Architects Act 1997 (Amendment) (EU Exit) Regulations 2019

Lord Deben Excerpts

Monday 25th March 2019 Grand Committee

[Lord Shipley (LD)]

My Lords, I thank the Minister for his explanation. At present, one in six architects in the UK IS from the EU 27. Indeed, the Royal Institute of British Architects estimates that in London and the south-east the proportion is as high as a quarter. Many are employed by large firms with international portfolios of work, particularly on big infrastructure and construction projects such as airports. The contribution of EU 27 architects is not just numerical; it also relates to cultural, language and specialist skills, such as interior design or acoustics, which give high added value to the UK’s capacity to export its architectural services worldwide. Retaining access to EU 27 architects will therefore be very important to the continued prosperity of the architectural services export sector, which depends on having cosmopolitan skills available to deploy in designing schemes that will be built right across the world. One estimate is that this generates around £2 billion of export earnings a year. In addition, there are EU 27 architects resident abroad who are employed on UK building projects. Without them, work would be delayed and the industry’s capacity severely reduced.

This statutory instrument at least recognises that there is a looming problem. It could be said to be making the best of a bad job by attempting to continue ready access for qualified architects from the rest of Europe to the UK. However, paragraph 2.10 of the Explanatory Memorandum relates to individuals’ ability to come to the UK because they will be subject to Her Majesty’s Government’s immigration policy. In other words, first, there will be an income limit; secondly, there will be access only via an employer’s application and payment of an annual fee; and, thirdly, there will be no right to move from job to job. That last point is particularly relevant in this sector, where particular expertise may be needed only for a short time on any one project and it would be routine to move on to another firm with a similar project at the right stage for the exercise of a specialism. There is serious concern within the construction industry that the Government do not acknowledge the importance of the sector in delivering every other policy objective of homes, capital investment in the NHS and capital investment in education, nor do they seem to understand the key role that migrants at every skill level of the industry play in delivering the key outcomes that the Government want.

I have three questions for the Minister. First, does he recognise that no deal puts at risk not just the delivery of key government policy objectives in many fields but will undermine the export potential of a flourishing architectural services sector? Secondly, what assessment have the Government made of the median salary paid to EU 27 architects in the UK, and what is his department’s estimate of the reduction in numbers of architects coming to the UK as a consequence of this imposition of the universal immigration salary cap on this group?

Thirdly, will he look again at why the Government have decided to end the right to an individualised skills assessment for those coming from the EU 27 who may not have fully completed their accreditation? That is known as general systems, as set out in paragraph 2.12 of the Explanatory Memorandum. This has the appearance of pettiness, cutting out a route for a minority of potential employees for no good reason and simply souring the atmosphere further. I hope the Government understand that what may appear to be a short and simple statutory instrument in relation to architects could actually have profound implications for the international status and competitiveness of the architectural industry.

[Lord Deben (Con)]

My Lords, I declare an interest as an honorary fellow of the RIBA.

I agree very much with what has just been said. Obviously my noble friend is presenting this as a necessary statutory instrument were we to leave the European Union without a deal, and in that sense no doubt we will have to pass it. However, we have also to say that it is an interesting example of the Government’s amazing ability to recognise that there is a need and produce a way of making sure that everyone who is an architect can come here, so we are not going to shoot ourselves in the foot, without saying the key thing, which is that our architects cannot go there. We are becoming an island that wants all the advantages but wants to carry none of the responsibility.

I know my noble friend will not like this, but I say to him that I am sorry that he, of all people, should be asked to present a measure that is another indication of the sense of decline that this nation now has. Instead of recognising that in so many things co-operation, common views, common standards and common deals are necessary, we are busy trying to pretend that there is an alternative route—a kind of 19th-century protectionist route—keeping the opportunity to gain advantages from other people but not expecting to play our part in common standards and the like. I am sorry he has to do it—I am sure that he finds it as difficult as I would were I in his position—but I remind noble Lords of the seriousness of what this actually means. It means becoming a different kind of country, one which is much less worthy than the country that first entered the European Union.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

It was.

