Great British Energy Bill

Report stage
Tuesday 11th February 2025 Lords Chamber

Report

Welsh and Scottish legislative consent granted, Northern Ireland legislative consent sought.

15:46

Amendment 1

Moved by

[Baroness Noakes]

1: After Clause 1, insert the following new Clause—
“ObjectivesGreat British Energy’s objectives are—(a) to reduce energy costs in the United Kingdom in a sustainable way,(b) to enhance the United Kingdom’s energy security,(c) to increase the levels of clean energy generation in the United Kingdom, and(d) to increase the availability of long-term energy storage infrastructure in the United Kingdom.”

[Baroness Noakes (Con)]

My Lords, I thank the noble Lord, Lord Vaux of Harrowden, for adding his name to Amendment 1. The amendment would add to the Bill a statement of objectives for Great British Energy.

In Committee we had a couple of debates about the difference between objects and objectives. While the words are closely linked etymologically, they mean rather different things in the context of the Bill. Objects are specified in Clause 3 in the context of Great British Energy’s articles of association, which is a document required by company law. Prior to the Companies Act 2006, every company had to have an objects clause, which defined the extent of the powers of the company. Since that Act, objects of a company are unlimited unless the articles specifically restrict its objects. That is what Clause 3 does—indeed, it uses the word “restricted” in subsection (2). Clause 3 does not require Great British Energy actually to do any of the listed activities—rather, it prevents Great British Energy carrying out things that cannot be fitted within the scope of the subsection (2) list.

My proposed new clause focuses on what Great British Energy should be achieving, rather than what it can and cannot do. It can then be held accountable if it fails to achieve what it was set up to do. Accountability is one of those concepts that is deeply unsexy but absolutely essential in the world of quangos.

Quangos such as Great British Energy are typically given a significant degree of independence, and Ministers, when it suits them, typically hide behind that independence. If strong accountability foundations are not created when a body is formed, Parliament will find it difficult to hold that body to account at a later stage.

The objectives that I have drafted in this amendment are fourfold. I have attempted to draft them in a politically neutral way that I think represents what the Government want to achieve with Great British Energy. I would not have drafted these objectives for Great British Energy, given a free hand—but then, given a free hand, I would probably not have set Great British Energy up.

The first objective is

“to reduce energy costs … in a sustainable way”.

I think there is common agreement that UK energy costs are too high, particularly for business consumers and by comparison with international standards. The other three cover energy security, levels of clean energy, and long-term storage infrastructure, which align with the Government’s aims for Great British Energy. If the Government prefer different words, I am not wedded to these ones and would be happy to discuss alternative formulations.

The Minister may well say that all of this will be covered by the strategic priorities to be set under Clause 5. Since the Government have refused to share even an outline of the strategic priorities which they intend to set for Great British Energy, or the framework document which will be agreed with it, it is difficult for the House to tell whether that is the case. In terms of ordinary usage of language, strategic priorities are not the same thing as objectives. Priorities might simply be things that the Secretary of State wants Great British Energy to focus on—perhaps based on technologies, types of energy, geographic locations and those sorts of things—but they might well fall well short of describing what Great British Energy is intended to achieve.

This amendment is not about the Government’s energy policies or the role of Great British Energy in those policies. It is straightforwardly about accountability and laying the foundations for Great British Energy to be held accountable in an effective way in due course. Great British Energy should, I submit, be judged on the outcomes that it achieves. There is a danger that if objectives are not set up front, we will be able to judge it only on what it has done and not what it has achieved. That is tantamount to giving Great British Energy a free pass on accountability.

I have also added my name to Amendment 37, in the name of the noble Lord, Lord Vaux. There are two important issues here, one general and one specific. The general point is that it is quite normal for the Government to take powers to specify what a public body reports on. Private sector reporting rules that exist for companies do not automatically ensure that the interests of public sector accountability are supported and, in many cases, public sector bodies do things that simply do not happen in the commercial sector. That will be the case for Great British Energy.

My specific issue is a subset of that general point. We need to make sure that Great British Energy reports on the extent to which it has achieved additionality, as in paragraph (d) of the proposed new subsection in Amendment 37. Additionality is a public sector concept and there is nothing in Companies Act reporting requirements that would ensure Great British Energy included relevant data and analysis. I believe we should ensure that this information is available routinely.

Lastly, this is a bit of a dustbin of a group, with a lot of individual things in it, but I will comment briefly on Amendment 17, in the name of the noble Earl, Lord Russell, which would require the Government to give Great British Energy £8.3 billion of financial assistance during this Parliament. I have remarked before that the £8.3 billion is nowhere to be found in the Chancellor’s Budget. The noble Lord, Lord Cryer, wrote to me after one of our Committee days, for which I thank him, to confirm that the Budget made no provision for Great British Energy beyond the £125 million to be spent in the next financial year. It is all to be settled as part of the current spending review.

If I were the Secretary of State for Energy Security and Net Zero, I would be looking at the deteriorating economic environment, made much worse by the Budget, with some concern. The fiscal rules are already under threat and I would not put my money on the Chancellor finding headroom for the full £8.3 billion promised in the manifesto. I shall be especially interested to hear what the Minister says in response to Amendment 17. I beg to move Amendment 1.

[Lord Vaux of Harrowden (CB)]

My Lords, I shall speak to Amendment 37 in this group and to Amendment 1, which has been introduced by the noble Baroness, Lady Noakes, and to which I have added my name. Before I start, I thank the Minister and his team for the very constructive and helpful discussions that we have had since Committee. We have made good progress and I am very grateful. I also thank the noble Baroness, Lady Noakes, and the noble Viscount, Lord Trenchard, for their support for my Amendment 37.

The noble Baroness, Lady Noakes, has already introduced Amendment 1 with her usual clarity, so I will try not to repeat her too much. As we discussed at some length in Committee, this Bill creates GBE as an entity, but nowhere does it set out what GBE is actually expected to achieve—what its aims or objectives are. As the noble Baroness just pointed out, Clause 3 sets out its “objects”, but we should be completely clear that the objects set out only what the company is allowed to do, not what it is intended to achieve. The only place where the company’s aims will be set out will be in the statement of strategic priorities in Clause 5. However, we have not seen these, even in draft. They will be published sometime in the future and are not subject to meaningful parliamentary scrutiny. They will be laid before Parliament, but there is not even the level of scrutiny that may be applied to a negative statutory instrument. Your Lordships’ Constitution Committee described this as being “disguised legislation”.

It is important that the Bill should include, at least at a high level, some statement as to what GBE is actually intended to achieve. The noble Baroness, Lady Noakes, should be commended for not trying to score political points with her Amendment 1, which is why I have supported it. I think that she has tried to align the objectives in her amendment with what the Government have said are the goals for GBE, so I hope the Minister will look kindly on it. If not, and if the noble Baroness were to divide the House, I would be minded to support her.

My Amendment 37 covers similar ground to my amendments in a later group. I apologise: I was told at a late stage to degroup them on the advice of the Public Bills Office, for some esoteric reason that I am not sure I fully understand. These amendments all try to inject some much-needed transparency and accountability into the Bill—something that is currently somewhat lacking. The only reporting that GBE must do, as it stands, is the annual report and accounts that it must file in accordance with Section 441 of the Companies Act. We had a lot of discussions on this in Committee and the Minister undertook to write to set out the additional requirements that will apply to GBE as a publicly owned entity. I thank him for his letter, which I think satisfies the first three proposed new paragraphs of my Amendment 37. The element that would still not be covered, as the noble Baroness just pointed out, is the assessment of the extent to which the investments or partnerships entered into by GBE have encouraged additional investment by the private sector.

This is extremely important. If all that GBE does is make investments that would happen anyway in the private sector then that would not be a good use of public money. Indeed, it could actually damage the creation of a thriving market for financing green energy—the well-documented concept of crowding out. There is an important role for GBE, just as there is for the UK Infrastructure Bank, now called the National Wealth Fund, to act as a catalyst to kick-start or accelerate investment in new technologies where the private sector is not yet ready to invest. There is a good precedent for this: it can be very strongly argued that the offshore wind industry, now so successful, would have been much slower to develop without the initial backing of the European Investment Bank, which the UK Infrastructure Bank was designed to replace in this country.

If the Minister will confirm clearly that he would expect GBE to report in its annual report and accounts on the extent to which it achieves additionality then I will be happy not to press Amendment 37.

[Earl Russell (LD)]

My Lords, I will speak to my Amendment 17 in this group. This probing amendment seeks further clarity from the Minister on the Government’s commitments to Great British Energy’s budget. It seeks information on the timing of the delivery of the budgets that have been promised and further clarity on Great British Energy’s ability to borrow funds in the future.

I have raised a probing amendment on Report because, as we have heard, this money is still subject to the spending review, and we have seen recent announcements from the Chancellor surrounding growth. For those reasons, we seek clarity that the £8.3 billion up to 2029 is available as promised and will be delivered. We previously saw cuts to Labour’s £28 billion green deal before the election. The key thing—and I hope the Minister will agree—is that there is absolute clarity on these matters; that is needed for securing the £60 billion in private investment. We need clarity and consistency in policy direction, which I hope this Government will maintain.

16:00

We have discussed wider issues on the budget and the borrowing powers that may be available to Great British Energy at some point in the future. I appreciate that the company is being set up, and that these matters are being actively discussed with the Treasury, but it would be useful if the Minister could give some update to the House on where the Government’s thinking stands on these matters.

My understanding is that the basic assumption is that Great British Energy will be set up and that, when it is established, it should be given borrowing powers in the future. Can the Minister say what the timeframes are for giving those borrowing powers? What kind of prerequisite conditions is GB Energy expected to meet before the Treasury gives it those powers? I hope that the Minister agrees that, if the Treasury has too tight fiscal controls in its handling of GB Energy, and GB Energy was not given these investment powers so that it could borrow to invest in growing, taken together this would restrict the ability of GB Energy to meet its objectives as set out in the Bill.

GB Energy is in a unique position—a different position from private companies—in that it can take a long-term and strategic view of the UK’s future energy needs. Indeed, it can make investments that other private companies may not be capable of or just simply will not make. Those investments are in the long-term national energy interest of the UK. Therefore, I seek clarity on all those matters.

Turning to the other amendments in this group, I thank the noble Baroness, Lady Noakes, for speaking to my amendment and raising the point about the budget, and for her Amendment 1, and the noble Lord, Lord Vaux of Harrowden, who has added his name to it. We do not oppose the spirit of the proposed new clause, but we are not absolutely certain that it is necessary in the Bill. We believe that GB Energy, by its very nature, will reduce our energy costs and enhance our energy security. I have a slight issue with the words “in a sustainable way”; I suspect that my reading of them and that of the noble Baroness might be slightly different.

GB Energy will fundamentally increase the levels of green energy that is generated and free us from the fluctuations of foreign energy markets. We believe that these are settled matters that the Minister himself has spoken to from the Dispatch Box. We have more sympathy for the issue of long-duration energy storage. On that point, it would be useful if the Minister could say that it is his belief that the strategic priorities for GB Energy will engage in long-duration energy storage.

[Lord Hamilton of Epsom (Con)]

I am grateful to the noble Earl. He said that he thinks that green energy will lower costs. So far, green energy has actually raised costs. Why should it lower costs in the future?

[Earl Russell (LD)]

I thank the noble Lord for his intervention. Green energy over time will lower costs. There is an initial hump to get over with investment, but the trouble that we need to address is our increasing and continued dependence on the vast fluctuations in foreign gas markets. We saw what happened with the war in Ukraine, and we saw that the noble Lord’s Government had to invest £40 billion towards subsidising bill payers—money that was invested for no long-term benefit. We must get away from those things and we must have energy security. These are investments in Britain and in reducing our bills, and they are worthwhile doing. It is really important that GB Energy invests in these emerging technologies. That is why I have raised my amendment on GB Energy’s ability to borrow; if GB Energy cannot borrow it will not be able to make these key investments.

Amendment 20, tabled by the noble Lord, Lord Offord of Garvel, and the noble Earl, Lord Effingham, is about the annual report and financial assistance provided to GB Energy. We expect this to happen, so do not feel that the amendment is necessary.

We support the spirit of Amendment 37, but expect the Treasury to require all these areas to be reported on. Having reflected on what was said in Committee and the Minister’s response, we expect GB Energy’s reporting requirements to be similar to those of the Crown Estate. It would be useful if the Minister could confirm that.

Amendment 39, in the name of the noble Lord, Lord Frost, and supported by the noble Viscount, Lord Trenchard, is one of the strongest Conservative amendments to be tabled on Report. We have some sympathy with proposed new subsection (1), which is similar to an amendment I moved in Committee. At that stage, it did not win the Minister’s favour—I suspect that that might be the case again today. Where I slightly part company with noble Lord, Lord Frost, is in relation to the annual review for the chair of GB Energy. My view is that an important and good annual review would not be one that was fully made public. To me, that seems a slightly strange request, and may be counterintuitive to the object which he seeks.

I am going to stop there as I have run out of time and there are a lot of amendments in this group.

[Baroness Coffey (Con)]

I support Amendment 1, in the name of my noble friend Lady Noakes. I should declare at this point that I live about five miles away from Sizewell B nuclear power station and one that is about to be built, Sizewell C, and less than a mile away from other energy infrastructure that is still going through the planning process.

A lot of my time at the other end was taken up with considering the importance of energy, not only for a long-term sustainable future but the security issues rightly referred to in these objectives. The reason these objectives matter is that this is an unprecedented situation, where we are handing, in effect, a blank cheque to an arm’s-length body. Admittedly, it will have strategies set by the Secretary of State, but, as has been pointed out, there will be absolutely no reference to Parliament in its consideration. That is why the amendment tabled by my noble friend Lord Frost has attraction, in proposing at least having a direct connection with two Select Committees of the other place and a relationship with the chair of GB Energy. As my noble friend pointed out, these are the reasons that the Government gave us for having this new entity. Therefore, it would make a lot of sense for the Government to accept this amendment directly.

On Amendment 17, where I disagree with the noble Earl, Lord Russell, is that I do not believe we should get into legislation that dictates the amount of taxpayers’ money that will be spent. I have seen that happen before in legislation, and then all of a sudden money starts getting wasted. The whole purpose of this financial vehicle is to de-risk and bring in external private investment. That is a sensible approach, especially given the amount of uncertainty, which I appreciate the Government are trying to address in other ways. Nevertheless, for something such as energy security, a significant amount of investment is going to be required right across not just Great Britain but the United Kingdom, and this is a critical moment for our nation. That is why, while I think there will be money well spent, we should not be dictating a minimum.

The amendment tabled by the noble Lord, Lord Vaux of Harrowden, is really sensible. This company will be in an unusual situation—not unique, but unusual—and the extra information required, particularly in proposed new paragraph (d), is the core essence of why this company is being set up: it is stepping forward to try to get others to do so.

If anything, what has evolved over many years is the need for transparency and understanding. The amount of trust that people have in how their taxpayers’ money gets spent really matters in the contract that Parliament and government have with the electorate—the taxpayer. So, elements such as this will enforce the rationale rather than just necessarily seeing energy bills tick upwards, unfortunately.

So if Amendments 1 and 37 are pressed, I will certainly support them—although, regrettably, not Amendment 17 from the noble Earl, Lord Russell.

[Lord Frost (Con)]

My Lords, I will speak to Amendment 39 in my name. I thank the noble Viscount, Lord Trenchard, for putting his name to it, and thank the noble Earl, Lord Russell, for his warm comments on at least aspects of this amendment.

The broad aim of Amendment 39 is to do what a lot of other amendments have sought to do, both in Committee and no doubt today, which is to ensure that GBE gets the kind of scrutiny that a major public company would get: that is, its internal procedures, processes and purposes get a degree of public attention and comment. I worry that we are setting up a company over which there will be relatively little oversight and perhaps rather idiosyncratic governance compared with a normal public company. So it is with that in mind that I have tabled Amendment 39.

There are two aspects to the amendment. One is about pre-appointment scrutiny and the other is about what happens once the chair has his feet under the desk, as it were. I share the view of the noble Earl, Lord Russell, that the first part of this is the most important part of the Bill.

Before getting into the substance I should declare an interest, which is that I am an unpaid director of the group Net Zero Watch—I am sorry for not mentioning that at the very start.

On the first aspect of this amendment, its purpose is to make sure that the appointment at least attracts a degree of scrutiny and comment from relevant Select Committees. When I put this amendment down in Committee, I had in mind only the Treasury Select Committee in the Commons, but I have picked up the suggestions made by others that the Environment and Climate Change Committee also ought to have a role in this. I emphasise that this amendment would not give those committees a block. The right to make the appointment does not go to those committees; it is the right to comment on a decision that the Secretary of State proposes to make and which he or she will still be able to make after the Select Committees have looked at it. That degree of public scrutiny is important. The chair is a public figure in many ways, and in fact we have seen, from some of the statements he has made already, that he intends to use that public platform to make comments. It seems right in these circumstances that there should be a degree of political scrutiny of this.

The Minister said in Committee that this was not in line with the guidance of the Cabinet Office for such appointments. But I suggest that, even under the hard rein of the internal regimen of the noble and learned Lord the Attorney-General, guidance written by a department cannot constrain the Government, or indeed the legislature. Indeed, we see that in real life, because the appointments of the chairs of Ofgem, the Climate Change Committee and the Nuclear Decommissioning Authority, and so on, are all made in accordance with such a procedure. So there is really nothing novel here: it is the right thing to do for a major company of this nature and I hope the Minister will think hard about the defensibility of the position as it currently stands.

I will speak briefly to the second part of my amendment, which is really probing. The current arrangements for the accountability of the chair seem rather unclear. I guess formally he is accountable to shareholders, but the shareholder is obviously the Secretary of State and a chat with the Secretary of State is perhaps not enough for accountability for a company such as this. It may be that the auditors are not best placed to do that and it may be that there should be a degree of confidentiality to it, but there surely should be something that is formal and agreed and which can produce a degree of political debate. Perhaps the Minister can say exactly how this accountability will be achieved in practice, if it is not via some formal process of this nature. I repeat, to conclude, that the first subsection proposed by my amendment is the most important, and indeed, really quite substantively important to the nature of the body we are creating.

16:15

[Lord Teverson (LD)]

My Lords, I shall talk briefly to Amendment 1, because I probably disagree with it rather more strongly than my Front-Bench colleague. That list of objectives is more a list of government objectives than company objectives. It seems absolutely impossible that the company could ever satisfy its objective to reduce energy costs in the UK in a sustainable way in its own right. That seems inappropriate, in that it would not be able to meet those objectives.

