reassurance from the Minister.
The amendment argues:
“Within one year of the day on which this Act is passed, and every two years thereafter, Great British Energy must publish a report regarding its relationship with … Great British Nuclear … the Office of Gas and Electricity Markets (Ofgem) … National Energy System Operator (NESO) … the UK Infrastructure Bank … the Crown Estate”.
Obviously, it is essential that Great British Energy publishes reports and that these are available. It is important that we have a good understanding of how Great British Energy is working in practice. That involves understanding how it is establishing its working relationships alongside other partners and fulfilling its missions and goals, as we work towards net zero. It extends to objectives and joint projects and asks, “What problems are happening?” These are all key issues in the energy transition, which is itself a complicated business that involves lots of partner organisations and joint and crossover responsibilities. This is already a crowded space—or a tangled web, if you like—in which Great British Energy is being created. Indeed, the delivery of GB Energy’s goals will happen only if the new organisation builds strong and lasting relationships that develop well and help create both joint working and good outcomes.
I want to say a word about the Crown Estate Bill, if I may. It is the cornerstone of GB Energy’s relationship with the Crown Estate; their partnership was announced on the same day that GB Energy was created. Clearly—certainly for the initial part of GB Energy’s life—that partnership will be about developing floating offshore wind with the Crown Estate. As part of the Crown Estate Bill, an amendment was agreed in order that the Crown Estate produces an annual report on its relationship with GB Energy. So that is already happening on the Crown Estate side. I ask the Minister to give an assurance that, from the Government’s point of view, there is no reason why that requirement would not be mirrored on GB Energy’s side. I cannot see one; it seems like common sense to me. As others have said, reporting is a general issue running across this Bill.
I note what the Minister has said today in relation to group 10. I also note what he has said about the possibility for ongoing parliamentary scrutiny. Ministers are responsible, of course, for example at Question time. As the Minister has confirmed today at the Dispatch Box, GB Energy will be subject to scrutiny by all the Select Committees across both Houses of Parliament, but it is important that these relationships are reported on via an annual report. I would like to hear some reassurance from the Minister on that.
I turn briefly to the other amendments in this group. As we have heard, Amendment 94 in the names of the noble Lord, Lord Offord of Garvel, and the noble Viscount, Lord Trenchard, would require the Secretary of State to appoint an independent person to review annually the effectiveness of Great British Energy in delivering its objectives, meeting its strategic priorities and complying with its directions. The independent review would be required to cover Clauses 3, 5 and 6 of the Bill.
I would be interested in the Minister’s response to this amendment. My worry is that this would be overly burdensome for the organisation. I am not certain that I was able to find another comparable organisation where these conditions applied, so my concern is whether we are asking for something that is not on a level playing field with other, similar types of organisations. I note as well that strategic directions can be given and, as I said, there are also other methods of scrutiny, so it would be the Minister’s right, at any point, to give the strategic direction for that to happen.
Amendment 103 in the name of the noble Lord, Lord Vaux of Harrowden, would require an independent review of the effectiveness of Great British Energy in achieving its objectives and the extent to which it had encouraged private investment. But this would be every three years. I was interested to hear what the noble Lord said in relation to the UK Infrastructure Bank. Again, my worry is whether this is a level playing field, but I was interested that the noble Lord said that that is part of that organisation and how it works. That makes me more inclined to lend support to his amendment.
Lord Vaux of Harrowden (CB)
I am sorry to interrupt the noble Earl. This was lifted directly, almost word for word, from the relevant legislation, the UK Infrastructure Bank Act.
Earl Russell (LD)
I thank the noble Lord. I would be keen to hear what the Minister has to say in response to that amendment.
Lord Hunt of Kings Heath (Lab)
My Lords, this has been a very interesting debate and I am grateful to noble Lords for what they have said. I will start with Amendment 102, tabled by the noble Earl, Lord Russell, and supported by the noble Viscount, Lord Trenchard. As he said, the amendment focuses on Great British Energy’s relationships with its key stakeholders and would require the company to publish a report every two years detailing its relationship with a number of named public bodies.
As I have already said, we of course expect and want Great British Energy to enter into a number of partnerships or relationships with other public bodies. This will include public bodies beyond those highlighted by the noble Earl, including, for example, those operating in the devolved Administrations—although I agree with him very much about the importance of the relationship with the Crown Estate.
I think it was implied in what I said earlier that we are absolutely certain, as part of the rigorous reporting requirements that the organisation will need to take part in through its annual reports and accounts, that it will report on activities undertaken as part of these partnerships. That seems to me a perfectly sensible request, which I can affirm readily. In view of that, I am not sure that you need a separate report, but we can make it very clear to GBE that we expect it to report on this regularly. We have already publicly committed to setting out how Great British Energy and the National Wealth Fund will collaborate and complement each other. I can assure noble Lords that we have made the same commitment on Great British Energy’s relationship with Great British Nuclear.
In terms of Great British Energy’s relationship with Ofgem and the National Energy System Operator, again, we would expect GBE to be subject to the same legal and regulatory frameworks as other entities. Clearly, when it comes to the Crown Estate, I readily say that, of course, GBE will report on its relationship, just as the noble Earl said. The Crown Estate will be doing similar, and we hope that there will be a consistency of approach in their reports. I am sure that there will be.
Turning to Amendments 94 and 103, which would require independent reviews of Great British Energy’s effectiveness, I thank the noble Lords, Lord Offord, Lord Vaux and Lord Cameron, and the noble Baroness, Lady Noakes, for putting their names to them. We all agree that Great British Energy needs to be accountable, transparent and clear about how it is delivering against its objectives and the statement of strategic priorities. The Bill already ensures that GBE will provide regular updates through its annual reports and accounts. These documents will be laid before Parliament, ensuring public accountability. Clause 5 provides that GBE must “act in accordance” with the priorities set out by the Secretary of State. To ensure this, Great British Energy must publish a strategic plan on how it will deliver those priorities, and it will update this plan regularly.
On the question, generally, of a review, I certainly understand the point that noble Lords have made and agree that reviews are important. I am prepared to consider the principle of a review between Committee and Report. I would not want to get into a debate about how regular those reviews should be. It is important that GBE has a good run before it is subject to such a review. Equally, I do not think you want a review happening on a regular annual basis because that would detract from its ability to perform effectively, but I understand the principle of a review. I will take this away without commitment at this stage, but I am happy to talk to noble Lords between now and Report about it.
Coming back to additionality, we obviously agree that it is an important principle, and we would expect Great British Energy to learn from the UKIB/National Wealth Fund approach. Of course, GBE has rather a wider role than the National Wealth Fund, particularly in that it is not just an investor but a developer, and it has an important future role to play in trying to get rid of some of the barriers to investment that we have seen in the energy sector.
Having said that, I think additionality will be covered. Equally, we accept that undertaking reviews from time to time is important. But they should not be done so frequently that they lose impact in what they are there to do. I hope noble Lords will accept that I have tried to be constructive in my response to these amendments.
Lord Offord of Garvel (Con)
I thank noble Lords for their contributions to the debate on this group, and I thank the Minister for listening to these concerns, which, as always, are to do just with the review and governance of GB Energy for it to be held to rigorous and proper account. I thank the Minister for considering how he deals with this. In the meantime, therefore, I beg leave to withdraw the amendment.
Earl Russell
“Budget report(1) Great British Energy must publish an annual budget report and send it to the Energy Security and Net Zero Committee, or any successor Committee, of the House of Commons.(2) This report must include but is not limited to—(a) a breakdown of current and expected funding sources;(b) spending per sector;(c) grid spending;(d) future spending;(e) estimations of future profitability.(3) A representative of Great British Energy must appear before the Energy Security and Net Zero Committee, or any successor Committee, if requested by the Committee.”Member’s explanatory statement
This amendment requires GBE to publish an annual budget report.
