Financial Services and Markets Bill

Earl of Caithness Excerpts

Report stage
Tuesday 6th June 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise very briefly to express Green support for the non- government amendments in this group and acknowledge the way in which the weakness of the government amendment has already been acknowledged. Noble Lords will note that the explicitly environmental amendments, from Amendment 15 onwards, do not have a Green name on them. I am delighted about that because there was not space for one, because the amendments have cross-party support from right across the House, which really shows how far we have come in these debates.

I shall make four brief points, because I am very aware of the time. They are building on the points just made by the noble Baroness, Lady Young, and reflecting on an article published last week in Nature, which demonstrated that in seven of eight key measures, including climate, biodiversity and water, we are outside the safe and just operating space of this planet. We are absolutely at crisis point and I pick up the point made by the noble Baroness, Lady Hayman, that we cannot afford to wait. We cannot wait for the next Bill, the Bill after that and the Bill after that. I very much agree with the point just made by the noble Lord, Lord Vaux, that the country should not have to wait for the House of Lords to insert these things into Bills; they should be there in government Bills as a matter of absolute, basic course.

I have a particular point about Amendments 93 and 113, which strengthen the fiduciary duty of pension funds to ensure investors consider the impact of their investments on environment and society. The case has already been made that there is no finance on a dead planet and there are no pensions on a dead planet, but the society element also deserves to be noted. We have had a huge amount of discussion of the problem of the large number of people of apparently working age who are not engaged in our labour force at the moment, and the public health crisis that is associated with that. It is the kind of thing that Green councillors have been going on about, as members of governing boards of pension funds for years: such things as tobacco and the kinds of food products that are being supported are all issues that have an impact on pension returns.

On deforestation, the noble Baronesses, Lady Meacher and Lady Boycott, among others, have already made points about this, but there is £300 billion of UK pension money in high deforestation risk companies and financial institutions—that is a figure from Make My Money Matter. Again, there is a point about risk. The financial sector in the UK faces up to £200 billion of risk in Brazilian beef and soya and Indonesian palm oil supplies alone.

Finally, there is another risk in terms of our international reputation. We are of course enthusiastic signatories of the global biodiversity framework, which promises, under target 14, that the UK will align

“all relevant public and private activities, [fiscal] and financial flows with the goals and targets of this framework”.

How could the Government not be accepting all the amendments in this group?

[The Earl of Caithness (Con)]

My Lords, I have my name to Amendment 15, so ably introduced by the noble Baroness, Lady Hayman. I thank her for her very clear exposition of it and I thank the noble Baroness, Lady Young, for her little additions just to fill in some of the other parts of this important subject. I thank the Minister for her time yesterday when I came to discuss this amendment with her: it makes a lot of difference that a Minister is so receptive to a discussion, even though we did not part any closer than when I walked through the door.

I congratulate the Government on their world-leading position on green finance. That is a nice position to be in, but we need to work very hard on that if we are to retain it.

Farmers and Landowners: Tax Consequences

Earl of Caithness Excerpts

Monday 28th November 2022 Lords Chamber

[Baroness Penn (Con)]

As I said, many of the tax rules should not have a bearing on many of the environmental activities under ELMS. We already have several schemes under way, with a high take-up among farmers. But we understand that there could be broader implications, particularly for the landscape recovery scheme, and we are carefully looking at this. The 22 initial projects are receiving funding through that scheme, and people have felt able to sign up to them under the existing tax rules and systems. But we will look at those projects and implications as part of our design.

[The Earl of Caithness (Con)]

My Lords, I urge my noble friend to look urgently at this problem, which is very serious for farmers and landowners, who cannot make a decision with any certainty, given that the tax regime might change. What incentive is there for a farmer to do the good thing for biodiversity if they will be taxed badly for it?

[Baroness Penn (Con)]

As I said, the tax rules should not have a bearing on many environmental activities under the ELM schemes. We are cognisant, particularly where there may be a change of land use, that this could invoke questions of tax treatments—although, even if the land may not be used for agriculture any more, it may often still qualify for business property relief, for example, as an alternative inheritance tax relief.

Brexit: Financial Services (European Union Committee Report)

Earl of Caithness Excerpts

Thursday 9th February 2017 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, I thank my friend, the noble Baroness, Lady Falkner, for her introduction and the rest of the committee for its work. Sadly, I am no longer on that committee so I did not take part in this report; but I declare my interest, which is that I remember the 1950s and 1960s very well and do not want our grandchildren to live under such years as we lived under when Britain was going downhill rapidly. One reason why Britain has turned that corner is the financial services, which are the whole subject of this report.

Although the noble Baroness has said that London is the world’s leading financial centre, it has no divine right to be. It was not when I was a child, but it has now got to that position—and there are many countries interested in taking it away. Our change in status as we go from within to outside the EU is undoubtedly an extra threat to the dominance of London, and another undermining factor. The other side of the argument is of course that the EU has lost a major player in its financial discussions. Britain was always at the forefront. When I was a Treasury Minister, we were at the forefront of changing regulations in Europe—we took the lead because nobody else had the experience to do so. The capital markets directive, led by my noble friend Lord Hill of Oareford, and how that has changed direction is just one example of Britain’s influence no longer being in the right place.

We made our decision on 23 June and we must now make the best of it. This report will help the Government to achieve that. I was particularly pleased to read paragraphs 109 and 110, which refer to the transitional period and trying to avoid a cliff edge. As the noble Baroness has just said, the Prime Minister has been firm on that and given a positive lead, which is to be welcomed. Third-party equivalence and passporting are also important. In paragraph 56, the committee tells us that the Government are,

“analysing the difference between the opportunities afforded by passporting and third-country equivalence”.

It would be helpful if the Minister told us where the Government have got to with that.

Paragraph 58 refers to possible regulatory divergence between the UK and EU, and indeed between the UK and US. I thought this was a very good point to make because, since the report was published, we have all seen in the press what has been happening. We have a new President Donald—in fact we have two President Donalds: one in the EU and one in America. President Donald in America has made it absolutely clear that it is “America First”—and, indeed, America second and third—with the rest of the world about fourth. He has been backed up by Patrick McHenry, the Republican vice-chairman of the House Financial Services Committee, who wrote to Janet Yellen at the Federal Reserve, warning her that:

“Continued participation in international forums such as the Financial Stability Board, the Basel Committee on Banking and Supervision and the International Association of Insurance Supervisors is predicated on achieving the objectives set by the new Administration”.


