Protection for Whistleblowing Bill [HL]

Baroness Featherstone Excerpts

Friday 2nd December 2022 Lords Chamber

[Baroness Featherstone (LD)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Browne of Ladyton, who made some excellent points. I congratulate my noble friend Lady Kramer on this vital Bill.

I was leader of the opposition on Haringey Council when Victoria Climbié was murdered in 2000. “Lessons must be learned” was the oft-repeated answer to all the questions, but no one in authority listened or learned. So it happened again. Again in Haringey, just seven years later in 2007, baby P—Peter Connelly, a 17 month-old toddler—was murdered by his mother’s partner, his mother and one other. By that time, I had become the MP for Hornsey and Wood Green, the western half of Haringey. Again, there had been warnings from whistleblowers.

The particular case I am citing is the story of Kim Holt, one such whistleblower, a doctor in the special clinic run by Great Ormond Street Hospital as outreach at St Ann’s in Haringey, and the clinic to which baby Peter was taken. Why was Great Ormond Street running a child safety clinic in Haringey? It needed to demonstrate outreach work to gain foundation status. Kim eventually came to me as the only person who would listen to her and do something. Kim and I flagged up the dangers caused by the lack of appropriate staffing at the clinic before Peter was murdered. Between us, we saw the police, Haringey Council leadership, Haringey Council social services, the local PCT, the Great Ormond Street board and CEO, the chief nurse of the NHS, and others, but none of them heard what we were telling them—neither me nor Kim. It was too big to fail; protect the institution; reputations were at stake. I do not have long enough to tell the whole tale or include all those who tried to flag up the dangers ahead.

When baby Peter was killed and the furore arose, the media focus was on Haringey Council and Sharon Shoesmith as the head of social services. But it was also this clinic that failed baby Peter and therefore Great Ormond Street, because it was its clinic, its responsibility, and it had been warned. With a long history of hospital admissions and many, many injuries, Peter made his final visit to this clinic—his last hope. The doctor there did not perform a full examination of Peter because he was “miserable and cranky.” Furthermore, no reports had been provided of his previous admissions and attendances at the Whittington or North Middlesex hospitals for possible non-accidental injuries, nor were they even sought. Had they been, the doctor would have seen the history of the myriad signs of abuse that were taking place. According to the post-mortem, Peter would have been suffering from numerous fractured ribs and possibly a broken spine at the time of that last visit. The broken spine would have left him paralysed and unable to empty his bladder.

Post Peter’s death, the clinic was judged “clinically unsafe” in the Sibert and Hodes report—the report commissioned by Great Ormond Street. “Clinically unsafe” was the actual terminology used by investigators post Peter’s death and independently verified by the Royal College of Paediatrics and Child Health investigators. The report found that, while originally four paediatricians were employed, two had resigned and a third, Kim Holt, was put on sick leave due to the overload, thus leaving only one single doctor in charge to staff the clinic, Dr Sabah Al-Zayyat. She was not properly qualified, was tired and overworked, and the report found that she should never have been employed in the first place. She paid a price for her part in this disaster.

The report also found that there was no named doctor for child protection. The named doctor position is the absolute critical requirement for this service. That crucial information was deliberately withheld. Instead of submitting the full report as an addendum to Great Ormond Street and Haringey PCT’s individual management review, Dr Collins, the then CEO of Great Ormond Street, passed over only a partial and selective version, omitting all the key points of danger. The information that had been expunged would have flagged up the dangerous conditions operating within the child health safety team for which Great Ormond Street had the responsibility. This report was kept secret and was released only in response to a freedom of information request from the BBC to Tim Donovan, with whom I worked to expose this horrific cover-up for a period of two years.

Dr Holt had escalated her concerns to the chair and CEO of Great Ormond Street in November 2006; she had been to the GMC. I took it to the board of Great Ormond Street, who basically told me to get lost—as I said, it was too big to fail. How dare I question this great establishment? Shoot the messenger—silence the whistleblower.

Kim was ostracised by the senior management team. Her workload had been unsustainable and she had been signed off work with work-related stress in February 2007. Great Ormond Street then moved to remove her from her post, with an offer of a year’s salary and the expectation that she would sign a non-disclosure agreement. Great Ormond Street would not allow her to return to work. The offers of money increased to £120,000, and that was signed off by the Treasury. Kim declined, as she felt that the concerns she raised were important and relevant for the inquiries that had, sadly, begun to happen. She eventually returned to work four years after her initial period of sick leave. Great Ormond Street has since apologised to her for the distress caused. It is too big to fail, as in so many cases. These are the reasons why my noble friend’s Bill is vital.

Office of the Whistleblower Bill [HL]

Baroness Featherstone Excerpts

2nd reading
Friday 25th June 2021 Lords Chamber

[Baroness Featherstone (LD) [V]]

My Lords, congratulations to my noble friend Lady Kramer on bringing this super-important, much needed Bill to the House.

Whistleblowers have for so long paid a price for their bravery in bringing to attention that which organisations, institutions or Governments want kept secret. Take your pick—the Catholic Church, the NHS, the Government, the banks, the BBC and more, all of whose reputations the powers that be judged far more important than those put in jeopardy by their refusal to hear and act on what they were being told. More often than not, those institutions shoot the messenger, those who warn of peril, rather than expose their own weaknesses or wrongdoing. It is immoral.

One brave whistleblower, Kim Holt, at that time under a gagging order and on two-years’ so-called gardening leave, came to me as her MP. She was one of four senior consultant paediatricians in the Haringey child protection team. Many of your Lordships will have heard of the Baby P case, in which baby Peter Connelly tragically died. Of course, it was his family who actually killed him, but it was the cover-up by the institutions that failed to listen to all the warnings given about what was happening in the departments charged with his care that failed him.

Great Ormond Street Hospital was the worst, and it was in charge of the clinic. The four senior consultant paediatricians there, including Dr Holt, jointly signed a letter to Great Ormond Street Hospital management, saying that they were extremely worried about the terrible processes in the department that meant children were being put in danger. I worked with Tim Donovan of BBC London, and we discovered that Great Ormond Street Hospital commissioned an independent report on the role of the paediatric health team run by Great Ormond Street. It was called the Sibert/Hodes report, and its findings were damning, exposing the danger and the responsibility thereof. Despite the report pinning the failures accurately, it never saw the light of day. Great Ormond Street suppressed the original version that contained the truth and published a summary omitting all the points detrimental to Great Ormond Street.

After I had fought for justice for my constituent Kim Holt for over three years, Great Ormond Street finally apologised—too little, far too late. Kim Holt was persecuted by Great Ormond Street for speaking up for the safety of children. Richard Horton, in a signed editorial in the Lancet, wrote:

“When the highly critical Sibert/Hodes Report landed on the desks of GOSH’s managers, they clearly faced a difficult dilemma. If they made the findings public, the inevitable media scrutiny might have damaged their reputation and slowed the progress of their Foundation Trust application. If they edited out GOSH’s failings, they might leave themselves open to the claim of ‘cover up’”.


They did edit out Great Ormond Street’s failings and they did cover it up. Kim Holt was just another victim of “too big to fail” but the real victim was patient safety. The need for the independent office of the whistleblower is clear. I ask your Lordships to please support this excellent Bill.

Trade Bill

Baroness Featherstone Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 8th September 2020 Lords Chamber

[Baroness Featherstone (LD) [V]]

My Lords, I congratulate both maiden speakers on their excellent maiden speeches.

The Government assure us that this is a continuity Bill, but that is not totally true. That is not all that it is. The Government also assure us that food and environmental standards will be maintained, but will they? On what basis should we trust a Government that have not stuck to a single edict they have issued during the coronavirus pandemic and who only today have signalled their intention to renege on an international treaty? What is the comfort that underpins their assurances? Words seem very cheap. The Government assure us that they are putting green at the heart of recovery, but assurances are not the actualité. If all those things are the case, why not underpin those assurances with legislation?

This Bill is not simply about continuity rollover of trade agreements, because it enables further change to be enacted by secondary legislation. Assurances that anything major would be the subject of further legislation sadly count for nothing. Perhaps the Minister would like to explain exactly who would be the arbiter of a minor technical change which rightly could be dealt with by an SI and who would not. When you add in the absence of any commitment to discuss or consult on proposals for changes that might well be contained in these extensive powers, one cannot help but be left with suspicions. The Trade Bill is vulnerable to major changes, with new trade agreements that bear scant relationship to a simple rollover.

This need not be a bad thing. I would argue that it could be an opportunity to change to even better environmental and food standards and work conditions, which we should be looking at post Covid. Covid has bequeathed us an opportunity to do things differently. With the scales gone from our eyes, we can see the unacceptable level of inequality that bedevils our country. We can see that the planet needs us to take the radical action that Covid forced on us, and that there has to be a better balance between “what’s good for me” and “what’s best for us”—an aspiration for the common good rather than only individual advancement. Let us really take back control and use this as an opportunity to build back better.

