Subsidy Control Bill

Baroness Boycott Excerpts

Committee stage
Wednesday 9th February 2022 Grand Committee

[Baroness Blake of Leeds (Lab)]

I rise to move to Amendment 62, in the name of my noble friend Lord McNicol. I am also looking forward to discussing Amendment 63, in the name of the noble Baroness, Lady Boycott, which is supported by the noble Baroness, Lady Sheehan, and my noble friend Lord Whitty.

Following on from the discussion of the purpose of the work of the CMA and the opportunities it will present, I want to express the concern that we could be missing a real opportunity if we do not look more closely at the way it will work. Amendment 62 has been tabled to probe the question of what practical effect the CMA’s work will have, beyond on the making of individual decisions taken in isolation on the basis of its advice. Also, as we have discussed, what powers will it have to investigate or highlight areas of concern which come to light?

On a general note, in many cases the delegation of responsibilities to a regulator or other form of arm’s-length body creates a symbiotic relationship whereby day-to-day work can be carried out independently of the department, but that same department can benefit from the experiences of its agency. We remain concerned that, as I have said, we are missing trick and that the whole process is weakened by the lack of a need to respond annually on what work the CMA is undertaking collectively. It is not clear whether there will be a sense of the overall contribution that the CMA and subsidy control will make to key policy areas. Will its findings have an impact on future policy and statutory guidance, or is its sole purpose simply to state opinion or comment on the individual cases before it?

Amendment 63 will enable us to have a specific debate on the policy objectives around net zero, particularly linking to the outcomes of COP 26, as we have discussed before in Committee, and highlighted by the publication this week of the levelling up White Paper. Where are we going to be able to assess progress? Surely, a section of the CMA’s annual report would be a very good place and opportunity to bring together the sense of purpose of the subsidy regime.

We have talked a great deal about what subsidies are and who they are there to benefit. Surely this presents an opportunity to make sure that there is the transparency, clarity and real sense of forward thinking that will help take strategic objectives forward. As I say, we are concerned that the Bill is fairly silent on these areas, and we would like to hear from the Minister what the contribution of the CMA and its work will be to the progress of strategic priorities going forward. With those comments, I beg to move.

[Baroness Boycott (CB)]

My Lords, I declare my interests as set out in the register and apologise for being unable to attend day one in Committee. I am very grateful to the noble Baroness, Lady Sheehan, for introducing my amendments on that day, and to the noble Lord, Lord Whitty, and the noble Baroness, Lady Hayman, for their support.

Today I am introducing Amendment 63, again with the welcome support of the noble Baroness, Lady Sheehan, and the noble Lord, Lord Whitty. Some of the reasons for this amendment have just been set out. It is linked to my earlier amendments in that it is aimed at ensuring that progress towards achieving our net-zero and environmental goals is reported on and monitored after decisions on subsidies have been made.

Amendment 63 provides that a review of the impact of the subsidy control regime on progress towards achieving net zero and our environmental goals should be included in the annual report prepared by the CMA, as has just been mentioned. The Government have said that the new subsidy regime aims to enable public authorities to deliver

“strategic interventions to support the UK’s economic recovery and deliver government priorities such as … net zero.”

As debated on day one, the framework permits subsidies that support our net-zero goals, but there is very little in the Bill that actually enables subsidies that support or encourage consideration of net-zero and environmental goals in their design and the way they are awarded.

Ultimately, if we do not do this, the Government will not know whether the subsidy regime is delivering on its net-zero and environmental priorities. Tracking underlying progress is absolutely crucial to identifying whether their aims are being met and to understanding what progress or changes we need to further make.

On day one, the Minister said that:

“Net-zero and climate change considerations are not inherent to all subsidies”,


and that placing a principle that considers our climate change and environmental commitments in the Schedule 1 principles

“could lead to public authorities having to do bespoke, possibly onerous, assessments for every single subsidy awarded or subsidy scheme made”.—[Official Report, 31/1/22; col. GC 158.]

The delivery of net zero is one of the key strategic priorities of this Government, but if there is to be no specific principle ensuring that public authorities properly factor this into their decisions, it seems even more important that we put clear monitoring and reporting of these issues in the Bill.

The Bill sets out an overarching monitoring and reporting process, predominantly led by the subsidy advice unit within the CMA, which includes determining

“whether any changes should be made to the regime as a whole or certain aspects of the regime.”

However, absolutely nothing explicitly suggests that this monitoring and reporting process will encompass the impact of the new subsidy regime on achieving the strategic net-zero priority.