That is worrying.

Let us take away the froth: we all know that America has always put America first in international negotiations, but what worries me is America not standing by its international obligations. Can the Minister say whether there was any indication in the Prime Minister’s meeting with President Donald of the USA—President Trump—that the US will not stand by those international obligations? If it does not, it is serious not just for the UK but for the EU and the rest of the world. Sir Jon Cunliffe at the Bank of England has said:

“It is important that we have proportionate, highest quality regulation – robust and in line with best international standards … The UK – in order to be a successful financial centre, you need good regulation … robust regulation and … regulators that have credibility and experience”.


Those are very wise words from Sir Jon, with whom I had the pleasure of working when I was a Treasury Minister. Abiding by those international obligations is so important. Sir Jon is also quoted in paragraph 51 of the report:

“If we want globalised financial services, we all have to have confidence in each other’s regulatory and supervisory machinery”.


That encapsulates it extremely well.

It is not just a trade negotiation between the political parties that is important, but agreement between the regulators. Can the Minister confirm that the intention is that provisions on international regulatory co-operation in financial services supervision will be included in all future trade agreements, both with the EU and other states, and that this would be an additional requirement in the future mission of the Financial Conduct Authority and Prudential Regulation Authority?

I turn from the report specifically to a wider view of financial services, because if we are no longer members of the EU, we will have to increase our trade around the world. There is no doubt that there is a new world financial order. Europe, the old aunt to the world, is getting even older and more irrelevant. In a recent report PwC said that by 2040, the E7—Brazil, China, India, Indonesia, Mexico, Russia and Turkey—could be double the size of the G7, which comprises the UK, Canada, France, Germany, Italy, Japan and the US. That will certainly change the dynamics. PwC went on to predict that, whereas in 2016 five countries in the world top 20 of projected GDP rankings, based on purchasing power parity, were in Europe, by 2050 there will only be three, all at a lower level than now.

One might think that gives us a great opportunity in dealing with the E7, but then comes the crunch. TheCityUK has done a lot of work on service trade restrictions and produced an index. It is interesting that, on that indexed basis, the E7 countries—which are going to be double the size of the G7 countries—are the most restrictive with regard to accountancy, commercial banking, insurance and legal services. We will have a tough job breaking into those markets. We have a lot of work to do, and if the US is not working to the international standard it will be even harder. I agree, therefore, with what the noble Baroness and her committee say in their report. If the City of London loses its status as the world’s premier financial centre, it will not be to other countries in Europe but to overseas—to New York, Singapore and China.

Can the Minister also comment on currency devaluation, through which we have the potential to really mess up the world and our financial services? We have been told that the euro is undervalued and the American dollar overvalued. Does the Treasury think that a currency devaluation between countries will start, which would be hugely damaging to us?

I will comment briefly on what I call “language and perception”. Language is hugely important in Europe. Phrases such as “common ground” and “a good compromise” are perfectly acceptable in Europe, while here they are portrayed in the press as wishy-washy and as Britain giving everything away. It is not as the press portrays it: it is 27 countries all having to give something and take something to reach a good compromise. I am greatly concerned that language will play a big part in our negotiations, and I hope the Minister is fully aware that this could be a major problem.

As for perception, a lot of people are influenced by it. If the perception is that Britain is not doing as well as before, that will compound our difficulties. One need only look at today’s papers: it is predicted that 30,000 jobs will be lost—that is the headline, the bad perception. That, however, is 0.5% of the people working in the financial services industry, and although the figure comes from the Bruegel think tank, it is at the worst end of TheCityUK’s projections, which thinks, at the other end of the scale, that as few as 3,000 jobs could go. Perception is of major importance.

We have no idea where we will end up at the end of our negotiations with the EU. I hope that the press and both Houses of Parliament will let the Government get on with the negotiations and do the best job we can. One good thing about Brexit is that if it all goes wrong, we have nobody to blame but ourselves.

Queen’s Speech

Earl of Caithness Excerpts

Wednesday 25th May 2016 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, I would like to pay a very big tribute to Her Majesty. For many of us, she is the only monarch we have ever known and, in her 90th year, she yet again came to this Chamber to make her gracious Speech. What a lucky country we are to have such a person in that role.

I turn to the economy first. We have had three days of speeches—and today is no exception—from people wanting to spend more money on some very good and worthy areas: defence, education, welfare and the National Health Service. But not one of those speakers, to my knowledge, has told the House what projects they are going to cut in order to spend that extra money or where the money is going to come from. Such is the luxury of not being in government.

Ministers have to be accountable, and that is right and proper. I pay tribute to our Ministers. We are hugely fortunate in this country. Of course, we complain a lot. We whinge well, as Brits. But I would rather be in this country than any other country in Europe. We have better employment, less unemployment, more job security and we have created more jobs. The doomsayers said that that was impossible, so I say a big thank you to our Ministers for putting us in this position. It does not mean that everything is right and that there are not problems ahead. There are. There are huge economic problems ahead of us whether we are in or outside the EU. But I would rather be in the position we are in this country than in any other country in the EU.

Whether we are in or outside the EU, there is economic regulation. I have taken part in the EU Sub-Committee looking at financial matters. We interviewed a Treasury Minister about banking union. He was very proud that the British banks were not allowed to take part in parts of the banking union into which they wanted to opt. That will cause extra regulation and extra cost for British bankers, and most likely cost British jobs. I have since heard that our penchant for overregulating is known as “la source anglaise”. For the Brexiteers who reckon that all will be wonderful if and when we leave, it will not. We will have the problem of overregulation.

Turning to transport, I am not yet convinced on HS2. My noble friend Lord Ahmad has tried, but he has not yet convinced me that there is an adequate case for it. I would have been much more excited if the gracious Speech had talked about Crossrail 2 or, perhaps even more important to me, the trans-Pennine crossing. That is where a huge economic hub could open up. My noble friend talked about the northern powerhouse. Well, that would really get it going. We looked at this issue when I was in the Transport department. That was a few blue moons ago, and it is terribly sad that it has not progressed further.

The Government are also bringing forward reform of compulsory purchase orders. There is a nice little hotspot for us to get into. They say that the process should be fairer and quicker, but fairer to whom? There is great concern among we surveyors that the landowners will not get full value for their money and will get a reduced sum. Therefore, the developers will receive the extra profit from the increase in land values. We will need to study that with great care.