[Lord Deben]

Well, if it were consulted, why is it not listed in the Explanatory Memorandum, as far as I can see? Perhaps I have misread it—I apologise to my noble friend if I have—but I think it says that the ARB was consulted, or that officials

“have been in regular contact with ARB”.

The ARB is constantly referred to, not the RIBA. I have declared my interest, but it happens to be true that the RIBA is the body to which most architects would look for advice and to which they have given their concerns.

As this is not going to be a both-ways arrangement and because the Government do not want a no-deal exit from the European Union—although what the blazes they do want is increasingly difficult to understand, and I suspect that the negotiations would have gone much better if people had known in the first place what they wanted, because clearly not until very recently did anybody know anything about what we wanted—can the Minister give me an assurance that one of the things we will be seeking immediately in negotiations for some sort of reasonable exit—which of course would leave us in a worse position than we are in at the moment—but even if that was so, would be to make this a reciprocal arrangement and that that reciprocity would be at least as good as the present reciprocity?

That leads me to my last point, which is on the Immigration Rules. The architectural profession is remarkably badly paid. If you look at the average wage of an architect, it is remarkably low for a member of a professional body. So I am concerned, as was the noble Lord, Lord Shipley, that we should not allow the Immigration Rules to interfere with our ability to recruit from the rest of Europe. It seems to me that this is a serious double jeopardy system. Why do we have to have these rules? Surely we could have had, in these regulations, a very simple system which said that if you got a job with a British architect registered with the ARB you would be able to have that job. Why do we have to double-do it? Is there not a much more sensible way, which is merely to do exactly what we do at the moment and say publicly that we would like this to continue to be reciprocal, although we do not have the ability to make it reciprocal ourselves?

I remind my noble friend of the figures that have been quoted: it is likely that one in four of architects in the London area come from the rest of Europe, so this is no minor matter. Therefore, I hope that we can have assurances that the Government will seek, under any agreement, to have reciprocity and, secondly, that the Minister will look again at the idea that we have to insist upon going through our immigration arrangements, when we could have a perfectly simple system, like the one we have at the moment. We should look very carefully at any income limit in any case because it is likely to affect newly-qualified architects from the rest of Europe in a way that would do our profession no good. It would interfere with, and indeed endanger, the very large amount of money that Britain earns through the primacy of our architectural profession. When you are talking about what may be £2 billion, you are talking about a very serious amount of money. If we cannot recruit newly-qualified experts from the rest of Europe to a shockingly underpaid profession, that would do us a great deal of harm.

[Lord Beecham (Lab)]

My Lords, not for the first time, Newcastle is united in this Grand Committee. I think we would both welcome the noble Lord, who has characteristically analysed the Government’s proposals in a very effective way.

This instrument will freeze the list of architectural qualifications that are recognised immediately before exit day in the event of a no-deal Brexit. As a result, an individual holding one of those qualifications will be eligible to join the UK register of architects if they have access to the profession of architect in their home state. This will allow access to the workforce of EU-qualified and EEA-qualified architects. The register of qualified architects of the UK held by the Architects Registration Board currently includes 40,650 members, 17% of whom were admitted under EU directive procedures. Given that significant number, it is astonishing that no impact assessment appears to have been prepared for this SI. The UK must of course continue to attract the best talent after Brexit and have an immigration system that responds to the needs of industry, especially in the context of the architectural sector. The London’s Architectural Sector report states that the city’s architecture industry is worth £1.7 billion and is growing at 7% every year. That figure is set against the industry’s total value nationally of £4.8 billion, a significant contribution to the economy nationally.

The SI makes little attempt to make up for the damage that the industry has faced since the referendum, which has caused an alarming amount of uncertainty for businesses in the last two and half years. Since the referendum, projects up and down the country have been postponed as this period of chaos has badly damaged the investment market. An article on Consultancy.uk referred to Global by Design, published in 2018 by the RIBA, which said that 68% of architects have already seen Brexit impact their revenue stream as they have had projects put on hold and moreover, crucially, that 74% of architects regard access to the EU single market as necessary if the industry’s international workload is to grow. Already 40% of practices have had projects in the EU cancelled since the referendum.