Earl Russell (LD)
My Lords, in moving Amendment 95, I will speak also to my Amendments 96 and 97, on accountability to Parliament. This group is all about GB Energy reporting to Parliament. As I have said, the Bill is quite short and some bits are missing, so I think noble Lords are just looking for as much reassurance as the Minister can give on these matters.
As the Bill stands, there are no real basic requirements for GB Energy to produce an annual report, or requirements for it to report to Parliament, beyond those in Clause 7 and what the Minister has said at the Dispatch Box today. I note that GB Energy will be subject to the same general reporting as other arm’s-length government organisations.
My Amendment 95 would ask GB Energy to publish an annual budget report, which would be sent to the Energy Security and Net Zero Committee or a successor committee of the House of Commons. That report must include but not be limited to,
“a breakdown of current and expected funding sources … spending per sector … grid spending … future spending … estimations of future profitability”.
It goes on:
“A representative of Great British Energy must appear before the Energy Security and Net Zero Committee, or any successor Committee, if requested”.
Amendment 96 says:
“Great British Energy must publish an annual report and send it to the Energy Security and Net Zero Committee, or any successor Committee, of the House of Commons”,
and that that report
“must consider Great British Energy functions and activity in the contribution to the following … supporting local communities and economies … the achievement of the United Kingdom’s climate and environmental targets … the relationship with The Crown Estate … a just transition to green energy … a jobs and skills transition into the green economy”.
It would also provide that Great British Energy must appear before that committee if requested.
Amendment 97 would require GB Energy to commit to an ongoing sustainable development review of its activities. It states:
“Great British Energy must keep under review the impact of their activities on the achievement of sustainable development in the United Kingdom”.
This would require GB Energy to keep under constant review the impact of its activities on sustainable development goals, as recognised by the United Nations, the Commonwealth and other bodies that refer to human rights developments, which aim to meet the economic, environmental and social needs of the present, while also ensuring the ability of future generations to meet their own needs.
At the outset I acknowledge to the Committee that my amendment is a direct copy of one tabled by the noble Baroness, Lady Hayman, and so skilfully negotiated with the noble Lord, Lord Livermore, the Financial Secretary to the Treasury, as part of the Crown Estate Bill. It was agreed as a government amendment to that Bill as it left your Lordships’ House. I wish to put on the record my thanks to both of them for their work in getting the amendment into the Bill. My reasons for bringing the amendment here again are, as I said, simply to mirror the other Bill, because the two organisations are so closely interlinked. For me, this is a minimum backstop amendment. I have added my name to Amendment 116, in the name of the noble Baroness, Lady Hayman, and I continue to support it, but I wish to make clear that if that amendment falls, this one is a kind of backstop.
My amendments are relatively straightforward, so I will turn to the other amendment in this group, Amendment 117, in the name of the noble Baroness, Lady Bloomfield of Hinton Waldrist. This would hold Great British Energy accountable to the relevant parliamentary committees of both Houses of Parliament.
The Minister has said—I already suspected that this would be the case with an arm’s-length body—that this would be subject to parliamentary scrutiny. It is good that he has confirmed that from the Dispatch Box. I just wanted to indicate my full support for the amendment and the principles that it sets out. It is obviously important that all bodies that the Government set up should be subject to parliamentary scrutiny from the Select Committees.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I shall speak to the amendments in this group, which contains amendments in my name and those of the noble Earl, Lord Russell, one of which he moved. I thank the noble Earl for introducing this group; I appreciate the sentiment and spirit of his amendments, and his support for mine.
I do not wish to repeat noble Lords’ arguments from previous groups, but these amendments again seek to shape the governance, accountability and sustainability of the proposed Great British Energy entity. They have been drafted in line with the values of responsible governance, fiscal prudence and national interest, so, although I will not repeat his arguments, or those of my noble friend Lady Noakes from earlier, I wholeheartedly agree with the comments made by my noble friend Lord Roborough on the first group.
On Amendment 95, which would require GBE to publish an annual budget report, I appreciate the sentiment of ensuring transparency in how public funds are utilised. On these Benches, we have always championed the prudent use of taxpayers’ money, and this amendment acknowledges that principle. However, we must ensure that such reporting is not merely a box-ticking exercise. The report must provide meaningful insights, ensuring that GBE operates efficiently and delivers value for money. We cannot allow an additional layer of bureaucracy to stifle innovation or create unnecessary costs. Therefore, I agree with the noble Earl, Lord Russell, on the spirit of this amendment, and I look forward to hearing from other noble Lords about how the reporting requirement could best be used to ensure that GBE operates in the best interests of the nation.
Lord Hamilton of Epsom (Con)
My Lords, I, too, speak in support of these amendments. It is definitely important that accountability is brought to bear here. Of course, one has the constant worry that the private sector is going to pick up all the low-hanging fruit, which is quite profitable, while GB Energy is going to be left with all of the much more speculative stuff, which will probably lose money for the taxpayer.
I want to refer in particular to subsection (2)(d) in the new clause to be inserted by Amendment 96 in the name of the noble Earl, Lord Russell, which refers to
“a just transition to green energy”.
I use that as a bit of a hook on which to return to the question I asked in Committee on Monday; I should have intervened and asked the Minister to answer before he sat down, but I had a problem at that stage, which is why I have given him advance notice today. I hope that the Minister will be able to answer my question for me because there is a dispute on our side. My noble friend Lord Fuller is a great exponent of green liquid hydrogen. Let us face it: if we could manufacture it effectively, it would be a bit of a silver bullet in solving many of these problems. But, at the same time, my noble friend Lord Roborough said that it will always be much too expensive to produce. I was slightly surprised by this because, like my noble friend Lord Fuller, I have always taken the view that the technology will develop as it goes along and the price will start to come down. It used to be the policy of the previous Government to support hydrogen; it is certainly supported by JCB.
Lord Ashcombe (Con)
I thank my noble friend for letting me speak. I wish to correct the record: it was actually me who described what my noble friend is describing, not my noble friend Lord Fuller.
Lord Fuller (Con)
Although I do of course wish to be associated with those remarks.
Lord Hamilton of Epsom (Con)
I cringe, with apologies to my noble friend Lord Ashcombe; I did not realise that it was he who said it. Anyway, whoever said it, I very much supported the view that it might well be possible for the price of liquid hydrogen to come down as the technology developed and got better.
My noble friend Lord Roborough said to me that it was always going to be expensive. I said that it was being manufactured by wind turbines in the North Sea at the moment, but as we have already discussed, the problem with wind is that it is intermittent. The wind gets turned off every now and then, the windmills do not turn, and electricity is not generated. Apparently, it is very expensive to replace all the filters, and so forth, and you need to have a constant supply of electricity to produce hydrogen.
What is felt about this on the Opposition Benches does not really matter; what matters is the attitude that the Government are taking towards liquid hydrogen and whether this is something that Great British Energy will be investing in or not. I would be grateful if the Minister would tell us where the Government stand on liquid hydrogen, as it is an important component of having clean energy for this country.
Lord Petitgas (Con)
My Lords, I also support these amendments aimed, like others, at greater accountability and transparency of the delivery of GBE. In particular, I support Amendment 95 in the name of the noble Earl, Lord Russell, on budgets. It is all very well to check on delivery and ask for more reports, but you only get what you measure. It needs to be set against a budget and objectives. I have found the objectives in the Bill to be a little vague. I am therefore in favour of Amendment 95 to the extent that it will allow us to set reporting and disclosure against a set of objectives, and a certain budget. I would also add additionality in there, as that is the only way to understand whether the delivery has been effective.
Lord in Waiting/Government Whip (Lord Cryer) (Lab)
My Lords, I will begin with Amendments 95 and 96 in the name of the noble Earl, Lord Russell.