I agree absolutely with the noble Baroness, Lady Noakes, that it is extremely unfortunate that we do not understand or know what the statement of strategic priorities is. That is the fault and that is the problem. On Amendment 1, I do not believe the company, with a budget of £8 billion, would be able in any way to meet all those objectives. I say also to the noble Baroness, Lady Coffey, that I agree with her and I do not think my noble friend Lord Russell would expect that amendment to be part of the Bill. As he said, it is a probing amendment to understand what the Government’s position is on that amount of money into the future.

[Lord Ashcombe (Con)]

My Lords, I support my noble friend Lady Noakes in this first amendment, because the four objectives outlined are highly relevant. In particular, I shall focus on the second objective, energy security, where maintaining a balanced mix of electricity generation is crucial. As we know, this includes baseload nuclear, renewables, gas and supplementary power by interconnectors.

My primary concern, as will not surprise your Lordships, is gas. It is essential not only to continue production from our existing North Sea fields but to allow further exploration and development in order that we may discover more. At this point, I very much thank the Minister for the time we spent last week discussing this item.

I think it is relevant to point out that, according to research from the Library, the UK’s indigenous gas supply still met 43% of our national demand in 2023, covering electricity generation as well as commercial and domestic needs. However, to bridge the shortfall, we rely on imports from two main sources: Norway, which supplies 32% of our pipeline but faces a growing political and resource pressures due to the European energy crisis; and the United States, which provides 15% through LNG, with other countries contributing less than 5% each.

The environmental impact of importing gas is significant. As of 2022, emissions from Norwegian imports were 50% higher than those from UK production, while LNG imports from the United States generated more than 3.5 times the emissions. Additionally, electricity accounts for only 25% to 30% of the UK’s total energy demand, with the remainder still dependent on fossil fuels. Many of these same arguments can be used for the continued production of oil, even though it is not, I am glad to say, used in electricity generation.

Given these facts, it is imperative that we continue to utilise the UK’s own resources by lifting the current pause on oil and gas exploration and production. I realise that this is slightly counterintuitive but, by doing so, we can assist the growth agenda, protect our jobs in the North Sea, reduce unnecessary imports, prevent higher global emissions and avoid shifting the environmental burden on to other nations. This amendment will very much assist the objectives of Great British Energy.

[Lord Hamilton of Epsom (Con)]

My Lords, I wish to pick up the concern voiced by the noble Lord, Lord Vaux, that GB Energy will pick up some of what I have described as the low-hanging fruit of projects in the energy sector, which can be serviced by the private sector. I do not think that that will happen very much. The putting up of wind turbines and so on by the private sector is well established. It is done by financiers who are more concerned by the feed-in tariff than they are by anything else. They even succeed, as I mentioned in Committee, in being paid at a time when nobody wants the electricity coming from the wind turbines, which I always think is a rather remarkable financial deal to be able to pull off.

Turning to Amendment 39 in the name of my noble friend Lord Frost, I raise with the Minister the question of tiered finance. There will be an awful lot of looking into the activities of GB Energy in investing in things but, in my view, here lies the problem: you will find that there are different layers of finance going into a project that may involve GB Energy. The risk we always run is that, unless the new chairman who has been appointed for GB Energy is incredibly smart, he is going to be left with the worst, highest-risk element of any of these deals being funded by the taxpayer. Of course, this means that, if the thing goes wrong, the private sector will suffer less than the taxpayer, who will lose all their money.

I would like to hear the Minister’s view on tiered finance, including how we will be able to have openness around it. Will it be possible for outsiders to look in on these deals and comment on them? Generally, does the Minister agree with me that the risk to the taxpayer seems extremely high on this? Of course, we will need Treasury authorisation for all these deals—the Treasury may stop them happening in the beginning—but it would be interesting to know how the Minister’s mind is working on this because it strikes me that the taxpayers are standing in the way of the high-risk elements of any of these deals in which GBE gets involved.

[Lord Offord of Garvel (Con)]

My Lords, I thank my noble friend Lady Noakes for opening the debate on this group of amendments, as well as all noble Lords who have contributed to the debate so far.

My noble friend Lord Frost pointed out in Committee that this Bill is even thinner in its contents than Bills that we would normally term skeleton Bills. I completely agree with this characterisation. As it stands, there is nothing in the Bill that tells us what Great British Energy will actually do. What will it invest in? How will it decide where its money goes? What criteria will it use for its investments? We have had three and a half days of Committee over five days on the Bill. We still do not know the answers to these questions.

On the first day in Committee, the Minister said:

“The key thing in the structure of the Bill is the objectives set in Clause 3. They will be informed by the statement of strategic priorities that Great British Energy will operate in, making sure that it will be aligned with the Government’s priorities”.—[Official Report, 3/12/24; col. 1066.]


We have discussed the different objects and objectives of Great British Energy, but I think that we need to return to this topic. It was pointed out by my noble friend Lady Noakes and the noble Lord, Lord Vaux of Harrowden, that, contrary to what the Minister has claimed, Clause 3 does not set out the objectives of Great British Energy.

Clause 3 establishes the objects of Great British Energy. Those objects set out what GBE will do. Those objects will be the means through which it will try to achieve its objectives, but what those objectives are still eludes us. That is why Amendment 1, tabled by my noble friend Lady Noakes and signed by the noble Lord, Lord Vaux, is so important. It establishes in the Bill the objectives that Great British Energy will have to work towards. Ensuring energy security, increasing long-term energy storage, increasing the levels of clean energy generation and reducing energy costs are all laudable objectives. They are all things that the Government have indicated that they want Great British Energy to work towards, but unless they are put into the legislation, there is no assurance that they will happen.

This point is especially pertinent given the recent refusal to re-commit to reducing energy bills. Noble Lords will be all too aware that during the election campaign the Government pledged to reduce energy bills by £300 per household. We then heard the chair of Great British Energy, Jürgen Maier, speaking on Sky News this weekend and refusing to say whether that promise still stood. Then the Prime Minister, speaking at the National Nuclear Laboratory last week, confirmed this figure and said:

“We said we’d aim for £300 … That’s what I want to achieve”.


We therefore have what appear to be different commitments from the chair and the Prime Minister. The chair will not commit to reducing household energy bills by £300 per year, but the Prime Minister will. Which one is it? If we already have a difference in opinion, and clearly no joined-up thinking before the Bill has even been passed, how can anyone believe that Great British Energy will follow through on its supposed objectives? It is evident that the only way this will happen is if there is a clear statement of those objectives in the Bill.

I turn to the other amendments in this group. My Amendment 20, and Amendment 37, tabled by the noble Lord, Lord Vaux of Harrowden, seek to ensure that there are clearer reporting requirements in the Bill. Currently, there are no requirements to submit reports other than the usual ones under the Companies Act 2006. Many noble Lords have argued that this is not acceptable. The reporting requirements in these two amendments are not overly onerous for GBE to comply with, yet the net benefit would be significant.

I have also tabled Amendment 41, which seeks to ensure that Great British Energy is given a specific direction to achieve a 10% minimum return on its investments annually. Like with the rest of the Bill, there has been absolutely no indication of the expectations that will be placed on GBE. Without this, how can anyone be certain that the taxpayer will see value for money from this investment? If £8.3 billion from the public purse is going to be funnelled into a state-operated investment company, I am certain that taxpayers would like some guarantee that it will pay off—or at least some measure of target return.

This brings me to Amendment 49. Given the permissive extent of the borrowing provisions in the Bill, it is pertinent to allow the Secretary of State to implement a restriction on borrowing. The amendment does this via affirmative statutory instrument, allowing the Secretary of State flexibility, while placing greater safeguards on the amount to be spent via Great British Energy.

In the same vein, we also need to ensure that there are adequate safeguards for the financial assistance that the Secretary of State can provide. Amendment 56 does this by preventing Clause 4 coming into force until the Secretary of State has established the conditions under which financial assistance may be provided. Once again, we need clarity around this issue. We need to know when, how and why the Secretary of State would give financial assistance, under what circumstances and with what conditions attached; otherwise, there is a distinct possibility of the Bill becoming a blank cheque to Great British Energy for unlimited sums of public money.

Finally, Amendment 57, in my name and that of my noble friend Lord Effingham, requires the publication of a revised financial framework document. I said in Committee that I did not feel it possible to move forward with the creation of Great British Energy until the Government were more forthcoming on this matter. Regrettably, this elusive information is still being withheld. We need sight of the framework document. Once again, I strongly urge the Government to produce this and allow noble Lords to examine its contents.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, I am grateful to all noble Lords who have taken part in this interesting debate. Of course, we have returned to some of the arguments that we had in Committee. I understand that noble Lords would like to have more information about the activities of Great British Energy, but we have chosen to bring a Bill that, essentially, sets up the basics of establishing a company. Much of the detail that noble Lords have discussed will come through the statement of strategic priorities, which we will debate later.

We do not think it right that we can publish our own statement, or a draft, without the full active participation of Great British Energy, and we are not really going to move from that position. Given that the statement of strategic priorities is to come and that we will hold Great British Energy to account for its performance, as would be expected with any normal public body for which the Government are ultimately responsible, we are resistant to putting what we believe to be unnecessary detail in the Bill, restricting what the company can do in carrying out its activities, especially as these evolve over the longer term.

16:30

I am very clear that the objectives will be set by the statement of strategic priorities. The protection that noble Lords have—as the noble Baroness, Lady Noakes, rightfully pointed out—is that the statement cannot overrule the objects clause in Great British Energy’s articles of association, and that this framework is provided for in legislation through Clause 3 of the Bill. We have already published the founding statement, which outlined that Great British Energy’s overall mission is

“to drive clean energy deployment, boost energy independence, create jobs and ensure UK taxpayers, billpayers and communities reap the benefits of clean, secure, home-grown energy”.

The founding statement also outlined what Great British Energy would do to deliver that mission.

I also remind noble Lords that in Committee we discussed the number of mechanisms that exist for Parliament to scrutinise Great British Energy. We are committed to transparency, which is why Clause 5 provides that the Secretary of State must lay a copy of the statement of strategic priorities and any revision before Parliament. Parliament will be presented with a copy of the annual report and accounts of Great British Energy each year and will be able to hold it to account for its activities and its stewardship of public funds through the normal methods of accountability.

In relation to Amendments 17 and 49, tabled by the noble Lord, Lord Offord, and the noble Earl, Lord Russell, on borrowing, the Government have committed to capitalise GBE with £8.3 billion across this Parliament. I take what the noble Baroness, Lady Noakes, has said, but I have supreme confidence in my right honourable friend the Chancellor and the spending review. It is a government commitment that GBE will be capitalised with £8.3 billion across this Parliament. I cannot go beyond that because it depends on the spending review and, however much I am pressed, I cannot say anything more on this.

[Lord Hamilton of Epsom (Con)]

Can the Minister be absolutely clear on the role of the Treasury? He talks about £8.3 billion being allocated to GB Energy, but will the money not actually be held in a sort of escrow account in the Treasury and will GB Energy not have to apply to the Treasury before it can spend any of it? It is rather important whether the ultimate decision lies with the Treasury or GB Energy.

[Lord Hunt of Kings Heath (Lab)]

My Lords, we need to await the outcome of the spending review and the timetabling of the money to be allocated to Great British Energy. We are trying to establish a balance between wanting to give Great British Energy operational independence and ensuring that the proper controls over public expenditure are kept appropriately. I think the noble Lord, with all his experience of how government works, will have confidence that the Treasury will be keeping a very close eye on this and the processes, and ensuring that public money is spent wisely. My role as a Minister, too, is to ensure that, none the less, GBE has sufficient operational independence to be able to make the kind of decisions that need to be made to get the investment decisions right. We are trying to get, and clearly want to get, a balance between proper control and giving GBE the right ability to make the decisions it needs to make without being excessively micromanaged.

We do not expect that GBE will need to borrow. However, if it turned out at some point in the long term that a Government decided that, and GBE asked for more borrowing facility, the normal processes of His Majesty’s Treasury would come into play. As a public body, GBE would require explicit agreement from His Majesty’s Treasury before being able to borrow from external providers, if HM Treasury agreed that this would be beneficial. We should also bear in mind that the chief executive officer of Great British Energy will be the accounting officer. That too should give a great deal of comfort on the proper expenditure of public money.

On Amendments 20 and 37, on the reporting requirements that were the subject of much discussion in Committee, I do not want to restate previous arguments, but much of the content proposed in the amendments would already be included in the annual report and accounts of Great British Energy, which, as I said, will be laid before Parliament. Also, the Treasury already has the ability to request specific reporting information from arm’s-length bodies through the Government Resources and Accounts Act 2000. Furthermore, GBE will be required to follow the provisions of the Government Financial Reporting Manual, which sets out details of required reporting by arm’s-length bodies through annual reports and accounts; these are additional to the requirements of the Companies Act 2006.

I thank the noble Lord, Lord Vaux: we have had a series of engagements between Committee and Report on the issue of additionality. I well recognise that this is an important matter, and noble Lords have been right to raise it. Let me be clear here: additionality will be an important principle for Great British Energy, and it will form part of the way in which Great British Energy assesses its opportunities and investment decisions. In the context of the noble Lord’s amendment, I am very happy to confirm our expectation that Great British Energy will include reporting on additionality as part of its annual report and accounts. I also confirm that all investment into and expenditure of Great British Energy will be subject to future business cases, including the cost and benefits of these investments, and the monetised and non-monetised impacts of Great British Energy’s future activities will also be considered.

Additionally, Great British Energy is part of the Government’s major projects portfolio. We therefore expect a summary business case for these activities to be published in due course. Moreover, we expect the outcomes of future spending reviews to be made public through the Chancellor’s Budget announcements, as is customary.

On Amendment 39, on the subject of Great British Energy’s chair, which was tabled by the noble Lord, Lord Frost, and returns to a point he raised in Committee, one accepts that it is important to ensure the quality and performance of the chair, but the existing framework and best practices, which I outlined extensively in Committee, already provide robust mechanisms for oversight and accountability. I will again say—the noble Lord, in a sense, challenges me on this—that the decision on scrutiny of appointments normally falls to discussions between the Secretary of State and the relevant Select Committee chair. It is a procedure that the previous Government followed; we will continue with that. Moreover, the proposal for an annual review of the chair by external auditors seems to be way over the top. I have already said that GBE will be subject to the normal accountability arrangements. I would expect Ministers, in addition, to meet the chair of GBE frequently, as Ministers in my department do in relation to a number of public bodies for which they are accountable. As ever, we are trying to find the balance between holding GBE properly to account and putting our trust in it, in the quality of people around the board led by the chair, and in the senior officials that they then appoint to do the job properly and effectively.

In relation to Amendment 41, proposed by the noble Lord, Lord Offord, on the rate of return, I think this is going into too much detail and is inappropriate for Parliament to insist on. The Bill we have before us is focused solely on making the minimum necessary provisions to enable the establishment of this operationally independent company. Adding the proposed detail risks too narrowly restricting the company in carrying out its activities, not least because GBE’s work will extend beyond investments. We do not want to be restrictive and put a rate-of-return requirement on all its activities. For me, one of the most important activities that GBE will do is to carry out a lot of the groundwork to enable investors to come in. We know that we have a big problem with the manifold delays in energy infrastructure development and investment. We, of course, seek to reform the planning system and find other ways in which we can speed up development, but GBE has a vital role to play in relation to that too.

I will resist Amendments 56 and 57, on the commencement of the powers in the Bill. These amendments would delay the designation of GBE under Clause 1 and the ability of the Secretary of State to provide financial assistance to it under Clause 4. Those clauses are fundamental to GBE’s ability to start its operations as soon as this Bill is passed.

I am very grateful to noble Lords for their interventions and contributions. I understand that they wish to ensure that GBE is properly held to account. I hope I have convinced them that we will indeed hold GBE to account. Equally, I must fly the flag for operational independence and for the ability of the board to do the job we set out for it to do.

[Baroness Noakes (Con)]

I thank all noble Lords who took part in the debate on this group of amendments. I will start with Amendment 37, in the name of the noble Lord, Lord Vaux. He will decide, when we get to Amendment 37 in its place on the Marshalled List, what he does with it. I will just say now that I was grateful for what he said on additionality, because it is important that we get proper public reporting on whether Great British Energy has achieved the additionality to which it is required to adhere.

I thank the various noble Lords who have given their support to my Amendment 1. I got lukewarm or even negative support from the Liberal Democrat Benches, but I think they were trying to engage in the wording of the objectives. My sense was not about the detailed wording; I was trying to capture what I thought the Government were trying to achieve in terms of objectives for Great British Energy, because the key thing for me is that we have things against which we can hold Great British Energy to account.

The Minister said that the strategic objectives would be set by the statement of strategic priorities. As I tried to argue, it is not inevitable that a statement of strategic priorities would include objectives. If the Minister is telling me that it will include objectives, then we should have something against which we can hold Great British Energy to account. He rather confusingly then went on to say that we would be able hold it to account for its activities. My argument is not that we hold it to account for its activities but that we hold it to account for what it achieves against what it is supposed to be achieving, but I assume that that was loose language on the part of the Minister and that the strategic priority statement will indeed set strategic priorities. On that basis, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

16:45

Clause 3: Objects

Amendment 2

Moved by

[Baroness Liddell of Coatdyke]

2: Clause 3, page 2, line 13, after “encouraging” insert “investment in,”
Member's explanatory statement
This amendment, along with others in the name of Baroness Liddell of Coatdyke, aims to broaden the definition of "clean energy" to include technologies that directly or indirectly reduce greenhouse gas emissions, such as Carbon Capture, Utilisation & Storage (CCUS) and low carbon hydrogen.

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I refer to my entry in the Register of Members’ Interests: I am the honorary president of the Carbon Capture and Storage Association. The amendments listed in my name all relate to the same issue so, with the permission of the House, I will group them together. Their purpose is to give clarity and not to exclude vital technology

The UK is at a pivotal moment in energy transition and these amendments would update the Bill to reflect the role of CCUS and hydrogen in achieving a sustainable, reliable and low-carbon energy system. It is a very useful Bill, but it does not explicitly include these technologies in the definition of “clean energy”. Accepting these amendments would be a means for the Government of highlighting to investors and to the industry their commitment to supporting both renewable energy and low-carbon technologies in a balanced and inclusive way.