With nothing in the Bill that embeds this consideration, it is really difficult, if not impossible, to understand how the Government intend to monitor whether their strategic objectives are being met, or indeed possibly being undermined. The Government have declared a climate emergency, so it seems quite astonishing that we are prepared to put public money towards efforts that could undermine that goal. Indeed, all public money should be put towards anything that makes this goal more available and possible for us all.

[Baroness Sheehan (LD)]

My Lords, I rise to speak to Amendment 63 in the name of the noble Baroness, Lady Boycott, to which I and the noble Lord, Lord Whitty, have added our names.

Before doing so, I want quickly to speak about Amendment 62, which I support. I recognise the less than complete nature of the assessment it advocates, namely the

“assessment by the CMA, on the basis of the reports it has prepared”.

However, those reports are limited to the voluntary or mandatory referrals referred to in paragraphs (a), (b) and (c). I also have some reservations about the reference to the legislation meeting its stated objectives; that is living in hope that a stated objective might actually appear in the Bill at some point.

I thank the noble Baroness, Lady Boycott, for her comprehensive introduction to Amendment 63; it leaves me with little to say. These subsidies will be used by hundreds of public authorities. According to figures I have seen, some 550 public authorities will be able to give out subsidies under this regime. Can the Minister confirm that figure? It is important that many of them fully grasp the importance of their decisions. The Government have said that meeting the net-zero target and levelling up will be policy objectives, but words are not enough. We need to be able to demonstrate that that is the case. This amendment would ensure that it is the case with respect to the net-zero target and other environmental targets. The amendment will be especially necessary if the Government resist that tabled by the noble Baroness, Lady Boycott, which would include a new principle to consider net-zero goals.

Clear and detailed monitoring and reporting of climate change risks and opportunities has been successfully implemented in other parts of our economic system—for example, by the FCA and the PRA through amendments to last year’s Financial Services Act, and by the Pensions Regulator through the pensions Act, also of last year. For the first time, the Pensions Regulator has published guidance on governance and the reporting of climate-related risks and opportunities. Such inclusions in those Acts really help to drive climate alignment across these sectors.

This Bill is an opportunity to do the same in relation to our subsidy control regime. Amendment 63 would allow the Government to continue to claim that they are a global leader on climate change.

--- Later in debate ---

The Government take their net-zero commitment and environmental targets seriously and this Bill will support those aims by giving public authorities—

[Baroness Boycott (CB)]

Given that the UK has committed to a 50% cut by 2030, a review that takes place only every five years does not seem wholly practical, given that we have only eight years.

[Baroness Bloomfield of Hinton Waldrist (Con)]

It is the Government’s position that five-yearly reports are sufficiently frequent to take a view of how successful this is. They are the appropriate tool to conduct a review of the environment and energy principles. Clause 65 provides an achievable timescale for delivering complex and substantive analysis of this sort. To ask that we prepare something every year would be an unnecessary burden on the whole subsidy control regime and the structures we have put in place to support this.

The CMA will have the ability to gather all the information needed to conduct such an analysis for these five-yearly reports, through Clause 67. These are powers that the CMA will not have in relation to its annual reports. I therefore humbly request that the noble Baroness withdraw the amendment.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

We are just going to have to agree to disagree on this point. I believe that it is part of the overarching principles of this Government that the environment is one of our most important points. I do not believe that it needs to go on to the face of every Bill. I know that it is in the pensions legislation, but I cannot go further than I have already gone at the Dispatch Box in the context of this Bill.

[Baroness Boycott (CB)]

My Lords, given how huge this area is in terms of the amount of public money that gets spent and given that the Government have a public commitment to net zero, it seems astonishing that we do not have the legislation blended in to this Bill. We are not talking about minor amounts of money; we are talking about the way in which whole communities live, work and operate.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I remind the noble Baroness that we have a legal commitment to net zero.

Energy Costs

Baroness Boycott Excerpts

Thursday 6th January 2022 Lords Chamber

[Baroness Boycott (CB)]

My Lords, I am very pleased to support this debate, but I am always sad that we have to have it at all. In her Question to the House, the noble Baroness asks about the effect of rising energy costs. In my few minutes, I will talk about the effect this will have on food.

Potentially, 6 million households—not 6 million people—will have to choose between heating and eating, paying a bus fare or buying sanitary towels. Some 2 million of those households are, at the moment, keeping their heads above water, but come 1 April they are liable to sink below the waterline.