Amendment 95 proposes requiring GBE to publish an annual budget report and send it to Parliament through the Commons Energy Security and Net Zero Select Committee—or its successor, as he said, since its name seems to keep changing every five minutes. Amendment 96 proposes requiring GBE to publish an annual report on various topics which must also be sent to the Select Committee. GBE will already have a requirement to produce publicly available annual reports and accounts at Companies House, and the Secretary of State will lay copies before Parliament.
The noble Earl, Lord Russell, also mentioned the requirement that the Secretary of State appear before the Select Committee to speak to those reports. That requirement is already fulfilled. I know that Select Committees cannot subpoena witnesses, so there is no compulsion, but the Secretary of State and other Ministers regularly appear before relevant Select Committees. I emphasise other Ministers with specific interests. Once GBE is up and running, and producing these accounts, that is the time when the Secretary of State will appear before the relevant Select Committees. In theory, the Secretary of State does not have to appear—as I said, there is no compulsion—but it would be pretty odd if they did not do so under those circumstances.
There are also additional requirements on government-owned companies to ensure transparency and accountability. These include the obligation to follow the Treasury’s directions on accounts through the powers extended in the Government Resources and Accounts Act 2000, and laid out in the Government Financial Reporting Manual and related “Dear Accounting Officer” letters. Furthermore, GBE will be required to report on its governance around, exposure to, and risk of, climate-related scenarios in its operations as set out by the Task Force on Climate-Related Financial Disclosures a couple of years ago.
I acknowledge the noble Lord’s expectation that Parliament will hold a strong interest in the performance of GBE, which anybody who knows anything about how Parliament works would expect. I fully anticipate that the relevant Select Committees will call representatives from the company and from the department to provide evidence when required.
The point about hydrogen made by the noble Lord, Lord Hamilton, is a little wide of the scope of the amendment. However, I remind noble Lords that the exact mix of technologies in which GBE, as an operationally independent company, chooses to invest will be determined by its board in due course. His prediction—he is inviting me to look into the future, and I suppose he is doing the same—is that, as technology advances, hydrogen starts to fall in cost. That is fairly sensible, although I do not ask the noble Lord to hold me to it, because we are looking into the future and we do not know what technologies there will be then.
Amendment 97 proposes that GBE reviews the impact of its activities on sustainable development in the UK. This Government—this has been made very clear and repeatedly so—firmly believe in a healthy natural environment and that is critical to a strong economy and to sustainable growth and development. Our commitment to the environment is unwavering and will be in the future, including through meeting the Environment Act 2021 targets and halting biodiversity decline by 2030. That is a pretty demanding target, but that is what we have set out for five years’ time. I assure the noble Earl that the projects in which GBE is involved will be subject to the usual and rigorous planning and environmental regulations, where the impacts on the environment and habitats are considered. The Bill focuses on establishing the company, and adding more detail at this point may restrict its activities or add layers to its reporting and governance.
Amendment 117, proposed by the noble Baroness, Lady Bloomfield, seeks to legislate the scrutiny of GBE by relevant Select Committees. My noble friend and I have touched on that to some extent. This amendment goes beyond the precedent and practice of the involvement of Select Committees in public appointments. The chief executive of Great British Energy, once appointed, will also be its chief accounting officer and will be accountable to Parliament for their stewardship of GBE and its funds. As is common practice for public bodies, the management and leadership of GBE will be available to the relevant Select Committees as needed. There is no real need to legislate on this arrangement at this point.
I remind noble Lords that the chief accounting officer would, in all likelihood, be called before the Public Accounts Committee. Over the past few years, the PAC was chaired by Margaret Hodge, as was, who is now the noble Baroness, Lady Hodge; she was followed by the honourable Member for Hackney South and Shoreditch. Those who have seen those sessions know what an acute and thorough grilling that committee gives to anybody who appears in front of it. That Select Committee is always chaired by a Member of the Opposition; that is set up in the Standing Orders of the House of Commons. It is now chaired by the honourable Member for Cirencester and Tewkesbury. Having served with him in the other place for more than 20 years, I assure noble Lords that he will be just as incisive as his predecessors.
The Cabinet Office guidance on pre-appointment scrutiny by House of Commons Select Committees provides criteria and processes for such roles. It sets out that decisions on the scrutiny of individual posts should be made between the Secretary of State, the chair of the relevant Select Committee and the Cabinet Office. It is not common practice for this to be set in primary legislation. As per this guidance, no public body currently appears to have its full board subject to that kind of pre-appointment scrutiny. We anticipate recruitment for the substantive board to begin over the course of this year and will ensure that it is undertaken in a manner that aligns with best practice. To reassure the noble Baroness—
Earl Russell (LD)
I am sorry to intervene, but I think the noble Lord has moved on to the next group of amendments in his response to me, unless I am mistaken, because the next one is on government appointments, is it not?
Earl Russell (LD)
I thought the noble Lord had moved on; I apologise for interrupting.
Lord Cryer (Lab)
I am glad I was able to reassure the noble Earl. I hope that I have provided the assurances and explanations sought by noble Lords in tabling these amendments, and I sincerely hope that they will not press them.
Lord Hamilton of Epsom (Con)
May I press the Minister a bit harder on green hydrogen? If my noble friend Lord Roborough is right and, whatever happens, it will be much too expensive to produce, then we surely have to look elsewhere. What is the Government’s attitude towards liquid hydrogen as a fuel for the future?
Lord Cryer (Lab)
I am grateful to the noble Lord for that question. I cannot add anything to what I said before. GBE will look at a range of technology and sources. The whole of energy policy is predicated on security of supply and range of supply, because at various times in British history, although those two things have not been absent at the same time—or perhaps they have, briefly—there have been times when one or the other has been absent. If it is possible for hydrogen to play a part in that security of supply and range of supply—it certainly would on the latter—I do not see why that should not be part of the nation’s energy supply in the future.
Earl Russell (LD)
I thank all noble Lords who have taken part in the discussion on this group of amendments, and I thank the Minister for responding to me; I apologise for interrupting him. I appreciate everything he said, and I appreciate that there will be reports on GB Energy and that there are lots of opportunities for parliamentary scrutiny. It is appropriate that we ask these questions. The amendments in this group and others look to go a bit further to ensure that certain things will be reported on.
In response to the discussion on the previous group, the noble Lord, Lord Hunt of Kings Heath, asked me whether we were looking for a separate report. In my mind, this is about making sure that GB Energy produces a really good-quality annual report that covers a broad range of areas and is open and transparent about its activities.
Lord Hunt of Kings Heath (Lab)
Perhaps I may intervene. In the discussion on the first group of amendments, I promised to write a letter to noble Lords focused on financial information. It might reassure noble Lords if I pick up that challenge and say that we should perhaps also try to encompass the annual report arrangements. If that would be a sensible way forward, the letter will set this out very clearly in writing so that noble Lords can see it after Committee but before Report.
Earl Russell (LD)
That would be greatly appreciated and would really reassure us. That was the point that these amendments were trying to get to, so I thank the Minister.
Lord Frost
“The Chair of Great British Energy(1) The Chair of Great British Energy may not be appointed until the appointment has been scrutinised by the Treasury Committee of the House of Commons, or any successor committee.(2) The Chair of Great British Energy must be based full-time at the headquarters of Great British Energy in Aberdeen.(3) The Chair of Great British Energy must undergo an annual review on their performance and—(a) this review must be carried out by external auditors;(b) this review must be submitted to the Secretary of State and laid before Parliament.”Member’s explanatory statement
This would require the Chair of Great British Energy to undergo pre-appointment scrutinisation, to be based at Great British Energy’s headquarters full-time and to undergo an annual review of their performance.
Lord Frost (Con)
My Lords, in moving Amendment 98 I will also speak to Amendment 99 in my name. As it is the first time I have spoken in Committee, I take this opportunity to declare an interest as the director of the company Net Zero Watch.