The purpose of the amendments is simply to broaden the definition of “clean energy” and ensure that GBE can support a wider range of innovations that will foster investment and partnership. That will be crucial to the UK achieving clean power targets by 2030.

In the Carbon Capture and Storage Association, which was established in 2006, we recognise that we have the commitment of the Energy Secretary and, indeed, the Chancellor of the Exchequer, who speaks of CCUS often to promote the concept of clean energy. However, to reach out to the myriad companies anxious to develop CCUS, it will be necessary to be a lot more precise. There are many out there who are very keen to get in on the act, not just here but around the world.

In the Bill, “clean energy” is defined as any energy

“produced from sources other than fossil fuels”.

Our argument is that you can “clean” energy. That is what carbon capture is about: cleaning the energy that has already been applied.

Some people think that carbon capture, utilisation and storage is a new concept, but it has been around for at least 25 years. When I was an Energy Minister about 25 years ago, it was described as clean coal technology. In 2006, Dr Chapman established the Carbon Capture and Storage Association. It has grown, and the benefit to the environment has been recognised. I have been to a lot of conferences on carbon capture and storage. It is not a terribly exciting issue to most people—it is to me—but the most recent conference in November was packed out. It was held in Central Hall Westminster and the sheer scale of interest was quite dramatic. Businesses see the opportunity.

The Intergovernmental Panel on Climate Change and the Climate Change Committee have both taken a great interest in CCUS as an integral part of limiting global temperature rises and the route to net zero. Indeed, the Climate Change Committee estimates that the UK needs to capture over 50 million tonnes of CO₂ per year by 2035 to keep in line with emissions reductions.

The ambition, certainly on this side of the House, is to get to a clean power energy system by 2030, as we promised during the election. That might not be possible without carbon capture and storage. Indeed, CCUS is absolutely essential for industries such as cement. Without CO₂ there is no cement industry; CO₂ production is an essential part of the process of creating cement.

CO₂ storage has operated for 25 years in Norway. There are now 50 operational large-scale CCUS facilities worldwide and 44 are under construction. These are countries that are out there, desperate to get in the lead. The IEA has stated that global CCUS deployment has

“tripled over the last decade”.

However, we cannot afford the delays that we have seen in the past. Yesterday, I was delighted to see that Drax can proceed with a £2 billion carbon capture upgrade at its north Yorkshire plant. It is more important to get things moving rapidly now, because there are so many businesses that are interested in carbon capture in the UK which are getting to a stage where they are wondering whether we are going to do anything about it.

Last week, the Public Accounts Committee published a report that was very sceptical about the delivery of CCS. Yes, it does not come cheap, but the much-quoted £22 billion is over 25 years; you do not have to put your hand in your pocket right now for £22 billion to pay for it. However, what we do have to watch is the pressure on the fuel bills for households; they must not carry the cost of other delays. The PAC report challenges the department more than the industry, not least on dispersed sites and the slow response to issues that we saw repeatedly with the previous Government—not helped by repeated reshuffles.

The time for CCUS is now. It will create jobs, not least for those currently in the energy industries who can bring knowledge and experience to the table. All I ask is for the Government to make clear their commitment and to get this country in the lead in cleaning up our energy systems. We will all benefit. I commend Amendments 2 to 6, 11 and 12 to the House.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I rise to speak to Amendment 7 in the name of my noble friend Lord Offord, to which I have added my name. This modest amendment merely asks the Government to insert

“the production of nuclear energy”

at the end of Clause 3, page 2, line 18. I also pay tribute to my noble friend Lord Trenchard, who sadly is unable to be in his place today, for his Amendments 10, 33 and 36, which all focus on the nuclear sector.

The Minister for nuclear will not be surprised that I bring this back on Report. He will understand that we merely wish to ensure that nuclear energy plays its full role in our energy mix; putting it on the face of the Bill signifies the Government’s intention that it should do so. I will not repeat the arguments in full that I made at Second Reading. The Government have already acknowledged the importance of nuclear in various speeches at Nuclear Week in Parliament, and the recent announcement that the nuclear national policy statement, EN-7, is to be updated is very welcome.

By accepting this amendment, the Government can bridge the gap between their stated aspiration and its implementation. It will also send a strong signal to investors, developers and the broader energy sector that the UK is serious in its ambitions for nuclear. While we can sadly no longer aspire to claim a world first in the development of new nuclear technologies—Canada has already claimed that crown—it is not too late to be building domestic supply chains and a home-grown industry that will contribute to our own energy security. At the same time, one must of course recognise the potential for creating good-quality jobs and careers in areas such as north Wales that need them most.

Of course, the relationship between Great British Energy and Great British Nuclear remains the big unknown. If properly resourced, GBN could have been uniquely positioned to co-ordinate and drive nuclear developments across the country. It still can. It was created 18 months ago and the small modular reactor drawdown was launched in October 2023. We await the outcome of that competition and I hope that the Government will pick up the pace.

Finally, noble Lords have been silent about the equally important relationship between Great British Energy and UK Industrial Fusion Solutions or the International Atomic Energy Agency. While the STEP project at West Burton will not help the Government towards their 2030 ambitions, in the long term fusion remains the holy grail and is one sector where the UK really does lead the world. I ask the Minister to give the House a clear assurance that Great British Energy will have a role in developing our nuclear energy capability.

[Viscount Hanworth (Lab)]

My Lords, Amendment 10 is a minor amendment and the noble Viscount, Lord Trenchard, has asked me to speak on it in his absence. I believe his amendment evinces frustration at the tendency of those who are averse to nuclear energy to exclude it from their definition of “clean energy”. He has therefore proposed that the Bill should state that clean energy means renewable energy, nuclear energy and energy produced from sources other than fossil fuels.

In assessing the hazards of nuclear energy, one must separate the issues of nuclear cleanliness, by which I mean the absence of nuclear pollution, from issues of nuclear safety. The latter range from concerns about the accidental spillage of radioactive materials to the risks of rare occurrences such as the accidents of Three Mile Island, Chernobyl and Fukushima.

A degree of laxity characterised the early nuclear industry, but the industry has since developed a stringent attitude towards cleanliness. The radioactive emissions of our nuclear power stations are negligible. They are a fraction of the emissions from the granite rocks of Aberdeen, and the human exposure is far less than that of a high-flying airline passenger on a scheduled flight. The industry’s attitude to cleanliness extends far beyond the question of radioactive contamination; I have seen the senior management of a nuclear power station become apoplectic at the discovery of a cigarette butt embedded in a gravel pathway.

The major accidents that I mentioned were occasioned by the meltdown of nuclear power stations embodying pressurised water reactors. They have led to a heightened emphasis on the safety of such power stations. That is evident in the design of the Hinkley C power station, where the consequences of the worst imaginable malfunctions would not extend beyond the power station itself. The same is true of the current designs of small modular reactors, which are also pressurised water reactors.

The SMRs employ a nuclear technology that is set to be replaced by fourth-generation technologies endowed with passive safety. A molten-salt reactor provides an example: in the unlikely event of a rupture of the containment vessel, the molten salt and the nuclear reagents would escape into wider containment, after which the nuclear reaction would cease and the salt would crystallise at 300 degrees Centigrade. Such reactors are fit to be employed close to industrial processes that require abundant heat and electricity. An unfortunate fact, to which I must testify, is that we are failing to support the development of such reactors. We are leaving it to others to develop the technologies that are vital for achieving our net zero ambitions.

[Lord Hamilton of Epsom (Con)]

My Lords, I support Amendment 10 as well, because the future of nuclear is very important if we are going to lead to a much cleaner environment in which to live. It is an important source of power generation that does not emit filth, like so many of the others do.

I shall pick up on the remarks of the noble Baroness, Lady Liddell, about Drax. I have a slight problem with Drax because, although it makes out that it is using renewable fuel, it seems to be cutting down quite a lot of trees in North America to feed it, and the stuff that comes out of the chimney is highly polluting. The fact that it is not as polluting as coal does not mean it is not polluting at all.

We have to look very closely indeed at the use of some renewables—I am not including solar and wind here. I mentioned in Committee that we are growing oil-seed rape to turn into vegetable oil that then gets refined and put into aircraft, but all the way through that process we are emitting CO₂ and that is what we are supposed to be combating. Drax is emitting CO₂ as well.

17:00

I have some sympathy with the Government over this. They want to continue with Drax because it is a critical power station that produces a very large amount of electricity for people in that region and they cannot really do without it. But it would be quite nice if the Government said that and, at the same time, audited the amount of CO_{2coming out of Drax so that we know what we are dealing with.}

In years to come we may perhaps have brought in nuclear, for instance, with small modular reactors. I forgot to declare in Committee my modest shareholding in Rolls-Royce; it certainly would benefit if the contract was given to it. Small modular reactors might well bring in good new sources of electricity and it may be possible to wrap up Drax at some stage, which is polluting the atmosphere and contributing to CO₂ emissions. We have to be very careful that we do not fall into the trap of saying that, because it is being fed with sustainable wood chips or oil-seed rape is being grown and so forth, we are not emitting vast amounts of CO₂ to get to the point where we generate the electricity. We need to look very closely at this.

[Baroness Boycott (CB)]

My Lords, I will speak to Amendments 13 and 44 in this group. I thank the noble Baroness, Lady Young, and the noble Lord, Lord Randall of Uxbridge, for supporting Amendment 13, which is very straightforward. Very simply, it would exclude biomass from the things that GB Energy can invest in. Amendment 44 is drafted very tightly and makes the assumption that biomass will still be included, but then asks: will the Government report on the perceived carbon neutrality of that biomass, the percentage of power it will provide to the grid and the overall impact of it on achieving our domestic and international climate targets, particularly our nature targets?

I wanted to bring these back today as I did not feel like the Minister’s response in Committee addressed the issue. But it would be entirely remiss of me not to take the opportunity to say well done to the Government on what they have said about the future regime of Drax. I wondered whether the noble Lord, Lord Hamilton, had picked up on this. It came out yesterday and is a big move on behalf of the Government to start to rely much less on Drax and to really try to clamp down on all the things he was talking about, such as importing old wood from Canada and the sense that we just cut up wood in the Pacific and ship it all the way here. The Government have gone a really long way and I am really grateful, because I and a lot of people have banged on about Drax now for a very long time. It is terrifically encouraging to see that the phase-out of this type of power is on the cards as we build up all the others. From my point of view, it does not mean that all biomass is okay; I think it is a very dodgy source of fuel.

I noted, in a report by E3G last month, that the clean power mission could be delivered without extending the lifetime of Drax, so perhaps the Minister can tell us how far they have considered this as an option and what options were considered. I have a few specific questions. Bioenergy is costly and, as I said before, has a great impact on nature and land use, and particularly on what we will have for food production. I know there are lots of things such as miscanthus that you do not have to replant, but you are still using up some really good agricultural land. Is this a good use of the money we are going to invest in GBE?

Can the Minister confirm that Drax will not be allowed to burn wood from primary forests for any of its generation? I am so pleased with the work that has been done, but I would like some confirmation that we can all listen to. On the issue of transparency, can he commit to his department publishing whatever research, analysis or investigation it has done before arriving at the decisions it has today? When I asked a Written Question on this recently, the substantive point was not answered.

As many people who care about this have seen, “Dispatches”, Private Eye, “Panorama” and even an Ofgem investigation have found that all the biomass energy generators in the UK have misreported data. This is endemic—it is continual. Along with several other noble Lords, I wrote to the FCA last week about some of these allegations, which contradict Drax’s annual report. So, while I appreciate the announcement, I would like to know what measures the Government are taking to tackle this issue. The operators—or at least one—cannot be trusted to mark their own homework, and the regulator has thus far failed to be completely on top of it. I know that we are tightening all the regulations, but is the Minister confident that his department will be able to deliver what has been asked for, because what has been asked for is a terrific step forward.

While the Government have let the door open for BECCS in the future, we need to be honest about the fact that we do not know whether it will work at the scale that is needed. It was very interesting to hear the outline of the earlier amendments in this group, with the extreme positivity about what carbon capture and storage will be, and I look forward to hearing more about it. However, at the moment it is taking out very little carbon from the atmosphere and, in all the future carbon budgets, it plays a very big role in us getting to net zero. Many people are anxious about whether this will be deliverable, and on what timescale.

[Lord Howell of Guildford (Con)]

My Lords, the speech of the noble Baroness, Lady Liddell, was music to my ears. This really is the missing prince at the ball—the missing element in the whole strategy of reducing emissions in order to curb the violence of climate change, which, after all, is the main purpose of all our endeavours. It is not a secondary purpose, it is the main purpose, and of course it is failing. Emissions are continuing to rise worldwide and the forecasts are very gloomy that they will rise still further. Our own performance has been good in contrast, as one tiny bit of the jigsaw, but overall the aim of reducing emissions is not succeeding. Carbon capture, usage and storage is an area where vast improvements can be made, with real effort to store emissions, such that we no longer have to watch those gloomy monthly or three-monthly figures detailing rising emissions worldwide again and again.

Furthermore, it is admitted, quietly—I think I have heard NESO and other experts say it openly—that carbon capture and storage is an essential part of the 2030 story. Because we have delayed so much—all parties are to blame—and we have not got on with nuclear, which we have allowed to shrink because we dithered on various other technologies, there has been very little advance on carbon capture and storage, but we know that in order to achieve decarbonised electricity by 2030—I think we are talking about the present electricity output, which is one-fifth of our total energy storage, not the whole of an electrified economy—we will need, in order to prevent outages, further gas-generated power. That is not proclaimed very loudly; CGN plants are being contracted for, designed and built to make it possible for there to be reliable and, we hope, affordable energy in 2030, even though it is substantially decarbonised.

That will require an output of carbon of considerable size, which will have to be captured and stored, otherwise the system will not work. The 2030 target is literally unobtainable, unless we have an elaborate expansion of carbon capture and storage for gas-generated electricity, which is an essential part of the pattern for 2030, as it probably is for 2040 and 2050 as well. Domestically, this is a central issue, yet it is hardly mentioned in this discussion or in the Bill.

That is not all; worldwide, the one contribution that this nation could really make through its brilliant technology is in developing cheaper versions of carbon capture and storage. All over Asia, there are coal-driven electric plants belching carbon and smoke, and more are being built at the moment. China has achieved amazing things in reducing its coal-based electricity from 1,900 gigawatts a year down to about 1,000 gigawatts. As we now produce no electricity from coal, which is rather amazing, that is an infinite number of times the amount that we produce. China is down to 1,000 gigawatts, but that is still a vast addition every year and every day—it is producing much more than we do in a year in emissions of carbon dioxide and methane as well.

To deal with the world’s problem, carbon capture and storage is essential, capturing not only carbon emitted when generated from fossil fuels but carbon direct from the atmosphere. Some major projects are being developed around the world on that scale. All these are essential projects to achieve the main aim, which is to lower emissions. If that is the main aim then Great British Energy should surely have a serious role in it.

We should be using the resources of organisations with money to invest in getting the cost down, to the point where it is possible to put some kind of abatement on those 11,000 chimneys and have some control of the carbon to be captured. Can that be done in the next stages? Of the countries concerned, one is talking mainly about the United States, where it can be done; China, where they are trying to do it; and India, where they are trying hard but not succeeding at all. They need the engineering skills to install carbon capture and storage, once we have developed systems which are cheaper and more economic. There is a whole new programme there to be developed. Is it being developed and invested in? Is this organisation looking at it? We have not had a single word from the Government—not a word—on the idea that this should be a major part of the story.

The noble Baroness, Lady Liddell, is totally right that this should of course be a major part of the story. I fear that, as with so many parts of the endeavour to get to a green transition, we are losing sight of the main purpose, which is reducing emissions. This nation is superbly equipped to contribute on that front, but not necessarily by itself subsidising more and more low-carbon electricity for our own purposes. We should go that way but not push it too fast, because if we do that then we will slow things down.

If we are to contribute to the world’s efforts on this, which are failing and going backwards at the moment, and to make more progress, we must turn to carbon capture and storage. Why is there no mention of it in the Bill? Please can it go in, through this amendment or in other ways that the Government choose, to indicate that we are serious about reducing emissions and not just about the virtuous side of clean energy, which is very nice and very important but not the main aim?

[Lord Berkeley (Lab)]

My Lords, my Amendment 35 is about the renewable liquid heating fuel obligation, which is something we debated in Committee. I thank my noble friend the Minister for spending time with us and understanding the problems of some of the people who operate in this field. I am grateful to the noble Lord, Lord Bruce, for his support.

This issue affects 4 million people in this country, and about 250,000 businesses, who are off the gas grid and therefore generally rely on heating oil, as I do in the countryside—I declare an interest. These are big businesses and they are no more complicated than other similar systems, but it is a question of whether the renewable fuel obligation could be applied, so that it would be easier for people to continue to use fuel oil with this addition, rather than having to spend a lot of money converting to some other means, which I know has been debated at length.

17:15

Our discussions with the Minister were very helpful. They helped me, and maybe him, build a greater understanding of the benefits that RLHF could deliver in supporting the Government’s decarbonisation agenda. I hope that this debate, and my noble friend’s positive response, will give people comfort in continuing to press further with the renewable fuel option. My main question for the Minister is whether he can he give the House any further insight into when the Government will publish a consultation to implement the renewable liquid heating fuel obligation.

The amendment would implement Section 159 of the Energy Act 2023. It is interesting that there does not seem to be any problem with the supply side; the people I mentioned who service similar boilers at the moment can provide it. The great thing is that making this change can reduce emissions quickly and affordably, and therefore contribute to clean power and the net-zero objective: it is win-win, really. It is similar to the renewable transport fuel obligation, which the last Labour Government put in place. My suggestion is that we would start with a 20% blend of renewable liquid fuel, which can be done very quickly. That would show that there is enough feedstock and a minimum running cost increase to the consumer, which is important. There would be no requirement for changes to boilers, as I think the suppliers have all said.

It is worth pointing out that, in the last period of storms—I really cannot remember how long the storms went on for this winter, but it was a long time—we saw the impact that they had on electricity infrastructure. The great thing about retaining fuel is that, yes, you need to have the electricity switched on to fire the boilers, but it is not providing the heat and so you need much less of it. It is therefore a much more comforting way of heating your property or business than if you had to make a big change.

I am told that all the equipment and the liquid fuels can be produced at Grangemouth, in Scotland. This amendment gives Ministers a starting block from which to report and explain how quickly the change could be made, what changes would be necessary and how it could be done.

