Great British Energy Bill

3rd reading
Tuesday 25th February 2025 Lords Chamber

Third Reading

Relevant documents: 4th Report from the Constitution Committee and 7th Report from the Delegated Powers Committee. Welsh, Scottish and Northern Ireland legislative consent granted.

15:44

Amendment 1

Moved by

[Lord Hunt of Kings Heath]

1: After Clause 6, insert the following Clause—
“Reviews of Great British Energy’s effectiveness
(1) The Secretary of State must appoint an independent person to carry out reviews of the effectiveness of Great British Energy.
(2) In carrying out the review, the independent person must have regard to the statement of strategic priorities prepared by the Secretary of State under section 5(1).
(3) After each review, the independent person must—
(a) prepare a report of the review, and
(b) submit the report to the Secretary of State.
(4) On receiving a report, the Secretary of State must—
(a) send a copy of the report to the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland, and
(b) no less than 14 days after complying with paragraph (a)—
(i) publish the report, and
(ii) lay a copy of the report before Parliament.
(5) The first report must be submitted to the Secretary of State within the period of 5 years beginning with the day on which this Act comes into force.
(6) Subsequent reports must be submitted to the Secretary of State at intervals of not more than 5 years.
(7) In this section, references to an “independent person” are to a person who appears to the Secretary of State to be independent of—
(a) the Secretary of State, and
(b) Great British Energy.”
Member’s explanatory statement
This amendment requires the Secretary of State to appoint an independent person to carry out reviews of the effectiveness of Great British Energy.

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

My Lords, Amendment 1, in my name, inserts a new clause after Clause 6 which requires the Secretary of State to appoint an independent person to carry out reviews of Great British Energy’s effectiveness. Throughout the Bill’s passage, the Government have made it clear that we are committed to ensuring that Great British Energy is subject to appropriate accountability and reporting requirements.

In particular, we have set out in the Bill that Great British Energy’s annual report and accounts will be published and laid before Parliament. The annual report and accounts of Great British Energy will be subject to external audit and the Comptroller and Auditor General will be appointed as the company’s external auditor, in line with the Managing Public Money guidance. The accounting officer of Great British Energy, once appointed, will also be accountable to Parliament, and the National Audit Office will have the right to review Great British Energy’s work and report its findings publicly, and to the Public Accounts Committee.

Having reflected on arguments made on Report in relation to independent reviews, particularly by the noble Lord, Lord Vaux, I am bringing forward this amendment. It will require the Secretary of State to appoint an independent person to carry out a review of the effectiveness of Great British Energy, including having regard to the statement of strategic priorities with which Great British Energy must comply.

The review prepared by this independent person will be submitted to the Secretary of State, who must ensure that it is published and laid before Parliament. The Secretary of State must share the report with the devolved Governments at least 14 days before publication. The first review must be submitted to the Secretary of State within five years of the Act coming into force, and there will be further reviews at a maximum of five-year intervals. We think that this sensibly balances additional accountability alongside the existing mechanisms of review and reporting, while not overburdening Great British Energy and ensuring that it has the time and space to take long-term strategic decisions as an operationally independent company, and as we have debated extensively during the preceding stages of the Bill.

I also repeat the assurance I gave to the noble Lord, Lord Vaux, on Report, which relates to additionality, and confirm that this will be an important principle for Great British Energy, particularly in respect of its investment activity. As such, we expect that these independent reviews will consider “additionality” as part of any assessment of Great British Energy’s effectiveness, having regard to the statement of strategic priorities in doing so.

This amendment is in keeping with a commitment I gave on Report. I hope noble Lords will support the amendment and I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I rise very briefly to thank the Minister for tabling this amendment, which, as he says, introduces a periodic independent review of Great British Energy’s effectiveness, as he undertook to do on Report. I am most grateful to him for the constructive discussions we have had around this as the Bill has moved through its stages. I also thank all noble Lords who have added their support to this through the process.