I have a couple of preliminary remarks before turning to the text of the amendments. These two amendments very much echo themes that we have been debating at length over the last day or two. They are amendments to make up for the lack of detail in the Bill and to ensure, as my noble friend Lady Noakes pointed out the other day, that this company is subject to the same degree of scrutiny that large public companies would expect to face. With the Bill, we are creating a company with precious little oversight or scrutiny as normally understood in company law, and with an idiosyncratic version of the normal governance and accountability arrangements that go with a normal company. Of course, this fact is why nationalised public companies are typically so badly run.
The only detail we have had on the ground covered by these two amendments is in the founding statement, which says:
“Led by its own CEO, Great British Energy will be overseen by an independent fiduciary Board, rather than ministers, benefitting from industry-leading expertise and experience across its remit. Trade unions will also have a voice and representation within Great British Energy”.
Although Ministers both here and in the Commons have commented on that, they have not gone beyond what that statement says, and we are still left rather unclear about how these arrangements are to work, other than to say that normal company law will apply. As I say, that is not quite enough, and these amendments are designed to fill the gap here.
I turn to the text of the amendments. Amendment 98 is designed to set out a few minimum requirements for the themes that we have been talking about: transparency and accountability. Amendment 98 would make clear that there must be a chair and, more importantly, that the appointment of the chair would require a degree of parliamentary scrutiny, in this case by the Treasury Committee. As has been noted, we have already trespassed slightly on this ground, and the Minister noted that this degree of scrutiny would be going beyond precedent. He read out the Cabinet Office guidance on this subject, which is interesting but not decisive for this House and the legislators.
Certainly, the degree of parliamentary scrutiny is dictated by the very political nature of this job, and quite a political figure has been appointed to it as the current chair. He has not been shy in giving us his ambitions for the company. He told the Guardian on 17 October that he thought it should become a “national champion” and
“a longer-term operator in … areas, such as floating offshore wind”.
I do not know whether that is the Government’s view of the development of GB Energy—it might or might not be—but they are statements by the chair and, by making them, he is coming into the arena of political debate about the company. Therefore, some sort of political process in his appointment seems logical. I cannot help noting that he has made broader reflections on politics, populism and progressivism, and he has been a quite a critic of Brexit in the past. Of course, he is entitled to have these opinions but, once you get into the political field, you must expect to face a degree of political scrutiny of your appointment. That is why this amendment would require such public scrutiny.
Similar thoughts are behind the other part of this amendment: the requirement for a publicly available review of performance against the purposes of GBE, and that this should be done independently. Once again, we come back to the point that has been touched on at length: that this is an unusual company and that normal accountability mechanisms are not there. There is only one shareholder, the content of the board is uncertain and, as it stands, there is no requirement in the Bill for directors of any kind at all—although I will come on to Amendment 99. This is a public company, fulfilling absolutely classical public goals, so there must be accountability to the public in how it is run.
Proposed new subsection (2) would require the chair to be based full time at the headquarters of the company, which has been said to be Aberdeen. The Government have made a virtue of that fact, at some length, when talking about GBE. They also confirmed, in October, that the new chair would be based in Manchester. It is not unusual for a non-executive chair to be based somewhere else, but the current chair role is not exactly a non-executive one; it is quite hands on. I struggle to see how one can run the company in quite that way.
The Government say that he will
“regularly spend time in Aberdeen”.
That is good and important, obviously—but this is a new company. It needs leadership as it is built up. If the taxpayer is going to get value for money out of the chair, his salary and the process, he should be where the company is when he is working.
I wish to record that Amendment 99 is a copy of an amendment tabled by Andrew Bowie MP and debated in the Commons—although perhaps it was not fully debated. Again, this comes back to the fact that we are dealing with an unusual company. What is being created is, in many ways, more like an executive arm of HMG than a genuinely independent company. The description that the Minister just gave about the role of the CEO rather confirmed that. It sounded much more like the role of the Permanent Secretary of a department, responsible to Parliament as accounting officer, than the role of a genuine CEO of a company.
The Bill is literally silent on appointment processes, content of the board and so on. The amendment is designed to fill that gap, to give clarity on numbers, and to make it clear that there must be non-executives as well as executives, that there must be a CEO as well the chair, that there can be no repeated appointment beyond defined limits and so on. That is a bare minimum. There already are some provisions in the Bill connected with the articles of association, so the line of principle about what is right to include in the Bill and what is not has already been passed. I hope that, with that in mind, the Minister will consider that these are serious amendments designed to deal with potential weaknesses in the corporate governance and accountability of GB Energy. I look forward to hearing his response.
Earl Russell (LD)
I shall speak to my Amendment 101, and I thank the noble Viscount, Lord Trenchard, for adding his name in support of it. It would simply prevent the board of GB Energy from being appointed until each prospective appointment had been scrutinised by the Energy Security and Net Zero Committee. I believe in pre-appointment scrutiny, and I put this forward as a way of helping to ensure that that happens.
I shall not speak for long on this amendment, because I suspect that it will not win favour with the Government and that the Minister will argue that there are well-established processes and procedures for making such appointments. It might be useful if he could say a brief word about what those processes will be.
Amendment 99 is very similar to mine on pre-appointment scrutiny, so I lend my support to it. However, I would probably leave out the politics; I am much more interested in the skills and abilities people have to perform the functions that they undertake. Their personal politics should not really come into it.
Amendment 98, in the name of the noble Lord, Lord Frost, and the noble Viscount, Lord Trenchard, has three elements. The first reflects my amendment in this group. The second calls for the headquarters to be placed full time in Aberdeen. The third calls for the chair of GB Energy to undergo an annual review by external auditors, and for that review to be sent to the Secretary of State.
I cannot disagree with the first part, because we are kind of on the same ground, so I welcome it. Labour made commitments on the second part, but I am not certain that the Bill is the place to go into what a full-time headquarters is and how it should be defined, so I will park that. On an annual review by external auditors, my question is again about level playing fields. Would other people in other similar organisations find that that was part of their normal working relationship with their employment contracts? I suspect that they would not. If the answer is no, there is no precedent for putting it in the Bill, so I would not think it acceptable.
Lord Offord of Garvel (Con)
My Lords, I will speak to the two amendments in this group regarding the appointments of the chairman and board of Great British Energy. These amendments, in the names of my noble friends Lord Frost, Lady Noakes and Lord Trenchard, attempt to fix a glaring omission from the Bill as it stands. As drafted, there is no mechanism to govern the appointments process of the chairman and the board, and this is a concern as we have heard on many occasions that GB Energy will be responsible for £8.3 billion of taxpayers’ money. Those at the top of the company will have enormous responsibility and therefore it is paramount that adequate scrutiny is given to these appointments.
My noble friend Lord Frost has attempted to address these concerns with his amendments in this group. Amendment 98 requires the chairman of GBE to undergo pre-appointment scrutiny in front of the Treasury Committee. This amendment has not come out of the blue: it is exactly the same process as the appointment of the chairman of the Office of Gas and Electricity Markets, otherwise known as Ofgem, which is the regulatory authority for the energy sector. Once the Secretary of State appoints the chair, they must appear before the House of Commons Energy Security and Net Zero Committee. This is also the case for the chairs of the Climate Change Committee and the Nuclear Decommissioning Authority. The Commissioner for Public Appointments keeps a list of significant appointments, which details the public bodies of which the chairs must undergo pre-appointment scrutiny by Parliament. There are no fewer than 40 current chairmanships of public bodies for which this appointments procedure applies.
There is clearly precedent for the chairmen of significant public bodies with responsibility for large sums of public money to be subject to pre-appointment parliamentary scrutiny. If this is the case for these three other public bodies with responsibilities in the energy sector, why should the chair of GBE not also be subject to the same pre-appointment parliamentary scrutiny process?