Turning to the question of a wildlife Bill, we are due a Law Commission report but the commission cannot recommend the species protection level. It has asked Defra and the Welsh Government to look at this issue so that the law can be made more uniform. What progress has been made on this issue, which is hugely important to farmers? In the north of Scotland—and it will come to Northumbria, about which the right reverend Prelate made such a good speech—we have had success, in that the number of ravens has increased hugely. But ravens are killers of healthy young lambs. There is nothing more heart-breaking for a farmer than to produce good lambs and find that your week-old lambs are being attacked by ravens. They are doing it for fun. It has been watched very carefully. It involves only a small number of ravens, and if farmers could be licensed to exterminate those, the problem would solve itself. But it is not just ravens. We have read recently about ducks on a watercress farm in Hampshire. People have to realise that in the countryside, farming is your business. If we as politicians do not allow farmers to do their job properly and try to maximise their livelihoods—which has been extremely difficult to do in past years—we will need to look at the whole of farming in a different light and say, “We want you there in the country and we will pay you to farm not very well because we want green hedges and we do not want you to do what you are doing”.

Lastly, the noble Lord, Lord Palmer, mentioned GM crops. I hope that that is one area the Government will push the EU on.

Queen’s Speech

Earl of Caithness Excerpts

Thursday 4th June 2015 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, I can hear a collective sigh around the Chamber as we come to the last Back-Bench speaker after five days of debating Her Majesty’s gracious Speech.

It is always a pleasure to follow my noble kinswoman and, although nearly 30 years ago prisoners occupied my working day and working night, I will not follow her down her road. It is a pleasure to see in his place my noble friend Lord Finkelstein, who so ably seconded the gracious Speech. I hope that at some stage during the previous five days he has been able to leave it and go and do some other things. However, we very much enjoyed his speech.

I also enjoyed the maiden speech of my noble friend Lord O’Neill of Gatley. I make a plea to him and to the other new Ministers, who are highly talented: please, in the future, will they follow the example set by the noble Lord, Lord West of Spithead, who was also parachuted into this Chamber as a Front-Bench Minister, and not the example of others, of whom we see so little nowadays?

I agree with so much of what has been said over the past five days. The aspirations for health, defence, education, research and the environment are to be welcomed. However, in reality, those aspirations can only be delivered on the back of a strong economy and living within our means. Some politicians can be very prudent with their own home budgets but very good at spending other people’s money.

We have heard much about the UK’s productivity. We are not alone in the problems that we face. We are part of Europe, and Europe is increasingly the aged aunt of the world—and I fear it is getting more geriatric. Europe’s share of global GDP has fallen from 30% in 2007 to 23% in 2013. Over the same period, member states’ average ranking on the World Economic Forum’s global competitiveness index has fallen from 34 to 38 out of 144. Europe’s competitiveness on financial market development has particularly suffered, with average rankings falling from 36 to 55. International investment has also declined by €9.5 billion over the same period. The EU has much to do. Perhaps the capital markets union is an opportunity to start to turn round the decline. We hope that it will, and we will discuss that, along with the report that Sub-Committee A did on capital markets, in the near future. If, however, the EU starts to follow the track of the financial transaction tax, the downhill slide will only be hastened.

We look forward to hearing much more from the noble Lord, Lord King of Lothbury, after his excellent maiden speech. He reminded us of the problems that the recent depreciation of sterling had already caused us. I am sure he will agree with me that there will be considerably more problems for sterling unless we rebalance our economy and reduce our budget deficit. The coalition halved it as a percentage of GDP, and that needs to be at least halved again. However, I agree with the noble Lord, Lord Turnbull, that there is no need to reach a break-even for the overall deficit in this Parliament.

The noble Lord, Lord King, also reminded us that improving productivity is easier said than done. Since 2009, productivity has been negative in the public sector, agriculture, energy and water, and the financial services, which together account for about one-third of UK output and employment. The output per worker in the UK economy has barely risen since 2006. It is self-evident that we need better education, skills and infrastructure. My noble friend Lord O’Neill and my right honourable friend the Chancellor of the Exchequer will only move from “good” to “great” status if they stop the talking and take action.

I remind my noble friend Lord O’Neill that the great infrastructure projects for upgrading the A1 and the A14, a new TransPennine railway and airport expansion in the south-east, all high on the agenda today, were high on the agenda when I was a Minister, and that is some long time ago. Today we celebrate the completion of 26 miles of tunnelling under London for Crossrail 1. Would my noble friend agree that it would be a very good idea to get Crossrail 2 started before the end of this Parliament?

I want to focus on one area that is vibrant and fast growing yet where productivity has declined, and that is financial services. There has been a non-stop raft of legislation in the EU since the financial crisis. The effect of much of it is contradictory, with detrimental results. The Government want less regulation and bureaucracy and more competition. I agree with them. Let me give an example of somebody I know. He is an investment manager who runs a fund that has 15 different share classes. Now, for each one, he has to produce a separate key investor information document—a KIID. That often has to be done in the local language. Last year, his firm produced just under 3,000 KIIDs—an increase of over 10% on the year before—in 17 different jurisdictions and in several different languages. The legal and compliance team has increased fourfold in the past four years, and the annual spend on insurance and regulation was up 40% on 2013. The noble Earl, Lord Kinnoull, reminded us that the regulators are competing now just to see who can be the nastiest and grab the biggest headlines. That is compounding the problem.

One needs to bear in mind that all those involved in the financial services industry, big or small, are suffering in exactly the same way as the company that I have described. That company could not be created today, and what is the result? The result is that we will have fewer small firms, less choice, more cost and less opportunity for the investor, and it means that the poorest in society will not be able to afford the advice that they are going to need, which is a very worrying trend.

Never before has so much money been spent on compliance and risk management as today, but things still keep going wrong. There are two views as to why this has happened. One is that the firms are so vast and so complex that proper management is impossible, and the other is that the money being spent is wrongly targeted and a rethink is necessary. Before the noble Lord, Lord Pearson, gets too excited and blames Brussels, I should point out that there is every evidence that what has been implemented in Europe would have been implemented in the UK whether we were in Europe or not. A recent survey by the Centre for the Study of Financial Innovation revealed that 65% of its respondents believe that the UK gold-plates regulations. My noble friend might not agree with that, but he has to keep his own new house in order.