With a majority such as that enjoyed by this Government, it can only strengthen their negotiating position and validation of outcome by having input from Parliament and others. Sunshine is the best disinfectant, they say. Openness, transparency and proper scrutiny will not only reassure those of us who are, to put it politely, sceptical of the Conservative Government’s agenda but will strengthen their position.

Reducing Greenhouse Gas Emissions

Baroness Featherstone Excerpts

Thursday 2nd May 2019 Lords Chamber

[Baroness Featherstone (LD)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Rooker. He put his finger on the pulse by saying that he expects that we will all make similar speeches, but it is the action that must take place that will be the judge of what we say today. For three years, before I stepped down, I stood here as the Lib Dem spokesperson for energy and climate change, and I said over and over again that what shocked me most when I came into post was the utter lack of urgency in the Government’s approach to action on climate change. I said over and over that we needed to go further and faster, and I often said that the Government appeared to think that signing the Paris Agreement was an end in itself rather than a beginning.

This Government, without the strong leadership on this agenda that we had previously, during both the Labour Government, with the Climate Change Act, and the coalition, with Ed Davey and Chris Huhne as Liberal Democrat Secretaries of State and the huge advances we made under their stewardship, have pulled the rug from under that agenda. By the end of the coalition, we had made Britain the fastest-growing green economy in Europe. The amount of electricity from renewables had more than trebled. We had set up the Green Investment Bank, which up to the change in government had helped to fund £11 billion-worth of green infrastructure projects. In 2015 we had a record-breaking year, with millions of pounds poured into solar and wind energy and more homes powered by nature than ever before.

None of those things would have happened with a Conservative-only Government. We knew that at the time, but in the first two years of a Conservative-only Government we had a shocking list of anti-green measures. I shall not repeat the whole litany, your Lordships will be relieved to hear, but there was the precipitous cutting of subsidies for solar and wind, banning onshore wind, causing thousands of job losses in solar, scrapping the original £1 billion carbon capture and storage project, cutting the renewable heat incentive, pushing ahead with fracking, abandoning the zero-carbon homes policy—which was crazy—and on and on.

I am sure that when the Minister answers this debate, he will list what the Government have done, point to the industrial strategy and claim that they are totally committed but, as the noble Lord, Lord Rooker, said, actions will speak much louder than words. We have real enemies out there: climate change deniers and the massive vested interests of giant oil companies. We have a climate change denier in the White House. Make no mistake, other countries will use Trump as an excuse not to act themselves. The wonderful, hard-won Paris Agreement, which gave us so much hope when it presented a united global ambition to tackle climate change is now under threat, and the global consensus is in danger of unravelling.

The United Kingdom should be leading the charge to net-zero carbon. Thankfully, along came Extinction Rebellion and we have a moment of opportunity, but it really should not be necessary to bring London to a halt. We have made it clear what needs doing: we need action. I commissioned work to find a road map for what needed to be done to get us to net-zero carbon by 2050, because it is clear that the current 80% target, even if we were to meet it, which looks unlikely, would not deliver the Paris Agreement. Culmer Raphael and Iken Associates, the consultants I commissioned, produced a report that I know the Minister has read; he has quoted its title, A Vision for Britain: Clean, Green and Carbon Free, and content back to me from the Dispatch Box. A huge number of experts in the field were consulted and gave their time and effort.

Even if we manage to do everything in that report, we get to 93% by 2050. Yes, we can make it to zero carbon with that extra 7% reached by technological advancement, but we now need even more radical action. What would it take? I would say close your eyes, my Lords, but that is always a bit dangerous here. Just imagine, as the ordinary citizen leaves his or her home in the morning, the commute to work has changed radically. In large urban centres, there are car pools of electric cars that anyone can rent, and rental, club and car-share ownership schemes have proliferated. People still occasionally own cars, but they use them far less and all cars are electric, with charging facilities available from most lampposts. Autonomous cars pick up and drop off from house to office and vice versa. Buses, tubes and trains are no longer the cattle trucks of yesteryear as people time-share slots to share familial roles, with many couples and non-couples sharing the working day. The third runway at Heathrow Airport never happened. A national anti-obesity campaign got everyone to get off their bus or Tube one stop early and walk, and separated cycle lanes are now in place on almost all major routes.

Houses are carbon-neutral. Gas-fired central heating and cooking now comes from green gas, hydrogen or green electricity. Renewable energy is the standard form of energy generation: solar, wind, geothermal, tidal and hydro dominate the market and prices have fallen dramatically over the past two decades and six tidal lagoons are now in operation. Hinkley Point was built but with vast public subsidy and coming in at three times the original price. It was, however, to be the last of its kind because before its construction was completed, nuclear was completely overtaken by massive changes in the energy market. Urgent and huge uplift in the provision of interconnectors took place in 2019. Fracking turned out to be a disastrous waste of time; the big companies abandoned their efforts as the geology proved too complicated and costly, not to mention the years tied up in local objections. People finally gained local control of the supply and delivery of their energy, with every household having its own battery storage and charging facility.

It has been years since carbon was allowed to get into the atmosphere as the technology of the 2020s saw capture and storage reach maturity. The exponential growth in renewables created an economic boom of huge proportions, and we are well on course to deliver the maximum rise of 1.5% in temperature. Industry cleaned up its act. We financed the transition in agriculture and land-use change, and we have a vibrant and successful circular economy. The financial institutions of our country changed the investment rules and regulations so that benefits to the planet and mankind were equally regarded alongside fiduciary duty. Exponential perpetual growth was frowned on as it was recognised that the world’s resources are finite. People self-regulated their eating of meat and accepted their ration of flying hours per year until the day that aviation became renewable. That is what it will take.

I like to think that the publication of our report helped to provoke Claire Perry into asking the Committee on Climate Change to look at zero carbon by 2050. This morning, the CCC launched its wonderful and extensive report on net zero. Britain’s future prosperity depends on developing an innovative, entrepreneurial, internationally open and environmentally sustainable economy where the benefits are shared fairly across the country and with future generations. This is indeed a climate emergency.

Oil and Gas Authority (Offshore Petroleum) (Disclosure of Protected Material after Specified Period) Regulations 2018

Baroness Featherstone Excerpts

Thursday 19th July 2018 Lords Chamber

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

My Lords, the UK’s offshore oil and gas industry is one of the country’s great industrial successes, but it has faced numerous challenges, including ageing infra- structure and growing international competition. In this context, in 2013 the Government asked Sir Ian Wood to conduct a review of the sector, specifically looking at how the economic recovery of offshore petroleum could be maximised. One of the key recommendations from the Wood review was the need to ensure that industry has timely and transparent access to petroleum-related information and samples. These can include, for example, data about infrastructure or reservoirs, or pieces of strata acquired in the course of drilling a well.

The Government committed to implementing the Wood review and included various powers in the Energy Act 2016 covering information and samples related to the offshore exploration and production of petroleum. These included a requirement for relevant persons within industry to retain certain information and samples for a specified period, as set out in the Oil and Gas Authority (Offshore Petroleum) (Retention of Information and Samples) Regulations 2018. Information and samples plans were also introduced to safeguard information where licence events, such as termination, occur.

The Oil and Gas Authority was given powers to require relevant persons to provide it with petroleum-related information or samples which they hold and which the OGA might need to discharge its regulatory role and to deliver the objective of maximising the economic recovery of offshore petroleum. The regulations we are considering today form the final piece of the picture: once information or samples have been acquired by the OGA, the regulations enable it or a subsequent holder to make such material available after a specified period.

The Energy Act 2016 places a general prohibition on disclosure of protected material, subject to certain exemptions. One of those exemptions permits the OGA or a subsequent holder to make protected material available at such time as may be specified in regulations. The protected material to which these regulations apply includes information about geological surveys, wells drilled, petroleum production and other reports and computerised models of the subsurface or a reservoir. It also includes samples of petroleum, fluids or strata acquired or created when drilling or producing from a well. Other relevant categories include information about installations, infrastructure and pipelines associated with offshore petroleum development.

Following a recommendation of the Delegated Powers Committee, the Energy Act 2016 included a list of factors to which the Secretary of State must have regard when determining the appropriate period after which protected material may be made available under the regulations. In summary, the requirement is to consider: first, whether companies have had sufficient time to satisfy the main purpose for which they created or acquired the information or samples; secondly, the potential chilling effect of requiring disclosure on discouraging future activity; and, finally, the benefit to industry and the economy in making such information and samples more widely available.

Each of these factors has been taken into account when setting the period after which different types of information and samples can be disclosed. The periods vary from immediate disclosure of very basic information which is not deemed to be sensitive, such as the fact that a survey has been carried out of a particular area, to 15 years for raw information from such seismic surveys, reflecting the fact that they are carried out at significant cost for commercial purposes. While care has been taken to ensure that the specified time is set appropriately, there is no absolute requirement to publish the material, and the OGA could consider representations where there are particular justifications for keeping information confidential for a longer period. However, in doing so, the OGA would need to weigh up the impact on delivering the statutory objective of maximising economic recovery of the UK’s offshore petroleum.