The Bill also fails to detail the procedure for the appointments and tenure of the directors of Great British Energy. As drafted, there are no requirements for the composition of the board, no limits on the number of directors that may be appointed and for how long a director may serve on the board, and no statutory duties to be conveyed on the board. The amendment from my noble friend Lord Frost plugs this gap.
Once again, there is precedent for having this level of detail regarding appointments to the board of a major public body. The Utilities Act 2000, which created Ofgem and which—we must not forget—was passed by the last Labour Government, did exactly that. Schedule 1 to that Act lays out, for example, that:
“An appointment of a person to hold office as chairman or other member must be for a term of not less than 5 years and not more than 7 years”.
So that Act includes details of the tenure and the appointments of the chairman and the board, yet the Bill does not. I ask the Minister why Labour thought it pertinent to specify the executive composition of Ofgem but does not believe it necessary to do the same for Great British Energy.
Viscount Trenchard (Con)
My Lords, I congratulate my noble friend Lord Frost on his two amendments in this group, which deal with the governance of GBE. There is, as has been said in previous debates, almost nothing in the Bill about the corporate structure of GBE or how it will be managed. I welcome my noble friend’s proposals to require that the chair should be full time and be required to attend the office in Aberdeen, from which it follows that he must be based there. That would also ensure that the person will be fully committed and be a real check on the powers of the chief executive, who may need oversight in interpreting the priorities and actions needed in response to directions received from the Secretary of State. My noble friend’s proposal that the board must comprise at least five and no more than eight directors makes perfect sense and provides for the assembly of a group of people with the appropriate skills and experience.
I have also considered and support Amendment 101 in the name of the noble Earl, Lord Russell, which requires scrutiny of any proposed appointments by the Energy Security and Net Zero Committee of another place. That committee should ensure that an appropriate balance of skills and experience among the directors is maintained at all times.
Lord Vaux of Harrowden (CB)
My Lords, I was not going to speak on this, but I just point out very quickly that the other Act that has a clause that is not quite the same but similar to Amendment 99 is the UK Infrastructure Bank Act. As I have already pointed out, that is the really analogous organisation to Great British Energy, so it must be appropriate, I think.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Lord, Lord Frost, for initiating the debate on his Amendment 98, where he proposes to place a number of requirements on the role of the chair of the board of Great British Energy. I agree that the chair, the board and the chief executive officer have major responsibilities. I must say to him though that I do not recognise GBE as being an executive arm of my department. It is very interesting that he said that, because the noble Lord, Lord Teverson, made the interesting remark on Monday that there is a risk in having too many controls and reporting arrangements in relation to GBE, detracting from what we need it to do. We do want it to have operational independence, albeit working within the context of Clauses 3 and 5 of the Bill, the requirements under the Companies Act and the accountability arrangements I have already referred to. We need very highly skilled people at the top of GBE to find their way through this in order to ensure that it actually delivers on the things we want it to deliver on.
At the risk of inviting the noble Lord, Lord Hamilton, to intervene, I take his point about winners and Governments: this is the whole point of having an organisation that is not part of government—but, of course, it is owned by government—and being able to really get on with the job that needs to be done.
I will address pre-appointment scrutiny of the chair in relation to Amendment 101 soon. Amendment 98 requires the chair to be a full-time position based at the headquarters of Great British Energy in Aberdeen. I must say that it would be highly unusual to specify that a company’s non-executive chair should be full time or based formally at an organisation’s headquarters. Looking at the Grand Committee, almost all noble Lords here have taken roles as chairs or non-executive directors of organisations that can be based very far from where they are resident. Frankly, if we were to adopt this principle, we might inhibit the appointment of high-calibre people, notwithstanding that Aberdeen is a very fine place to live and work, as I know from the experience of having a family member working in the offshore oil and gas industry from there.
I do not think that a full-time chair is appropriate; I think it is perfectly appropriate to have a part-time, non-executive chair in that role, as the noble Lord, Lord Frost, has already remarked. Having an interim chair does not preclude having a very lively presence—and a jolly good thing too. I do not think we should insist that that should be a full-time role.
My main board experience is in the public sector, in the National Health Service, and I have been around in the NHS for long enough to know the problem of chairs who come in on a daily basis and inhibit the proper role of the chief executive. I would be wary of encouraging that development in GBE; I am sure that it will not happen.
Again, in relation to the annual review of the chair’s performance by external auditors, which is to be laid before Parliament, first, we will of course ensure that there are annual performance reviews for Great British Energy’s chair. This aligns with best practice followed by other public bodies, and my department is well used to doing this in relation to a number of the bodies it oversees. The review will typically be performed by a senior official in the sponsoring department, supported by the senior independent director on the board, who will have deep insight into the chair’s performance over the year.
Of course, there will also be regular meetings between the responsible Minister and GBE, as there is in my department between Ministers and other organisations, as would be expected. In a sense, these are also part of the accountability mechanism. However, I acknowledge the expectation of the noble Lord, Lord Frost, that Parliament will have a strong interest in the chair’s performance. I fully anticipate that the relevant Select Committees will call on them on a regular basis to provide evidence and, of course, I fully expect the chair of GBE to accept those committee’s invitations.
Amendment 99, also in the name of the noble Lord, Lord Frost, would place certain requirements on the composition of Great British Energy’s board. As noble Lords have said, it largely replicates provisions in the UK Infrastructure Bank Act. We made clear in our founding statement that GBE will be an operationally independent company, overseen by an independent board. We do not think that it is necessary to legislate these provisions, since established governance documents, such as the UK Corporate Governance Code and the Governance Code on Public Appointments, already apply.
The UK Corporate Governance Code, published by the Financial Reporting Council, sets out best practice in relation to corporate governance. Although it applies formally to listed companies only, it is standard practice for government companies to comply with it or, where they do not, explain why. The Governance Code on Public Appointments provides clear guidance for ministerial appointments, which are regulated by the Commissioner for Public Appointments and should be followed even where roles are not formally within the scope of the commissioner. I can give an assurance from the Dispatch Box that Great British Energy will comply with these codes, ensuring best practice in corporate governance.
GBE will also be required to follow corporate governance best practice to help guide the composition of its board. This will have an impact on the number of directors required at each stage of GBE’s development and operation. We think that, having given those assurances, there needs to be a degree of flexibility at this stage about how GBE goes forward in relation to the composition of its board. The noble Lord’s amendment would also place standard requirements on when an individual should cease to be a director. I can assure him that such provisions already exist, including in the Companies Act 2006, and that they will, as is common practice, be replicated in GBE’s articles of association.
Amendment 101 in the name of the noble Earl, Lord Russell, proposes to require all appointments by GBE to be scrutinised by the Energy Security and Net Zero Committee in the other place before they come into effect. This is similar to new subsection (1), proposed by Amendment 98. Noble Lords will know that Cabinet Office guidance on pre-appointment scrutiny by House of Commons Select Committees provides clear guidance on the criteria and process to be used in these circumstances. It sets out that decisions on the scrutiny of individual posts should be made between the Secretary of State, the chair of the relevant committee and the Cabinet Office. It is not common practice for this to be set in primary legislation.
The guidance gives the criteria of the types of roles which may be in scope. Importantly, it sets out the principle that the posts which require pre-appointment scrutiny are, most typically, the chair or equivalent of the organisations. None of the roles identified in the guidance as requiring pre-appointment scrutiny are in government-owned companies of the kind that GBE will be. No public body currently appears to have its full board subject to pre-appointment scrutiny. Where individual roles are scrutinised, it is done following agreement between the Secretary of State and the committee chair.
From our point of view, the calibre of Great British Energy’s director appointments will be of great importance. We want GBE to succeed, so we want the highest calibre of people to be appointed as chair, to non-executive positions and to the chief executive officer role. We anticipate that recruitment for the substantive board will begin over the course of this year, and we will ensure that recruitment is undertaken in a manner which aligns with best practice. I can assure the noble Earl, Lord Russell, and the noble Lord, Lord Frost, that in line with Cabinet Office guidance, any relevant public appointments to Great British Energy will be discussed with the appropriate Select Committee chair. I hope that I have been reassuring regarding this.