Let us consider the irony and stupidity of the fact that, while we keep heaping qualifications, regulations and costs on the financial sector, any one of us can walk out of this Chamber tonight, set up an estate agency and sell off tomorrow what perhaps for most people is their largest and most precious asset, their home. That is a nonsense.

Infrastructure Bill [HL]

Earl of Caithness Excerpts

Monday 10th November 2014 Lords Chamber

[The Lord Bishop of Chester]

My Lords, can I ask the Minister when she responds to comment on two points? First, if we are now to be committed in this legally strengthened way to the maximum economic exploration of our oil and gas reserves, how do the Government see that to be compatible with the commitment under the Climate Change Act to reduce our emissions to only 20% of the 1990 level by 2050 without also having a strategy for carbon capture and storage, which I think lies behind the amendment?

Secondly, the amendment refers to the economic extraction of our hydrocarbons—I have never yet heard any reliable estimate of what the additional cost will be of having carbon capture and storage on a typical power station, be it a coal station or a gas station. What level of increase per kilowatt hour—in a unit that can be easily understood—is anticipated if carbon capture and storage is required on such stations? That impacts on what is economically recoverable.

[The Earl of Caithness (Con)]

My Lords, I have a question for my noble friend on the Front Bench arising from my work not long ago on carbon capture and storage. It concluded that every situation would be different and that it would depend not only on the oil wells but on the businesses trying to do this work. Some businesses might be able to pool their resources, and while it might be possible to set up a grid in a certain area, it might not be in another. Would not the amendments as proposed make that much more difficult? As my noble friend Lord Jenkin has reminded us, we are at a very early stage in CCS and the technology is not yet fully proven. An awful lot of work still has to be done, so to put something like this on to an industry which is in its infancy will surely cause more problems than it will solve.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)]

My Lords, I thank the noble Baroness, Lady Worthington, for proposing these amendments and all noble Lords who have contributed to the debate. It gives me the opportunity to respond in full to both amendments in the group. They seek to extend the maximising economic principle objective to include,

“co-ordination of the transportation and storage of CO₂”,

and would require,

“the establishment of a strategic vision for the permanent storage of CO₂ in depleted fields”.

I reassure noble Lords that the UK has one of the most comprehensive programmes on CCS anywhere in the world in order to support the commercialisation of the technology and develop the industry. The programme includes a competition with up to £1 billion capital plus operational support for large CCS projects and a £125 million research, development and innovation programme. In addition, the Government set out how we are supporting the carbon capture and storage industry in a policy scoping document published in August. The document sought evidence and views from experts and stakeholders on a range of issues affecting the CCS industry going forward, including CCS with enhanced oil recovery. The deadline for submitting those views passed just over two weeks ago. Given that we are analysing the responses we have received and are in discussions with HM Treasury over its review of the fiscal regime for oil and gas, it would seem premature to make provision in primary legislation at this time.

The Government recognise that captured carbon dioxide could play a role in enhanced oil recovery, and likewise that enhanced oil recovery could play a role in the UK’s carbon capture and storage industry going forward, but the extent of any interaction between the CCS industry and the concept of maximising economic recovery of petroleum is not yet clear. Carbon dioxide transport and permanent geological storage is a nascent industry, so although it is important to promote the industry where possible it would be wrong to be too prescriptive now. That point was made eloquently by my noble friends Lord Jenkin and Lord Caithness. Further discussions with industry and the relevant trade associations are needed before we can say with certainty how the MER UK principle should apply to areas such as CCS.

The Oil and Gas Authority will have a significant function in considering the role of CCS when determining whether companies are operating in line with the maximising economic recovery strategy. The OGA will issue carbon dioxide storage site licences and approve carbon dioxide storage permit applications. It will also have responsibility to ensure that CCS is considered as part of a proposed decommissioning plan and will take into account the viability of utilising captured carbon dioxide in enhanced oil recovery projects. In addition, the transfer and storage of carbon dioxide is an important technology, which is why it is likely to form a key element of the technology and decommissioning sector strategies that will be developed by the OGA, in consultation with industry. These strategies will help to underpin the overarching strategy related to maximising economic recovery.

The right reverend Prelate the Bishop of Chester asked how this would help us to meet our emissions reduction aims as set out in the Climate Change Act 2008. Implementing recommendations contained in the Wood review will be done in a way compatible with the legally binding climate change targets. Our overarching energy strategy seeks to underpin secure and diverse energy supplies, including renewable, nuclear and indigenous resources. The carbon plan has shown that Britain will still need significant oil and gas supplies over the next decades while we decarbonise our economy and make a transition to a low-carbon one; projections show that in 2030 oil and gas will still be a vital part of the energy mix, providing around 70% of the UK’s primary energy requirements as we seek that transition.

The right reverend Prelate also asked about the costs of carbon capture. If he and noble Lords would allow it I would like to write to him and ensure that the Committee gets sight of the letter.

Having given those reassurances and demonstrated that the Government see that carbon capture and storage will be a part of our strategy in the future, though we are still at an early stage, I hope that the noble Baroness can be persuaded to withdraw her amendment.

--- Later in debate ---

[Lord Marland (Con)]

My Lords, it gives me great pleasure to re-engage in this debate. In particular, I wish the noble Baroness, Lady Worthington, better health and applaud her braveness for coming in today. I had the great pleasure of opposing her, or being opposed by her, for quite some time, as Members will know. There was never anything between us. In fact, when we took the Energy Bill through the House, there was very little between us—and there is not now with these amendments. I am taken by the noble Lord, Lord Lipsey, who believes that these are probing amendments. I, too, believe that they are probing amendments.

There is nothing between us because, as the noble Baroness said in her opening remarks, she was in favour of fracking. She also said that it had to be properly regulated. We have heard in the debate, particularly from the noble Lords, Lord Teverson and Lord Jenkin, that we have the best regulation in the world for this part of the industry. To overdo regulation is to kill it. What it will kill is our ability to progress economically as a nation, as the two noble Lords on the opposite Benches have said; it will not enable us to have fuel security, which fracking gives us the opportunity to have; and it will not enable us to have cheap fuel in our homes. For people in this country these are the critical things that matter to the future of this economy and country. I am therefore delighted that the Government have taken on the work started four-and-a-half years ago in this field. It is fundamental to us all that we press on with it. The longer we debate it and get carried away in different directions from the core issues, the longer it will take to get this country back and going.