These are very technical regulations and the proposals they are based upon were subject to consultation with industry and other interested parties by the Oil and Gas Authority. The OGA has published a consultation response detailing how feedback received had been reflected through making appropriate adjustments to certain proposals; for example, excluding more subjective information from immediate release. The OGA will provide guidance on its application of these regulations before they come into force.

As petroleum licence conditions permit publication of certain information and samples after set periods, the additional impact of disclosure under these regulations is expected to be marginal. As such, a full impact assessment is not required. Other costs on industry will be due to familiarisation with the new regulations.

In conclusion, the Oil and Gas Authority considers that improvements to information retention, reporting and disclosure processes, including through these regulations, are critical to achieving the statutory objective of maximising economic recovery of the UK’s offshore petroleum reserves. The changes are expected to make an important contribution to the OGA’s vision for the industry, which indicates that maximising economic recovery can create £140 billion of additional gross value for the UK. In addition, they could potentially facilitate the reuse of reservoirs and infrastructure for other purposes, including carbon capture, utilisation and storage. I commend the draft regulations to the House.

[Baroness Featherstone (LD)]

My Lords, the legal obligation to retain specified classes of information and samples and specifying when such obligation ends is important, and these regulations will deliver that obligation clearly. What it also indicates, I hope, is that it is important to make the samples and analysis public, as opposed to keeping them hidden. That means that the exemptions such as commercial sensitivity should be very few and should be monitored to check that they are not used inappropriately.

The principal objective for timely and transparent access to petroleum-related information and samples was, as the Minister said, one of the recommendations in the 2014 Wood review. Making access to information a better process—I have a very similar speech to the Minister’s—can only help the industry. It is estimated that a potential £140 million in additional revenue may result from the more timely management of samples and analysis. Is it million?

[Lord Henley]

Billion.

[Baroness Featherstone]

I was not sure; I have written “billion”, but I thought that was an awful lot.

[Lord Henley]

Someone said, “A billion here, a billion there, and pretty soon we will be talking about real money”.

[Baroness Featherstone]

It is an industry that probably works in billions—way above my pay grade. We have no particular comments on the regulations per se. They seem fit for purpose and the consultation responses appear to have been taken note of.

Warm Home Discount (Miscellaneous Amendments) Regulations 2018

Baroness Featherstone Excerpts

Thursday 19th July 2018 Lords Chamber

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

My Lords, these regulations extend the warm home discount scheme until 2020-21, ensuring over 2 million low-income and vulnerable customers receive a £140 rebate on their energy bills in winter, when they need it most. This is vital support and a key policy for tackling fuel poverty.

The best long-term solution to alleviating fuel poverty is to improve the energy efficiency of a home, bringing down the cost of heating it. The Government are committed to tackling fuel poverty and improving energy efficiency. We have launched a number of interventions to help us achieve this. In the Clean Growth Strategy, we stated the aim to upgrade all fuel-poor homes to band C by 2030. In March, we consulted on focusing all of the energy company obligation funding—£640 million per year—on low-income and vulnerable households. We have committed to the continuation of funding for domestic energy efficiency until 2028, at least at current levels—an investment of £6 billion over the next 10 years—and we have consulted on proposals to strengthen the existing minimum standard regulations in England and Wales so that private landlords make improvements to F and G-rated homes before letting them. This is part of our wider, long-term aspiration to improve as many homes as possible to band C by 2035.

The energy efficiency improvement of homes takes time, however, and some properties, especially those that are harder to treat, may be left behind. Energy bill rebates through the warm home discount, therefore, continue to play an important role. Through the Domestic Gas and Electricity (Tariff Cap) Bill, which I hope will receive Royal Assent in due course, we are taking action to protect 11 million households currently on the highest energy tariffs. Under the warm home discount, around 1.2 million low-income pensioners in receipt of pension credit guarantee credit receive £140 as an automatic rebate on their energy bills. Over 1 million low-income and vulnerable households receive the rebate following an application to a participating energy supplier. In recognition of the success of the scheme, the 2015 spending review committed £320 million per year to the scheme— rising with inflation—until 2020-21. The current regulations underpinning this scheme expired in April and the regulations in front of us today extend the scheme until 2020-21. This extension to the regulations will not inhibit the reform of the scheme in future. We intend to consult later this year on a number of changes from 2019-20, including expanding the successful data-matching process and so removing the need for consumers to apply. We will want to look at ways in which we can achieve the most effective targeting of the scheme by making the best possible use of the data available to us. To do this, we needed primary legislation, and I am delighted that the data-sharing powers we needed under the Digital Economy Act 2017 are expected to come into force before Summer Recess.

Meanwhile, the regulations we are debating today introduce a key change to the scheme. More energy suppliers will be required to offer the warm home discount to their customers. We will give smaller suppliers enough time to put the right processes in place, while giving a clear signal to the market. So, the threshold will reduce gradually, from 250,000 down to 150,000 customer accounts between 2019 and 2021. The impact of the threshold will be reviewed and, should the scheme continue beyond 2021, we expect it to be reduced further.

It is important to note that these regulations do not make significant changes to the scheme eligibility for this coming winter. This winter we want to prioritise the safe and timely delivery of the rebates. That will mean that all eligible pensioners on pension credit guarantee credit will continue to receive £140 off their bills. These regulations make only small changes to eligibility for the broader group—the part of the scheme for which customers have to apply—by including universal credit recipients who are in work with low earnings, and to reflect welfare changes.

We believe there is more room for more innovative, industry-led projects to identify fuel-poor households and to provide the most suitable package of advice and measures. Recognising this potential, we are increasing the spending cap on industry initiatives from £30 million to £40 million. We are also expanding the list of activities allowed under industry initiatives to include the provision of financial assistance with energy bills for households not eligible under the core group or broader group. This could be households not on the benefits system but particularly at risk of fuel poverty, including those where someone has a long-term illness or disability. This will be limited to up to £5 million overall and up to £140 per household—equivalent to the value of the rebate.

We want to ensure that industry initiatives funding focuses on support to reduce bills for the long term, such as through energy advice and energy debt assistance. These regulations will continue to reduce the cap on the spending allowed on debt write-off from £12 million to £10 million—or 25% of the increased cap—and to continue to reduce it in future years, to £8 million in 2019-20 and £6 million in 2020-21.

In conclusion, the regulations extend the warm home discount until 2020-21. These affirmative regulations provide vital support for low-income and vulnerable customers to keep warm for the next three winters. The changes that we propose to make will mean that more suppliers will be required to provide assistance to their eligible low-income customers, and that suppliers can spend more on industry initiatives to provide innovative and long-term energy bill support to households in need. I commend these regulations to the House and beg to move.

[Baroness Featherstone (LD)]

My Lords, obviously, we welcome the extension of the warm home discount, which has been successful. It has been in operation for seven years, and it benefits those in fuel poverty, so a further three years is welcome.

I noticed what the Minister said about energy efficiency. We on this side could not agree more that energy efficiency is massively important, and we welcome all and any measures the Government might take. However, we also encourage the Government to reintroduce the zero-carbon homes standards. When you have the opportunity to build new homes, it seems a pity not to reduce the need for heating and expense in that way. Two million low-income and vulnerable households have benefited, and the main elements remain in place and intact. I do not know how widely this consultation is marketed, as there were only nine individuals out of a total of 60 respondents. While the changes are not earth-shattering, that is a very small number for an issue that affects every household in the country.

I was pleased to see that the Government took notice of the concerns, and although they have agreed to reduce the threshold for suppliers, in the end all suppliers should be able to offer it or should offer it. At the moment, people are having to choose between keeping the warm home discount and saving by switching, and it seems that people would rather keep the warm home discount, even though savings might be larger than £140 by not doing so. However, we welcome these regulations.

Domestic Gas and Electricity (Tariff Cap) Bill

Baroness Featherstone Excerpts

Report stage (Hansard): House of Lords
Wednesday 27th June 2018 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, our concern is to ensure as far as possible that the cap ends in 2020. Many people are unconvinced of the value of price caps, which are against most economic theory and can have unintended consequences. There is also a strong consensus that the cap should be temporary, as we discussed in Committee and as the Energy Minister, Claire Perry, noted in the Commons. Moreover, a price cap where the case is strongest already exists. This covers prepayment meters in 4 million house- holds and 1 million vulnerable consumers following action by Ofgem. This in turn followed recommendations by the CMA, which did not favour an overall price cap.

A number of us are also concerned that the tariff cap could have an adverse effect on competition. Its existence might prevent or deter Ofgem or the Secretary of State from finding that the conditions for effective competition are in place and so the cap would have to be extended in 2020, frustrating the purpose of the discretion in the Bill. BEIS officials have helpfully suggested that this is not a risk. They know that the cap might in practice damage competition and say that the judgment to be made is that the Secretary of State considers that the conditions are in place for effective competition for domestic supply contracts—not that effective competition is in place.