The regulations fail to protect the recognition of UK-qualified architects’ qualifications in the EEA in the event of a no-deal Brexit. Those architects will have to rely on the individual registration policies of the 27 member states. The Government must look to establish a new mutual recognition agreement with the EU as soon as possible in order to provide reciprocity, and a date for that would be very welcome. I will be interested to hear the Minister’s response on that issue.

The Explanatory Memorandum states:

“The applicant’s ability to establish in the UK will be dependent on Government immigration policies”.


However, the Government’s immigration Bill has stalled and a £30,000 salary requirement for skilled migrants has been suggested. How many architects from EU or EEA countries living in the UK earn more than £30,000 now? How many architects have already registered with the Government’s settled-status scheme? Being a tier 2 sponsor for those earning more than £30,000 is difficult for many architecture firms because the process is lengthy and expensive. Have the Government done any work with the sector and the RIBA to assess exactly how much it will cost and whether the sector can bear the cost? According to the RIBA, the number of EU architects registering to practise in the UK has dropped by 42% since 2016, and 60% of them here at the moment say that they would consider leaving. That would damage architecture as a service both in this country and abroad; it would clearly suffer.

Architectural qualification requirements are frozen during the review period. How long does the Minister expect that period to last? How will architects come and work in the UK with new qualifications during this period? Paragraph 2.14 of the Explanatory Memorandum states:

“After EU exit, the ARB may lose access to the Internal Market Information (IMI) system. This facilitates communication between competent authorities. As a result, this instrument places the requirement to provide written verification from their home competent authority on the applicant should ARB be unable to secure it directly from the relevant competent authority”.


What assessment have the Government carried out to determine the ease of getting this written verification? Does it differ between authorities? Paragraph 2.12 states:

“This instrument removes the registration route of General Systems, which enables EU and EEA applicants who do not meet the automatic recognition criteria to work with the ARB to map what experience they do have against the UK criteria, and gain the experience necessary”.


Will the ARB offer any additional help to get candidates to work in the UK?

Finally, what estimate have the Government made of Brexit’s impact on UK practices and individuals currently, or potentially, working in Europe? What steps, if any, are they taking to create a new system including a reciprocal system of accepted professional qualifications?

Tenant Fees Bill

Lord Deben Excerpts

Monday 5th November 2018 Grand Committee

[Lord Kennedy of Southwark]

My Lords, Amendment 6, moved by the noble Baroness, Lady Grender, would amend Clause 8, which is concerned with financial penalties. The amendment adds paragraph (d) to subsection (4), which lists those situations where a financial penalty may not be imposed. The amendment, which I am happy to support, stops an enforcement authority imposing a fine where the relevant person has recovered funds through an application to the First-tier Tribunal. It seems to address an omission on the part of the Government and it is a sensible proposal.

Also in this group are Amendments 7 and 8, which I think would strengthen the Bill. Amendment 7 provides for the First-tier Tribunal to order the landlord or lettings agent to pay up to three times the sum of the prohibited payment that they improperly collected. There is no provision in the Bill for any form of compensation when a prohibited fee is charged and that in my opinion is a serious omission on the part of the Government. We believe that compensation will undoubtedly be appropriate in many cases given the likelihood that charging prohibited payments will cause tenants significant financial hardship.

Compensation would also act as an incentive for tenants to recover illegal fees where the enforcement authority is unable to enforce the law and would be appropriate recognition of the time and effort that it takes for an individual to enforce their rights through the courts. Compensation is an established principle in the consumer industry where one party is entrusted with another person’s money, in addition to enforcement penalties where rules or laws have been breached. This includes all sorts of bodies such as train operators, travel agents and lawyers. The idea of being paid compensation where the consumer has not been well served is well understood, and getting the money back is important, as the noble Baroness, Lady Grender, said.

My amendment is consistent with other legislation governing the private rented sector. I do not accept that compensation should be sacrificed in support of the Government’s aim that enforcement will be funded exclusively through fines. Amendment 8 seeks to add a further restriction on the termination of the tenancy. I believe this is a very important addition that brings a further element of fairness.