[The Earl of Caithness]

My Lords, I share the concern of the noble Lord, Lord Lipsey, as to where the heart of the noble Baroness, Lady Worthington, lies on fracking. Her heart on this subject is a little closer to that of the noble Lord, Lord Wigley, but she is putting on a very brave front, because she has to, and says she supports fracking. We have been at hydraulic fracking in this country for more than 50 years. As so many of your Lordships have said, this is a highly regulated industry and Britain is a world leader in it. It is totally inappropriate to compare our standards and form of regulation with some of the scare stories from America. However, it is about presentation and, at the moment, the industry and the Government are losing the presentation battle, although that might be beginning to change. As my noble friend Lord Deben will remember only too well, it is fine to say, “I wish the Government would improve their PR”. It is difficult to do that in practice because if it is a good news story our press do not want to know about it. All they want to know about are the bad news stories.

I made my comment about the noble Baroness, Lady Worthington, because these amendments will make the whole process much more difficult and time-consuming. For example, new subsection (1)(a) in Amendment 113G requires all sites to,

“carry out an Environmental Impact Assessment”.

We know that environmental impact assessments are hugely important. They cover a range of other industries. However, European standards have been agreed on for fracking. Within those standards are certain exemptions for the small fields and for some experimental wells, but there are also restrictions. It is not a total blanket; it is a limited exemption. Why does the Labour Party want to gold plate what is already in existence and covers the whole of Europe?

When I was on Sub-Committee B and we inquired into energy, what came over abundantly clearly was that the rest of Europe—which has quite a lot of shale gas, too, particularly Poland—is looking to Britain for a lead. When Britain does it, the rest of Europe will get on and do it. We in Europe can all benefit from that. If we do not take the lead, the others will not do it by themselves. That is why I support all those who have said that we must get on with it, regulate it and make transparent who is regulating what and why, so that we can give the maximum amount of reassurance to the public.

[Lord Young of Norwood Green (Lab)]

My Lords, in taking part in the debate, my only interest is that we should make a judgment based on supported evidence, rather than on allegations. If nothing else, the amendment is important because there is a battle of ideas on fracking that we need to win. Noble Lords have said that we are not currently doing so well on public opinion. Unfortunately, the scare stories are believed. There has been an important event since we debated this in Committee: the publication of The Economic Impact on UK Energy Policy of Shale Gas and Oil. It is a very important report. No one has questioned its integrity or the evidence it contains. I stress that point again and again.

Like many others, I looked at Amendment 113G. I was pleased to hear my noble friend Lady Worthington say that she was not opposed to fracking. I suppose the amendment is a bit like the curate’s egg: it is good in parts. It is probably better than the average curate’s egg because most of the parts are good. I support an environmental impact assessment—I agree with the noble Lord, Lord Teverson, that that is something that needs to be done. I support independent inspections of the integrity of wells used; I am pretty sure the fracking companies would as well. They are also prepared publicly to disclose the chemicals used for the extraction process. Again, read the report: they are in there. For the most part they are used in tiny amounts, and for the most part there is no problem with them whatever.

It is true that some practices that went on in the States were not helpful to the process of fracking. That is not to say that everything that happened in the States was bad, because it was not—there are plenty of good examples from there. We should not forget that fracking substantially reduced emissions in the States. It did and has created jobs and it has brought industry back to the States. We should not forget that important aspect.

--- Later in debate ---

[Lord Borwick]

My Lords, I only wish that I could agree with the noble Lord, Lord Judd, that it is a short-term exercise to get planning permission for this sort of development. The planning permission process will take many months, probably years, and cost a large amount of money. It is not a short-term exercise, and that is why I think this amendment is unnecessary because it will be up to the local council or local planning authority to grant the planning permission, with all the pressures put upon them to make the decision to protect the environment. With these sites listed in this amendment, I do not think they are going to get the planning permission which the noble Baroness fears they will. I really do not think it is going to be possible.

Secondly, I am sorry that—despite trying to listen to it—I am not sure I fully understood the meaning of “functionally linked”. How wide a definition will that actually be in practice? I wonder whether the noble Baroness could help in explaining that?

[The Earl of Caithness]

My Lords, I rise to oppose these amendments. I understand the principle behind them but, as my noble friend Lord Jenkin has reminded us, we are talking about something that is going to happen well below the surface. Having taken that into account, and while I agree with him that the amendment is in the wrong place, I also think that the principle of the amendment is quite important. However, what the noble Baroness has totally failed to do, and what the noble Lord, Lord Judd, has failed to do, is to explain why the present system of controls is not adequate.

I do not class myself as an environmentalist; I class myself much more as a countryman. I have a much broader range of interest than an environmentalist would have. The house that I used to own very recently up in Caithness was right beside an SSSI, and on that SSSI there wintered whooper swans and lots of geese and ducks. Around us there are now eight wind turbine farms. This is a huge area—an important one for nature—but the argument was looked at for every single one of those turbines. More recently, a planning application was made for four wind turbines to be sited much closer to the SSSI. My house was perhaps one of the nearest that was going to be affected by that and I lodged my objection on the grounds of nature and what effect the four wind turbines—which are considerably bigger than anything we are talking about in the fracking process and would be at a higher level for much longer—might have on the flight path of geese and swans.

The planning process worked perfectly and the decision was turned down. It has gone to appeal and I do not yet know what the result of that is, but my point is that the existing procedures are there now to protect such sites as these. I used the existing procedures and the planners looked at the existing procedures and agreed with all of us that had objected to these four wind turbines. I believe that what we have got in place is sufficient and we do not need any more.

[Lord Judd]

Before the noble Lord sits down—

--- Later in debate ---

[The Earl of Caithness]

My Lords, it is clear now. Industry does not need further clarity. It works.

[Lord Whitty (Lab)]

My Lords, those who oppose these amendments are missing the point. The amendments may well be in the wrong place; they may well be too wide. I did not intervene in the previous debate because I thought that it was becoming far too polarised. Public opinion on the issue of fracking is polarised, but public opinion is not polarised in relation to the protection of our national parks and our areas of outstanding natural beauty. Unless the Government in some way recognise within the overall approach to fracking that there are certain sites which have to be protected—whatever provision exists elsewhere in terms of general planning law and so forth—the outcry against fracking will grow rather than be reduced.