Has the Minister been able to think further about these matters and how to respond to my amendment, which I am retabling following the helpful discussion in Committee and his helpful comments about the direction of travel on the cap? Can he agree that the cap will end in 2020, all being well; and, given the concerns expressed by many distinguished industry experts, which I have sought to summarise, can he also confirm on the parliamentary record the BEIS interpretation of the conditions for any extension? I beg to move.

[Baroness Featherstone (LD)]

My Lords, I support the amendment, to which I have added my name. The first basis on which I do so is that, like the noble Baroness, Lady Neville-Rolfe, I regard the cap as an unfortunate necessity. The ambition and the emphasis must be to end the cap as soon as possible. Therefore we need to focus minds on the creation of that effective marketplace.

[Baroness Vere of Norbiton (Con)]

My Lords, the amendments in this group tabled by my noble friend Lady Neville-Rolfe would ensure that the price cap comes to an end in 2020 with no provision to extend it. The Bill allows a temporary and targeted price cap on poor value, standard variable and default tariffs. Fixed tariffs that are not default tariffs will not be affected by the cap as these are where the most competitive rates can be found. The price cap is only necessary to protect consumers on poor value tariffs until the conditions for effective competition are in place.

The Bill has a sunset clause at 2023 and the cap would fall at the end of 2020 if, at that point, the conditions for effective competition are in place; I think that my noble friend wanted a response on that issue. The Bill is constructed in this way because the Government do not want an open-ended intervention, which would not be good for competition and, therefore, consumers.

At this point, I want to address the communication received by many noble Lords about the way the Bill is drafted, potentially preventing the cap from being removed, as the cap itself may have an impact on competition. That point was not lost on the Government when the Bill was drafted, which is why the judgment on removing the price cap, as set out in Clause 7(5), depends on whether,

“the Secretary of State considers that conditions are in place for effective competition for domestic supply contracts”.

In its recent consultation, Ofgem stated:

“We interpret ‘conditions for effective competition’ as meaning that the right market framework is in place for competition to be effective for currently disengaged consumers once the cap is removed”.


In assessing whether the conditions for competition are in place, Ofgem said that it would expect to analyse both the demand side and the supply side of the market, consider whether the market structure will promote good outcomes for disengaged consumers and consider whether there are remaining barriers to engagement. It refers to market conditions, not current market outcomes, for example on the rate of switching.

Coming back to the amendment, it is clear that the Government want the cap to be in place for as short a time as necessary. Ofgem will report on the conditions for effective competition and make a recommendation. Ofgem’s recent consultation points towards a number of factors that might indicate that the conditions for effective competition are in place. On the supply side, these include more innovative business models and the rollout of smart meters. On the demand side, they include making it easier for customers to share their data securely with third parties—meaning that they do not have to look up and enter lots of data on websites when they want to switch—and promoting engagement to help customers identify the best deal. These measures will need time to be established but it is right that we ensure protections are in place until the conditions for effective competition are in place. That is why the Bill enables the price cap to be extended, one year at a time, up to the end of 2023 at the latest.

I am grateful to my noble friend for her amendments. I can confirm that, all being well, the price cap will fall away in 2020—but as we have noted, if all is not well, it will not. With that, I hope that my noble friend is assured and will withdraw her amendment.

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[Lord Henley]

My Lords, the noble Lord, Lord Grantchester, has put forward his amendment and it is quite obvious that he is in favour of it. I have to warn him that if he is intending to press this amendment to a vote, it would possibly create further delay and uncertainty and, whatever anyone’s views on the Bill, we on these Benches and noble Lords opposite feel that it is important to get it on the statute book as quickly as possible so that those whose duty is to do so can get on with finding the appropriate cap and get it in place before the cold weather arrives. It might be that in this wonderful spell the noble Lord has forgotten what cold weather is, and I will remind him of that come November. We want Ofgem and others to be able to get on with their work, and any delay which this amendment might create would be unfortunate.

I am grateful to hear from various elements on the Liberal Democrat Back Benches. I do not know what the official view of the Liberal Party is, but I am grateful to the noble Lord, Lord Redesdale, who gave very concise and encouraging reasons why this amendment ought to be opposed and emphasised that the situation is changing and we are facing a time when wholesale prices might rise. We also had an intervention from the noble Lord, Lord Teverson. I normally find the noble Lord a breath of clarity, but if I wrote his remarks down correctly, I think he said that he disagrees with the amendment but supports it and went on to say that he agrees with it—anyway, I was confused by his lines.

[Baroness Featherstone]

For the avoidance of doubt, the party’s position is to support the amendment.

[Lord Henley]

I am grateful to the noble Baroness, Lady Featherstone, for giving that clear and concise explanation of why the Liberal Democrats will support the amendment. I am also grateful that the noble Lord, Lord Redesdale, is prepared to stand up against the might of his party whips and explain why he thinks it is not such a good idea. I am also grateful to the noble Baroness, Lady Kennedy of Cradley, for her remarks. I agree.

Hinkley Point C

Baroness Featherstone Excerpts

Tuesday 26th June 2018 Lords Chamber

Asked by

[Baroness Featherstone]

To ask Her Majesty’s Government, further to the Written Statement by the Secretary of State for Energy and Climate Change on 17 July 2013 (HC Deb, col 106WS), how the package of benefits for communities in the areas around Hinkley Point C has been implemented so far; and how much the benefits provided to date have been worth.

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

My Lords, as stated in 2013, community benefit would not begin paying out until the plant is operational, which for Hinkley Point C is anticipated to be in 2025. However, communities are already seeing significant local economic benefits from the project, through investment in wider infrastructure, new employment opportunities and benefits for the local supply chain.

[Baroness Featherstone (LD)]

I thank the noble Lord for that Answer, but I think the local community were expecting something a little sooner, from business rates, which would have come in the local government finance Bill, but that was not in the Queen’s Speech. I take into account what the Minister said, but, given that Hinkley is already under construction, the local council there does not feel that the community is feeling the benefit. It was promised £128 million. What alternative arrangements are the Government making to deliver that? The community needs clarity.

[Lord Henley]

My Lords, there is absolute clarity, and there was absolute clarity in the original Written Ministerial Statement made by my honourable friend—I shall just double-check which one it was—my honourable friend Mr Fallon, back in July 2013. That is all of five years ago, and he made it absolutely clear that these particular benefits would not come into play until Hinkley Point was operating. That will, as I said, be in 2025. So there is clarity there. Other benefits are obviously coming through the work of construction, and improvements to local infrastructure are already happening; I think that EDF has already spent £45 million to date on assisting the local community with accommodation, economic development, education and skills, transport, environment and more. Obviously there is a certain amount of disruption; that is a matter for the original planning consent. Economic benefits are on their way and are coming—but what the noble Baroness asked about will not come into play until 2025.

Domestic Gas and Electricity (Tariff Cap) Bill

Baroness Featherstone Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 11th June 2018 Grand Committee

[Baroness Featherstone (LD)]

Is it all right if I speak to Amendment 7 now?

[Lord Henley]

My Lords, these amendments are grouped and it is open to any noble Lord to speak to any of them as they wish. I would suggest that the noble Baroness speaks to her amendment.

[Baroness Featherstone]

I thank the noble Lord. This amendment is about the duty on energy companies to communicate properly with their customers. I raised concerns at Second Reading that there is a possibility that energy companies might not be totally up front and honest with customers about the circumstances surrounding the introduction and execution of an energy price cap. I am particularly concerned that some companies may not be up front about the facts: this is a temporary cap, ordered by Parliament, the level of which is set by Ofgem to protect consumers on standard and default tariffs from excessive charging. Companies must not seek to absolve themselves from blame for the fact that a cap is being introduced—an action that they have necessitated. Nor must they be able to play it off as some sort of benevolence introduced by them to help their customers. I am also concerned that companies might imply that the cap brings about the best deal for customers and indicates in some way that they need not shop around.

Communications from suppliers have not always been totally clear, but they need to be. The last thing we need in setting and executing the cap is for communications to confuse, entice or entrap customers into any false beliefs or misunderstandings. The amendment seeks to ensure that suppliers cannot use the setting of a cap as a marketing opportunity. Companies are very clever in their use of marketing language to seduce customers into perhaps believing that the cap is protecting them in more ways than it was created for. We should not provide any opportunity for suppliers to mislead consumers, accidentally or otherwise, into believing that the price cap is beneficial in any other way or being put in place for any purpose other than that for which it was intended; namely, that it is as a temporary cap until such time as circumstances dictate that it must be lifted. It must not allow the supplier to appear to be the instigator of the cap. Nor must the cap be called anything other than what it is: a temporary cap. I am concerned about the wording being used to describe the cap. A company might say that it is a beneficial cap or a protective cap, but there should not be anything to indicate a benefit in the name of the cap.