These energy price rises affect everything in the life of a family. Food is always the part of the budget that is squeezed. You can always, more or less, buy something cheaper and thus less healthy, or you can just choose not to eat at all. This already happens, not just in families but in cash-strapped councils and schools, which take bits of the schools food budget as it passes through their hands. Too many of our children are being served cheap food that limits their physical and mental progress; now even more of them will be suffering that at home. For many more, breakfast will be reduced to a packet of crisps and a fizzy drink; that might fill them up for a moment, but who is thinking of the long-term damage? Of course, we see all this in the Covid epidemic.

Food prices are also rising. The Government’s own food security report, published just before Christmas, acknowledges that the poorest 20% of households are

“more impacted by changes in food prices”,

and that

“With a decrease in income alongside the percentage spent on food having remained the same, the poorest households”


have had a really “diminished budget” since 2017. But why is food always singled out as an item of expenditure that can be, and often is, the first to be cut? The report again explains that

“expenditures such as electricity and gas bills are … non-discretionary, meaning that it is difficult for a household to cut back on spending.”

In a subsequent paragraph, the report confirms:

“For some households, it could also mean that people might rely on food aid”,


or completely miss meals.

The Government are armed with all the facts they need to justify action. They know full well that without such action there will be more visits to the food bank. This has certainly been the case at Feeding Britain. One little boy said to his mum when they were aboard one of our food buses the other day, ‘Do we really need to go home, mummy? If we stay here we have the internet, it’s warm and there’s food”. A dad who recently joined one of our affordable networks commented to a volunteer that he had the first piece of meat he had been able to afford in six weeks. Aboard another of our food buses, two-thirds of people signing up at the first couple of stops required both low-cost food and emergency credit on their meter. One family in London recently sought help late on a Friday afternoon, with just 5p on their meter. Even if they could get some food, how would they cook it? Pensioners have been especially badly hit. As I have spoken about before, they are reluctant, through a matter of pride and despair in this country, to have to turn to food banks. We have been able to set up many food banks in Glasgow—not something I am proud of having to do.

I urge the Government to look at every possible bit of support they can through the social security system and things such as the Robin Hood tax, the warm homes discount and winter fuel supplies. I also urge the Government not to turn their back on investment in green energy. It would be a very short-sighted decision to say that we will stop funding our investments in this direction. We will all pay for it in the long run. Quite frankly, the energy companies have made enough money out of all of us over so many years that to tax them to try to stabilise this situation seems only fair and just.

Drax Wood Pellets

Baroness Boycott Excerpts

Monday 13th December 2021 Lords Chamber

Asked by

[Baroness Boycott]

To ask Her Majesty’s Government what assessment they have made of (1) the sustainability, and (2) the impact on biodiversity, of the wood pellets used by Drax for electricity generation in the United Kingdom.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, in 2020 plant-based biomass power generation made up approximately 9% of the total renewable electricity generation in the UK; this includes generation from wood pellets. The biomass that powers such generation meets strict sustainability criteria that the Government set out in legislation. The sustainability criteria include requirements for sustainable sourcing, covering a range of social, economic and environmental issues, including protecting biodiversity. The UK supports only biomass that complies with these strict sustainability criteria.

[Baroness Boycott (CB)]

I thank the Minister for his Answer, but I beg to differ. Some of the forests being logged for biomass are among the most ecologically rich and diverse in the world. The North American coastal plain, where most UK biomass imports—particularly Drax—come from, is a global biodiversity hot spot. Clear-cutting for biomass is occurring even in reserves that are designated protected forests. We are paying Drax £832 million a year in subsidies, and at the moment it is the fifth most polluting power station in Europe. I again ask the Minister my Question on the Order Paper. The impact on biodiversity, rather than non-existent as he said, is in fact very severe. When will the Government step up to the plate and do something about this?

[Lord Callanan (Con)]

I am afraid that I and the noble Baroness will have to disagree on this. Biodiversity is one of the criteria we take into account. We have sent officials out to southern USA, where most of this biomass comes from. This is residue, by-product from the forestry process, so it is not unsustainable. I think the noble Baroness is wrong.

Oil and Gas Authority: Remit

Baroness Boycott Excerpts

Thursday 2nd December 2021 Lords Chamber

[Lord Callanan (Con)]

No decision has yet been made regarding the proposed Cambo field. The export market for oil and gas produced from Cambo is purely a commercial matter dictated by the market, the quality of oil and the different refinery capabilities. But, as I said, even with continued development, we expect the UK to remain a net importer of both oil and gas throughout the transition period when following the Climate Change Committee’s balanced net-zero pathway.