Section 21 notices have undoubtedly been abused in the past, to the considerable detriment of tenants. It would be a complete travesty if, having stood up for yourself and your rights, and having taken action to recover the money that was improperly taken from you, you are then punished, in effect, and served with a Section 21 notice to leave your property. This amendment seeks to ensure that that does not happen and that the victim—here, the tenant—cannot be treated in that way. I do not see why we would allow rogue landlords or letting agents to behave in this way. My amendment seeks to ensure that they cannot, by implementing that six-month cushion.

[Lord Deben (Con)]

I wonder whether my noble friend will address the point raised by the noble Baroness when she referred to the number of letting agents that did not obey the law on their websites. I have found that in many areas—including modern slavery, an issue I am particularly interested in—a number of people just do not obey the law. It seems to me that it would be odd if we left it to the local trading standards officers. What is the arrangement? If you find such a case, who in government is supposed to enforce it? This also is a piece that might be dealt with in this legislation. If it is true—I assume that it is—that 17% of letting agents do not even obey the law of having to say what their fees are, that is outrageous.

[Lord Young of Cookham]

I am grateful to all noble Lords who have taken part in this debate. The Bill proposes a number of enforcement measures that offer a strong deterrent to irresponsible agents and landlords. It also makes provisions to enable tenants and other relevant people to recover unlawfully charged fees, if other attempts have failed, by going to the First-tier Tribunal, which will order reimbursement to the tenant of money that should not have been paid. Of course, tenants should get back any unlawful payments in full, whether that is direct from the landlord or agent, via their enforcement authority or through an order of the First-tier Tribunal. However, in certain instances, we think it is also appropriate for the landlord or agent to be issued with a financial penalty, as well as ensuring that the tenant receives their money back. This is to deter future non-compliance.

Amendment 6 prevents an enforcement authority imposing a financial penalty under Section 12 if the tenant has got their money back. We think that giving a power to impose financial penalties for breaches of the legislation is an important tool for enforcement authorities. Therefore, we cannot accept Amendment 6. However, the enforcement guidance will stress that enforcement authorities should take account of the landlord’s and agent’s conduct and past behaviour when considering the level of financial penalty to charge, if any. This includes whether the landlord or agent has reimbursed the tenant quickly when asked to do so.

Turning to Amendments 7 and 8, while we think it is right that agents and landlords should be issued with a financial penalty, we do not think it is appropriate for the tenant to receive further compensation in addition to repayment of the money owed. To add compensation risks penalising agents and landlords multiple times for the same breach, which we do not believe is fair; for example, it would not be right to ask a landlord who has been fined up to £5,000 for an initial breach to also pay three times the amount of a prohibited payment to a tenant. This would in effect be two financial penalties for the same breach. The deterrent effect, mentioned by the noble Baroness in her opening remarks, would of course be secured by the fines under the Act.

It is also worth noting that Clause 17 already provides further protection to tenants by preventing landlords recovering their property via the Section 21 procedure in the Housing Act 1988 until they have repaid any unlawfully charged fees. This approach is in line with legislation that already applies; for example, where the How to Rent guide has not been provided or where a landlord has not secured the required licence for a house in multiple occupation. Further, Clause 4 ensures that any clause in the tenancy seeking to charge a prohibited fee is not binding on the tenant.

We do not consider that further provision is needed along the lines proposed by Amendment 8. For example, it is not fair if a landlord who appeals against the imposition of a financial penalty, and this appeal is upheld, is then restricted from using the no-fault eviction process for six months. Under the noble Lord’s amendment, this would be the case—although that may not be what he intended. We firmly believe that our existing approach restricting a landlord’s ability to serve a Section 21 notice strikes the right balance and offers a serious deterrent to non-compliance. I hope the noble Lord will not move his amendment.

I suspect the short answer to the questions raised by my noble friend Lord Deben is: the trading standards officer. I would like to write to my noble friend setting out in more detail what is being proposed, under both this and existing legislation, to prevent misleading information appearing on websites and tenants being misled.