The amendment does not go quite as far as my amendment on Report, in two respects. First, as the Minister has just alluded to, it does not include any mention of reporting on the extent to which GBE has succeeded in encouraging private investment. However, the noble Lord was very clear on Report about the importance of the additionality principle for GBE and that he therefore expected that it will be covered by the independent review of effectiveness, and he has just repeated that in his speech just now, which gives me more than sufficient comfort on that question.

Secondly, my original amendment proposed a review every three years. While I think that it would have been better to have the initial review before 2030, which is the Government’s deadline for achieving decarbonisation —therefore, there would be time to do something about it if things were not going right—the five-year interval that the noble Lord’s amendment requires is a reasonable compromise.

I do have one question about the amendment. It was changed at the last minute to give the devolved Governments the opportunity to see the independent report 14 days prior to it being laid before Parliament. I fully understand and agree that the devolved Governments should be given the independent report, but I really do not understand why they should get it in advance of the UK Parliament. I would be grateful if the Minister would explain the reasons for that.

Frankly, however, that is not a major issue. I am very grateful to the Minister for tabling the amendment, which will be a very significant improvement to the transparency and accountability regime that Great British Energy will be subject to, and I therefore urge all noble Lords to support it.

[Lord Naseby (Con)]

My Lords, I took part at Second Reading, but, sadly, I had a short sojourn in hospital during Committee and Report. I will make three points, although I support the whole Bill in principle.

It seems to me that three key areas fall under this amendment. The first is mini-reactors. Three years ago, I was told that Rolls-Royce was ready to go. It is fundamental that the mini-reactors get going.

Secondly, I understand there is some discussion about the role of hydrogen. I have contacted two universities, Cranfield and Manchester, which are doing extensive work. Additionally, the boiler workers’ union is totally involved. Hydrogen work is absolutely fundamental to the future of our energy, particularly for domestic heating.

Finally, there is still a view that, rather than import oil and gas, we should carry on some degree of exploration in the North Sea.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I welcome the government amendment and the way in which the Government have listened to your Lordships’ House on this Bill and overseen considerable improvements. One was the inclusion, finally, of community energy, something your Lordships’ House has been fighting for through two Governments and several energy Bills.

However, an important issue arises at this moment relating to community energy. While the amendment that the Government have put down will help community energy to grow in the medium to long term, the sector faces an urgent short-term problem: the uncertainty of the community energy fund’s future. The fund began in January 2024 and has been very successful and heavily oversubscribed: more than 150 community energy projects have been awarded grants. More than 100 projects are ready to go and are eligible for funding, but they will not receive it because the initial £10 million is expected to run out in May. This is the only substantive mechanism helping community energy to grow, yet it has no future beyond this year.

I make no apologies at all for representing Community Energy here. Its members have asked me to say that we have seen so many times with energy policy over the years a boom-bust cycle of funding and defunding and then funding and defunding again. There is a short-term issue here, although the Government have expressed their support for the long term. So can the Minister give me a clear statement on how the Government will deal with the uncertainty over the community energy fund’s future? Can he assure me that there will be early action to deal with the enthusiasm that the fund has not been able to meet, and clear instructions on that in the statement of strategic priorities for Great British Energy, as required by Clause 5 of the Bill?

[Baroness McIntosh of Pickering (Con)]

My Lords, I take this opportunity to congratulate the Minister on bringing forward the amendment.

I support the words from the noble Baroness, Lady Bennett, and ask the Minister what the current position is on the future of the community energy fund: the Government seem to support it, but we need to know how it will proceed and when it will come into effect. How comprehensive will the review, to which the amendment refers, be? It appears to be limited to finances, but can the Minister confirm that it will also cover sustainable development?