[Baroness Boycott (CB)]

My Lords, HMRC estimates that decommissioning will cost the taxpayer £18.3 billion over the next few decades. Oil and gas companies can claim tax back on all decommissioning as well as R&D, as the noble Baroness, Lady Sheehan, pointed out. We also have one of the lowest tax burdens for oil and gas in the world. Shell paid $1.8 billion in tax to Norway last year, but the UK gave it $99.1 million towards decommissioning costs. What has happened to the polluter pays principle? After all, the oil companies have made a lot of money and trashed our planet, and now we are going to help them continue to make money in order to transition to a better future.

[Lord Callanan (Con)]

It remains the case that the petroleum sector is a net payer of taxes to the UK Exchequer. I frankly do not understand the argument that we should stop all production in the North Sea and instead import those materials that we will continue to need in every scenario. We would be declining to give ourselves the revenue and spending extra to import those same products.

Net-zero Emissions Target: Fossil Fuel Extraction Projects

Baroness Boycott Excerpts

Wednesday 3rd November 2021 Lords Chamber

[Lord Callanan (Con)]

The noble Baroness makes some valid points. The steel industry is integral to building the infrastructure, such as offshore wind farms, that we need to tackle climate change. While there has been a decline in coal mining in the UK for some time, there is a global market for coking coal. This reduction in the mining of coal in the UK will have no impact on UK steel production. I would remind the noble Baroness that we published the UK’s first ever industrial decarbonisation strategy, which will help in this area.

[Baroness Boycott (CB)]

My Lords, yesterday the Prime Minister said that the threat was huge. It has been very humbling to listen to some of the testimonies from countries such as Bangladesh, the Maldives and the Seychelles. I want to reinforce the point made by the noble Baroness, Lady Sheehan. Why do we have 40 licences out there? Are they going to be reviewed, and will this topic be discussed in Parliament? Will the Minister comment on what the Prime Minister said at 1.09 pm today to the Member for Brighton Pavilion, who was asking about this general issue? He said:

“I will say nothing about the Cambo oil field.”


This does not fill us with confidence, especially coming on the back of his strong and wise words in Glasgow.

[Lord Callanan (Con)]

The Cambo oil field is, of course, the subject of a licensing application at the moment. This is not a new development. The original consents were issued in 2001 and 2004 by the previous Labour Government. We are waiting for the Offshore Petroleum Regulator to take a decision, and then the Oil and Gas Authority will take a further decision. But I return to my previous point. We still import large amounts of oil and gas. It makes no sense to not produce it domestically if we can and then import it from Russia or Saudi Arabia. We need to decline our usage over time, and we are doing that. But in the transition, we do need oil and gas.

Emissions Trading Scheme: Transport

Baroness Boycott Excerpts

Monday 11th October 2021 Lords Chamber

[Lord Callanan (Con)]

Of course, these matters are never as simple as the noble Baroness makes out. Building on the previous Answer from my noble friend Lord Agnew, I say that it is important to recognise that the UK is proceeding faster than any other G7 country in our decarbonisation efforts. I am aware that the EU is looking at a carbon border adjustment mechanism—we will see if it happens or not—and of course we will look at the proposal.

[Baroness Boycott (CB)]

Are the Government supportive of the citizens’ climate assembly recommendation to introduce a frequent flyer levy? This would fit well with the polluter pays principle, which Ministers have advocated previously at the Dispatch Box, and the burden would fall on those most able to pay, something I am sure the Minister would deem fair.

[Lord Callanan (Con)]

I am sure the Chancellor will want to update Parliament in due course on any proposed levies.

Climate Change

Baroness Boycott Excerpts

Tuesday 7th September 2021 Lords Chamber

[Lord Callanan (Con)]

That is the £6 billion CO₂ question, in that we will have to wait and see. A tremendous amount of diplomacy is going on. My right honourable friend Alok Sharma, the COP president, is obviously engaging extensively, and we hope that they will publish realistic NDCs before COP.

[Baroness Boycott (CB)]

My Lords, the UK still has no fully costed plan to reach net zero. The Office for Budget Responsibility has made it clear that the cost of delaying will increase dramatically the longer we do so, and then we will not get the benefits of a more sustainable society and a greener economy. This vacuum of clear policies is now giving space to those who have vested interests in delaying and continuing subsidies for polluting fossil fuels—so can the Minister give the House assurances that he will act swiftly to address this misinformation and ensure that, in the forthcoming spending review, there are long-term investment commitments that take full account of all these costs and benefits?