Lord Frost (Con)
My Lords, I thank the Minister for his comprehensive and understanding response, and I thank other noble Lords who spoke in support of these amendments. I have two very quick points in response.
First, I note what the Minister says about the likely degree of independence of Great British Energy. We will have to see how that turns out, but I make the point, which was not really dealt with in his response, that there will always be an area where the company thinks that something is operational, but the Government believe it is political. That is where it is important to have clarity on relationships and how accountability works, so I am not entirely persuaded that the Bill gets this right at the moment, but I hear what he says.
Lord Hunt of Kings Heath (Lab)
I am not sure that you can legislate for this. I understand what he says, because as Ministers, we have relationships with a number of key bodies at the moment. We have formal relationships, there are accountabilities, reports and meetings, but we also build up trust, understanding and working closely together. It is difficult to legislate for that. In saying that we want GBE to work, it has to feel operationally independent, or it is not going to work. We cannot micromanage it, but on the other hand, we are setting the tramlines in the context in which it operates. It is hard to go much further than that, in reality.
Lord Frost
Obviously, there is a degree of judgment and practice in how these things are done. There is also a degree of judgment on the extent to which it is desirable to fix the framework within which these judgments and relationships operate, which is probably the area of disagreement.
On the question of where the chair is based, the amendment may not be perfectly drafted. I think there is a difference between “based at” and “resident at”. The point of this amendment is to make sure that the business of the company, when transacted by the chair, is very firmly in Aberdeen, the HQ of the company, and not dragged elsewhere by the fact that the chair may not be resident there. This may not perfectly deal with that point, but it is an important point all the same, so I welcome the Minister’s comments on it. I will reflect on whether any of this is necessary at Report, because it is part of a wider discussion, but for the time being, I beg leave to withdraw the amendment.
Lord Offord of Garvel
“Annual report: impact on coastal communities(1) Within 12 months of the day on which this Act is passed, and annually thereafter, Great British Energy must annually report on the impact of their activities on coastal communities.(2) The Secretary of State must lay a copy of these reports before Parliament.”Member’s explanatory statement
This would require Great British Energy to annually report on the impact of their activities on coastal communities.
Lord Offord of Garvel (Con)
My Lords, I rise to speak to my Amendments 106 and 107 in this group and to support my noble friend Lady Bloomfield’s Amendment 118. These amendments are closely aligned with Amendments 27, 28 and 29 in the name of my noble friend Lord Effingham, which were debated on the first day in Committee. Amendment 106 introduces a new clause that ensures that Great British Energy must annually report on the impact of activities on coastal communities. Amendment 107 similarly requires GB Energy to report on its impact on commercial fishing.
The Government have committed to substantial wind developments, promising to double onshore and quadruple offshore wind by 2030. It goes without saying that there is a difficult balance to strike when undertaking considerable developments while minimising the damage to the communities and industries that are most likely to be affected. That said, we must not lose sight of the communities and sectors to which GB Energy’s activities may be costly. I remind noble Lords that the Government have said that GB Energy will work closely and collaboratively with local communities to achieve their clean energy targets. I therefore see no reason why they should not consult and report on the impact of its functions on the communities they suggest will reap the rewards of GB Energy.
The impact of GB Energy’s activities and the Government’s green energy agenda on communities throughout the UK has been a recurring theme and a point of serious concern throughout the debate on the Bill. Last year, I highlighted the burden facing rural communities in particular, as the Government looked to ramp up transmission and distribution infrastructure. It is essential that the energy transition, and GB Energy’s role within it, do not come at the expense of the communities and associated industries.
Many in this House urged the Minister to ensure that the Secretary of State and GB Energy consult local communities. I point to the noble Baroness, Lady McIntosh of Pickering, who rightly raised concerns that offshore wind development risks forcing fishermen out of the seas in which they operate. It is essential that we carefully consider the use of our country’s marine space. Preliminary results from the Plymouth Marine Laboratory concluded that all the proposed offshore wind farms in the UK are predicted to impact fishing, with fishermen pointing to both financial and safety concerns resulting from the construction and operation of offshore wind farms. Ultimately, this is an issue of spatial competition.
Amendment 115 of the noble Lord, Lord Teverson, is broader, addressing the impact of GB Energy’s activities on both fishing and commercial shipping. He is right to extend the scope to commercial shipping. I turn to the UK Harbour Masters’ Association, which notes the challenges faced by the sector from offshore renewable energy installations. It calls for a report on the impact of such installations on the shipping industry and insightfully draws a link with commercial fishing, noting that fishing vessels may be squeezed out of their usual channels and enter shipping routes to avoid sites of renewable energy generation. We must not ignore the worries and recommendations of these industry bodies. With this in mind, many environmental, biodiversity and wildlife bodies have called for GB Energy to deliver for nature alongside climate. I welcome and support my noble friend Lady Bloomfield’s Amendment 118, which requires GB Energy to make
“a positive contribution to nature recovery”.
Careful consideration is key to the success of GB Energy. We must not isolate but include those communities and sectors that will be most impacted by the Government’s attempts to create this green energy superpower. Additionally, we ought to consider how GB Energy will act in a way that seeks to benefit both the climate and biodiversity, which are inextricably linked.
I look forward to hearing the contributions of all noble Lords in the debate on this group of amendments, and the Minister’s response.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, Amendment 118 in my name would introduce a new clause which requires GB Energy and its partners to make only investments that make a positive contribution to nature recovery. As my noble friend Lord Offord of Garvel rightly explained, the UK is facing both a climate and a nature crisis.
Nature recovery, the restoration of our country’s biodiversity and the climate are matters that are so closely interwoven. They cannot and should not be considered in a separate capacity. Therefore, if GB Energy is to be established in an effort to achieve clean energy by 2030 and net zero by 2050 and to reduce the UK’s carbon emissions in an attempt to tackle climate change, GB Energy ought to operate in a way which looks to make a positive contribution to nature recovery.
The Government themselves recognised the ties between climate and nature recovery. Indeed, they were elected on a manifesto which said:
“The climate and nature crisis is the greatest long-term global challenge that we face”
and
“The climate crisis has accelerated the nature crisis”.
The omission of a nature recovery duty is another shortcoming of the Bill. Climate change and the loss of biodiversity both compound and reinforce one another. The Royal Society has acknowledged that a flourishing ecosystem has the ability to combat the effects of climate change. We know that the UK’s biodiversity is under serious threat, yet we know that natural habitats have a significant role to play in absorbing and storing carbon and regulating the climate.
Wildlife and Countryside Link has called for nature recovery to be put in the Bill and the amendment in my name would do just that. It recognises that restoration of the UK’s nature has the ability to provide up to a third of the climate mitigation effort that is required if we are to achieve net zero by 2050. Rightly, it describes the Government’s failure to include a nature recovery duty as a “missed opportunity”.
A nature recovery duty ought to be a general principle of GB Energy. It would hold the Government to account on the manifesto they were elected on. It would introduce a clear condition, ensuring that GB Energy and its partners operate in a way which seeks to contribute to the biodiversity targets introduced by the previous Government in the Environment Act.
Nature recovery must not be seen to inhibit the facilitation of the production, distribution and storage of clean energy. Instead, it must go hand in hand with the objectives of GB Energy, helping to protect and restore carbon-rich habitats. Indeed, it is complementary to the objectives of GB Energy surrounding clean energy generation and distribution.
We must be cautious that the establishment of this body to rapidly ramp up the installation and generation of renewable energy technologies does not adversely affect biodiversity in the UK. We must seek to mitigate the risk of further diminishing or undermining the UK’s natural assets. The amendment in my name would do just that by embedding a nature recovery duty into law.