The amendment is very dictatorial, particularly for a Liberal. It states that the term used should be simply that it is a temporary cap and that, once it has been implemented, all companies should use that phrase in reference to it. There cannot then be any dodging around it. Since writing the amendment, I think it needs to go further and perhaps disallow any words around the name too so that suppliers cannot add adjectives to it. I am not sure how particular we can get on this, but I refer to words such as “beneficial” or “protective” temporary cap. It may seem picky and dictatorial, but my background pre-politics was in marketing and design, and it takes one to know one. Communications are hugely important. There can be no objection to calling it what it is: a temporary cap. In that way, no supplier will be able to use the name of the cap or its description inappropriately.

In the same vein, it should also be obligatory for suppliers to make it clear that the cap does not mean that the price under the cap will necessarily be the best price or the cheapest price. In any communications, suppliers must include clear and accessible information about switching energy suppliers.

Amendment 22 from us and Amendment 23 from Labour concern the provisions in the Bill surrounding the publication of information regarding variations in the cap. Clause 4 states that if the authority is thinking about modifying the price cap, it must notify holders of supply licences, but there is no requirement once a decision is made for companies to inform customers. These amendments put this requirement into the Bill.

Lastly in the group, Amendment 38 is in the name of my noble friend Lord Teverson, who cannot be here today. He wanted Ofgem to have powers to regulate the websites of energy suppliers and energy price comparison site operators. The purpose of that power would be to ensure that consumers are presented with objective information on immediate and future costs and matters of customer service sufficient to make informed decisions about energy supplier choice. I know he wanted a specific requirement for all such sites to list the immediate cost of energy to the consumer, together with, and in the same format, future costs when the initial contract term ends. This would protect consumers from being seduced by a good offer and a good price only to be shortly disappointed to find a huge hike when the first contract ends. He wanted a requirement also that, for each tariff, the terms under which price variations can be applied are clearly shown. However, much of that was out of scope, so Amendment 38 is a lesser version. It requires the authority to modify the supply licence conditions to ensure that the information presented on energy companies’ websites is “sufficiently objective” and to modify the Ofgem Confidence Code so that only price comparison websites that are similarly objective can be accredited by the code.

[Lord Carlile of Berriew (CB)]

My Lords, I want to speak, if I may, in favour of Amendment 23 in the name of the noble Lord, Lord Grantchester. At Second Reading, I referred briefly to my attempts to change tariff with my electricity and gas supplier. I think I described it as a parlour game on a computer system that did not always work. It seems to me that what we need to give the public is, first, clarity and, secondly, the capacity to compare one supplier with another.

Let me give two analogies, one good and one bad. The first occurred to me on Saturday when I was standing at a bus stop in central London alongside a hoarding advertising a new credit card deal. At the bottom of the advertisement, in big letters, it said, “Interest rate 57%”. On the face of it, that is quite a high interest rate, but the company has to advertise that interest rate so that it is really clear to the consumer. That is the sort of clarity we need. The bad analogy relates to train fares. Noble Lords who travel a great deal by train may, like me, go on to one of the internet sites that offer you the timetable and the train fares. With train fares there is absolutely no way of making a decent comparison between the different options available. Indeed, it is so complicated that, if you buy your ticket in Llandrindod Wells to go to Paddington, it may be a different price for precisely the same ticket if you buy it in Paddington to go to Llandrindod Wells.

If we are going to do this job now in the Bill, what is required is to ensure that consumers are able to make a proper comparison between the supplier they have and the alternative suppliers available. It does not mean that they will necessarily take the cheapest supplier. The noble Lord, Lord Lennie, made a point about green suppliers. Some of us might decide that we are prepared to pay a few pounds extra for the purposes of a better environment, but at the moment we have no way of knowing what sort of value green suppliers present. We have to go on to their website and take their word for it, which is not necessarily good enough. Amendment 23 at least makes a start in achieving those joint aims of clarity and the ability to compare.

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[Lord Henley]

I fully accept that, but the big six is six out of 70 companies. There are another 64, and that number is growing. It might be a small tail but it is good to know that those alternatives are available as suppliers.

I am grateful to the noble Lord, Lord Berkeley, for moving his amendment and to other noble Lords for speaking to theirs. The general message is that everyone is seeking more information and information of the right sort, which should be—I forget where the noble Lord was quoting from—on a durable medium. He took that to be paper, but it might be extended to vellum, if we remember our debates on other occasions about what Acts of Parliament ought to be printed on.

I am grateful to the noble Baroness, Lady Featherstone, for her amendment and her frank admission that, for a Liberal, she was being somewhat dictatorial. It is not unusual for Liberals to be somewhat dictatorial; in fact, I find them very prone to banning things and ordering us around, but that is the nature of the beast.

I am also grateful to the noble Lord, Lord Carlile, for mentioning his difficulties in trying to get information and change his supplier online. I also know how difficult that can be. One gets online and has problems, then that dreaded expression comes up: “Frequently asked questions”. One can always guarantee that the one question you want to ask will not be one of the frequently asked questions. I was grateful for the analogy he gave of the very good advertisement he saw for a credit card setting out interest rates of some 56%. I take it that he did not bother to take up such an offer. I will ignore what he said about train fares, only to say that I am grateful not to have to respond for the Department for Transport on this occasion. However, as someone who, like him, travels a great deal, I agree that fares can be difficult to follow.

It is very important that we make sure that energy companies not only are as transparent as possible with consumers but provide as much information as is necessary. I am happy to report that Ofgem’s standard licence conditions require—they are dictatorial, you see—suppliers to communicate information about cheaper tariffs to a customer with a “Could you pay less?” label on the first page of bills and statements of account. It is a requirement that the information on cheaper tariffs is included, along with a message saying, “Remember, it might be worth thinking about switching your tariff or supplier”. That required information includes details of the estimated savings that could be achieved by switching to a cheaper tariff.

As I made clear, customers can also continue to specify whether they wish to receive this information electronically or in a hard copy. I noted the percentages given by the noble Lord, Lord Berkeley, on how much people know what is happening in their bank accounts, whether they receive information on paper or online. The simple fact is that a great many people wish to receive this information online. We do not want to prevent that, but Ofgem is imposing a condition that customers must be offered the right choice. Ofgem is also leading a programme of work across industry, including detailed trials of different problems to engage people. Early information from these trials suggests that they can be effective at improving switching rates, however difficult some noble Lords might find that to achieve.

The Government are also working to improve consumer engagement. We provided a little over £1 million in funding for the Big Energy Saving Network and the Big Energy Saving Week last winter. We are also progressing midata in the domestic retail energy market. Midata is the method of electronically transferring customers’ data from a company system to a third party, such as a price comparison website, and should open the door to innovative third-party switching services.

The Government take transparency and ensuring that customers have the information available to switch very seriously, so although I agree with the spirit of these amendments, the processes and policies are in place for consumers to have the appropriate information that they need. It is also worth remembering the warnings that my noble friend Lady Neville-Rolfe gave about trying to insist on too much. Perhaps we should bear in mind the acronym KISS: keep it simple, stupid. There is a limit to the amount of information that should be provided and what is provided should be kept simple. I hope that with that explanation—

[Baroness Featherstone]

Has the Minister considered my argument about controlling how the cap might be referred to—perhaps as the “temporary cap”? That goes to the heart of the matter.

--- Later in debate ---

[Lord Stevenson of Balmacara]

There is no plot, my Lords. We are not trying to keep my noble friend Lord Grantchester away from the Dispatch Box but we find it more equitable to share the responsibility, so we are popping up as need demands. I am sure he will return to his commanding position as leader on the Bill very shortly.

It seems odd to have got to the third group of our amendments to find an amendment that, while ostensibly about the various types of cap that are envisaged in play, actually asks a rather deeper question. What is the Government’s intention behind the Bill and what is behind their intention to have Ofgem, as authority, introduce this within a reasonable time after the passing of the Bill? Is it to help vulnerable customers? Is it to help with fuel poverty? Both issues have been raised already in this debate. Or is it more focused on the market and its efficiency and is therefore unrelated to some of the issues we have already touched on, in terms of how people react to the provision of caps?

This issue was raised in the other place in Committee and on Report. What the Government were going to do about this was left open. At the heart of this amendment is a suggestion that the Government need to step up to the plate and tell us where they want to go on this. The discussion that took place in Committee in the other place on 30 April raised the points I shall make, at a superficial level. At the end, the Minister offered some assurances in summing up, but he did not bring forward amendments at later stages. Your Lordships’ House has not yet seen any from the Government.

At heart, there is common ground that it would be a perverse outcome of this price-cap Bill if low-income and vulnerable consumers currently protected by the safeguard tariff had their energy bills increased as a direct result of the introduction of measures in it. We are clearly looking for some certainty about this. Perhaps, when they are designing the wider cap, the Government could highlight that existing provisions require Ofgem to have due regard to low-income and vulnerable customers who are already protected by the safeguard tariff. I echo the points made by the noble Baroness, Lady Featherstone, about this new cap needing a name; otherwise, we shall get into trouble over what we are talking about. There are, of course, other measures in place. There is a warm homes discount, which may be extended. To what extent does that interpose itself in relation to the cap in the Bill? There are measures to protect those who pay cash through prepaid meters in their homes. Where do they stand in relation to it?