Interestingly, a 20% blend for off-grid properties will not only meet but exceed the carbon budgets straightaway, up to 2035. As I said, millions of people rely on this fuel oil at the moment, and it costs them a lot of money. I hope that Great British Energy will be conscious of the need for oil consumers too, and that it will include the change that I hope will come as a result of some of the things that I put in my amendment—I shall not go into them now—and bring people the comfort that they can still heat their homes, businesses or properties in a cost-effective way. The fuels are available now, the people are available to do it and the series of changes involved would be easy and quick to make. I look forward to my noble friend the Minister’s response to this group.

[Baroness Young of Old Scone (Lab)]

My Lords, I will speak to Amendment 13, to which I have put my name.

I am very clear that biomass is not clean energy. It has substantial downsides: the harvesting cycle does not replace carbon in an equivalent way until many years have passed; and the same goes for the impact on biodiversity—there is not a like-for-like replacement at all.

If we were to grow our own biomass here in the UK, the land take would be substantial and would compromise land uses for multiple other requirements for which we need land, as outlined in the land use framework. If the feedstock comes not from the UK but from overseas sources, that is not a secure source and we are putting ourselves in a position of vulnerability—as indeed we are from other overseas sources of fuel at the moment. It is not a sustainable and secure feedstock.

I welcome the Government’s Drax Statement yesterday, provided that it is only a first step to a rapid phase-down of Drax; I would be grateful if the Minister could confirm that. Can he also confirm whether the Government support the recent Ember report on subsidies post-2031, which shows that the case for a 2030 clean power system for the UK is possible, while reducing considerably our reliance on this expensive, imported biodiversity-unfriendly biomass?

On Amendment 44 in the name of the noble Baroness, Lady Boycott, I will ask the Minister for clarification. Will the review of biomass power, which was signalled in the Drax announcement, cover absolutely all the points made by the noble Baroness in subsections (2)(a) to (e) in the new clause proposed by Amendment 44? Can he give us some clarity on that?

I was not intending to comment on Amendment 2 in the name of the noble Baroness, Lady Liddell, on carbon capture and storage, but I am afraid that I will have to. I really do not like being on the opposite side from the noble Baroness, because she is a bit of a fighter and two Scots against each other might not be a good idea. But I think we are making a big mistake in overrelying, in the carbon budgets, on carbon capture and storage. I also agree with the noble Lord, Lord Howell—this is an out-of-body experience for me—and disagree with the noble Baroness, Lady Liddell; this is all the wrong way round. The reality is that carbon capture and storage projects are failing worldwide at the moment; they are not proceeding well, and investment is being withdrawn. This is the emperor’s new clothes. We are all saying, “There’s a bloody great hole”—

[Noble Lords]

Oh!

[Baroness Young of Old Scone (Lab)]

Sorry, Hansard.

There is a huge hole in the carbon budgets, in which we have all colluded by saying, “Well, carbon capture and storage will fill that hole”. But what happens if it is the emperor’s new clothes and it does not work? We have to be very wary and understand what is happening at the moment. The Government are, quite rightly, throwing quite a lot of money at carbon capture and storage to trial it out as quickly as possible to find out whether we here in the UK can make it happen. If we can, great; let us replicate it very fast. If we cannot, we have to find some other solutions.

My final point is in support of the noble Lord, Lord Berkeley—

[Lord Howell of Guildford (Con)]

I thank the noble Baroness for giving way. I do not want it to sound as though CCUS is the answer to everything, but surely the whole concept of carbon sinks, of trying to preserve our forests—which are rapidly disappearing—and of developing new freshwater areas around the world in desert areas, as has been proposed in a very elaborate series of schemes, is doing just that: they are trying to capture carbon directly out of the atmosphere or from projects which are belting out carbon. What is wrong about that? I do not quite see why she is so dismissive.

[Baroness Young of Old Scone (Lab)]

I am probably breaking the rules here—I should address the House rather than the noble Lord—but nature-based solutions, which create biodiversity and other benefits, such as benefits for human health, mental health, water purification and flood control, are excellent schemes if they can be made to work effectively and cost effectively, bearing in mind all the benefits. Carbon capture and storage from industrial processes or, indeed, from air sources—from carbon that is already out there—is the bit that is not yet tested and not yet proven. We need to get ahead and decide whether we can make that work in the UK, which, I hope, is what the Government are trying to do. Perhaps the Minister will confirm that.

On Amendment 35, I share the joys with noble Lord, Lord Berkeley—not in the same house, I may say—of being an off-grid home owner who wants to do their bit for carbon reduction. At the moment, the choice for the average home owner in a rural property of an aged sort, which is highly dependent on oil because they are off the gas grid, is not terrific. You live in trembling fear of the wretched boiler breaking down: in an emergency situation such as that, the choice that then faces you is either just slamming in another oil-fired boiler, or else shelling out 20-odd thousand and waiting in the cold for six months while they work out how to put in an air source heat pump, which will probably not work at all anyway. It is not a choice. We need options for that rather beleaguered population in the country, many of whom live in aged, drafty houses and have very little assets of their own to be able to upgrade or may have a listed building of the sort you cannot upgrade.

Renewable liquid fuel seems to allow a simple transition using existing kit rather than having to capitalise up front for a totally new technology. It could produce—literally from next week, if you wanted it to—carbon reductions of up to 80%. I support the amendment tabled by the noble Lord, Lord Berkeley, and I hope the Government can do that too.

[Lord Krebs (CB)]

My Lords, I did not intend to speak in this debate, but I will say a few words about biomass and Drax. In so doing, I have to declare a conflict of interest in that I chair Drax’s independent advisory board on sustainable biomass.

The point I want to make is very simple: the devil is in the detail. There are circumstances under which biomass is not sustainable as a source of energy, where it does not replace the carbon emitted from the chimney stack by the growth of new trees. On the other hand, there are circumstances under which it is carbon neutral. Therefore, the crucial thing is to understand whether Drax is sourcing its material in a sustainable way.

It is not my job here to defend Drax and it is certainly not my job to comment on government subsidy, but I can say that there is a very detailed literature on forest carbon. If any noble Lords wish to make assertions about the carbon neutrality or otherwise of biomass burned by Drax at its power station, they should first study this literature in great detail and not rely on second-hand reports on “Panorama” or in other media outlets. So, I simply urge those noble Lords who wish to comment on Drax to study the detail.

17:30

My final, crucial point is that in all the analyses of carbon neutrality of forest source biomass there has to be an assumption. That is the counterfactual: what would happen to the forest were biomass not being harvested? Let us take the case of the south-eastern United States, where fast-growing trees under the generic name of southern yellow pine are grown for timber, and the forests are owned by private landowners—they are farmers, essentially—most of whom have converted land from pasture or from other agricultural purposes to growing forests. The forest cycle is 27 years from a seedling to a mature saw-log tree that is harvested for building material. In that 27-year cycle, two thinnings take place to enable the remaining trees to grow tall, straight and large, and it is the thinnings that are used by Drax. In former times they were mainly used for paper purposes but, as paper use goes down, Drax and other companies take the thinnings to turn into wood pellets.

In understanding the carbon neutrality of this system, you have to ask the question: what would happen if those thinnings were not commercially used by a consumer such as Drax? One possibility is of course that the farmer would say, “Well, I’m no longer making enough money out of trees, so I’m going to get rid of forest and go into beef production”. So, in order to calculate the consequences for the global carbon budget, you have to make assumptions about the counterfactual. The situation is complicated, and that is all I really wanted to say: we should not jump to simplistic conclusions.

I will make just a very final, final point. The noble Baroness, Lady Young, asserted that this harvesting is bad for biodiversity; she and I are always on the same side when it comes to biodiversity, and I feel extremely apologetic in having to make a counterclaim. One of the things done by the independent advisory board that I chair was to commission a systematic review of the impacts on biodiversity of biomass harvesting in the south-eastern United States. In fact, there are two studies: we commissioned one and another was carried out independently by scientists at Oxford University, led by my noble friend Lady Willis of Summertown. Both reviews concluded that, far from having a negative effect on biodiversity, the thinning process has either a neutral or even perhaps a slightly positive effect on biodiversity—so, again, one must not jump to simple conclusions.

[Lord Hamilton of Epsom (Con)]

What the noble Lord told us about being on the advisory board of Drax is very interesting. But how about the shipment of all this timber across the Atlantic and the burning of it in the United Kingdom? That seems to me to pollute the atmosphere, as well as contributing to CO₂ emissions.

[Lord Krebs (CB)]

I thank the noble Lord for those questions. As I said, it is not my job to defend what Drax does. I am asked not to do that but to hold its feet to the fire on the sustainability questions relating to the sourcing. With regard to the life cycle analysis, Drax has an obligation to report the life cycle emissions of the power station, and the regulator scrutinises that reporting.

On the question of emissions from the stack at the UK power station, as I am sure the noble Lord is aware, under the UNFCCC accounting system, the accounting for those carbon losses are in the source country, not in the consumer country. Whether that is sensible is a matter for debate, but the fact is that the US has to declare the loss of carbon, and therefore in the UK’s accounting that counts as zero because the US has already accounted for it. Many people think that the consumer, not the producer, should have to account for it. It is not my part to adjudicate on that debate, but it is a perfectly valid debate to have.

[Lord Teverson (LD)]

My Lords, we seem to have gone into Committee mode.

I want to talk briefly to Amendment 35 from the noble Lord, Lord Berkeley, to which I have added my name. It is important never to forget that there are those issues in rural communities. I also am on oil, I regret to say. In Northern Ireland, 50% of households are dependent on oil and only 33% are connected to the grid. It is an important area, and I very much support the spirit of that amendment.

I also want to talk very briefly to Amendment 7, which is about adding “nuclear energy” to the list in Clause 3. I do not understand this amendment because Clause 3(2)(b) on the list refers to

“the reduction of greenhouse gas emissions from energy produced from fossil fuels”—

that must include nuclear—and Clause 3(2)(d) refers to

“measures for ensuring the security of the supply of energy”.

I would have thought that the nuclear sector would say it met both those objects. To add nuclear energy to that list would suggest that it does not meet the other two criteria, so that seems totally counterproductive.

[Lord Ravensdale (CB)]

My Lords, I declare my interest as a chief engineer working for AtkinsRéalis. I will make two very brief points.

My first point is on nuclear and the amendment the noble Lord, Lord Teverson, just spoke to, which was brought before the House by the noble Lord, Lord Offord, and spoken to by the noble Baroness, Lady Bloomfield. She made a great point; it is all about that statement of intent from the Government. The only other point I add is that, as regards Great British Energy, we need to think about not only the benefits in terms of the nuclear power stations but capturing that broader benefit for the economy of all the supply chains associated with it. The components, fuels, pumps, rods, control, drive mechanisms—that all requires investment in factories and infrastructure to capture the full economic benefit for the UK. I hope that perhaps Great British Energy could get involved in that, alongside Great British Nuclear.

My second point is around energy security. To follow on from something I raised in Committee, we have clear definitions for much of the terminology in Clause 3 but we do not have a clear definition there for energy security. I raise that because it can mean different things to different people. I think the Government are very focused on fuel security—gas and reducing our reliance on fossil gas. But of course there are many other aspects to energy security: there is cybersecurity, physical security, system reliability and price predictability. It is important to fully define that term so that stakeholders are not left guessing about what is really in the remit of Great British Energy. When summing up, can the Minister commit to having, certainly in the statement of strategic priorities, a firmer definition of what we mean by security of supply?

[The Earl of Erroll (CB)]

My Lords, people are talking a lot about carbon dioxide, and I hugely support carbon capture and utilisation. We have large plants manufacturing carbon dioxide deliberately. For instance, it is used for manufacturing fertiliser and in fire extinguishers—noble Lords may well have some in their house, and there are certainly some around Parliament. The food industry uses a whole lot of it, partly for carbonated drinks and also for refrigeration and some of the manufacturing processes. It is used for freezing and for transporting organs and such things in dry ice, which your Lordships have probably all heard of. It is used in greenhouses for bringing on the ripening of various things, and in the manufacture of a lot of chemicals. It has many industrial uses, and it is used in curing concrete. It is used for lots of things, so capturing it and using it would be very sensible, and we might manufacture slightly less of it.

[Lord Bruce of Bennachie (LD)]

My Lords, I rise very briefly to support the amendment in the name of the noble Lord, Lord Berkeley, but also to comment on the noble Baroness, Lady Liddell. I agree with the noble Baroness, Lady Young, that we need to get it right quickly or we cannot go there, but I hope we can go there. I was very encouraged that the Secretary of State said he might now prioritise the Acorn Project, the cluster in Scotland. That will be very welcome news for a very beleaguered Scottish industry that feels, frankly, that the Government are against it, and this would at least be a positive in the other direction.

On the amendment from the noble Lord, Lord Berkeley, and the comments of the noble Lord. Lord Teverson, the point has been made that the number of people is quite significant, but, if you look at the total across the UK, it is a relatively small percentage. The reality, however, is that, in some parts of the country, a very large percentage of people are genuinely concerned about what the future will hold. The point about Northern Ireland is the most powerful one. I thank the Minister very much for the meeting that he had with us, but what was discussed then was that the Irish Government seem to be on the verge of going down exactly the route that the noble Lord, Lord Berkeley, is recommending. That would clearly be an all-Ireland solution for the north of Ireland, but it would be rather odd if the UK could not find a way of running something similar at the same time.

I have just one other comment. The Minister gave me the impression that the priority for the Government was to get as many heat pumps installed as possible. I completely support that, but the reality, as has already been said, is that quite a lot of the houses are not actually suitable for heat pumps. I do not think there is a conflict here, but the point I would like to make to the Minister is: by all means promote heat pumps as much as you can, but recognise that some parts of the country need a solution fairly urgently, and heat pumps may not be the answer. So the amendment from the noble Lord, Lord Berkeley, has much to commend it and I hope the Government can give a positive response to it.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise very briefly, first to offer Green support for the two amendments in the name of the noble Baroness, Lady Boycott. I have just one point to add to our discussion of biomass. The Baroness, Lady Young, referred to the issue of using land that might be used for food production to produce biomass for energy. There is also a point about waste biomass. We talk about it as waste, but one thing we desperately need to do is store more carbon in our soil, and that is an alternative use of things that are being described as waste.

It may not surprise your Lordships’ House that I will speak against both the carbon capture and storage and the nuclear amendments in this group. I will be very brief, but I want to add a couple of factual points and respond to the question from the noble Lord, Lord Howell of Guildford, about why anyone would be against CCS. I point to SaskPower’s Boundary Dam 3 in Canada, which, after nine years and $1 billion, now has a capture rate for carbon dioxide of 57%, although it was built with the promise of 90% capture. That is what has happened in a number of projects around the world which have simply failed to match up to delivery.

I compliment the noble Baroness, Lady Liddell, for acknowledging the report from the Public Accounts Committee. This is a group with no particular horse in this race that has looked objectively at the Government’s plans and expressed great concern about the risk. One thing that the Public Accounts Committee rightly points out is that scientific evidence recently is showing that producing liquid fossil gas, which is planned to be used to run several CCUS projects, actually leads to the release of more greenhouse gas into the atmosphere than had been thought and so is less “green” than has been claimed. I think the noble Baroness, Lady Liddell, said, “Well, we don’t want to increase consumer bills”. The Public Accounts Committee notes that three-quarters of the almost £22 billion is envisaged to come from levies on consumers. That is where the funding is expected to come from.

Just very briefly on the nuclear points, I note that we are now up to £130 billion for clearing up old nuclear, Hinkley Point C is running behind time and well over budget and there is great concern about the £40 billion Sizewell C plans. I am sure that noble Lords will want to come back by citing small modular reactors as a response to this. I will just note that the Government on 6 February put out a press release headed “Government rips up rules to fire-up nuclear power”—rather Trumpian sounding, I think. Noble Lords might want to consider: do you actually want a small modular reactor on your doorstep or in your back yard?

[Noble Lords]

Yes!

[Baroness Bennett of Manor Castle (GP)]

Well, I ran that test at Eton College and I did not get many yeses from there.

17:45

[Lord Fuller (Con)]

My Lords, I shall speak very briefly in support of the noble Baroness, Lady Young of Old Scone, in her Amendment 13. It is said that when you are in a hole, stop digging—especially when it is a bloody great big one. It seems to me that it was the noble Lord, Lord Krebs, who dug himself into the mire by talking about CCC accounting principles, just delegating it to the regulators, so it is all right then, greenwashing away the IMO shipping carbon costs. He undermined his case, and it demonstrates how biomass burners such as Drax use smoke and mirrors to obfuscate. If the noble Baroness had tested the opinion of the House, she might have had much more support than she might have imagined. It is time to stop the classification of biomass as clean energy and I welcome her intervention.

[Lord Offord of Garvel (Con)]

My Lords, I will briefly include a consideration of the second group of amendments, talking about the definition of clean energy, and I express my gratitude to my noble friend Lord Trenchard. These amendments address a matter that many in this House have questioned during our debate: Great British Energy’s role and involvement in the production of nuclear. There is no doubt that nuclear energy in some shape or form will have a critical role to play in achieving the Government’s net zero targets. If the Government, via GB Energy, are to recognise the importance of nuclear, it is only right that they consult Great British Nuclear before investing in nuclear technology. That is where Amendment 36, proposed by my noble friend Lord Trenchard, becomes so crucial.

I also support Amendment 10, also proposed by my noble friend Lord Trenchard. This explicitly includes nuclear energy in the definition of clean energy. We know that it offers a reliable, low-carbon source of energy. In addition, Amendment 7, tabled in my name, includes

“the production of nuclear energy”

as part of GBE’s objectives, which complements Amendment 10 and further solidifies nuclear energy’s central role in being part of our long-term solution for energy security and decarbonisation.

Finally, turning to Amendments 2, 3, 4, 5, 6 and 11, proposed by the noble Baroness, Lady Liddell of Coatdyke, which would expand the definition of clean energy, we support the intention behind them to ensure that we remain inclusive of all potential technologies.

To conclude, I urge the Minister to consider the amendments in my name and those of my noble friend Lord Trenchard carefully, as they would help to ensure a clean, secure, sustainable energy future for the UK.

[Lord in Waiting/Government Whip (Lord Cryer) (Lab)]

My Lords, I shall speak not so briefly, actually, on this group of amendments concerning the scope of clean energy as defined in the Bill, particularly in relation of carbon capture, usage and storage, hydrogen, nuclear power, biomass and renewable liquid fuels.