Lord Teverson (LD)
My Lords, I shall speak to my Amendments 114 and 115. I agree very much with the spirit of the other amendments in this group. I say to the Minister that only one of my amendments is labelled as a probing amendment but they are both, in effect, probing amendments and I would not expect them to proceed beyond Committee as I have written them.
Amendment 114 is about national defence. Clearly, even since I wrote the amendment, this has become even more important in terms of offshore infrastructure, as we saw in the Baltic at the end of last year and following the serious shenanigans of “Eagle S”, the shadow Russian oil tanker which disrupted cables in the Baltic Sea, after which there was a NATO conference yesterday.
The purpose of this amendment is to hear from the Minister that GB Energy, in its offshore investments, will be plugged into the Ministry of Defence, and that the Ministry of Defence—which, if I may be slightly candid about it, has not always been positive about renewable energy onshore—will fully engage in these investments.
I think this is going to get more and more important. All sorts of technologies are coming out to ensure that, as soon as cables or pipelines are tampered with, it is quickly recognised and action can be taken. There is an Oral Question on this area in the House tomorrow, and I will be pressing more on the defence side, as we need to be a little more upfront in our reaction, as the Finns have been. I am really probing to see where that co-ordination with the Ministry of Defence is going to happen.
Lord Hamilton of Epsom (Con)
My Lords, I am a little confused by this conversation, because I always understood that oil rigs encouraged shoals of fish, providing them with a safe haven under which they thrived. If they thrive under oil rigs, why should they not thrive under wind turbines as well, if they are pinned to the bottom of the sea?
I agree that, if they are floating ones, it is more debatable whether fish could thrive under them, but, in my view, it does not necessarily follow that having such industrial structures in the sea goes against nature—it might actually go some way towards protecting it.
Lord Teverson (LD)
The noble Lord raises an important issue. As we know, when Shell wished to dispose of one of its oil rigs in the North Sea, to which a number of environmental NGOs strongly objected, there was a fair bit of scientific evidence that it made a positive contribution to North Sea biodiversity. Indeed, off the coast of Cornwall, an ex-naval vessel was sunk in order for it to become a reef, which increased biodiversity. We should not just reject the fishing industry’s views on this. The problem with offshore wind farms compared with oil rigs is the quantity—that is, the size of the area that would be an exclusive zone. That is the issue, but I take the noble Lord’s point.
Lord Hamilton of Epsom (Con)
I am grateful for the noble Lord’s intervention. May I take him up on his point about the Ministry of Defence, which I used to work for at one stage? He said that the people there were very much against such schemes, but I think that it is mainly to do with communications: if their radar and other communication systems are blocked by wind turbines, they will object to them. That is understandable. We should not paint the Ministry of Defence into the position of being anti all forms of renewable energy because I do not think it is; however, it is always concerned if it cannot reach out and listen to the enemy, wherever they may be, because there are wind turbines in the way. This is an interesting subject that probably needs looking into rather more carefully—it is certainly not as straightforward as some of my noble friends make out.
Lord Teverson (LD)
I shall not prolong the conversation tonight but the noble Lord is, once again, absolutely right about national defence, radar and being able to see an incoming attack with missiles or whatever. The problem was that the Ministry of Defence did not man that area enough. Decisions were extremely slow. There was a rumour—of course, I have no proof of this —that it used to use its slowness and its objections to insist that developers helped it upgrade its military equipment. I do not know whether it was true—I am sure that it was not, of course—but that was the perception. The main problem was the slowness of response.
Earl Russell (LD)
My Lords, I rise to speak to my Amendment 118A, which covers wider considerations. Let me be clear: it is also a probing amendment, as are all the amendments in this interesting and diverse group. I thank the noble Lord, Lord Macpherson of Earl’s Court, for adding his support to my amendment, which is about ensuring that communities benefit directly from the renewable energy projects that Great British Energy undertakes. I put it forward to see whether that is possible and to ask, from the Government’s point of view, what barriers to that might exist.
My amendment would ensure that 5% of gross revenue from all Great British Energy
“renewable energy projects generating over one megawatt”,
both onshore and offshore, would
“be paid into community benefit funds”.
The idea for it came from the honourable Angus MacDonald MP’s experience with Scottish Government Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments. This guidance promotes community benefits of a value equivalent to £5,000 per installed megawatt per annum, index-linked for the operational lifetime of projects.
My amendment requires that:
“Within six months of the day on which this Act is passed, the Secretary of State must prepare and lay before Parliament a report setting out proposals for ensuring that local communities benefit from renewable energy projects undertaken by Great British Energy. The report … must set out, but is not limited to, proposals for 5% of the gross revenue from all such renewable energy projects generating over one megawatt to be paid into community benefit funds”.
I will not go into the rest of the details; the amendment is before noble Lords. It simply puts into the Bill that local communities should directly benefit from renewable energy undertaken, and that there is a mechanism available for doing that. On the 5% figure, I am happy to have a conversation with the Minister if it is an issue. I note that Denmark’s Law on the Promotion of Renewable Energy 2008 had a 20% figure, in relation to which 5% is a lot lower.
To talk more about the spirit of the amendment, this is really about helping disadvantaged communities, particularly those that are hosting our renewable energy. A lot of them are in the highlands and in Scotland. They disproportionately suffer from poor infrastructure and poor public services, and a lot of them are living in fuel poverty. They are putting up with having their landscapes covered in turbines, dams, electricity transmission lines, substations and all the rest of it. I support community energy, as everybody knows—I have spoken to it in two other amendments and will not go into it here—but this is about more than that. This is not a nice-to-have; in my opinion, this is an essential part of the energy transition. It is about ensuring the continued long-term support for this journey that we are undertaking as a society.
Recent opinion polls on these matters are really strong. Where local communities benefit from the energy infrastructure, particularly the infrastructure that they host, their support for this transition is much stronger and more resilient. If this support falls away, that could be the end of the whole transition and of all this, so this is not just about being fair and supporting the communities that need it most and that host this stuff. It is also about making sure that these things go on beyond one Government and one term, that they are here, that we manage to take society with us on this journey, and that those who are hosting things that other bits of society need benefit from them.
Turning to the other amendments in this group, I signal my support for Amendment 118 in the name of the noble Baroness, Lady Bloomfield. I note that the Wildlife and Countryside Link put out a detailed briefing on that and why it needs to be there. I also support Amendments 114 and 115 in the name of my noble friend Lord Teverson. I will not go into too much detail on that. As he said, there is an Oral Question on this tomorrow. It is unfortunate that we have had more recent incidents, not just in the Baltic but off the coast of Taiwan. Obviously, the UK has a number of electricity interconnectors and gas pipelines —we had a conversation about gas in the House this week—and they will only ever increase. New contracts have been signed. We have about 7.7 gigawatts at the moment, and that will rise to 18 gigawatts by 2032, so this is a crucial part of our energy security and our journey to net zero.
I would ask the Minister one thing. We can have conversations about the other aspects later on, but I am worried about the Government going away, stepping up their appreciation of this risk and maybe recalculating some of their calculations around the security of supply as we transition to net zero in 2030 and beyond. Is there is a greater need to look at some of those things again? We will talk about the rest tomorrow.
If the Committee will excuse me, the noble Lord, Lord Macpherson of Earl’s Court, has left me a note. Does the Committee mind if I read that in support of my amendment?
These are his words: “My Lords, I would like to speak in support of Amendment 118A. I should first declare an interest as a director of two family-owned hydroelectric companies in Wester Ross. Having worked in the Treasury during the 1980s boom in North Sea revenues, I am all too conscious that Britain has a poor record in reinvesting the benefits of energy windfalls and an even worse record in passing on those benefits to communities directly affected by energy production. I think Shetland receives some money, but other places do not”.