To answer my original question, the Government see this more as a market-mechanism Bill than as anything to do with consumers, whether they are vulnerable, disabled, or fall into another category under existing measures. I think that is a mistake. A case was made in our first discussion this afternoon for making sure that we do not see the return of cold homes and the impact that illnesses have on the wider economy if people are not able to fund and maintain a warm and watertight home. However, the problem that needs to be solved for that to happen is not within the Bill but is raised by it. The current market allows for things to happen that are clearly inimical to consumer interests. We see a widespread use of what is called “tease and squeeze”. This is a technical term, which Hansard will want to look up. It is not found in any legal text but describes perfectly what happens to most customers of the big six and less so to those of the other 64 companies that make up the energy supply market, but it is still present. As was raised at Second Reading, it involves, in essence, the availability of extremely discounted initial tariffs to which people can switch, followed by a quick change to a much higher one, which is never really disclosed in any detail and does not appear on many price comparison sites. When you are signed up, you are squeezed. You are teased first with a chance to cut your energy bills quickly by moving to a wonderful new company that has sprung up. Within a year, however, you find that you are on a much higher tariff. If you pay by direct debit, as many people do, you may not notice that until the letter—probably not an email—arrives saying that you have suddenly built up huge arrears and have to pay them a large sum of money. I am not in any sense implying that any illegality or malpractice is going on in the marketplace, but it is certainly not in the consumer’s interest to have this tease and squeeze arrangement operating at will in a situation where the information flows are asymmetric and difficult to read and where the consumers themselves are not able to use effective mechanisms such as price comparison sites to identify exactly what their costs will be, both when they switch and, much more importantly, later.

Many noble Lords may have been approached by companies and others who have an interest in this area. It seems to attract a large number of people who have views on how this issue should go forward. Noble Lords will have been told that one of the major problems affecting it is that when you try to work out the actual costs of the deals that are available, and what they would mean to a consumer who is paying, the information is so opaque and difficult that people end up frustrated and unable to see it. They certainly do not get the most important information, which is the long-run cost that they are entering into.

Arguing back from where I had got to, if the Bill is primarily about improving the market, surely what we should be focusing on, given what I have been describing, is a better series of powers and regulations held by Ofgem to clean it up. We should ban “tease and squeeze” and make sure that consumers are offered clear and unequivocal information about what they are signing up to—now, a year down the line and further down the line, subject always to cost. We have to get behind the idea that this is in some sense a market, but to say that 70 companies compete openly and fairly for the consumer’s interest does not describe effectively what is happening. A group of small companies has been set up which are primarily concerned with issuing bits of paper called bills and getting money out of people. They do not have the sort of competitive marketing operations that we would expect in a fully fledged and operating market; I think the Government accept that. The Bill is only one very small part of what must happen next, which is a clean-up of the whole operation.

We know that this is one part of that. It was probably a politically inspired decision to try to get some locus in this area, which was very much the opposition parties’ game before the last election. Nevertheless, that will work only if some serious effort is put behind the arguments by bringing forward proposals that people will listen to and act on. If, as we have heard, the main measure behind this provision is the smart meters programme, the Government are putting their money on the wrong horse. From all the information we have—we will probably have the advice of the NAO in three or four months’ time—this programme does not seem to be delivering on the aspirations the Government had for it. If that does not work and the information in the home is not available to consumers at the point of consumption, we will not have an effective, intelligence-led approach to how we may look at our bills and try to make sensible decisions about their cost.

That was a bit of a rant to get the Committee into this debate. The issue behind this amendment is whether we should look more carefully at the issues that have arisen from the ideas already in play to protect vulnerable consumers, while ensuring that they are not affected by the introduction of this price-capping Bill and that as a result consumers benefit, the market is cleaned up and the Government get what they deserve in trying to ensure that people have a fair and open market that works well for all concerned. I beg to move.

[Baroness Featherstone]

My Lords, the purpose of Amendment 12 continues that theme. It would ensure that wherever there is a vulnerable person, whichever supplier they are with and whatever tariff they are on, the Government would empower Ofgem to deliver the lowest tariff—the tariff for vulnerable people. It would also ensure that that lower tariff is not deleteriously affected by the Bill in any way whatever, and that there can and would be no unintended consequences that result in vulnerable people paying more. The Government need to clarify for the record that the introduction of the price cap does not, and must not, allow for Ofgem to remove or fail to extend the current safeguard tariff for low-income or vulnerable households. It would be helpful if the Minister could lay out how this will not and could not be the case, and demonstrate beyond doubt how the two caps—the one already in place for vulnerable people and the new energy price cap being introduced—can operate at the same time, without causing detriment to anyone eligible for a lower tariff for reasons of low income or vulnerability.

Amendments 27 and 31 relate to Clause 7, which we will debate later. It says that Ofgem,

“must carry out a review into whether conditions are in place for effective competition”—

to include, among other things, consideration of the rollout of smart meters—and must recommend whether the cap should be extended or lifted. Then, after considering the review, the Secretary of State must publish a statement on whether the cap should be lifted or extended. Amendment 27 requires Ofgem to take into account,

“the level of protection in place for disabled domestic customers”,

at that time as part of that review process. Amendment 31 requires the Secretary of State to,

“have regard to the level of protection in place for disabled domestic customers”,

as part of the statement setting out whether the cap should be extended or lifted.

--- Later in debate ---

[Baroness Featherstone]

I have no legal training—which may be painfully obvious to the Committee—nor much experience of the consumer world, but I have listened to the arguments, which have been well made. There is not a point left in my speech that would not be repetitious. I am intrigued to understand what on earth the Minister is going to say in reply. In my view, these arguments are unarguable.

[Lord Young of Norwood Green]

My Lords, there is no danger of my repeating what I said at Second Reading because unfortunately I missed the cut and was too late to make a contribution. I do not want to repeat what has been said by the noble and learned Lords. I am trying to think of the collective noun for a group of such distinguished legal experts. I am not sure “a clutch” does them justice—if your Lordships will pardon the pun.

--- Later in debate ---

Moved by

[Baroness Featherstone]

13: Clause 3, page 3, line 8, at end insert—
“( ) Tariff cap conditions do not apply in relation to any supply of electricity by a holder of a supply licence who, in relation to the supply, has complied with—(a) Condition 21D.4(a) of the standard electricity supply licence conditions (obligation to ensure that claimed environmental benefits are a result of customers choosing to purchase the tariff), or(b) an obligation that is a replacement for the obligation imposed by Condition 21D.4(a).”

[Baroness Featherstone]

My Lords, one of the concerns that I raised at Second Reading is that there is no requirement for the authority to exempt from the cap those who wish to pursue a more environmental tariff. Under Clause 3(2) the authority may exempt such customers but there is no obligation to do so. There was such an obligation in the draft Bill, and with Amendment 13 we would reinsert the wording that was used then into this version of the Bill. The BEIS Select Committee was worried that the wording was too ambiguous and would allow companies with tariffs that were not environmental to use it as a loophole to escape the cap. We have tabled this probing amendment to ask the Government why more has not been done to get this into the Bill. Clause 3 enables Ofgem to exempt green tariffs from a cap if a customer makes the choice to move to a tariff that provides energy from renewable sources only—but with no clear timetable for introducing those exemptions.

Earlier this year, the Government stated that they would seek an exemption for green energy tariffs from the price cap. They said that if the power was from a renewable source only, it would be exempt from the cap, but Ofgem is not required to consult on this before the cap is implemented. If this is not amended, there will be a chilling effect on what is still a nascent but vital industry. Taking the Government at their word, encouraging consumers to stay green or to go green should be built into the introduction of the cap from day one.

In March this year, Ofgem published an update on its plans for the price cap. At that point, it said that it was planning to issue a series of working papers on a whole range of aspects of the cap ahead of a policy consultation. One such paper was to be called “Our views on an exemption for tariffs which may support the production of renewable gas and electricity”. It issued a series of working papers, none of which related to that exemption. If we cannot get this in the Bill, the cap when instituted will not include that green exemption. I look forward to hearing what the Minister says about how the Government might amend the Bill to ensure that consumers who choose to buy clean energy are not disadvantaged. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I support the amendment of the noble Baroness, Lady Featherstone. The amendments in this group are variations on the same theme, which is the question of how one can find in the Bill the right balance between the wish to encourage the drive towards reduced carbon and no-carbon generation of power as far as possible and, at the same time, trying to get out of what appears to be a cul-de-sac in which the more we propose exemptions from the tariff for those who exercise clear preferences for green supply and carbon-free generation, the more they will not feel the benefit from measures that are meant to reduce the cost of the electricity and power that they consume. I do not know what the right balance for that is, so this is a probing amendment.