We heard for the first time, I think, on Report about the framework document, of which the noble Lord said at col. 1204 of Hansard that it will become available only after the Bill has received Royal Assent, yet it would seem to go to the very heart of sustainability and environmental protection, which are so key to this Bill. Can the Minister explain, if the framework document will indeed cover these points, because he linked it to the sustainable definition that he was using, as recognised by the UN, why it is not part of the Bill, why we have not had the opportunity to debate it, and what the relationship will be between the framework document and the contents of the amendment that he has just put forward?

[Lord Alton of Liverpool (CB)]

My Lords, I briefly add my remarks to those of the noble Baronesses, Lady McIntosh and Lady Bennett, about the community energy fund. I thank the Minister for responding so positively to my noble friend Lord Vaux by bringing forward this amendment on more general accountability. It is a good step forward, but will he respond on those companies—I gather there are around 150—that would have been eligible for the community energy fund but will not be able to receive funding if the money indeed runs out in May, as is forecast? On that specific point, when the £100 million runs out in May, what will be put in its place?

[Lord Howell of Guildford (Con)]

My Lords, I find the amendment extremely interesting. Perhaps I may just make a general point about the nature of such amendments and provisions outside this Bill. We see here a grey area between what is strictly on the Government’s credit and bill under the PSBR and what is in the private sector. Previous Governments have been caught on this barbed wire for many years as to what lies in the public sector and influences the Government’s credit and what does not. I think we are going to see the model contained in the Minister’s amendment in many other areas as well. Right around the world, Governments have all the demands on them to make utilities work, vast changes to infrastructure and so on, and the private sector has the money. Somehow, the two must be brought together, as we tried to do in the late 1990s with PFI—the private finance initiative—which ran into great difficulties, but there were some lessons to be learned from it.

We have to learn more lessons now, otherwise the finance for these things simply will not be found. This applies particularly in the energy sector, where very large investments are required over many years. The Government cannot do it because they cannot raise the money and the private sector does not want to take such risks. This is very interesting, and I see that the Minister has done his best in plunging into this still very grey area, because we do not really know how to define accountability or what it is we are calling to account.

As to the amendment itself, I had to smile. We have had similar arrangements in the distant past for bodies that are neither public nor private, and this is an attempt to overcome the problems of that in the past.

It is, frankly, not very easy to evaluate the amendment to appoint this independent person to review effectiveness if we are not quite sure what “effectiveness” means. It says, “turn to Section 5(1) on the obligations on the Secretary of State to lay down certain criteria”, which, apparently, he has not done yet, so we do not know what the criteria will be. They will appear in six months’ time. Of course, it is easy to think of various criteria to allow one to say, “An organisation has, unfortunately, lost a lot of money but has still done terribly well, because I have these criteria here which show that it has achieved certain other objectives”. There are criteria that we can think about: externalities, opportunities for broader contributions, geopolitical objectives. All these things not only rest on highly subjective judgments but will be very far in the future. The analogy comes to mind of goalposts on wheels: the goalposts have been moved from time to time and from year to year as to whether effectiveness has been achieved, even though a lot of money may have been lost.

I have to put in a reservation that all these issues are matters of intense debate. All round the planet some of the best minds are wrestling with the effectiveness measurements of certain huge investments of a green nature, which look terrific but, unfortunately, either do not make money or go wrong, but nevertheless contribute to some part of the battle against climate violence and to some limitation on the ever-rising carbon dioxide and methane emissions.

16:00

It would be nice to have that broad set of criteria as soon as possible and for it to be shared with Parliament. To be asked to pass this amendment before we know what on earth the judgments will be, what they will be based on, or who the polymath will be who can somehow convincingly second-guess the market is asking quite a lot of us. I can see how the amendment adds something to the accountability side, but that something is very vague. I hope that there will be more efforts by the Government before long to give us a clearer idea of what “effectiveness” is, how it will be judged, how much the market will be overridden by views in five years’ time, and whether, in fact, it is going to work at all.