Taken together, these amendments seek to broaden the definition of clean energy within the Bill to explicitly include CCUS, blue hydrogen and nuclear energy, while others aim to restrict biomass or impose additional reporting requirements on GBE. While the Government recognise the significance of these technologies and lauds them in achieving net zero, we must resist these amendments, for reasons I will now set out.

I turn first to Amendments 2, 3, 4, 5, 6, 11 and 12, tabled by my noble friend Lady Liddell of Coatdyke. These amendments aim to ensure that CCUS and CCUS-enabled blue hydrogen are explicitly covered under Clause 3. The Government recognise that hydrogen and CCUS are vital in our transition to net zero, contributing to decarbonisation and energy security while supporting jobs in key industrial regions.

Analysis by DESNZ—a great acronym—and the Climate Change Committee confirms that CCUS-enabled blue hydrogen will be crucial for scaling up hydrogen production into the 2030s, which was referred to extensively at Second Reading, in Committee and today. On hydrogen, Ministers remain committed to delivering on our current trajectory, which includes offering contracts to the 11 successful electrolytic hydrogen projects through the first hydrogen allocation round and delivering future allocation rounds, as well as providing support for blue hydrogen production through the CCUS programme, with the £21.7 billion recent funding paving the way for the first large-scale blue hydrogen production plant.

Clause 3(2)(b) already enables GBE to facilitate, encourage or participate in projects, such as CCUS and CCUS-enabled hydrogen, that would contribute to the reduction of greenhouse gases from energy produced from fossil fuels. Therefore, these technologies fall within the scope of GBE’s objectives. We have made it clear—in the founding statement, in the Explanatory Notes and during multiple stages of the Bill’s passage—that emerging technologies such as CCUS or hydrogen could be part of GBE’s energy portfolio once it is operational. However, while GBE will be able to invest in these technologies, as we have emphasised on many occasions, it will be an operationally independent company. The exact mix of technologies in which it chooses to invest will therefore be determined in due course and be influenced by available opportunities, now and in future. I hope that the noble Baroness, Lady Liddell, recognises that these arguments are not required and will therefore withdraw her amendment.

I now turn to Amendments 7, 10 and 36, which were spoken to by the noble Lord, Lord Offord, the noble Baroness, Lady Bloomfield, and the noble Viscount, Lord Hanworth, the latter speaking on Amendments 10 and 36 on behalf of the noble Viscount, Lord Trenchard. Amendment 7 in the name of the noble Lord, Lord Offord, seeks to add

“the production of nuclear energy”

as an objective in Clause 3. Amendments 10 and 36 in the name of the noble Viscount, Lord Trenchard, seek to expand the definition of “clean energy” used in Clause 3(2)(a) to ensure that it includes both renewable energy and nuclear energy and would require GBE to consult GBN before it invests in nuclear energy.

We must resist these amendments for two key reasons. First, it is already possible for GBE to invest in nuclear energy. Nuclear energy is already defined as clean energy under Clause 3; as such, its production, distribution, storage and supply are activities that GBE could undertake under Clause 3(2)(a). Secondly, I assure noble Lords that GBE would engage with Great British Nuclear ahead of any such investment in nuclear energy. I do not think that we need to include such a requirement for the Secretary of State to direct GBE to engage with GBN ahead of any investment in nuclear energy given both this context and the fact that the Secretary of State is the sole shareholder in both companies.

This Government view nuclear power as one of the reliable, secure, low-carbon sources of home-produced electricity. It will play an important role in helping to achieve energy security and clean power while securing thousands of good, skilled jobs as well as a range of power and energy supplies. The Government are taking significant steps to advance nuclear energy. GBN is leading the selection of small modular reactor technology. Incidentally, a record £410 million has been allocated for fusion research and development, supporting cutting-edge facilities and research.

I wish to add something regarding the comments from the noble Baroness, Lady Bloomfield. Considering the importance of the remits of the two entities, GBN and GBE, they will remain independent sister companies for the time being to ensure that both organisations are best placed to deliver on the Government’s ambitions for energy security and variety of supply. We are maintaining a nuclear focus board for GBN, with highly specialised and experienced personnel; again, this has been debated over a long period. The two organisations will work together effectively to ensure that the UK is on the path to achieving energy security and clean power while securing thousands of skilled jobs.

I hope that the noble Lord, Lord Offord, recognises that this Government are taking active steps to support the continued growth of the nuclear sector; that he is reassured that the Bill allows for GBE to support nuclear energy within the definition of clean energy; and that he will agree not to press his amendment. 

I now turn to Amendments 13 and 44 in the name of the noble Baroness, Lady Boycott; my noble friend Lord Berkeley and the noble Baroness, Lady Young, also spoke to them. Amendment 13 seeks to exclude biomass from the Bill’s definition of clean energy. Amendment 44 would require GBE to produce a plan for its use of biomass power generation and assess the impact of it on both sustainability and its compliance with targets and obligations.

I must resist these amendments for the following reasons. The Government recognise biomass as vital to the UK electricity grid. The Intergovernmental Panel on Climate Change and the UK’s Climate Change Committee—the CCC, which engages with Governments of all hues—highlight its role in decarbonisation if strict sustainability policies are in place. Biomass sourced under strict sustainability criteria is considered a low-carbon energy source; the noble Lord, Lord Hamilton, also spoke about this.

The Government support only sustainable biomass, and generators such as Drax receive subsidies only for biomass that meets the UK sustainability criteria. A CfD has recently been agreed with Drax for short-term support from 2027 to 2031 to provide crucial low-carbon, dispatchable power for UK energy security. With our having introduced tough new sustainability measures with clear and enforceable standards, Drax will need to use 100% sustainably-sourced biomass—up from the current figure of 70%—and no more money will be paid for non-compliant biomass. There will be substantial penalties for any failure to meet these strict criteria, protecting both consumers and the environment.

The comments from the noble Lord, Lord Krebs, were interesting, to say the least. He set out that the figures are more complex than the headline figures might appear. I would add that the UK’s sustainability criteria limit supply chain emissions and include environmental protections. Where biomass comes from forests, land criteria ensure sustainable harvesting and productivity. Large-scale biomass generators can convert to bioenergy with carbon capture and storage—BECCS—which the Climate Change Committee and the International Energy Agency recognise as key to net zero, delivering negative emissions alongside low-carbon electricity. Of course, Drax’s activities are accountable to Ofgem.

Amendments 13 and 44 would unnecessarily constrain the company, despite the role of biomass in balancing an energy system with increasing renewables. GBE will operate independently, with its investment choices guided by strategic priorities and opportunities available at the time. Parliament will scrutinise its activities—we have just discussed this at great length, particularly with regard to Clause 5—through annual reports and standard accountability processes.

The Government have tabled an amendment requiring GBE to review its impact on sustainable development. This will ensure compliance with environmental regulations while supporting nature and biodiversity. The framework document will mandate annual reporting on sustainable development, embedding it into the company’s strategy and operations. Given these reasons, I hope that the noble Baroness, Lady Boycott, can see a way not to press her amendments.

Amendment 35 in the name of my noble friend Lord Berkeley seeks to direct GBE to assess energy-related issues for off-gas grid households and to report on the role of renewable liquid heating fuels. I must resist this amendment for the following reasons. While the Government recognise the challenges faced by off-gas grid households, GBE will have the autonomy to determine its investment priorities. The Government already have measures in place to support those households. For example, the boiler upgrade scheme is receiving an extra £30 million for this financial year, as well as a near-doubling of its budget to £295 million in the next financial year, so that families can benefit from £7,500 off the cost of a heat pump. Evidence shows that 42% of grants under this scheme have gone to properties off the gas grid; that figure is not bad.

As my noble friend Lord Berkeley discussed with my noble friend the Minister, although renewable liquid fuels may play a limited role in decarbonisation, their affordability and supply constraints make them unsuitable for large-scale deployment. We are committed to engaging with industry on the challenges and solutions for decarbonising heat in rural homes, and we will take a considered and proportionate approach. I therefore hope that, with my response and the meetings that my two noble friends have had, my noble friend Lord Berkeley will be able to see a way not to press his amendment.

18:00

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I am grateful to the Minister for what he has said and am happy to withdraw my amendment. We understand that Great British Energy is independent, but we are very grateful for the statements that the Government have made around the issue.

Amendment 2 withdrawn.

Amendments 3 to 7 not moved.

Amendment 8

Moved by

[Lord Hunt of Kings Heath]

8: Clause 3, page 2, line 18, at end insert—
“(including through projects involving or benefiting local communities).”Member's explanatory statement
This amendment clarifies that Great British Energy may facilitate, encourage and participate in the things mentioned in subsection (2)(a) to (d) through projects involving or benefiting local communities.

[Lord Hunt of Kings Heath (Lab)]

My Lords, Amendment 8 relates to Clause 3 and makes it clear that community energy is within scope of the objects of Great British Energy. I am grateful to the noble Earl, Lord Russell, for his support and for our engagement between Committee and Report.

We had an interesting and somewhat lengthy debate in Committee on the role of community energy. I have always recognised the important role that community energy can have as we strive for clean power and net zero. Following positive discussions across the House, particularly with the noble Earl, Lord Russell, I accepted that the role of community energy could be made explicit in the Bill. That is why this amendment has been tabled. It sets out a clear intention that local and community energy is important for Great British Energy and the Government.

GBE will enhance existing support for community energy. This will be done through partnering with, and providing funding and support to, local and combined authorities, as well as community energy groups. This is very important. To support community energy groups to access funding and to establish themselves in all areas of Great Britain, GBE will provide commercial, technical and project-planning assistance, increasing the capability and capacity to build a pipeline of successful projects in local areas. This has clearly been missing in the current arrangements, where lots of local groups want to develop community energy but find it difficult to access advice and access the pathway to finance. GBE has a really important role to play here. I beg to move.

[Earl Russell (LD)]

My Lords, I support government Amendment 8 and will speak to my Amendments 14 and 25. I am deeply grateful to the Minister for putting community energy in the Bill with Amendment 8. It is now clear that Great British Energy may facilitate, encourage and participate in those things mentioned in Clause 3(2)(a) to (d) through projects involving or benefiting local communities.

I am really pleased, as this is a win for MPs on all sides of the other Chamber and for noble Lords on all Benches in this Chamber. There is notable strong cross-party support to see community energy in the Bill. It was a key objective for us, and I am delighted that we have had a successful negotiation and got this done. We have the third-best wind resources in the world. It is our view that there can be no Great British Energy without Great British community energy. With this amendment, our objective has been achieved.

It is worth noting that, as the Minister said, GB Energy has a unique role here. When Jürgen Maier was before the Energy Security and Net Zero Committee he talked about a system coming “out of the box”. That is exactly it—going into local communities, GB Energy will be able to deliver community energy and engage with them from start to finish.

I remind the House that community energy could deliver up to 8 gigawatts and power 2.2 million homes, saving two nuclear reactors-worth of energy. It could remove 2.5 million tonnes of CO₂ and provide over 30,000 jobs. What is not to like about that? I am delighted that we have made progress on this and I thank the Minister.

Moving on, my Amendment 25 is a probing amendment in response to a question that my counterpart, Pippa Heylings, asked in the Commons this week about the fact that, at the moment, the £10 million community energy fund is oversubscribed. Some 100 projects are unable to get funding, and the money is due to run out in May. While I greatly appreciate getting community energy into the Bill, can the Minister provide clarity on what will happen with that fund? Is he able to put more money in? Is there an interregnum until GB Energy can start funding it? Ed Miliband gave very strong words in support of community energy but did not really answer my honourable friend’s point about the money. If the Minister can provide any more certainty or say whether this is being looked at, that would be appreciated.

Amendment 14 is our warm homes plan and emergency home insulation plan. It requires the Government to transfer the responsibility for the warm homes plan to GB Energy should it be requested. We have some of that coldest, dampest and most miserable homes in Europe. UK housing stock accounts for around 7% of total carbon emissions. They are among the least energy-efficient homes in Europe, with 12 million homes in England alone currently falling below adequate energy efficiency standards. The UK Climate Change Committee has said that residential retrofits need to increase to a rate of 500,000 a year by 2025 and 1 million a year by 2030 to meet our climate targets. This is a huge and daunting task. It is one of the biggest infrastructure tasks of the 21st century.

Our citizens have suffered cold, damp, draughty and unhealthy homes for far too long. In the single largest housing-related cost burden to the NHS in 2023, some £50 million was spent fighting cold-related illness. Homes cost more to heat than they should because they do not retain the heat that the homeowners pay for. The best energy of all is the energy that we never use, in particular the energy that we do not waste on absolutely nothing. Energy efficiency remains a missing part of overall energy policy. Citizens should not have to choose between heating and eating. In this country, 6 million people live in fuel poverty, while at the same time we are wasting this energy. It is utter madness.

The last Government completely failed to tackle this problem. They cut the funding and the ambition to deliver warm homes and to insulate our homes. That was not good enough. Carbon Brief calculated that UK energy bills were £22 billion higher over the past decade than they should have been because the Conservatives cut the “green crap”. The number of homes being insulated each year at the start of 2024 was 98% below 2012 levels. Of that £22 billion, £5 billion was due to poorly insulated homes and £3 billion was because homes were being built that were not meeting energy efficient standards.

However, no Government of any persuasion has ever managed to tackle this problem. It is a tough nut to crack, even with the best will in the world. Going house-by-house and retrofitting our mixed housing stock is an extremely challenging undertaking. I welcome this Government’s commitment to the warm homes plan and the £6.6 billion in funding that has already been provided. The programme that the Government are setting out will provide low-interest loans to support families to invest in insulation, encourage low-carbon heating and enable the retrofitting of our homes. The Climate Change Committee has estimated that £3.15 billion is probably the total cost of getting this done, but I welcome what the Government are doing. My amendment is not a criticism of that but is here to support.

The burden is on the private sector, where 90% of these properties are owner-occupied and not meeting standards. We need to do stuff with the over-65s, because that is a particular problem. We need to tackle fuel poverty, as we have 2.26 million homes in fuel poverty as of 2022. We need new financing options, particularly green mortgages, so that private home owners can take the cost of making these measures and put them against their mortgage, and we need similar situations for people in the private rented sector.

This is good, though. The New Economics Foundation has said that every £1 spent of public investment could generate £4.60 in capital expenditure and £6.90 in broader economic activity; this is good for our homes and our economy. It could create thousands of green jobs and increase local UK supply chains.

I am worried about the delivery of these plans; that is why I have put this amendment forward. I recognise that the Government are exploring these issues as we speak and that my amendment is a bit radical and left field. I say to the Minister that this is difficult, and at a time when the Government are also trying to put in solar panels and heat pumps. I am not the only person to be concerned about delivery of these plans. I recognise that GB Energy is an independent organisation. My amendment is not prescriptive; it is simply about not ruling out options from the start. It is about making sure that that door is not closed to GB Energy from before it is set up; it is about making sure that there is space for those conversations to take place.

If my amendment passes and GB Energy never approaches the Government or the Minister to say that it wants to take any of this on, for whatever reason, then my amendment does no damage at all; it makes no difference whatever. It comes into play only if GB Energy approaches the Minister and says that it has the skills and the contacts within the industry, that it fits with its community energy plans, and that it wants to do this and make a difference. This amendment, if it does nothing else, allows these conversations to take place, and I think that is a good thing. I dare the Government to be different and take a different approach to this daunting and challenging task.

[The Deputy Speaker (Baroness Watkins of Tavistock) (CB)]

My Lords, I apologise. I failed to make it clear at the beginning that, as Amendment 9 is an amendment to Amendment 8, I have to call Amendment 9.

Amendment 9 (to Amendment 8)

Moved by

[Lord Whitty]

9: After “communities” insert “and projects providing for workforce planning and training to ensure adequate jobs and skills in a fair transition to cleaner energy”

[Lord Whitty (Lab)]

My Lords, I thank the noble Baroness on the Woolsack for that clarification.

I applaud completely Amendment 8, and am glad that the Government have moved this amendment which reflects the discussion in Committee. However, I am deeply disappointed that they failed to reflect an amendment that I tabled in Committee and had hoped that Ministers would accept. I find it quite extraordinary that, in a Labour Government’s proposition on the transformation of the energy sector, there is no clear reference to the workforce, workforce planning or raising skills.

We are, in effect, transforming over time a workforce whose most skilled and probably best paid employees work on oil wells to then operate in the wind sector, other renewable energy sectors and the nuclear sector. We wish to transform the generation end, but it affects the distribution and transmission end as well, where the whole system has to be changed and made more connected. The development of storage and new skills will be required, right through to the retail end where today’s jobbing electricians, gas fitters and plumbers will have to change their skills to fit in with the new energy form. But the Bill does not mention it.

I criticised the Conservative Government, who had much longer Bills where the words “skills” and “workforce” did not appear, but this Bill, on the strategic requirement for Great British Energy, which will be a major mover in this area, does not really mention skills. I hope, therefore, that the Minister will accept that there is a requirement and bring forward an amendment at Third Reading which reflects that.

I gently say to the Ministers on the Front Bench that, unless we reflect on that, we are going to lose some support among the existing workforce and those who might be thinking of training to enter the workforce. This applies to other Bills as well; if I were capable of being in two places at the same time, I would be making the same point on the buses Bill, where a relatively elderly workforce is going to be faced with a transformation in technology and regulation. I might also have made the same point on the railways Bill.

I gently say to my colleagues on the Front Bench that these are quite heavily unionised industries that they are proposing to transform. It would be good to have the representatives of the existing workforce, and, potentially, the future workforce, on-side in the job of Great British Energy and the Government. I declare an interest as a member of the GMB and the former general secretary of Unite and UNISON. We are at an early stage, and the Government need to recognise that representation will be important during this transformation of a very important sector. I hope they will recognise that and commit to putting something in the Bill for Third Reading.

18:15

I will make a brief remark in relation to Amendment 14, which the noble Earl, Lord Russell, has spoken to. I gather that the Government are going to oppose that amendment, and indeed I am not too happy with the wording myself. But it is important that Great British Energy has responsibility not just for energy generation and distribution but for energy efficiency, and that it has the ability to step into this field. I hope the Minister makes that clear.

Meanwhile, on my main point, I hope to have a more positive reply from my noble friend the Minister, who has been very helpful in other respects. I hope we have some positive news.