Our solution—we are not wedded to it but I would be interested to hear the Government’s observations on it—is that a situation where a consumer has clearly and unambiguously signified their intention to always select energy provided from wind or other renewable sources might provide a break point in which one could exercise discretion on whether they obtained the benefit of the cap. That seems to play to my earlier concern that this would prioritise people who used carbon-based energy sources as the only ones to benefit from the cap and would therefore reduce their costs.

I am not entirely clear which way we should go on this. It seems unreasonable to take an extreme position one way or the other, but that seems the only way to find an equitable solution. I look forward to hearing the Minister’s response.

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[Baroness Vere of Norbiton]

I thank the noble Lord for his questions. I would like to come back to the second question in due course because I did not quite follow the tension he identified between different types of consumers and whether they would be caught by the exemption and so on. I think there is an opportunity for us to meet again after this to discuss the green tariff exemption specifically.

On the first issue, the consultation, it is the Government’s intention to put an exemption in place for appropriate green tariffs, but the issue, as was brought out in previous discussions on the Bill, is that sometimes what is green is not green and the whole area can actually be very grey. We must not get ourselves into a situation where the real green tariffs are losing out. I am happy to have conversations in future.

[Baroness Featherstone]

I listened carefully to what the Minister said. It is very complex. There is still the kernel of an issue here, so I will read Hansard and consider what the Minister said. At the moment, I am uneasy that we have not bottomed out the issue that needs to be defined in the Bill to give the Government and the opposition parties surety that we have not, by accident or by design, done something to ace out what we are trying to value in all this. I beg leave to withdraw the amendment.

Amendment 13 withdrawn.

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Moved by

[Baroness Featherstone]

20: After Clause 3, insert the following new Clause—
“Review of the context surrounding the introduction of the tariff cap conditions
(1) The Secretary of State must carry out a review of the context surrounding the introduction of the tariff cap conditions.(2) The review must make reference to—(a) the circumstances that necessitated a cap on energy prices being introduced;(b) whether or not the circumstances referenced in paragraph (a) could have been prevented by earlier intervention; and(c) what steps the Government can take to prevent a cap being necessary in the future.(3) The Secretary of State must lay a report of the assessment before both Houses of Parliament within one year of the passing of this Act.”

[Baroness Featherstone]

This amendment is about context and the prevention of any repetition of a need for a cap. It is again a probing amendment to get the Government to talk about advancing their thinking on how not to allow a broken energy market to arise again. A cap should never be necessary. It is not a good answer but an answer. Everyone agrees that competition and a properly working market should be the effective way to do this. This amendment suggests that a review needs to be carried out to understand the circumstances that necessitated the introduction of the cap. Could the circumstances that heralded that necessity have been avoided had action been taken earlier? Were there warning signs? I would say that there were. With more consumers switching and more competition, I hope we will not be in that situation again, but the big six still have around 80% of the market. Was that a contributing factor? Of course it was. How is it that prices became so high? What measures might be introduced at an earlier and more expedient point to prevent a recurrence? What are the Government going to do to monitor what companies say to customers?

I raised another issue at Second Reading. Recently, some of the large energy suppliers raised their prices. I questioned the rise and the answer I got was that wholesale energy costs were rising and therefore prices had to rise. Shortly after that, E.ON’s profits rose by 41%, which was so far beyond any rise in the cost of wholesale energy that it made one wonder whether there really was cause and effect and whether rising energy costs were the sole arbiter of the rise in price. That is something the Government need to look into. If we do not examine, review and contextualise what brought us to having to introduce a cap to protect people on standard variable and default tariffs, how can we be sure it will not happen again? I look forward to the Minister’s answer about what the Government will put in place to ensure that that never happens again.

[Lord Grantchester]

I shall speak to Amendments 21 and 24, which are in my name. Under Clause 4, Ofgem must undertake various actions by way of notice of proposed modifications, including giving notice that it proposes to make modifications. Amendment 21 specifies that Ofgem must provide reasons in a narrative that explains why it is making modifications—ideally, an assessment of why modifications are being proposed.

We all recognise that energy bills soared 20% between 2007 and 2013 and that the average household pays around £300 more today than it might otherwise do in a more competitive market. However, in the interests of transparency it is imperative that Ofgem outlines its reasons for setting the price cap at any given level for the benefit of suppliers and customers alike. That would help set parameters when undertaking later reviews and assist greater scrutiny.

Amendment 24 has been proposed following the debate last week in your Lordships’ House on the European Union Committee’s report Brexit: energy security. In its report the committee portrayed how the UK and the EU are already increasingly interconnected on energy. Already, high levels of gas are being piped from Norway and over 5% of electricity demand is being met from the EU, with estimates that this source of electricity supply is likely to increase to over 25%. At present the UK is a member of the internal energy market and the committee’s report underlines the risk should the UK not remain within the IEM. From evidence received, it is universally argued that the UK could be more vulnerable to supply shortages or challenges, making supply less efficient, with the result that retail prices to consumers could rise. Amendment 24 specifies that the consequences of Brexit must become part of the review of the market and the application of the cap.

In the Government’s response to the Select Committee, they failed to address this point while being pressed to undertake an assessment of the consequences of the UK leaving the IEM. How do the Government propose that Ofgem should assess the situation in its review? The effect should be recognised for the application of the cap and, hence, included in the Bill.

[Baroness Vere of Norbiton]

My Lords, I will speak to Amendments 20, 21 and 24, which relate to the reasons for this cap and the details of its implementation.

The noble Baroness, Lady Featherstone, proposes a review of the energy market, in particular setting out the reasons for the cap, whether it could have been avoided and how a price cap can be avoided in the future. The Bill follows on from an extensive two-year investigation undertaken by the Competition and Markets Authority. This reported that there was, in effect, a two-tier market, with good value tariffs for those who engage in switching suppliers but for those who do not, the market was uncompetitive and these consumers were being charged an unjustifiably high price for their basic energy needs.

The CMA also found that the significant market share of the largest energy companies and the use of the standard variable tariffs had led to a situation where customers, including some of the most vulnerable in society, are simply paying too much, They are also paying for the inefficiencies of the larger companies to the tune of around £1.4 billion a year. The noble Baroness, Lady Featherstone, mentioned E.ON and its 41%. I was not quite sure what she was referring to and whether that was a return on capital. A profit increase of 41% would depend on its starting and end points; it is not hugely relevant, depending on the leverage of the company. Potentially, we should look at its return on capital, which is far more instructive.

It was as a result of this very detailed, two-year report that the Government and Ofgem undertook to protect those on the poorest-value tariffs on a temporary basis until the conditions for effective competition are established. In addition, Ofgem is actively considering the future of the energy retail market. This work is looking at barriers to innovation and whether the current market model needs to be reformed. Another review at this stage would simply tell us what we already know and take resources away from the vital work being carried out to support the necessary reforms of the market.

On Amendment 21 proposed by the noble Lord, Lord Grantchester, I am sure he is aware that, as part of the licence modification process, Ofgem will be required to state that it proposes to make the modifications and their effect. Subject to the will of Parliament, it is clear that this action is going to take place; indeed, suppliers and other interested parties are actively involved in the consultation being conducted by Ofgem. The amendment is therefore not necessary.

The noble Lord’s Amendment 24 relates to those matters which Ofgem should consider during its review of the level of the cap, which must take place at least once every six months. It is incredibly important that Ofgem, as the industry regulator, be allowed to consider what it feels matters the most. He may be pleased to learn that Ofgem has published a consultation paper which sets out the matters it proposes to review when considering the level of the cap. That will of course include wholesale prices and many of the factors raised in the debate of last week, which he mentioned. Hence, the amendment is unnecessary at this stage.

I hope that the noble Baroness and noble Lord are content with my explanations and will be willing to withdraw or not move their amendments.

[Baroness Featherstone]

I thank the Minister for her response. I understand that the Bill puts in place an examination of the conditions for effective competition, as an answer for not having a cap, but I am trying to go a little deeper. I want to avert the idea that a cap can become a mechanism whenever the market is dysfunctional. It is not the answer and we therefore have to go deeper. On the basis that I will consider what the Minister has said, I am happy to withdraw my amendment.

Amendment 20 withdrawn.

--- Later in debate ---

We heard in Amendment 37 a slightly different recommendation from the DPRR Committee as regards Clause 9. I am sure that the Minister will be able to respond to this. The committee said that, under the clause, Ofgem is allowed to make modifications to the standard conditions of supply licences in consequence of the tariff cap conditions ceasing, although in fact the power is framed so that Ofgem may make such modifications as it considers expedient or necessary. The committee took exception to the way the term “expedient” constitutes a significant widening of the powers conferred by Clause 9. I am sure that the Minister has a response to that, at least in draft if not fully ready, and again I look forward to his comments.