[Earl Russell (LD)]

My Lords, I will speak first to the amendment in the name of the noble Lord, Lord Hunt, which is supported by the noble Lord, Lord Vaux. These Benches are pleased to see that continued progress has been made and that this government amendment has been brought forward. There has been a unanimous voice across the House that there needed to be more reviews in the Bill and that it was important to have this amendment, so we are pleased to have it in place.

I echo what was said on the Government’s amendment to the amendment and the addition of proposed new subsection (4)(a), which requires a copy of the review to be sent to the devolved Ministers 14 days before it comes to Parliament. My assumption is that that is there so that the devolved authorities have a chance to comment on the review and that those comments have a chance to come before Parliament, but it would be useful if the Minister could confirm why that new subsection has been added and what the Government’s thinking is on it.

We welcome the review, but it is happening over a five-year timeframe, with the first review completed at the important date of 2030. If the Government recognise the need for the review, why not have it on a more regular basis? A three-year or four-year timeframe would be more useful for this proposed new subsection to have the effect that the Government intend it to have.

I turn beyond the amendment to what I want to say at the end of Third Reading. These Benches have been consistently supportive of the Government and their objectives in this Bill. We believe that, done well, GB Energy will help to secure our energy independence and reduce our reliance on volatile international gas markets, which have proved so costly for UK bill payers and our economic prosperity.

The previous Conservative Government spent some £40 billion subsidising bill payers, and that money provided no long-term benefit to our overall energy security. Just this week, the Energy and Climate Intelligence Unit published a report on the anniversary of the invasion of Ukraine, stating that £140 billion has been spent by the UK on the international gas markets since 2021—the equivalent of £1,300 per person. Again, this has brought no long-term benefits.

We have the third-best wind resources in the world, so it is great to see that these are finally being properly developed to bring us long-term energy security and to reduce costs for our energy bill payers. The CBI reported this week that the green economy contributed £80 billion in gross value added to the UK economy last year and grew at a rate of 10%—three times faster than the rest of the UK economy.

Having said all that, I always felt that the Bill was a little bit too short and lacked the content that it needed; that has caused us some challenges when scrutinising it. We welcome all the amendments that have been passed; we believe they add value and that the Bill leaves this place in a stronger position than when it arrived. I am particularly grateful to the Minister and his Bill team for including community energy in the Bill. This is a really important amendment, and it will benefit our communities and help with the energy transition. Community energy has been supported by MPs and noble Lords on all sides, so this is a win for everybody. I am grateful to Power for People, which has provided support to all of us on these matters, and we will continue to press the Government, as others have already mentioned, on the future of the community energy fund.

We also welcome the other amendments that were tabled: the amendment on strategic priorities; and the amendment that the noble Baroness, Lady Hayman, negotiated with the Minister on sustainable development.

Finally, if noble Lords will excuse me, I want to say something about the words that we use as parliamentarians and how we talk to each other on the issues of climate change. I deeply regret the end of the political consensus on climate change. My personal feeling as a relatively new Peer in this House is that while bits of our debates on this Bill were excellent, there were too many moments when points were repeated, purely party-political points were made that did not improve or challenge the Bill, filibustering took place, or we had numerous votes that took place very late at night.

The public support action on climate change. Polling consistently shows 70% support. The public also want to see reductions in their energy bills; they do not much care, frankly, how that happens, but it requires all of us to make progress. These matters are challenging enough to address with a sense of consensus, and they are made even more difficult when political hostility is added to the mix. My final point is that we must all work better together so that we can all achieve more.

[Lord Offord of Garvel (Con)]

My Lords, in concluding for His Majesty’s loyal Opposition, I thank noble Lords from across the House for their tenacity in scrutinising the Bill, and in particular the noble Lords, Lord Alton of Liverpool and Lord Vaux of Harrowden, for their amendments. On my own Benches, I note the contributions of many noble friends, who have done sterling work to temper what is a misguided piece of legislation which will not deliver cheaper energy for UK households or businesses.