[Lord Hamilton of Epsom (Con)]

I will speak to government Amendment 8 about community energy supplies. The noble Baroness, Lady Bennett of Manor Castle, said that, when she was at Eton, there was nobody there who wanted to have a small modular nuclear reactor near to their home. This is something that I think may be more widespread than just Eton. I suspect that many people will be looking at the value of their houses and thinking that if they have a small modular reactor power station nearby, the value of their house may drop.

Therefore, I ask the Minister whether his idea of community energy supplies includes offering either cheap or free energy to people who live in the locality. That would make an awful lot of difference to the acceptability of SMRs—I once again declare my modest shareholding in Rolls-Royce—because then you might well have a situation where a buyer of a house that is slightly close to a small modular reactor gets a deal for either cheap or free energy. It is very important to make these things acceptable to people in the locality. I suspect that, if it is possible for the people who are putting in the small modular reactor to say to people locally that they can have cheap or free energy, that may well go an awful long way to making these things acceptable in a way which they otherwise would not be.

[Lord Wigley (PC)]

Before the noble Member sits down, will he address the point that many of the sites that have been earmarked for SMRs are existing nuclear sites? Any effect on property values has probably already happened, and those sites clearly have an appeal for such SMR projects.

[Lord Hamilton of Epsom (Con)]

I totally accept that fact, and people have certainly got used to having much bigger reactors on those sites and so will not worry about it. I have ambitions, though, for SMRs that go way beyond existing sites. There are not that many of them in this country, and I hope that we will have an awful lot more. When I come to move my amendment later on in the evening, I will be making reference to the fact that we might have a small modular reactor for specific purposes.

[Baroness Hayman (CB)]

My Lords, I will intervene very briefly on this debate, and I declare my interest as chair of Peers for the Planet. I have just a couple of points on the issues that have been raised. First, to follow up on what the noble Lord, Lord Hamilton, said, the idea of ensuring that communities gain the benefits of infrastructure that is near to them applies not only to small modular reactors but to many other things. In particular, the House knows of my concern for onshore wind and an increase in onshore wind developments. We have to do that in a way so the community, first, understands why we are doing it, and secondly, sees some benefit from those projects, whether on an individual or community level.

The other thing—and I of course welcome the government amendment on community energy—is that I very much agree with the spirit of what the noble Lord, Lord Whitty, said. Some of us get very weary trying to inject the same issues of principle into legislation after legislation. Skills and the needs of the workforce, and the way we practically turn aspirations for green growth and green jobs into satisfying, well-paid, sustainable jobs, has to be done through the nitty-gritty of skills training, passporting and making sure that the opportunities are there for transition and for young people. It is enormously important that the Government and GBE do not lose sight of that.

In exactly the same spirit, we have banged on—if that is a parliamentary phrase—about home insulation and energy efficiency on any number of Bills. If I may say so to the noble Earl, Lord Russell, it is probably slightly inelegant to put that in the Bill as a hypothetical for what GBE might want to do, but the spirit of what he is saying, and the fact that this has been such a recurring theme, is absolutely central: it has so many benefits in saving money, saving emissions, increasing health and ensuring that we lift people out of the poverty that is occasioned by the housing in which they live. I hope that the Minister can give us some encouragement that the warm homes strategy, or whatever we are calling it this time—we have called it lots of different things over the years but have not been very successful in delivering it—will be a high priority for the Government.

[Baroness McIntosh of Pickering (Con)]

My Lords, I will speak to Amendment 22, in my name and those of the noble Baronesses, Lady Boycott and Lady Young, and the noble Lord, Lord Teverson. I congratulate the Government on bringing forward their Amendment 8. I imagine that it will find favour with the House rather than Amendment 22, but I will take the opportunity to press the Minister on a couple of aspects, just to give me reassurance that he means more than the warm words that we see expressed in his amendment.

In particular, how do the Government intend to deal with the current uncertainty over the community energy fund’s future? Is the Minister able to give us a guarantee of how that will pan out? Also, does he intend to take, or encourage GB Energy to take, early action to ensure that the fund will be matched by other funds, as I understand needs to be done, and that clear instructions on the above will indeed be set out in the strategic priorities for Great British Energy, as required by Clause 5?

I am not that familiar with community energy schemes, but I have seen how they operate in Denmark—I declare my interest, being half Danish and taking a great interest in Danish matters. I understand that they are so successful in Denmark because there is a system where local citizens, often organised in co-operatives, which again is very Danish—Arla is a co-operative in the milk industry that many here are familiar with—own a significant portion of renewable energy sources, such as wind farms and heat networks. Does the Minister agree that community ownership is part of the success of these schemes and that that is a path down which he would seek to go?

[Lord Fuller (Con)]

My Lords, I will speak briefly to my Amendment 53, which seeks to ensure that the voices of local people are heard when proposals are made or encouraged by GB Energy for renewable energy projects that impact on local areas. This is a group about community involvement and consultation, and how people might have their say. I regret to say that, in so many cases, local people have been airbrushed from the debate, which has been conducted above their heads. We build resentment, scepticism and resistance when local people are denied their say. I speak with authority when I say that the NSIP system is being systematically abused by developers of solar farms, who string together otherwise stand-alone and discrete proposals for small-scale solar and aggregate them together as a device to somehow creep over the threshold. The voices of the local planning authority, locally elected representatives, local people and business are excised from the record.

The NSIP system was designed to allow truly exceptional and impactful infrastructure projects to be considered in the national context. I completely support that principle, but I see in my own area, for example, that one proposal, extending to 1,100 hectares but covering 40 square kilometres and at least a dozen separate landowners some 15 miles apart, has been cobbled together in the crudest and most cynical manner to creep over that 100-megawatt capacity line. It undermines public confidence in our planning system and acts as a recruiting sergeant for conspiracy theorists and their superficial, fundamentalist views. We will all become tainted and tarred by their brush while we deny the public due process and a proper say on these schemes, which should be decided locally but are not.

Later, on Amendments 50 and 52, I will say that solar should not be permitted on the best and most versatile land—grades 1 to 3A. I recognise that other land could be used for large-scale renewables, but we need to exercise care and caution. Even grade 4 or grade 5 land has a value, but that is more likely to include amenity value, outstanding landscape contribution or wider social benefit, perhaps in areas of outstanding natural beauty or other designations. It is for that reason that, for all land—even in cases where land may be at the poorer end of agricultural quality—changes in use to renewables more widely should be consulted on for residents within a 20-mile buffer of the widest proposed land extent. My amendment provides for this stipulation.

It is because the NSIP system is being abused and has fallen into disrepute that I have brought this amendment to repair the damage and indignation that local people rightly feel. We are storing up some terrible problems if the political class structurally sidelines views in an unthinking dash for renewables and fails to consider those wider impacts.

[Baroness Boycott (CB)]

My Lords, I rise briefly too to speak to my Amendment 22. I am very grateful for all the support of so many noble Lords, and I am thrilled to be standing here after so many attempts to get community energy into the statute books. I note the work of Power for People, which has done a fantastic job over the years to make this happen.

Following on from the point made by the noble Baroness, Lady McIntosh, my sister has lived in Denmark for over 50 years now and she has had a financial stake in a wind farm for a very long time. She gets good, reliable, cheap energy. They really like it; it makes you feel like part of something.

I do not support the Liberal Democrats’ amendment that GB Energy should have to pay for all the home insulation, but I am extremely worried about where this money is going to come from. I do not see a place. We all understand that we have to do something about homes, for all the many reasons that the noble Earl, Lord Russell, and the noble Baroness, Lady Hayman, set out, yet there seems to be a bit of a black hole, as we call it, in this department. You cannot get everything out of the GB Energy fund, and it is right that it should be ring-fenced around the actual production of the new green fuels that we all need, but there needs to be a be a really tough plan. I would be very interested to know what the Government have in store.

18:30

[Earl Russell (LD)]

The aim of my amendment is not that GB Energy should pay for it; I feel that GB Energy would be a good body to deliver it.

[Baroness Boycott (CB)]

Okay.

[Baroness Young of Old Scone (Lab)]

My Lords, may I add to the outbreak of harmony by thanking the noble Earl, Lord Russell, and the Minister for Amendment 8? As the noble Baroness, Lady Boycott, said, it is great to see local community benefit coming on to the face of the Bill. Especially since all the supporting material about GB Energy is very strong on community energy schemes, it just seemed rather crazy that it was not in the Bill, so I say thank you for that.

Ideally, of course—we environmentalists are miserable people who always want more, so I am moving on to Amendment 22, to which I also have added my name—with the Government having gone as far as Amendment 8, which puts community energy schemes on the face of the Bill, it would be quite nice to get slightly more specific recognition that such schemes need to be part of the strategic priorities. Therefore, can the Minister say why he will not accept Amendment 22, which I assume he will not support?

[Baroness Bennett of Manor Castle (GP)]

My Lords, I shall join in the general outbreak of harmony that has struck your Lordships’ House and welcome government Amendment 8 on community energy. This is one more demonstration that campaigning works—but, boy, does it often take quite a long while. I really must commend Community Energy England, Green Alliance, and Peers for the Planet, which have all been pushing this issue for a very long time. I also commend your Lordships’ House collectively, because your Lordships may recall that, in the previous Government’s Energy Bill—now an Act—this was the last amendment standing, as we defended again and again the need to include community energy on the face of that Bill. Perhaps this is a demonstration to your Lordships’ House that it is a good idea to stand up for principles, because eventually you will get there, even if it takes some time.

To echo the remarks of the noble Baronesses, Lady Young and Lady McIntosh, yes, we would like to see the Government go further, both in the strategic priorities and in the sense that we need long-term, stable policies. I remember meeting so many community energy groups that were just about ready to go when the feed-in tariff was ripped out from underneath them and their projects collapsed after so much voluntary effort had been put in. The people doing this need the certainty to know that this will work and deliver, and that means long-term, stable policies.

Turning to Amendment 14 in the name of the noble Earl, Lord Russell, I can say that, based on the clarification that he has just provided, the Green group will be pleased to support his amendment, should he press it to the vote.

In the previous group, we were talking about Drax, which has benefited from £6 billion of subsidies since 2012, which the people and the planet cannot afford anymore. Imagine if that £6 billion had gone into home energy efficiency instead; there is good evidence to show that we would have needed so much less generation in the first place. The cleanest, greenest energy that you can possibly have is the energy that you do not need to use. There are not only the environmental benefits and the cost-of-living benefits, as huge as they are; there are also the public health benefits, since so many people live in unhealthy homes. Your Lordships’ House often talks about productivity and all the people of working age who are not in paid work. The quality of our homes is a big issue there, and that must not be forgotten as an added bonus, as well as the environmental and cost-of-living ones.

[Lord Ravensdale (CB)]

My Lords, I too very much welcome the Government’s Amendment 8 and thank the Minister for the productive engagement we had in between Committee and Report.

I also thank the Minister for facilitating the very useful discussion with the CEO of Great British Energy on local area energy planning, which tunes into some of the things we are doing in the Midlands. I would welcome a brief reassurance from the Minister on local area energy planning and how that is to be taken forward. One of the concerns is that it is absolutely vital to get local authorities engaged in the process and have that bottom-up view on energy assistance governance to match the top-down view that will be brought forward in the spatial strategic energy plan, as other noble Lords have said. Local energy planning is central to that, but we have seen a great disparity in the UK, with large, well-funded combined authorities and councils taking a rigorous approach, but other, less well-funded ones simply not having the resources to do that. Great British Energy could provide a key role here in funding local authorities and in having that view across the system of local area energy planning. I would welcome some reassurance from the Minister on the way forward for local area energy plans. Will they be one of the things that Great British Energy invests in?

[The Lord Bishop of Norwich]

My Lords, I support the Government’s Amendment 8. It is good that the Government have introduced this amendment so that Great British Energy can facilitate, encourage and participate in local community energy projects. I pay tribute to the noble Earl, Lord Russell, for the work he has done on this, as well as a number of different campaigning organisations and other Members of your Lordships’ House. This is a very important amendment, and it will be a great help to a whole range of different community organisations.

I also support the comments made by the noble Baroness, Lady McIntosh, and the noble Earl, Lord Russell, in pressing the Minister about the community energy fund. Some reassurance there would be very helpful.

Village halls, sports centres, voluntary youth organisations and churches could all benefit from being able to generate local energy for local people. I certainly see the potential for our churches, which have wonderful south-facing roofs. With the planning consent given to King’s College Chapel in Cambridge to have solar panels and other landmark projects such as York Minister and Salisbury Cathedral, there are new opportunities emerging.

I warn your Lordships that, if you are ever invited to go to a dedication of solar panels on a church roof, just beware. When I went to dedicate the solar panels on the roof of St Peter Mancroft church in the centre of Norwich back in September, a very observant member of the public rang 999, saying that a youth was stealing lead off the roof. When I came down, having dedicated the solar panels, I had to answer to two local police officers who had turned up—it was a great compliment to be called a youth, though.

This is important work for community groups and the charitable sector to be able to contribute to their local communities in new ways, particularly in areas of low economic activity, and to provide income for their sustainability. There is a challenge that I wanted the Minister to be aware of, however. The connection charge that is asked for to upgrade the electricity connection to many churches and community centres often prohibits them being able to do this sort of work. In the diocese I serve, St Margaret’s church in Lowestoft has just been quoted a sum of around £100,000 to make the connection. That means that the project is just unaffordable, so we need to be creative and think more about how community groups can be able to engage.

But I warmly support the Government bringing forward their Amendment 8.

[Lord Teverson (LD)]

My Lords, I too very much welcome the Government’s amendment. I would also like to congratulate the noble Baroness, Lady Boycott, on her work to get her amendment there, which I think added pressure. The noble Lord, Lord Whitty, has made a very good point. It may be something that will carry on in other Bills as we go through the Session.

I want to talk briefly about the amendment from the noble Lord, Lord Fuller. There is some truth in it, but I think it is an amendment in the wrong Bill. This whole area of land use will come in when the Government finally bring forward their land use legislation. I would point out that onshore wind has a very small footprint in terms of agricultural land. If we had that 20-mile radius, I am thinking of the first field south of London that has, perhaps, a very modest wind farm or a single turbine. It would probably require a consultation with some 5 million people for that one turbine. So, I think it is the wrong place and the wrong amendment for this Bill, and it discriminates against certain parts of renewable energy. There is something in it in relation to land use that does need to be pursued, but perhaps in a Bill to come later in this parliamentary Session.

[Lord Howell of Guildford (Con)]

My Lords, I have glad tidings for the noble Baroness, Lady Boycott, regarding her concerns. There are between 23 million and 27 million homes in this country still using gas for heating, cooking and warmth. Clearly, that has to be tackled. The answer is quite simple, but complicated as well. The answer is that modern electric boilers can replace all those gas boilers, without having to dig and provide new hydrogen pipes and all sorts of other such complications.

The snag is that electricity is so hopelessly expensive. That is the deterrent. Here we are, wishing to transform millions of homes away from gas, and the pipes then will all become redundant. We can put in modern electric boilers, which can do the job just as well, but the cost goes up rapidly. If only we could focus on how to reduce the cost of electricity by building rapidly—which we are not doing—the cheaper, smaller modular reactors and cheaper devices for producing electricity, and even using more hydrogen on the electricity side; that is another story that we have not really discussed. Even on that basis, we are facing the problem that electricity is very expensive. As long as we keep it that way, as long as we play that game in relation to the overall energy cost, we are shooting ourselves busily in both feet.

[Lord Offord of Garvel (Con)]

My Lords, the topic of community energy was raised several times in Committee by noble Lords on all sides of the House, because it is a highly important aspect of energy provision. When in government, we introduced the community energy fund, which provided funding to specifically target the community energy sector. So, I would concur with noble Lords that it is very important that communities are involved, as they are able to raise and solve issues that are unique to their local community.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I will first say that I am grateful to noble Lords for their support for my Amendment 8. I echo what the noble Baroness, Lady Bennett, said about the success of campaigning. She might have recognised the Government’s role in this, but she did not quite get that over the line. But there is always hope.

On the point made by the noble Lord, Lord Hamilton, about community benefits, I agree with the principle; we are looking at community benefit schemes. I have told noble Lords before about my visit to Biggleswade wind farm, where the company involved is giving around £40,000 a year to the local community. Certainly, we need to look at schemes like that and see what we can do to extend them.

As regards nuclear and that interesting discussion, the noble Lord, Lord Wigley, made it very clear that the existing sites contained in the last statement will always be recognised for what they offer. We are not seeking to undermine their potential; we are simply saying that we need a more flexible siting policy in the future.

The noble Lord did not mention Wylfa, so I will. Of course, he will know that Wylfa was identified as one of the sites in the last statement. Clearly, it still offers many potential opportunities. There was a great deal of interest earlier this week in the planning inspector’s report, which purportedly came out against the development of Wylfa. I, for one, think that it offers great potential.

18:45

Within the new national policy statement there is still a restriction, so that even small modular reactors—even advanced nuclear reactors, generation 4-type reactors—can be sited only in semi-rural or rural areas. We still have criteria around that. I am thinking about Eton. The playing fields are extensive and there is a lot of green land around, so I am not quite sure, but I suspect that it is hedged in by things to do with castles and lots of people as well. The point is that we see huge potential for small modular reactors. The point is well taken and the new planning statement will encourage that.

In relation to my amendment, I very much take the point made by the noble Lord, Lord Ravensdale, about local plans, and the links with local authorities and combined authorities. He and I have had a very fruitful discussion. I should acknowledge the contribution that Midland Engine has played, and his role in it. He has discussed with me the sort of work that has been done in the Midlands in relation to energy. I am very excited by that. I want to see, in any new configuration of local government, mayors and combined authorities, that that work is taken forward.

I also acknowledge the right reverend Prelate the Bishop of Norwich. I can only express my admiration for his bravery in climbing on the roof of a parish church, and for the contribution of the Church in this area. A few months ago, in Birmingham, I met a group of church people interested in community energy; the potential is clearly there. I take his point in relation to connections and I will ensure that that is considered by my officials. Clearly, we cannot expect to see community energy develop if there are so many obstacles put in its way.

One of the great advantages of Great British Energy is around trying to help these schemes come to fruition. That does not mean to say that I can wave a magic wand and deal with the connection.

18:47

Sitting suspended.