[Baroness Featherstone]

I am somewhat in sympathy with the noble Baroness, Lady Neville-Rolfe, on ending the scheme in 2020. She also raised the issue of the political element. With an election in 2022, if not before, I would not want to see a race on who could cap the most as a part of political manifestos. What the energy market needs is a real resolution.

[Lord Henley]

My Lords, I hope that I can deal with this group of amendments in the two, three or four-dimensional manner that the noble Lord, Lord Stevenson, has asked me to. Given that my noble friend Lady Neville-Rolfe moved the first amendment, I should say that, like her, generally speaking the Government are not convinced about price caps. We have our doubts and we made it clear at Second Reading that we do not like to go down this route and we said that it had to be temporary, albeit with an ability to extend the cap for a short while, year by year, but no more than that.

The aim of my noble friend’s amendment is to end it in 2020. The noble Baroness, Lady Featherstone, also has some sympathy with that, as she returns her party to classic, 19th-century liberalism—a wonderful development. We believe that it should be a temporary measure and that 2020 is the right time to end it, with the ability to extend it to a final, absolute sunset in 2023. I do not think that removing the possibility of extending would provide consumers with protection if the conditions for effective competition were not in place at the same time. As I said, we prefer to do it that way. I rather dread the thought of further primary legislation each year if we wanted to extend it or do it for another year. We have already had that with other Bills.

My noble friend asked if I could report a little on the prepayment meter cap and the effect it has had. The evidence seems to be that, since the cap, prices have come down to below it. There has been some bunching of prices, but there is competition below the cap in the prepayment market. That shows that these things can occasionally work. However, as I said to my noble friend, philosophically we do not like the idea of caps. I rather agree with her.

I turn to the other amendments in the group. The noble Lord, Lord Stevenson, spoke to Amendment 32, the purpose of which appears to be to create a firm link between the price cap’s removal and the completion of the rollout of smart meters. It seems to suggest that the cap can be extended in circumstances where the smart meters programme has been completed, but the conditions for effective competition are not in place. The rollout of smart meters is but one of many possible indicators that define a competitive market. There will be other indicators of the conditions for effective competition. Ofgem’s consultation points towards other factors that might indicate that the conditions for effective competition are in place, including ways of improving customer engagement and increasing switching. I am sure that the amendment aims to be helpful, but I believe it is simpler and safer to leave it to Ofgem to assess the conditions for effective competition, rather than put provisions on the face of the Bill that would link statements about the future of the price cap to particular programmes.

The noble Lord also spoke to Amendments 33 and 35. The Government would not wish to see an inversion of this Bill’s policy intention by removing the price cap’s sunset clause. I repeat that we have no intention of delivering an indefinite price cap. As I have made clear on a number of occasions, this is a targeted and temporary intervention until the conditions for effective competition are in place. I think that is why the Bill achieved broad, cross-party consensus in another place and was endorsed by the BEIS Select Committee. Amendment 35 would also increase the risk of transforming this temporary measure into a permanent feature of the retail energy market. Again, we do not believe that that would be appropriate.

Finally, I turn to Amendment 37, which is a probing amendment seeking to understand the purpose of Clause 9. Clause 9 empowers Ofgem to modify the standard supply licence conditions following the removal or cessation of the tariff cap as specified under Clause 8. The clause allows Ofgem to modify the standard supply licence conditions as it considers necessary or expedient, but with the requirement that Ofgem publishes the modifications to alert all stakeholders as to the impact of the modifications. The publication of the Secretary of State’s decision will alert stakeholders to the cap coming to an end. This provision would enable the licence conditions to be tidied up to reflect the cap being lifted. Otherwise, they would remain in the licence but would be redundant.

We have been clear that the price cap is a necessary intervention in the market, but one that should only remain until the conditions for effective competition are in place. The decision on extending or removing the cap will be made in the light of the report and recommendation from the expert regulator. The Government are not prepared to enable this price cap to be a permanent feature as it could risk distorting the market, but noble Lords will wish to note that Ofgem has enduring powers to protect consumers and specific duties regarding vulnerable consumers. Indeed, Ofgem has indicated that it may be necessary to have in place price protection for a narrower set of consumers once the price cap under this Bill has ceased to be in place.

I hope I have provided the appropriate assurances. Though the amendments are coming from rather different directions, I hope first of all that my noble friend will withdraw her amendment with the assurance I have given and, secondly, that the noble Lord, Lord Stevenson, will not feel it necessary to move his amendments.

Brexit: Energy Security (European Union Committee Report)

Baroness Featherstone Excerpts

Wednesday 6th June 2018 Lords Chamber

[Baroness Featherstone (LD)]

My Lords, we have had an excellent debate and I congratulate my noble friend Lord Teverson and the EU sub-committee on this excellent report on the energy security ramifications of leaving the EU. Our status as a full member of the EU has, up to now, ensured our energy security, efficient trading and a focus on energy efficiency while, as mentioned by the noble Lord, Lord Krebs, also ensuring a continued advance on decarbonisation. A number of your Lordships across the House—I think it was the noble Lords, Lord Selkirk of Douglas and Lord Krebs, and my noble friend Lady Sheehan—referred to the Commons Minister himself admitting to the committee that we will have to remain as near as possible to current arrangements. He is probably sorry that he said this. That particular sentence, I guess, highlights the complete folly of this. We seem to be cutting off our nose to spite our face in this fool’s rush to be free of the EU.

This excellent report demonstrates in every sphere the necessity of replicating or continuing each and every area of our energy relationship with the EU. Almost all of your Lordships who have spoken raised the necessity of remaining in or having an exact replica of our membership of the internal energy market, whose creation we led on. If we are to keep energy costs down, we will need to remain in it if and when we are outside. The Government are incredibly fond of referring to energy prices, so perhaps they should take notice of themselves. Perhaps the Minister can tell us in his response how we are to avoid the imposition of broader EU energy policy if we no longer have any voice in its creations but are mere supplicants to the table. Switzerland was highlighted as an example of how bad it gets.

A number of your Lordships raised the challenges and dangers of leaving Euratom, which was debated at length during the passage of the Nuclear Safeguards Bill, and where across the House we fought tooth and nail for the amendment that eventually came forward from the Government during ping-pong. It gives us an insurance policy so that if everything that should be in place by March 2019 is not, there is that fallback position.

A number of your Lordships also raised the issue around interconnectors. What do the Government believe will happen when these circumstances arise? At the moment my understanding is that, as a country, you get priority according to your need in the direction of energy flow. We have benefited from that to date but it will no longer be the case if we are not in the club. Club members will be served first.

We cannot presently meet our own heat and power requirements. I would obviously argue with the Government that we could if they really supported renewables, actually did something about energy efficiency, invested in renewable heat and supported innovation to scale. The noble Lord, Lord Rooker, certainly made clear his view of the Government’s response and, having read it, I was pretty much in agreement with his view. It is apparent from that response that the Government are relying to an extent on shale gas to answer their prayers. I can see the attraction of having the problem of the energy gap filled by private money coming in. It leaves the Government only to break all their promises and remove planning protections for local people, as if shale is some sort of economic miracle that will rescue us from the gas gap.

The Government look to the American experience to be replicated. Outside the recent report showing the new scientific evidence on the danger of fracking in ex-mining areas, I point out to the Government that our geology and geography is very different from America’s. Even if it were feasible to produce shale gas at scale, the economic miracle is fading. Asset life is critical, and the outlook is poor. In the USA, shareholders are now experiencing the reality rather than the promise of shale. A company such as Cuadrilla, which is looking for shale in Lancashire right now, has seen its shares fall to a quarter of what they were worth in 2009. That bubble is bursting. Shale is proving difficult in this country. The Government’s answer to the challenge of giving local people their right to protest is to change these applications to permitted development, and that from a Government who promised local people the final say. The shale bandwagon has passed. This is not the time to climb on it. This is the time to say yes to tidal lagoons, to invest in renewables and to take innovation to scale.

As the noble Lord, Lord Krebs, neatly highlighted, the Government’s answer to many things is the clean growth strategy and the industrial strategy. They form the stock answer to all questions on the future of energy security, but I find no security in them. They are full of ambition, but they are also full of words rather than actions. Actions speak louder than words, and we have seen many a time that the Government’s actions are going in the wrong direction. The Minister will be relieved that I shall not rehearse all the measures this Government have removed or have taken that have damaged our green credentials, which include removing the zero-carbon homes standard and the precipitate removal of subsidy that devastated many in the solar industry. The even more serious part of that is that the consequent undermining of investor confidence—if we Brexit, we will need investor confidence —is real and tangible in the investment community. Thank goodness we have pioneers pushing the boundaries.

This brings me to the last issue I want to address, which is the loss of EU investment in so many projects and areas in this field: the European energy programme for recovery, the connecting Europe facility, Horizon 2020 and the European Investment Bank, which many noble Lords raised. Perhaps when he replies the Minister will say how EU funding worth billions, which we will lose on our exit from the EU, will be replaced.

I will finish on the island of Ireland. I heard no solutions for it, and I look forward to the Minister giving us such a solution.