The Government should at least have the grace to recognise that that is a reality. In terms of public acceptability of fracking, protection of our protected areas is an important element which needs to be in the regulations and in the Bill. Whether the amendments in the name of the noble Baroness are technically in the right place or not, the politics and the PR for fracking need to make that point. If they do not, the 25% of people who fundamentally oppose fracking will grow in number. The Government have the opportunity to ensure that that does not happen. I hope that, if not now then in the process of this Bill through the Commons, the Government will put that right.

--- Later in debate ---

[Lord Teverson]

My Lords, I very much agree with the amendment. I have backed similar amendments to other Bills. Unfortunately, we did not manage to get any further on it. It is Liberal Democrat policy that we should get unabated coal out of the energy generation system by 2025—to me that seems an eternity. One of the key things that would do, as this amendment would do, would be to stop long-term investment of any size in unabated coal generation and facilities. That seems to me an absolutely fundamental prerequisite, not only of meeting our carbon budgets, but of ensuring we meet our international obligations, such as on air quality. It will be very difficult to continue to lead on climate change—as we do and as we want to continue to do into the future—if we have a continued electricity generation industry based on coal for the long term.

There are all sorts of other ways to do stop that reinvestment. We have rehearsed these arguments many times before. It is the Chancellor’s and the Treasury’s wish that we should have gas investment at a reasonable level in this country over the next few years. Of course, the more we take the risk of encouraging coal to reinvest into the future—we do not know how much of that will happen but some of it already has—the more we will crowd out investment in other technologies. I suspect that the Minister will not accept the amendment, unfortunately, but I know that a number of Ministers and people in DECC understand the importance of taking coal out of generation. I hope that the Government will one day come to a single view that this needs to be done.

[The Earl of Caithness]

My Lords, we were treated yet again to an exposition by the noble Baroness on a matter that we debated at length and voted on last year on the Energy Bill. Here we are doing it again. If the noble Baroness and her party had really wanted to meet some of the targets then they should not have flapped around like wet hens in a thunderstorm when they were in power and got on with doing something about nuclear. As a result of this Government, the energy programme is taking off in a way that it should have done a long time ago. We all agree that we want to get coal out of the system. It is about getting the timing right for that, without creating extra costs for the consumer and without switching the lights off. The coal power stations have to meet the new directive on, I think, 1 January 2016. This subject has been debated long and often and we have voted often. We will obviously continue to do so, but thankfully we are now heading in the right direction. I hope that my noble friend on the Front Bench will not accept the amendment.

[Baroness Verma]

My Lords, I thank the noble Baroness, Lady Worthington, for yet again bringing this subject to the attention of the House. As my noble friend Lord Caithness eloquently said, we debated this amendment during the passage of the Energy Bill less than a year ago. Noble Lords will recall that, after careful consideration, this House and the other place decided that it should not be adopted. I do not propose to set out in detail again the reasons why the Government did not support this amendment when it was last considered. However, noble Lords will recall that the Government’s main concern was that it could lead to circumstances where existing coal plants closed prematurely, leading to a need for more generation capacity to be built earlier than would otherwise be necessary, and resulting in totally unnecessary and avoidable cost to consumers.

I want to address the points made by the noble Baroness that developments since we last considered this amendment make it necessary to reconsider the conclusion we reached at the time. It is true that there have been a number of developments over the course of this year. We have set about implementing our electricity market reforms, which include taking the actions that are delivering new investment and our plans for a secure, affordable and low-carbon electricity system. That is well demonstrated by the allocation in April of the first contracts for difference to eight renewables projects. These projects include offshore wind farms and coal to biomass conversions, which alone will provide up to £12 billion of private sector investment by 2020, supporting around 8,500 jobs and providing a further 4.5 gigawatts of low-carbon generation capacity to Britain’s energy mix.

The noble Baroness pointed to the capacity market and the fact that four of the 11 remaining coal plants are seeking a three-year capacity agreement to refurbish their plant. She said that that is evidence that these plants will upgrade to comply with the industrial emissions directive allowing them to continue operation long into the future and generating at levels inconsistent with our decarbonisation plans. She also pointed out that the freezing of the carbon price floor improves the economics of continuing to operate coal-fired power stations. The fact is that neither of these developments is expected to have a significant impact on the overall future outlook for coal.

The Government’s latest projections, which take into account recent changes to the carbon price floor, suggest that virtually all coal will have retired by the end of 2025. Only one of the four plants seeking a three-year capacity agreement has fitted the equipment needed to comply with the directive and operate without constraint when it comes into force on 1 January 2016, as my noble friend Lord Caithness rightly said. We are not aware of evidence that any of the other plants will be compliant with the directive at the time it comes into force.

Even were these plants to achieve compliance at some point in the future, our assessment remains that overall levels of generation from coal will decline over time as multiple factors, including age, environmental regulation, increasing levels of low carbon generation and a strengthening carbon price, act to reduce coal generation, although the additional resilience to our energy system that comes from a small number of compliant plants while they are still economic to operate would not be unwelcome.

The risks that would be created by this amendment are also more immediate. I would like to draw the attention of noble Lords to the first auction under the capacity market that will be held in December, which is our response to ensuring security of supply at the least cost to the consumer. A potential impact of this amendment is to constrain the ability of plants to generate when it is otherwise economic for them to do so. Accepting this amendment will therefore create a significant regulatory risk to those plants seeking refurbishment contracts in the capacity market. Their response may therefore be to seek a higher capacity clearing price to compensate for this possible reduction in electricity market revenue, particularly in the years preceding the first delivery year in 2018-19. Alternatively, these investments may not go-ahead. Neither scenario is desirable, with the risk that the cost of the capacity market is pushed upwards with no accompanying benefit to security of supply.

We should also consider what sort of signal it sends to investors of all types of generation, not just coal, now and in the future. They will interpret this as further intervention of a measure that has already been rejected by this House and so close to the first capacity market auction where we will be seeking competitive commitments from over 48 gigawatts of capacity to ensure continued security of our electricity supplies over the course of this decade. It is also important to remember that over 10 gigawatts of new gas has come forward to participate in the December auction, highlighting that we have the right incentives in place to ensure security of supply at the least cost to consumers and to encourage competition through new investment. As we discussed last year, I will oppose an amendment that has the potential to increase consumer bills and increase the risks to security of supply.