19:15

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have already spoken to my Amendment 8 and I now turn to Amendment 9 from my noble friend Lord Whitty, which is an amendment to my amendment. I had an opportunity for a very useful discussion with him after Committee. On jobs—the skilled people in the industry—I make it clear to the House that in Great British Energy’s policy priorities its mission is to drive clean energy deployment, boost energy independence and create jobs, alongside the other important aims. The GBE founding statement is explicit that GBE will boost the number of skilled jobs in this essential industry.

The statement of strategic priorities will reiterate these points and provide some more detail, and I am confident that GBE will take strongly on board the point that my noble friend has raised. We have already said that we expect trade unions to have a role in GBE, and I think the appointment as a non-executive director of my noble friend Lady O’Grady, the former general secretary of the TUC, supports this. I would also very much like to arrange a meeting between my noble friends to discuss this further.

On Amendment 22, we expect the statement of strategic priorities to outline any areas or programmes of activity that the Government would like GBE to prioritise in pursuit of its objectives. The problem with the wording of this amendment is that it would distort the work of GBE by placing community energy above and beyond the company’s other strategic priorities.

On Amendment 25, to support community energy groups to access funding and establish themselves in all areas of the UK—a point I made earlier—GBE will provide commercial, technical and project planning assistance, increasing the capability and capacity to build a pipeline of successful projects in local areas. Our local power plan will ensure coherence with other public sector advisory functions, and funding and finance organisations operating in the local energy space.

On community funds, of course we recognise the important role that community groups play in our efforts to tackle climate change and the sector asks around future funding. Great British Energy will build on the community energy fund by partnering with and providing funding and support to community energy groups to roll out renewable energy projects and develop, as noble Lords have said, up to 8 gigawatts of power. Further details will be set out shortly, but that is as far as I can go tonight.

As far as Amendment 14 is concerned, I make it clear to the noble Earl, Lord Russell, that there is no question about the importance of what he said about the challenge we face in relation to our building stock. That is therefore the challenge of our warm homes plan. We do not agree with the amendment because we do not think it should be the role of GBE to roll out the warm homes plan. I think he was talking about a wider principle than specifically the Bill and the role of GBE.

The warm homes plan has to be seen as a vital component of our ambition to become a clean energy superstar. As a first step we have committed an initial £3.4 billion in the next three years towards heat decarbonisation and household energy efficiency, and £1 billion of that has been allocated in the 2025-26 financial year. The intention is to upgrade up to 5 million homes across the country over this Parliament by accelerating the installation of efficient new technologies such as heat pumps, solar, batteries and insulation and to work and partner with combined authorities and local and devolved governments to roll this out. I accept that this is essentially a first step. It is a really challenging area, alongside our industrial processes. We will set out further details on the warm homes plan in due course, and we think that is the best way to proceed.

Finally, there are two responses to Amendment 53 tabled by the noble Lord, Lord Fuller, with whom I had the opportunity of a very useful discussion. I do not think it necessary to constrain GBE. Any development in which it is involved and provides finance will be subject to the existing stringent planning regulations, although we hope to see reform of our planning system, and the environmental impact assessments in environmental legislation that is brought to bear when considering these applications. The noble Lord’s argument should be with the planning system and environmental protections. The noble Lord, Lord Teverson, is right—we do not think that this Bill is the appropriate place for these proposals.

[Lord Whitty (Lab)]

My Lords, I will withdraw this amendment to an amendment. I tabled it because Clause 3(2) restricts the objects without mentioning the workforce. If my noble friend has other ways of dealing with this, that is fine.

Amendment 9 (to Amendment 8) withdrawn.

Amendment 8 agreed.

Amendments 10 to 13 not moved.

Amendment 14

Moved by

[Earl Russell]

14: After Clause 3, insert the following new Clause—
“Warm Homes Plan and emergency home insulation(1) The Secretary of State must accept any request from Great British Energy to have responsibility over the delivery and implementation of the Warm Homes Plan.(2) If Great British Energy makes a request under subsection (1), the Secretary of State must provide support to Great British Energy following the transference of responsibility.(3) If Great British Energy becomes responsible for the delivery and implementation of the Warm Homes Plan, that delivery must include an emergency home insulation programme which—(a) provides targeted support for people on low incomes,(b) seeks to achieve to the reduction of household energy bills, and(c) contributes to the achievement of the United Kingdom’s climate and environmental targets.”Member’s explanatory statement
This amendment requires the Government to transfer responsibility for the Warm Homes Plan to GBE should it be requested and further requires GBE to introduce an emergency home insulation programme that would seek to reduce household energy bills, and contribute to achieving climate and environmental targets.

[Earl Russell (LD)]

I appreciate the Minister’s response and what the Government are doing in relation to the warm homes plan. I also appreciate the commitment he has given, in time. My amendment is not prescriptive; it is simply about keeping those conversations open. I think that GB Energy could fundamentally have a role in delivering all or part of the plans, and I wish to test the opinion of the House.

19:22

Division 1

Ayes: 65

Noes: 156

19:33

Clause 4: Financial assistance

Amendment 15

Moved by

[Lord Petitgas]

15: Clause 4, page 2, line 37, at end insert—
“(2A) The maximum amount of financial assistance provided by the Secretary of State must not exceed £8.3 billion.”

[Lord Petitgas (Con)]

My Lords, in moving Amendment 15 I will also speak to Amendment 16 in my name. I will start with Amendment 16, which seeks to establish baseline investment governance for GBE. Remarkably, the Bill as drafted provides no clear framework for GBE’s investment decision-making process, leaving critical questions of accountability unanswered. This amendment is a necessary safeguard for three reasons.

First, it addresses the glaring governance gap that I just spoke about. The Bill delegates ultimate authority to the Secretary of State but offers no clarity on how GBE itself will assess value for money or who, within GBE, will be accountable for such decisions. Without defined governance structures, we risk approving an open-ended cash flow without proper oversight. This is simply not acceptable when billions of taxpayer pounds are at stake.

Secondly, it highlights the need for financial expertise and accountability. At Second Reading the Minister suggested giving GBE free rein to pursue opportunities with an entrepreneurial spirit—I think he mentioned independence today. While I sympathise with this ambition, GBE is neither a venture capital fund with a proven investment committee nor a publicly traded company like Ørsted in Denmark, subject to rigorous market scrutiny. In the absence of such mechanisms, it is imperative that His Majesty’s Treasury provides oversight. We need experienced financial professionals—dare I say grown-ups in the room?—to ensure value for money, while balancing financial returns with broader strategic goals.

Thirdly and lastly, Amendment 16 is designed to ensure public trust and confidence. Some may argue that setting governance requirements could stifle innovation. On the contrary, clear accountability and oversight would enhance GBE’s credibility and reassure taxpayers that their money is being managed responsibly. Without these safeguards, we risk undermining trust in this ambitious initiative.

This amendment does not constrain GBE’s mission; it strengthens it by ensuring robust governance and responsible stewardship of public funds. In summary, we are asking for clarification from the Minister of how GBE’s spending will be monitored and how the Government will ensure value for money.

Amendment 15 seeks to establish a cap on the level of funding for GBE. While the Government have allocated £8.3 billion for this initiative, the Bill lacks clarity on whether additional funding may be sought without parliamentary oversight. This amendment is prudent and necessary, again for three reasons.

First, it ensures fiscal discipline and taxpayer protection. GBE’s mission is to attract private investment into renewables but, as we have said several times, there is absolutely no shortage of private capital in this sector. Companies such as Iberdrola, SSE and National Grid have already committed billions to clean energy projects, so there is a clear risk that GBE’s funds will be directed towards high-risk or less attractive ventures like a magnet. As the noble Lord, Lord Mandelson, once said, when politicians try to pick winners, losers invariably find the politicians. A funding limit would safeguard taxpayers, while allowing GBE to prove its effectiveness and build a track record.

Secondly, Amendment 15 aligns with precedents and market practice. Other government initiatives aimed at crowding in private investment have operated within defined financial limits. Moreover, to me, GBE’s structure resembles that of a venture capital fund holding minority stakes in multiple projects. It would be unheard of for such a fund to operate with open-ended financial commitments. That would undermine investor confidence and fiscal accountability.

Thirdly and lastly, a cap signals discipline, not doubt. Some may argue that limiting funding could project a lack of ambition. On the contrary, in an era of fiscal scarcity, such a measure would demonstrate resolve and responsible stewardship of public resources. It would also encourage efficiency in achieving GBE’s objectives while maintaining credibility with Parliament and the public.

This amendment would not hinder GBE’s goals. It strengthens them by ensuring accountability and the prudent use of public funds. I am minded to test the opinion of the House on Amendment 15.

[Earl Russell (LD)]

My Lords, I rise from these Benches to speak against Amendment 15 in the name of the noble Lord, Lord Petitgas. His amendment seeks to add a limit on the maximum amount of money that the Secretary of State can provide to GBE—anything above and beyond the £8.3 billion that the Government have committed to. We strongly oppose this amendment. The noble Lord talked about resolve, strength and all these things, but I do not agree with any of that. It is not for the Opposition to use an amendment to legislation to determine what funds a Government can spend on something in the future, when we do not know what is going to happen.

Just this week we have talked about the Drax situation; the Government have halved the subsidies to Drax. The money that the Government are saving from having to subsidise Drax is money that could well go to GB Energy—for example, to fund the long-duration energy storage that we desperately need, so that we can do the transition and keep the lights on. The money should be used for other renewables projects.

It is for the Government to make day-to-day spending decisions and they are accountable for the decisions they make, as GB Energy is accountable to the Treasury and the public for how it spends its money. Ultimately, the Government themselves are responsible to the public, but I do not think it is for the Opposition to put a cap on what Governments can spend. Core spending is a decision for the Government, so this would be a highly unusual amendment and, if it is put to a vote, we will oppose it.

[Lord Offord of Garvel (Con)]

My Lords, I support the amendments in the name of my noble friend Lord Petitgas. In tabling his amendments, my noble friend looks to protect the taxpayer while securing the financial integrity of GB Energy, establishing that GB Energy’s attempt to ramp up renewables must not come at the cost of fiscal responsibility and £8.3 billion. The drafting of Clause 4 is far too ambiguous. We must introduce sufficient safeguards by limiting the scope that the financial powers in the Bill afford the Secretary of State. The taxpayer is coughing up a significant £8.3 billion into an investment vehicle that, as my noble friend Lord Petitgas said, has the potential to completely de-risk the profits of multi-million pound energy companies. Meanwhile, the Government have cancelled winter fuel payments, introduced an NI jobs tax and launched a raid on British farmers, all to save money.

The reality is that £8.3 billion is actually a very tricky number. On the one hand, it is a lot of money, a big, significant investment into energy. On the other hand, in the scheme of energy investment required, it is a relatively inconsequential figure, especially when we talk about wind farms being built out to the potential tune of £100 billion. Either way, whether we consider that to be a big or a small number, the taxpayer deserves to know that the Government are deploying public funds appropriately. The Bill contains no limitation on how much financial assistance GB Energy will receive, there is no cap on the money that can be pumped into GB Energy and nor does the funding have to undergo any approval. What is to stop GB Energy becoming a bottomless pit?

Clause 4 states:

“The Secretary of State may provide financial assistance to Great British Energy”.


But, again, we are lacking in detail on ways to hold the Secretary of State and GB Energy accountable. We have seen no method to restrict the amount of financial assistance the Secretary of State may provide, nor do we understand how the success of each investment will be measured, or indeed reported on. I trust that the Minister will take these amendments seriously. Our transition to net zero must be done with an eye to fiscal responsibility, ensuring that the energy transition is both sustainable and affordable.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to the noble Lord, Lord Petitgas, for returning to a theme he developed in Committee. I assure the noble Lord, Lord Offord, that I take the amendments seriously. But, like the noble Earl, Lord Russell, I do not believe that they are appropriate, because I do not think it right to constrain the arrangements we set out in the Bill in this way. Nor do I think it appropriate for Parliament to take to itself the kinds of controls that the noble Lord is suggesting.

Let me make it clear, first, that in terms of the sum, we are committed to capitalising Great British Energy with £8.3 billion over this Parliament, but we have the flexibility in the future for a current or future Secretary of State to provide further financial support if it were required in this or a future Parliament. There must be flexibility here: one cannot set in stone a figure for all time. We must allow GBE to develop and grow, and we have to learn by experience.

However, the idea that the money being spent by GBE will not be subject to thorough tests and reviews is simply not true. As we have already said, any financial assistance to GBE provided by the Secretary of State will have to be subject to the usual governance and control principles applicable to public sector bodies, such as His Majesty’s Treasury’s Managing Public Money principles. GBE will be allocated funding through the spending review and will draw down on it when required in the normal way, through the supply estimates process, which is scrutinised, of course, by the other place. As is the case with any government spending, the Secretary of State will be able to finance planned activities only if Parliament votes the necessary financial provision.

19:45

The requirement for Treasury approval is a long-standing convention, being one aspect of the Treasury’s power of control in matters of finance and public expenditure. Let me be clear that, in relation to including spending limits in legislation, it is rare for financial or spending limits to be contained in primary legislation, for the reason I mentioned in my introductory remarks. I have asked officials to find me examples of legislation where it happens and there are a handful of Acts with spending limits—but they are limits on individual payments, rather than setting an overall limit on what financial assistance can be given. So, while I accept that the noble Lord is very exercised and has developed his points with eloquence, we think there are sufficient controls in place through the normal Treasury controls over how the Government will react with the body, so I do not believe that the amendments are necessary.

[Lord Petitgas (Con)]

I thank the noble Earl, Lord Russell, for his comment, which I must say did concern me: in a way, he highlighted the fact that it is more likely than not that the amount will be exceeded. I should also thank the Minister. I am glad that he recognised a certain coherence in my arguments over the last few weeks, but I am not totally satisfied that we have the necessary limits on GBE and, with this in mind, I wish to test the opinion of the House on Amendment 15.

19:46

Division 2

Ayes: 148

Noes: 195

19:57

Amendments 16 and 17 not moved.

Amendment 18

Moved by

[Lord Alton of Liverpool]

18: Clause 4, page 3, line 5, at end insert—
“(6) Financial assistance under this section must not be provided if there exists credible evidence of modern slavery in the energy supply chain of any company designated Great British Energy.”

[Lord Alton of Liverpool (CB)]

My Lords, I thank all who have supported this amendment, both in Committee and tonight. It is an all-party amendment, so I particularly thank the noble Baroness, Lady Kennedy of The Shaws, the noble Lords, Lord Offord of Garvel and Lord Teverson, and the other signatories in Committee, including the right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Blencathra, whom I see in his place. I am also grateful to the Inter-Parliamentary Alliance on China and its chief executive, Luke de Pulford, for its briefing note. I am always grateful to the Minister for the meetings we have had outside of the Chamber; I know that he cares as deeply about this issue, as I do. Whether or not there is a meeting of minds on the amendment this evening, I pay tribute to him for the work that he has done on this.

The Joint Committee on Human Rights is currently conducting a full-scale inquiry into supply chain transparency and modern slavery. We have heard powerful evidence from Rahima Mahmut of the World Uyghur Congress, which I commend to the House. I also urge noble Lords to look at the links not just to Xinjiang and the appalling treatment of Uighur Muslims there but to other parts of the supply chain that would be caught by this amendment. That would include, for instance, children who are sent down mines in the Democratic Republic of the Congo. There are 25,000 of them, and we know that many are linked to Chinese-owned companies. Those children are forced labour too, and this amendment seeks to address that.

The amendment is also informed by the July 2023 report of the Joint Committee on Intelligence and Security, which warned against increased and deepening UK dependence on the CCP regime, and it urged greater national resilience. It said that China had penetrated “every sector” of the UK’s economy, underlined by three decades of trade deficits with China, which currently stand at £32 billion. The amendment goes right to the heart of this dependency—which the noble Lord, Lord Blencathra, has regularly raised—exposing a fundamental incompatibility between a rules-based liberal democracy that respects human rights and one that does not. It builds on our obligations under the Human Rights Act 1998, the Modern Slavery Act 2015, the Proceeds of Crime Act 2002 and the 1948 convention on the crime of genocide, along with prohibitions from Victorian legislation, the Foreign Prison-Made Goods Act 1897, which I have mentioned to the Minister before. The amendment is modelled on, and consistent with, earlier all-party amendments, passed by substantial majorities in your Lordships’ House, to the Procurement Act 2023, the Health and Care Act 2022 and the Telecommunications (Security) Act 2021, as well as the genocide amendment to the Trade Act 2021.

20:00

In short order, the amendment seeks to prohibit the Secretary of State from using public money to fund any company designated as Great British Energy where credible evidence exists of modern slavery in any part of its energy supply chain. If your Lordships pass the amendment, it will enable the House of Commons to consider the question further. If incorporated, it would require the Secretary of State to determine a threshold for

“credible evidence of modern slavery”,

thereby excluding from procurement any company in the energy supply chain meeting that threshold. Although the Minister insists that the company will be, in his words, “operationally independent”, it would be disingenuous—we have heard these arguments around the House today—to suggest that, with £8 billion of public money involved, the Government should be absolved from their usual duties to uphold law enacted by Parliament.

I will give a brief illustration of what I mean. The Government have declined to give any estimate of the number and cost of solar panels which have been purchased from China over the past 10 years, or will be purchased over the next 10 years under the terms of this legislation, or how many will be required to meet to objectives of the Great British Energy Bill. The Government say it is “an absolute priority” to build

“resilient solar supply chains, free from forced labour”,

and, of course, I welcome that. But, in the next breath they says they do not

“hold data on the supply chains of individual businesses and therefore cannot provide details of overall expenditure or quantities of Chinese imports of solar panels”.

When I asked Government Ministers recently about shipments arriving from Xinjiang at UK airports via a company called European Cargo, I was told the Government make no checks and instead it was a matter for Border Force—but neither did it make any checks.

Last month, I sent the Minister a report by Ignites Asia which identifies funds run by global managers who had at least £1.4 billion linked to 14 solar and EV companies using slave labour in Xinjiang. I am told that we should rely on the Solar Taskforce to determine whether this is happening, but it is not mandated to exclude suppliers or companies credibly linked to forced labour, nor does it have a statutory basis for that purpose.