“It is in the nature of renewable energy production that it tends to take place in remote areas. I am thinking in particular of the Highlands of Scotland, but the same applies to Cornwall, Devon, Wales and Cumbria. People living in these communities often have to live with negative aspects of renewable energy: towering windmills or hydroelectric schemes which change the natural environment and can particularly scar a hillside. Because of the remoteness, oil and gas and electricity connections cost more”.
“Successive Governments in Westminster and Edinburgh have supported the principle of requiring energy developers to support their local communities, and there have been some good examples of community investment. But practice is variable, and often contributions are set in cash terms and bear no relation to the subsequent success of renewable energy schemes. Great British Energy has a huge opportunity to lead by example in exercising best practice. By setting up community benefit as a fixed percentage of gross revenue, this amendment seeks to ensure communities benefit more fairly. A 5% contribution is relatively modest, as I understand it”—and he then goes on to make the Denmark point.
“Of course I hope that the noble Lord the Minister will agree to the amendment, but I have a feeling that he will argue that this amendment will cut across the operational independence of Great British Energy and that this Bill is the wrong vehicle for addressing community benefits. If that is the case, I would like to ask the Minister if he can go beyond fine words of general support for community benefits. Will he commit to setting out a clearer definition of what represents a reasonable and fair rate of community benefit for a given level of revenue for renewable energy projects?”.
Lord Cryer (Lab)
Before the Minister responds, I should have pointed this out before, but I was not aware: reading out speeches from another Member is not acceptable, according to the Companion. That is partly my fault. I apologise: I should have said something.
Earl Russell (LD)
I apologise; I thought that it was acceptable. The noble Lord should have intervened earlier if it was not. I would not have done it if I had known that it was not acceptable, so I apologise to the Committee.
Lord Hunt of Kings Heath (Lab)
We certainly got the noble Lord’s point.
This has been an interesting debate with which to finish today’s proceedings. I start with Amendments 106, 107 and 115. The debate between the noble Lords, Lord Teverson and Lord Hamilton, on the benefits of oil rigs and other structures for fish populations allows me to say that other energy infrastructure can also have a positive impact on nature. We know, for instance, that wind farms can coexist with farmland easily. We have examples of solar meadows, which is a practice of growing wildflower meadows on solar farms. I have heard talk of green corridors, where beautiful new pylons are built to extend the grid. I am not being facetious here, as we need to look at ways in which energy can contribute to nature recovery. It is an important point to make.
I agree on the importance of our coastal communities and commercial fishing, as reflected in Amendments 106 and 107. Amendment 115 would require GBE to consult annually with the commercial shipping sector and fishing industry. I would expect GBE to provide regular updates on its work on such issues through its annual reports and accounts. We know that the projects that Great British Energy is likely to be involved in will all be subject to relevant regulations, including environmental impact assessments. There will be statutory stakeholder engagement to understand the potential impact of development. In line with other energy developers, GBE will consider the impact and risk of its activity on the commercial shipping sector and fishing industry, as it will other affected stakeholders. I will draw these remarks to the attention of the chair of GBE, so he can understand the importance of the issue that the noble Lord, Lord Offord, has raised.
In relation to coastal communities, there will be many opportunities in the energy sector in the future. We talked about the challenge of the North Sea transition. We obviously hope that, as jobs reduce in the oil and gas sector, the people involved can take up other jobs, some of which I hope will be in the wider energy sector. But overall, GBE has an important contribution to make in this area.
On Amendment 114, the noble Lord, Lord Teverson, raised an important point on the Ministry of Defence and security agencies. Clearly, to ensure resilience, GBE will have to consider the impact and risk of its activity on offshore installation, including its pipeline and cable connections, within the context of relevant security regulations and hostile state action. It is a very important and serious matter. All nationally significant infrastructure projects, which include projects in the energy sector over 50 megawatts, undergo rigorous scrutiny to monitor and mitigate security risks. In the end, these decisions fall to Ministers to make in relation to development consent orders.
There was an interesting debate on air defence issues between the noble Lords, Lord Teverson and Lord Hamilton. I have to say that my department is working very closely with the Ministry of Defence on these issues. We are talking closely and working to ensure that our own offshore wind ambitions can coexist alongside air defence. MoD programme NJORD will deliver an enduring radar mitigation solution, which will prevent turbines from interfering with MoD radar systems. In the context of our more general working relationship with the Ministry of Defence, it will be a responsibility of GBE to consider and consult relevant stakeholders. My department will of course ensure that that happens appropriately.
Amendment 118, tabled by the noble Baroness, Lady Bloomfield, would place a nature recovery duty on Great British Energy. Let me say at once that we are absolutely committed to restoring and protecting nature and meeting our Environment Act targets. We want GBE to focus on its core mission to drive clean energy deployment, but I assure the noble Baroness that the projects that GBE invests in and encourages will be subject to all environmental and climate regulations, in the same way that every other company is.
I draw her attention to our recently published Clean Power 2030 Action Plan, which dedicates an entire section to
“Integrating clean power and the natural environment”.
I was going to quote from it, but I do not think I need to do now. We are launching an engagement exercise in 2025 to invite communities, civil society and wider stakeholders to submit their ideas on how we can best encourage nature-positive best practice into energy infrastructure and development. Feedback from this exercise will allow the Government to better understand how we can integrate nature restoration through the clean power 2030 mission. We very much agree with the substance of what the noble Baroness said.
Lord Teverson (LD)
As the Minister will know, terrestrially, there is now biodiversity net gain, which came through the Environment Act and is applied to terrestrial developments. I do not think this is for the largest of them yet, but that is due to happen. I understand it is the Government’s intention to introduce marine biodiversity net gain regulations. I presume GBE will be subject to those.
Lord Hunt of Kings Heath (Lab)
My Lords, I am going to have to take advice on that as I do not have the information. However, if there are regulations which apply to companies, GBE will be expected to comply, and to act consistently with general government policy towards biodiversity. I will write to him about that in some detail.
On community benefits, I take the point of the noble Earl, Lord Russell, and other noble Lords. In our manifesto, we committed to ensuring that communities which live near new clean energy infrastructure projects can directly benefit from them. We are considering at the moment how to effectively deliver community benefits for those who live near new energy infrastructure, which includes new energy generation and transmission technology. We are developing guidance on community benefits for electricity transmission network infrastructure and onshore wind, which we will be publishing in due course. We are also reviewing our overall approach to community benefits, both to ensure consistency and quality and to ensure that communities are properly recognised and are able to come with us on our net zero and clean power journey. This includes looking to existing examples in Europe and further afield to see what has worked elsewhere. I look forward to updating the House on our approach to community benefits shortly.
The role of Great British Energy has been set out in its founding statement, and our commitment to putting local communities at the heart of the energy transition is a very strong component of what we are doing. The local power plan will support local communities to take a stake in the shift to net zero, as owners and partners in clean energy projects. They are important in themselves, as there is a huge appetite in many localities for community power, engagement and involvement. I agree that seeing a tangible benefit for local communities is important in itself, but it is also growing general support for the move to clean power and net zero, which is very important indeed.
We take the noble Lord’s point. It is clearly important, we are working on the details and will be publishing further information in due course. In my first week as a Minister in the department, I visited Biggleswade onshore windfarm, a small windfarm with 12 turbines. The company there is voluntary and there is a good practice trade guideline of paying £40,000 a year to the local community for such things as the local parish church, the community hall and other things. It was really good to see and is an example of what can happen.
Lord Offord of Garvel (Con)
I rise to close this group and indeed this sitting of the Committee today. It is worth saying that the chairman of Great British Energy, Jürgen Maier, has acknowledged the importance of communities. He used the words that GBE should be considered “a three-party partnership”, involving the private sector, the public sector and the community. If we also take account of the Labour assurances that have been given to communities along the way, I see no reason why we cannot consider these amendments further at the next stage, but for now, I beg leave to withdraw the amendment.