There is an almost unanimous consensus on the need to substantially decarbonise our electricity system on the pathway to cutting our greenhouse gas emissions by at least 80% by 2050. There is a similar consensus that it is only with carbon capture and storage that coal will continue to play a role in that future. The measures we agreed last year to reform our electricity market are already bringing forward the investment needed to achieve this cost effectively and securely. Against this background we continue to believe that applying the EPS as proposed by this amendment is a potentially risky intervention in the market.

I hope I have gone half way to convincing the noble Baroness that the developments since the Energy Bill was before this House less than a year ago are unlikely to have the impact she assumes and I hope on that basis she will be willing to withdraw her amendment.

Genuine Economic and Monetary Union (EUC Report)

Earl of Caithness Excerpts

Wednesday 2nd July 2014 Grand Committee

[The Earl of Caithness (Con)]

My Lords, the fact that I am the sixth speaker yet only the first after the chairman to have served on the committee shows that, once again, the House of Lords produces high-quality, interesting reports, of which this is undoubtedly one. I pay tribute to the way in which the noble Lord, Lord Harrison, who introduced the debate so well, chaired our committee and to those who helped us to prepare the report, whom the noble Lord has also mentioned. We were extremely well served. It is one of the features of this House that we are well served and are able to provide reports that are read right across the EU.

What a joy to hear batsman number three, the noble Lord, Lord Liddle, coming in free from the shackles of the Opposition Front Bench. Perhaps he should never have gone there. It would have been much more interesting if he had not.

We have heard a little bit of criticism of the Government. We have heard it all before. I remember more than 20 years ago, when I was a Minister, being criticised because we were not participating enough in Europe. Nothing has changed. I think that behind the scenes we are probably participating as much as we ever did in Europe, although there is no need to be complacent. I agree with what the noble Lord, Lord Jay, says: the number of British people working in the important institutions and holding key jobs has declined. I hope that my noble friend will say something when he sums up on how that is going to be corrected.

Part of what we have achieved was revealed at the recent Council of Ministers meeting. Once you get away from the frothy headlines, which have already been discussed, you see that thanks to Britain the whole procedure of appointing the President is going to be reviewed for the first time ever. All 27 other Heads of Government have agreed expressly that they will address our concerns. It has been agreed that there are different paths of integration for different countries. Unless one takes a firm stand, one cannot shift the other Heads of Government in the way that Britain seems to have been able to in the recent past.

On the report, I agree with a lot of what has been said, but I want to focus on something that my noble friend Lord Lamont raised—the question of the single deposit insurance scheme. I was intrigued when it was first introduced by the Council President, Mr Van Rompuy, in June 2012. The banking union had three elements, one of which was the single deposit insurance scheme. That was included,

“to strengthen the credibility of the existing arrangements and serve as an important assurance that eligible deposits of all credit institutions are sufficiently insured”.

As we have heard, that was quickly watered down under political pressure—we set that out in paragraphs 104 to 113 of our report. In summary, that is because it is so contentious and requires all participating countries to pay into the system and to accept responsibility for any ensuing liabilities of the scheme, with the corollary that the fiscally stronger would be expected to shoulder some of the burden of the fiscally constrained.

As a result, the November 2012 Commission blueprint on deep and genuine economic and monetary union made no reference to a common scheme, instead stating that effective and solid national deposit guarantee schemes would put the banking sector back on a solid footing. The deposit guarantee schemes directive, which sought to strengthen these national schemes, was agreed in December last year.

Our witnesses were split as to the necessity of a common scheme. Some argued that it was necessary to prevent capital flight from troubled countries to those that were perceived to be safe. Others suggested that, while desirable, a common scheme was not necessary or could even add to the risk of moral hazard. The committee concluded unanimously that the common deposit guarantee scheme was necessary for banking union to succeed and for the eurozone to thrive. While recognising the extreme political reluctance to countenance such a significant move in the direction of debt mutualisation, the committee thought that it was an important step if the foundations of the single currency were to be reinforced.

Taken together with the flaws in the single resolution mechanism, which the noble Lord, Lord Harrison, mentioned, we concluded that notwithstanding the significant progress made so far—and it has been significant—only a partial banking union is in prospect. Consequently, the vicious circle linking bank and sovereign debt remains a threat. The whole purpose of the banking union proposal was to break that link, but it is still there.

In their response to the report, the Government agreed,

“that the common deposit insurance for those Member States participating in the Banking Union would lead to more effective and integrated financial regulation across the euro area. However, the Government will consider any formal proposals on this matter as they arise”.

I must say to my noble friend that I thought that that was a little parsimonious. Could he expand on that? Given its importance, it deserved a better response.

In its response, the Commission stated that,

“at this stage, it is not envisaged to set up a common European Deposit Guarantee Scheme (DGS) within the Banking Union. The funding of national DGSs should be improved by the Deposit Guarantee Schemes Directive that is about to be adopted by co-legislators”.

I referred to that. The Commission continued:

“Voluntary lending arrangements between adequately prefunded national schemes could strengthen the overall protection of depositors across the internal market, help tackle asymmetric banking shocks, and mitigate their cross-border spill-over effects. The Commission agrees with the need to take further steps to break the link between bank and sovereign debt, which includes the instrument of direct recapitalisation of banks by the European Stability Mechanism”.

It was also said that this was music for another day and some time into the future.

However, what remains is a problem. The question is whether the existing banking union will be robust enough in times of crisis. Time will tell, but it is at the very least a hostage to fortune. At the moment, we are in the lull before a storm that will be even greater and more destructive than the storm that we have just come out of.

EU: Financial Transaction Tax (EUC Report)

Earl of Caithness Excerpts

Tuesday 17th December 2013 Grand Committee

[The Earl of Caithness (Con)]

My Lords, a policy conceived in revenge, born under the enhanced co-operation procedure and nurtured on envy, is a sad and frightening prospect. The FTT is such a policy, and unfortunately it is alive and deadly, as our report states.

Our report savages the proposal for the FTT. We are by no means alone: a recent report by Oxera for Marex Spectron reckoned that the FTT would destroy more sources of revenue than it would create public funding: it will cost more than it receives. Deutsches Aktieninstitut is also heavily critical of the FTT. It says that,

“the burden of the FTT as proposed by the European Commission amounts to between 5.0 and 7.3 billion euros annually for private households and non-financial companies in Germany”.

The Corporation of London has also been very critical and reckoned that the impact of the FTT would be higher for non-participating member states than for participating ones. We have to remember that the non-participating ones are in the majority. There will be further reports in the new year, and I have no doubt every one will be critical.