Last month, the Minister kindly hosted a helpful meeting with Jürgen Maier CBE, the former chief executive of Siemens and now the chairman-designate of Great British Energy, the private/public hybrid company being created by the Government. I asked Mr Maier directly about supply chains and Xinjiang. He told me, “There is law and regulation to which we should comply. We should be held to a very high bar”. Notwithstanding good intentions—and I believe him to be sincere—inadequate legislation is not much of a bar. Mr Maier will know his own history: in an earlier generation—in 1944, at the height of World War II—Siemens had a workforce that included 50,000 slave labourers running factories in concentration camps, and it was not alone. Good intentions are not enough. Therefore, I hope that this all-party amendment will address that issue.

Is 2025 Xinjiang so very different? The PRC has placed millions of citizens from the Uighur region into what it calls “surplus labour” and “labour transfer” programmes. In one recent year, more than 3 million people were transferred and conscripted on to work programmes in factories and farms. I will not repeat what I said in Committee and at Second Reading at some length, but I urge noble Lords to go back and look at the record if they want to see the scale and the links that I am referring to.

There are other reasons—not to do with slave labour—that are connected to this amendment. The solar panels of Xinjiang have a higher carbon footprint that those manufactured elsewhere in the world. As we heard in an earlier debate, although China has been increasing the number of products connected with the green energy priorities of the future, it is also building the equivalent of two new coal-burning power stations every week; it is doing so to build its industrial and military might, and certainly not to do its bit towards tackling climate change.

While the Secretary of State agonises and, presumably, beats himself up, he can be sure that Xi Jinping is losing no sleep over targets or the use of slave labour to achieve his objectives. His regime has become the biggest emitter of greenhouse gases in the world: 15 billion tonnes of carbon a year. China uses coal to power heavy industry and to export steel and cars, which we once produced in the UK, in the workshop of the world. British labour will never be able to compete with slave labour or industries that are heavily dependent on cheaper and dirtier energy. The UK should be tooling up, creating British jobs and, with our allies, seeking alternatives to supply chains dependent on Uighur slave labour. Procurement should strengthen national resilience. It should reduce dependency on states which pose a risk to our national security. It should protect British manufacturing from competitors that use slave labour, or grossly exploited labour.

This amendment puts it to Parliament: do we want a slavery-free green transition, or are we content to allow the Government’s objectives to be achieved through forced labour in a state accused by the House of Commons of genocide? It should be inconceivable that the UK, which did so much to end the scourge of slavery around the world, would today accept or be willing turn a blind eye to products made by a state with an imposed system of forced labour. Good does not rest on the shoulders of a wrong. I beg to move.

[Lord Wigley (PC)]

I intervene very briefly to support the amendment that the noble Lord, Lord Alton, moved. I thank him for the campaign he has run on this issue for several years now, and for the way he has defended those who are enslaved or used in other countries—China in particular, but in other parts of the world as well. It is right and proper that we bear this in mind when we legislate and when we set up an organisation of the sort we are discussing.

I do not think that any of us, in any party in this House, would want to see us benefiting from the sort of suffering that has happened in other countries. The noble Lord mentioned China, but there are other countries where this happens. It is a consideration that should come into the deliberations we have as we build a new organisation with immense responsibilities and resources at its disposal. Those should not—in any shape or form—be used to support people who are being exploited in the way that they are in some overseas countries. I have no doubt that the Government would agree with that as an approach; the question is how we turn it into practice.

In supporting this amendment, I say that I too have links with Siemens. I am sure that we would not want to paint it with a brush of what happened during the war. Many other companies that have emerged in the post-war world would not want to have too much exploration of what happened during the Nazi regime. Having said that, I very much hope that there is some way in which the Government can respond to this amendment and that some guidance can be given to Great British Energy to ensure that no advantage is taken of those who are not in a position to defend themselves.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I offer Green support for Amendment 18 in the names of the noble Lord, Lord Alton, and a range of other distinguished Members of your Lordships’ House. I will also speak to my Amendment 19, which goes further than the amendment from the noble Lord, Lord Alton, but which demonstrates just how moderate and reasonable his amendment is. Your Lordships’ House, the British Government and many parts of British society have long expressed their absolute horror at modern slavery, so surely we can put this into this important Bill, where it is such a crucial issue, as the noble Lord, Lord Alton, identified.

The noble Lord mentioned the Democratic Republic of the Congo and how the issues of modern slavery there, as well as child labour amounting to modern slavery, are very much an issue in terms of the energy supply chain. My amendment refers to

“credible evidence of deforestation or human rights abuses”.

I will take human rights abuses first. Much of what is happening in the Democratic Republic of the Congo might not fit the definition of modern slavery, but it absolutely fits the definition of human rights abuses. I note that I was at a briefing today with the DRC Foreign Minister, Thérèse Kayikwamba Wagner, who gave us the news, which has since been more widely reported, that, sadly, the ceasefire that had been called in the eastern Congo had been broken by M23, backed by the Rwandan Government. We have already seen nearly 3,000 people killed and some 3,000 people injured, and we heard from the Foreign Minister that, sadly, they expect those figures to rise very significantly. These are violent human rights abuses—there is simply no other term.

To tie this to the Great British Energy Bill, it is worth noting that the DRC produces 70% of the world’s cobalt, yet it somehow disappears without trace and reappears out the other side as legal, apparently appropriately sourced material, without any traceable chain to account for that. Of course, the people of the Democratic Republic of the Congo do not benefit financially from that. It is others—damaging, dangerous, aggressive forces—who benefit from it.

I wrote the amendment in this particular way because it goes back to the passage of what became the Environment Act, during which a number of noble Lords here today had much the same debate, with the tying together of deforestation and human rights abuses. One of the issues here is that indigenous people are responsible for protecting huge amounts of the world’s forests, and abuse of their rights is very much tied to the destruction of deforestation. I will note just one stat: if deforestation was a country, it would be the third-largest emitter of carbon behind China and the US. Much of that deforestation is of course linked in particular to agriculture. But in the DRC and parts of Latin America in particular, mining and deforestation are intimately linked.

So, your Lordships’ House has before it two amendments. I do not plan to push mine to a vote, but I offer the Green Party’s strongest support to the noble Lord, Lord Alton, for his amendment. How could we not vote to ensure that there is action on modern slavery?

[Earl Russell (LD)]

My Lords, I will speak also in favour of Amendment 18 in the name of the noble Lord, Lord Alton of Liverpool, and supported by the noble Baroness, Lady Kennedy of The Shaws, and the noble Lords, Lord Offord and Lord Teverson. I will speak briefly and will not repeat the arguments that I made in Committee.

We believe in people and planet, and we should never have to choose one or the other. The two are intertwined and co-dependent. Our goal of reaching net zero must not come at the expense of supporting repressive regimes that do not support the human rights of their own citizens, or on the back of slave labour.

In brief, we are very supportive of the intentions behind this amendment, but we feel that the ultimate solutions lie above and beyond GB Energy. The real solutions in the UK are about working with our allies and partners to develop our own manufacturing capacity for solar panels in particular, so that we are free of those from China. California has made progress on this; it can be done, particularly working with our European allies. This is really important stuff that the Government need to get to grips with.

We do not want to see GB Energy put at an unfair disadvantage vis-à-vis every other private contractor or engineering company doing solar panels in the UK. The noble Lord, Lord Alton, has already spoken about this, but I know that noble Lords will be very grateful to Jürgen Maier for having come and spoken to us. Unfortunately, I was off at the time, but my understanding is that it was a very good and productive meeting, and that he gave very strong and powerful arguments and responses to questions that were put to him on these issues. GB Energy, as we know, also has lots of stringent reporting requirements in place, including under the Modern Slavery Act.

20:15

We had very much hoped that further progress could have been made between Committee and Report. That, clearly, has not been possible. We will support this amendment if it is put to a vote, to allow more time for conversations to take place. My hope is that those conversations can happen either before Third Reading or when this amendment goes back to the other place. In either case, it is absolutely essential that some solutions are found, so that GB Energy is not put at a disadvantage against other companies. But the real, long-term solutions are about validating supply chains, developing our own solar manufacturing panel capacity, strong and determined diplomacy, and working with our allies to develop new forms of manufacturing processes.

Just briefly on Amendment 19, we are supportive of it, although I understand that the noble Baroness, Lady Bennett, has said she will not call a vote on it. But on the deforestation point, will the Minister kindly say whether government Amendment 38 would be relevant here?

[Lord Teverson (LD)]

My Lords, very briefly, I was pleased to add my name to this amendment and, like others, I commend the noble Lord, Lord Alton of Liverpool, for his long-time work on this crucial area. On supply chains, those companies involved in fitting solar or anything else in this area should really be concerned about their supply chain in terms of scope 3 emissions, where they have to track their supply chain backwards, so I would hope that was also a method to check means of manufacture as well. I am also very sympathetic to the amendment from the noble Baroness, Lady Bennett.

[Lord Offord of Garvel (Con)]

My Lords, Amendment 18 is a simple yet essential safeguard that ensures that public funds will not support companies tainted by modern slavery in their energy supply chains. The UK has long stood against forced labour and exploitation. If we are serious about a just and ethical transition to clean energy, we must ensure that Great British Energy, a publicly backed entity, operates to the highest moral and legal standards. There is a clear precedent for this approach. The UK’s Modern Slavery Act 2015 requires companies to take responsibility for their supply chains, yet we know that modern slavery remains a serious issue in the global energy sector, particularly in the sourcing of solar panels, batteries and raw materials such as lithium and cobalt.

This amendment does not create unnecessary bureaucracy or hinder investment; it simply ensures that taxpayers’ money does not fund exploitation. If there is credible evidence of modern slavery in the supply chain, public funding must not flow to that company. It is a basic ethical standard. It is also a matter of economic resilience, because reliance on unethical supply chains creates risk for businesses, investors and the public. Therefore, supporting this amendment strengthens the integrity of Great British Energy. aligns our economic ambition with our moral obligations and sends a clear message that Britain’s clean energy future must be built on ethical foundations. I urge all noble Lords to support this amendment.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to all noble Lords who spoke in this important debate, and particularly, of course, the noble Lord, Lord Alton. He and I have worked together on a number of these issues, particularly in relation to enforced organ donation in Xinjiang province, and I have always been tremendously grateful for the advice and support he has given.

On this debate in general, I agree with the noble Earl, Lord Russell, that behind it lies more fundamental changes that we need to see, including his point about the development, where we can, of a UK supply chain. He said that he is going to support the noble Lord, Lord Alton; I understand and accept that.

Let me say at once that the Government wholeheartedly agree on the importance of confronting human rights abuses, including modern slavery, in energy supply chains, and we are committed to tackling the issue. I am glad that the meeting with Jürgen Maier was helpful; he is providing some strong leadership in this area. I have had also had discussions with the noble Lord, Lord Alton, between Committee and Report, but we have not quite found a way through as yet.

My understanding is that Great British Energy will already have a range of tools in place to support its efforts to identify and tackle human rights abuses in its supply chain. Indeed, as a state-owned company, it will be expected not only to abide by but to be a first-in-class example of adherence to the UK’s existing legislation and guidance. We support voluntary due diligence approaches taken by UK businesses to respect human rights across their operations and supplier relationships, in line with the UN’s Guiding Principles on Business and Human Rights and the OECD guidelines for multinational enterprises.

The noble Lord, Lord Offord, referred to legislation passed by his Government, which I readily acknowledge. Under Section 54 of the Modern Slavery Act 2015, Great British Energy will be required to prepare a slavery and human trafficking statement for the financial year, in relation to its turnover of £36 million or more, outlining the steps it has taken in the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains nor any part of its business. Once the Procurement Act 2023 comes into force—on which the noble Lord, Lord Alton, and I shared a common endeavour—it can reject bids and terminate contracts with suppliers which are known to use forced labour themselves or anywhere in their supply chain.

We will also use the modern slavery assessment tool known as MSAT to assess the supply base for modern slavery risks. With these tools, I am assured and am confident that Great British Energy will not ignore credible evidence of modern slavery and human rights abuses. I believe that its exemplary adherence to this legislation, which the Government rightfully expect, will not only ensure that the company is doing all in its power to combat modern slavery but also pull up the standards expected of the UK’s wider energy industry under the existing legislative landscape. I think the chair of GBE has reinforced that point.

It is our belief that any action that has to be taken must not only be robust but—to take the point of the noble Earl, Lord Russell—take a whole-of-government and society approach. We expect UK businesses, including GBE, to do everything in their power to remove any instances of forced labour from their supply chain. Our guidance and international principles encourage business to remediate or mitigate when instances are uncovered, such as industry collaboration or improved internal purchasing practices. Amendments 18 and 19 would not allow GBE the opportunity for mediation; they would only penalise it.

There is a practical question around how these amendments might work in practice and what their impacts on GBE and its operations would be. They do not define what is meant by “credible evidence”, and this could be left open to interpretation. I am not trying to be pedantic here because, clearly, the noble Lord, Lord Alton, suggested in his opening remarks that he wanted to give the Commons the opportunity to debate this matter. I agree that we should not be too pedantic about the wording of the amendment, but I wanted to mention that as one of the practical consequences of enacting the amendments as they are currently drafted.

Combating human rights abuses, such as modern slavery, across the whole energy industry is a much more effective way to make progress than applying measures on a company-by-company basis, as these amendments would do. We recognise that the landscape has changed since the Modern Slavery Act was introduced; that is why we are committed to improving our response to modern slavery and will set out next steps more broadly in due course.

I should inform the House that we are partnering with an expert institution to provide detailed and relevant information on what modern slavery statements should cover, including practical advice for businesses to go beyond compliance with their legal requirements and actively identify and remedy instances of modern slavery in their supply chains. GBE will follow that, of course.

The noble Lord, Lord Alton, expressed some scepticism about the Solar Taskforce. Having been relaunched by my department, it will focus on identifying and taking forward the actions needed to develop resilient, sustainable and innovative supply chains that are free from forced labour. The aim is to support the significant increases needed in the deployment of solar panels to meet our ambition of seeing a large increase by 2030.

More widely, the Government are taking action to ensure that our clean energy supply chains are resilient as a key priority in the transition to net zero, in both de-risking the delivery of our carbon budgets and maximising the economic benefits from the transition. This will involve domestic action, such as investment in manufacturing, and international action, such as removing trade barriers and collaborating with our allies.

With respect to the speech from the noble Lord, Lord Alton, I know that the House wants to see action from the Government. I can assure noble Lords that my department is working collaboratively across Whitehall on this important issue, including with the Department for Business and Trade and the Home Office, to assess and monitor the effectiveness of the UK’s existing measures, alongside the impacts of new policy tools that are emerging to tackle forced labour in global supply chains, including in the energy sector. We are not ignoring the points made by the noble Lord. We take this seriously and, as I said, we are strongly looking at this across Whitehall at the moment.

I turn to the amendment in the name of the noble Baroness, Lady Bennett, to which she spoke so eloquently. Let me be clear: the UK’s existing sustainability criteria put limits on the greenhouse gas emissions of the supply chain and already include environmental protections. Where biomass is sourced from forests, the land criteria include requirements around sustainable harvesting and maintaining productivity. This ensures that forests are managed well and in a sustainable manner, as carbon dioxide emissions released during combustion are absorbed continuously by new forest growth. The statement that we made on Monday in relation to biomass reflects how the Government are moving. They might not be moving as fast as the noble Baroness wants, but we are, I think, moving in the direction that she wishes to see.

I remind the noble Baroness, Lady Bennett, that, as a public body, Great British Energy already has a duty to conserve and enhance biodiversity. The noble Earl, Lord Russell, was right to remind me of my own Amendment 38, which we will come on to at some point this evening. I do not want to repeat what I am going to say later, but it is a very important amendment and I hope it will provide considerable reassurance to the House.

[Lord Alton of Liverpool (CB)]

My Lords, I am grateful to the Minister. I have taken my own remarks at something of a gallop this evening, but this has been a very worthwhile debate. It was good to hear from the noble Baroness, Lady Bennett, the noble Earl, Lord Russell, and the noble Lords, Lord Wigley, Lord Teverson and Lord Offord. The fact that there was so much agreement across the House about the scourge of modern-day slavery and the failure, 10 years later, of the 2015 legislation to deal with this problem effectively demonstrates the truth of what has been—

[Lord Hunt of Kings Heath (Lab)]

My Lords, in my remarks, I accepted that life has moved on since 2015. The Government know that we need to look at this further, which is why we are working across Whitehall at the moment. I wanted to assure the noble Lord that we do not ignore the fact that we need to move on from the 2015 legislation.

[Lord Alton of Liverpool (CB)]

I accept that it is not the Minister who is at fault here. However, whether there is the same enthusiasm elsewhere across government is something that we can all speculate on. He will remember that, in Committee, I drew to his attention the report on 26 December 2024 in the Financial Times linking 14 companies to events in Xinjiang involving $1.4 billion of exposure.

[Lord Hunt of Kings Heath (Lab)]

I am sorry to challenge again the noble Lord but, seeing my noble friend Lord Collins on the Bench, I assure the noble Lord that I speak for the Government in saying that we are very concerned about this. We are not at all being complacent.

20:30

[Lord Alton of Liverpool (CB)]

I know that the Minister and his noble friend Lord Collins are concerned. The issues are not a problem here, but, as I suggested earlier, they may be elsewhere within government. Maybe we have to concentrate people’s minds, as the Minister and I have done previously on other legislation. He referred to the Procurement Act, when we were successful, together with other noble Lords, in concentrating the mind of the Government at that time. That is all I am seeking to do this evening.

The Minister referred to our duties. The Modern Slavery Act and its Section 54 are 10 years old. The author of that legislation was the noble Baroness, Lady May, then Home Secretary and who became Prime Minister. It was, at the time—everybody said it—landmark legislation. She recognises that the voluntary nature of Section 54, which is a tick-box exercise, does not do the job, but no one has brought forward changes to that. That is why the Joint Committee on Human Rights is currently conducting an inquiry into modern-day slavery and supply chain transparency.

The Minister will know that, on previous occasions, Ministers have said from that Dispatch Box that it cannot be done in this or that Bill at this time and that there will be other legislation and that will be the time to do it. It never is the right time. There never is the right legislation. The issue ultimately is whether we entrench dependency on a country run by a regime like that of the CCP or whether we have resilience in the United Kingdom and create supply chains between democracies that have similar values; otherwise, British taxpayers’ money, to the tune of billions of pounds, is going to pour into the coffers of a regime that is inimitably opposed to the values that we espouse. For all those reasons, I would like to test the opinion of the House.

20:32

Division 3

Ayes: 177

Noes: 127

20:42

Amendments 19 and 20 not moved.

20:43

Consideration on Report adjourned until not before 9.20 pm.