GB Energy is flawed because it exposes the conflict at the heart of this Government between the Chancellor’s stated priority of economic growth on the one hand and, on the other, the accelerated pursuit of net zero at any cost that the Energy Secretary has made his ideological obsession. While this scrap rages at the centre of Whitehall, there is only one loser: the public, who, it has been confirmed today, will be loaded up with the price of net zero to the tune of another £111 per household this year. That is directly because of this Government’s policies and a far cry from the promise in the Labour manifesto of a reduction in energy bills by £300 per year per household—a manifesto pledge which this Government have refused to include in this legislation.

As the Bill has progressed through your Lordships’ House and the other place, the chasm between rhetoric and reality has indeed been exposed. I believe that in a decade we will look back and ask why we invented this cardboard cut-out company. But despite our deep scepticism, it would be churlish not to wish GB Energy a positive start, so I offer some start-up advice. With its £8 billion of borrowed money, the first order of business should be a feasibility study of all the energy sources available to us in the UK. If it does so, it will discover the following. The dash for renewables at any price is a folly. In doing so, we are loading excessive costs on to our energy bills, to the point now where our industrial energy in the UK is five times more expensive than in the US and seven times more expensive than in China. All the while, we are offshoring jobs from the UK to China, turning UK revenue into Chinese profits. This is impoverishing our nation.

The Government are denying the facts. We are an energy-rich country, and our hydrocarbon industry is the envy of the world in terms of compliance and sustainability. Surely it is irresponsible to refuse to even explore the opportunities that onshore gas could bring, while of course undertaking an assessment of risk. The fact that this Government’s policy continues to tilt towards shutting down offshore oil and gas is surely an affront to the hundreds of thousands of skilled workers in Aberdeen and the north of Scotland. They surely deserve better than this.

Meanwhile, both parties agree that nuclear is efficient and clean, but it should be accelerated. We should cut the red tape by unleashing our homegrown engineers while being unafraid to learn from those, such as the Koreans, who have been able to roll out nuclear energy more quickly and at a lower cost.

If GB Energy does this feasibility study, it will realise the facts and then it should pivot net zero accordingly to ensure that our transition to a cleaner energy system is both fair and affordable to UK households and industry. For the sake of the country, we can only hope that it does so.

Finally, I believe it is important to state unequivocally that my own party must reflect on the last 14 years of government energy policy. The verdict of the electorate in July was clear and resounding. As many noble Lords are aware, an error does not become a mistake until one refuses to correct it, and I would encourage the current Government to heed these wise words.

[Lord Hunt of Kings Heath (Lab)]

My Lords, we were debating my amendment, but we seem to have done the “the Bill do now pass” speeches as well, so if noble Lords allow, I will do both in my response.

I thank noble Lords for their general welcome for my amendment. I think it is a very satisfactory outcome of our debates in Committee and on Report. On the question asked by the noble Lord, Lord Vaux, and the noble Earl, Lord Russell, about the devolution aspect, the noble Earl put his finger on it. It seems perfectly appropriate that the devolved Governments should receive a copy before publication, because that then allows them to have sight of any findings that might be relevant and which they may have to answer on the day of publication. No slight is intended to Parliament in this, it is just the normal business of Government-to-Government relationships and courtesy. That is why we withdrew the original amendment and replaced it with the revised one, in the light of representations made to us by the devolved Governments.

On the timings of the review, noble Lords will know that we had in mind, at first, the UK Investment Bank, which I think has a seven-year review period. The noble Lord proposed three years and in the end we compromised. That is not unreasonable: Great British Energy must be allowed some time to set itself up and get itself into working order and then, at an appropriate point, we will have a review. It is worth making the point that GBE’s work does not come to an end in 2030; that is just a deadline we have given for clean power. We expert GBE to go on for many years to come, and therefore it is going to be a judgment, but we think five years is not an unreasonable time.