[Lord Callanan (Con)]

We are certainly committed to action. We have published a number of strategies—the hydrogen strategy and the transport decarbonisation strategy—and the net-zero strategy will be published before COP. The noble Baroness will understand that I cannot give commitments for the Chancellor in the spending review.

Deep Seabed Mining

Baroness Boycott Excerpts

Monday 6th September 2021 Lords Chamber

[Lord Callanan (Con)]

The noble Lord is absolutely correct. The net zero campaign that we all contribute to and support will produce massive demand for many of those minerals, so investing in two new interdisciplinary circular economy centres—one on technology metals and one on circular metals—will help. Separately, Defra will be consulting later this year on new measures that will ensure that we better manage electronic waste and do more to drive up reuse and recycling, because of course that is a much preferable solution.

[Baroness Boycott (CB)]

Does the Minister agree that it seems deeply ironic that we are now about to dig up these nodules from the ocean without full knowledge of what that will do environmentally? We did the same with oil, and now we are trying to retract. As was just mentioned, recycling is one method of finding the metals that we need, but scientists now know that there are many other ways to produce the necessary batteries and technologies. In the same way that solar and wind power have now taken over from fossil fuels, we can avoid digging up the ocean. I would call for a moratorium, and I should like the Government’s opinion on how much R&D is going in the right direction.

[Lord Callanan (Con)]

I know that the noble Baroness is a big supporter of our net-zero policy, but many of the critical minerals found on the deep seabed are important and often irreplaceable in electric vehicle batteries, offshore wind turbines and other technologies. But of course we need to pursue alternative research and development, and find alternative battery technology, and, as the noble Lord, Lord McNicol, said, reuse and recycling will also be very important.

Net Zero Test

Baroness Boycott Excerpts

Thursday 22nd July 2021 Lords Chamber

[Lord Callanan (Con)]

I thank my noble friend for her comments and certainly agree with her. As she is well aware, the trustees of occupational pension schemes are independent of government; they are not bound by the commitments we have signed up to. However, given the significance of the financial risks posed by climate change, we expect all investment decisions made by pension scheme trustees to take climate change into account. As of 2019, trustees of pension schemes with 100 or more members have been required to set out in their statement of investment principles policies on stewardship on an ESG, including climate change.

[Baroness Boycott (CB)]

My Lords, if this test was brought in, would it not help government departments by giving them a very clear direction of travel? It would cover the sorts of decisions we are still wrestling with—Cambo in the North Sea and the Cumbrian mine—which have somehow slipped through despite government ambitions to reach carbon neutrality. This test could save future Ministers’ blushes. Can the Minister say what discussions have been had about this proposal and whether he will advocate it to his ministerial colleagues?

[Lord Callanan (Con)]

We have not had any discussions about implementing this proposal yet. We will respond to the Climate Change Committee’s recommendations in due course. But we are looking at the impact of climate change across all our policies. As I said, we have a couple of senior Cabinet-level committees, one chaired by the Prime Minister, which take all of these things into account.

Net-Zero Carbon Emissions

Baroness Boycott Excerpts

Monday 7th June 2021 Lords Chamber

Asked by

[Baroness Boycott]

To ask Her Majesty’s Government whether they plan to publish a strategy for public engagement and behaviour change to support their target for net zero carbon emissions by 2050; and if so, when.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, leading up to COP 26, we will publish a comprehensive net-zero strategy setting out the Government’s vision for transitioning to a net-zero economy, making the most of new growth and employment opportunities across the United Kingdom. Through the net-zero strategy we will communicate our approach to public engagement and support the public to make green choices. Achieving our net-zero target will be a shared endeavour requiring action from everyone in society.

[Baroness Boycott (CB)]

I thank the Minister for his Answer. For public-led behaviour change to happen, there will need to be perceived and real fairness. Those are not my words, but those of Dr Christina Demski, who has been advising the Government on this issue. Currently, that fairness is lacking. The Cambridge Sustainability Commission report shows clearly that it is the global elite who have been responsible for most of our emissions since 1990. What are the Government doing to tackle this inequality, both real and perceived? The BEIS public attitudes survey shows that there is a great deal of concern about climate change but quite an area of misunderstanding of what net zero means. Will the Minister encourage the Government to write to every household in the UK explaining what it means and what they can do to play their part in it, so that when we get to COP 26, we will all feel involved?

[Lord Callanan (Con)]

The noble Baroness is right that we need to involve all members of society in this. We have done a lot in this space. Since 2019, we are funding or running 13 deliberative dialogues on a range of net-zero issues such as net-zero homes, heating and transport, decarbonisation, and so on. A lot is going on in this space.