The attitude and behaviour of the Government has been commented on. It saddens me that my former department, the Treasury, has not improved its procedures. It was very slow to react in the first place. With hindsight, I remember we were not very quick in responding to ERM as we should have done. I thought lessons had been learnt. I have been on the committee since the first report was published, and I have noticed how almost offhand the correspondence has been. Since the change of Minister that has improved, and I ask my noble friend to make sure that that improvement continues, because it is vital that the Government listen to and work with the committee, rather than against us.

As for the Commission, there is not much left to say. I, too, sat open-mouthed at the evidence we took in Brussels from Mr Zourek. It was unbelievable, thoroughly unconvincing, almost unreal and not something I had ever expected to hear from the Commission.

Can my noble friend say something about the timing for the resolution of differences between the Commission and the Council’s legal opinion? That is important. Furthermore, is there a timing for, and any more information on, the resolution of our objection, and when will the objection by Luxembourg, on the same grounds as that of UK, be heard? Will it be at the same time as ours?

Financial Services (Banking Reform) Bill

Earl of Caithness Excerpts

Wednesday 24th July 2013 Lords Chamber

[The Earl of Caithness]

My Lords, this is indeed a hugely important Bill. It is one to which everyone looks to correct the position in which we found ourselves in 2008, when people genuinely feared that they were going to lose their deposits. They hope that at the end of this Bill they will be in the position that the right reverend Prelate quoted: that the banks in the UK will keep us up there as the world’s financial centre, while protecting the ordinary working person. I fear that the Bill as presented to us will not take us to that situation.

There are two main reasons for that. One has to look at the reasons for the 2008 crisis. The bulk of that crisis was due to a structural banking problem. It was not so much the bankers’ fault; you cannot blame the bankers for doing what legislation or law allows them to do. However, we were all surprised and even glad that the report on HBOS showed that the incompetence of bankers within a structural banking system was also a major problem. We can tackle one of the major structural problems of banks, and not by changing them too dramatically, because they have two main functions. One is the storage and distribution of depositors’ money and the other is the investment of money seeking investment.

The huge figures that the noble Lord, Lord Brennan, gave to us a moment ago underline the problem, which is that the deposit belongs to the bank the moment that you make it. The moment the money is paid into the bank it is no longer yours. Most people in the country believe that when they make a deposit to a bank it is still theirs. Two judicial decisions in 1811 and 1848 changed that, and banking became legalised theft, as I call it. It was a move to take away people’s money. The noble Lord, Lord Hollick, put it well when he said that it is getting other people’s money to work for you. It requires more than a change of culture to change that in banks; to allow people to retain control of their deposits requires a change in the law. If that happens, the banks will, quite rightly, charge for the storage and distribution of that deposit, but it will allow you, as the depositor, to say, “I want that amount on deposit, which will be guaranteed by the bank, and that amount can be used for investment”. If the investment arm fails, that is fine—it will not involve the taxpayer and your deposit is secure.

The way we need to go forward is by changing the structure that banks have used or adopted themselves to use in the past. We seek to change the removal of title from their own money for the depositors; we must get ownership of the deposit back to the depositor. If you merely ring-fence a bank, the money can be moved within the bank because all the money belongs to the bank. We do not know the rules for the ring-fencing, but it will not solve the fundamental problem that the bank owns all the money. Banks should also be allowed to offer equity investments. One of the major problems we face is debt. If all the banks are allowed to do is to make more loans, all you will do is create more debt. As Stephen Cecchetti at the Bank for International Settlements recently said:

“Debt is a two-edged sword. Used wisely and in moderation, it clearly improves welfare. But, when it is used imprudently and in excess, the result can be disaster”.

There is no doubt in my mind that we are heading for another banking disaster. This forthcoming banking disaster will be bigger than the one that I tried to stop in 2008 with my Safety Deposit Current Accounts Bill, which tried to do what I have just explained—namely, to retain ownership of a deposit placed with a banker. However, another, bigger banking crisis is undoubtedly coming.

We have talked a lot about competition, and a number of your Lordships have mentioned it, but what is the right amount of competition? Clearly, we would like more competition than the big four banks that we have here, but there are some 6,000 banks in the eurozone, which is part of its problem. There are too many banks; some have had to close as part of restructuring and no doubt a lot more will do so as the eurozone tries to sort out its problems. I do not know how we, as politicians, decide what the right amount of competition is, but clearly there ought to be more here and less on the continent.

Finally, I turn to regulations. As a number of noble Lords have pointed out, a huge amount of regulations are to be brought forward under the Bill; until we see those we will not know how it is going to work. I therefore ask my noble friend when these orders and regulations will be made available. We have a problem with the Energy Bill at the moment, because now almost at the end of Committee we do not have the regulations and draft statutory instruments before us so that we can look at the meat of what we are discussing in that Bill. There has been an outcry among all Members, from all sides of the Committee, that this is unacceptable. If we go into Committee on this Bill without getting the draft statutory instruments, we will face exactly the same problems in Committee as we currently face in Committee on the Energy Bill.

When I looked at Clause 17 of the Bill I was slightly confused as to exactly what statutory instruments we will look at. The noble Lord, Lord Barnett, talked about orders that may be part of the Bill but which do not seem to be statutory instruments that will come before the House. I hope that my noble friend will be able to clarify exactly what we will be allowed to discuss, whether they will be affirmative or negative resolutions, and when they will be presented.

Environment: Green Growth

Earl of Caithness Excerpts

Wednesday 16th May 2012 Lords Chamber

[Lord Sassoon]

My Lords, I can indeed confirm that that is not the policy of Her Majesty’s Government.

[The Earl of Caithness]

Would my noble friend also bear in mind, in response to the question asked by the noble Lord, Lord Davies, that what the noble Lord proposed about greenness and efficiency would hurt hardest those in the country who do not have cavity walls but have solid brick or stone houses and no access to mains gas? It would penalise those in the country. That again shows that the Labour Party is very anti those living in the countryside rather than those living in urban areas.

[Lord Sassoon]

Apart from the fact that taking away people’s capital gains tax relief by linking it to green efficiency is absolutely not on the agenda, the key point here is that the forthcoming Green Deal—a world-first policy proposal—will mean that many people will be able to make their homes warmer and more efficient. That is what really matters. Of course we want to see more efficient homes, but there are ways to do that, and the Government have a policy.