I say to the noble Lord, Lord Naseby, that I agree with him about the potential for small modular reactors —we have a programme that Great British Nuclear is running at the moment and I hope it will be able to come to some important decisions over the next few weeks and months—and he is absolutely right to mention them. I also share his view about the potential of hydrogen. We do not disagree at all with the noble Lord on that.

As far as community energy is concerned, this was raised on Report and I do not think there is anything more I can say at the moment. Clearly, we recognise the important role that community groups can play. Our intention is that Great British Energy will build on existing support, by partnering with and providing funding and support to local and combined authorities, as well as community energy groups, to roll out renewable energy projects and develop up to 8 gigawatts of clean power. I am afraid I cannot give any more details at the moment, but I understand and take note of what noble Lords have said about the companies concerned. I take this seriously and will ensure that it is considered, and we will set out further details in due course.

On the issues raised by the noble Baroness, Lady McIntosh, about sustainability, let me be clear that the independent review is focused on the effectiveness of GBE in delivering its mission. It will cover all aspects of the work of Great British Energy and will not focus solely on its financing, as the noble Baroness feared. To give an example, one of its important roles will be to clear the way to allow developers to come in. That will be an important part of the review. Furthermore, as I have already said to the noble Lord, Lord Vaux, additionality will be an important part. Clearly, the amendment that I brought on Report—about GBE needing to keep under review the impact of its activities on the achievement of sustainable development—means that that will be part of any review undertaken by the independent reviewer. I hope that reassures the noble Baroness.

16:15

We have had some interesting and detailed discussions on more general points about what is, after all, a rather short Bill. I note that the noble Earl, Lord Russell, thinks it could have been longer. My department hopes to bring forward other legislation as time allows, and subject to the usual discussions in government. No doubt we will make progress on that.

As for the statement made by the noble Lord, Lord Offord, I was interested in his point about his party’s stewardship of energy policies over 14 years. I very much regret that the Opposition seem to be backing away from the consensus that we had on the crucial importance of responding to climate change and net zero. Of course, rising prices are a concern to all of us, but we believe that the only way to ensure that we have long-term energy security, and to wean ourselves off the international gas market and the volatility that that has brought, is to move as quickly as we can towards clean power and net zero. The noble Lord, Lord Offord, knows that I totally agree about the importance of nuclear, but his party did not open a single nuclear power station during its stewardship—they fiddle-faddled around and decisions were delayed. This Government will ensure that nuclear has a strong role to play in the future.

Having said that, we have had what I can only describe as detailed scrutiny by your Lordships’ House on this very short Bill. I am grateful to all noble Lords who have taken part and enabled us to tease out some important issues, including the noble Lord, Lord Offord, and his colleagues on the Opposition Front Bench, and the noble Earl, Lord Russell, whom I thank for his constructive approach to the Bill. I resisted amendments that sought to add lists of items to be considered in the Bill, giving the usual government reason that by listing items you exclude others.

It is invidious to name names at these proceedings, but I want to mention the noble Lord, Lord Vaux, and his perseverance and persistence in ensuring that GBE has effective accountability; the noble Baroness, Lady Hayman, and her diligence in ensuring that climate and sustainability issues were fully considered; the noble Baroness, Lady Noakes, and her forensic scrutiny of the financial aspects of the Bill—she was once a formidable director of finance in the NHS, and I know only too well the skill and expertise that she brings; and the noble Lord, Lord Alton, and his continuing and hugely impressive work on human rights issues. Many other noble Lords have played significant parts in these debates and I thank them very much indeed.

I am grateful to my excellent Bill team, led by Safia Miyanji, who gave huge support from a wonderfully committed team; to my private office, led by Angus Robson; and to Ayeesha Bhutta and the Whips’ Office for the remarkable way that they underpin all our activities.

I end by acknowledging the unsung heroes in the Public Bill Office, who do so much to make sure that the amendments we debate are actually coherent and fit in the legislation. I commend this amendment to the House.

Amendment 1 agreed.

16:20

Bill passed and returned to the Commons with amendments.