--- Later in debate ---

[Lord Palmer of Childs Hill (LD)]

My Lords, I pay tribute to the noble Baroness, Lady Hayter, for her imaginative use of Clause 21 in the Bill. She explained the story behind the amendment; I know that the Minister, who was so involved and helpful in getting client money protection on to the statute book, will understand it.

I will not repeat the wonderful arguments made by the noble Baroness but the principle behind this has always been that client money protection was operated voluntarily by 60% of the market. It was the 40% who did not cover themselves voluntarily that we had to deal with. Against the background of what has happened in the department in putting this situation into practice, it seems that we are covering the 40% but are in grave danger of losing the 60%, who will not want the situation outlined by the noble Baroness.

There is a problem because large firms and organisations deal with large sums of money going through their books, in their bank accounts and in their clients’ accounts. Therefore, such firms are exposed. That is how the department has come to the figure of £200 million for cover; it feels that the firms need to be insured to cover that exposure. With respect, the department has not looked at the real world, where the large firms and organisations described by the noble Baroness reduce their exposure by placing funds in custodial TDP schemes, thus reducing the amount that they hold. So, you do not need insurance to such levels because, to use an analogy, the firms will do what the betting industry does in laying off bets and what the reinsurance industry does in laying off their insurance risks on others in the industry.

Therefore, in very simple terms, without repeating anything she said, I support the noble Baroness, Lady Hayter. I hope the department will look into not having a vast £200 million cover because it is not needed. It will frighten off the 60% who already cover themselves voluntarily under client money protection. There is no need for this large sum. Everything else in the Bill is right; we have made great strides in client money protection. The noble Baroness mentioned the status quo; we should let sleeping dogs lie so that we can get CMP operating properly and not frighten off large firms. They may be unduly frightened but they can take action by putting money in custodial funds. I support the amendment.

[Lord Deben]

I wonder if I can help the noble Lord. I know he always worries when I get up and say that I am going to be helpful, but on this occasion I might be. I remind the Committee that I am chairman of the organisation that represents independent financial advisers and those who deal with wealth management. Therefore, I understand a lot about the parallel circumstances referred to by the noble Baroness, Lady Hayter, when she pointed out the protection accorded to bank accounts and the different sorts of protection in the financial services industry. What I really want to say is that I hope my noble friend will think very carefully about this because we have seen the huge difficulty that people now have—even the most excellent of firms—in getting proper protection from the insurance industry.

The noble Baroness made an important point about being proportionate as to what the real risks are. I want to make a point about the dangers of not being proportionate. This is an industry of great importance and I am absolutely excited by the Bill because it does a whole lot of things that need to be done. However, we have to be very careful about importing into it those things that will result in unexpected and unwanted additional results.

I am not sure that civil servants are always as expert in these detailed aspects of insurance as those who deal with them daily. All the advice is that there really is no need to protect any more than the kind of protection that ARLA and RICS already provide. You do not really need that advice: the fact is that they have run the system very effectively up to now. I remind my noble friend that the party he represents is always very much in favour of free enterprise and people getting together to organise things on their own. Would it therefore not be a good idea for us to be very careful about not taking that advice?

We know that the 40% that do not belong to these organisations are, by nature, either not very careful or painfully close to the edge of the law. There is a real range. But I remind the Committee of the last speaker, who rightly said that we do not want to enfranchise the 40% by disfranchising the 60%. That does not seem a sensible answer. I hope my noble friend will take the advice of those who have had to deal with these things in other areas: that it is extremely dangerous if you get yourself into a position in which you lay too heavy a weight of insurance when it is not necessary. I have a long history of defending the consumer, but I do not see how consumers are better protected by excluding from the market the two organisations that have so far dominated it—if that is the right word.

The last thing I want to say is this: I have often spent time trying to encourage ARLA to become a more professional body. One of the successes of recent years has been precisely that, and we ought to be encouraged by what ARLA has done. It would therefore be a great pity if, on this occasion, we ignored its experience, which has come about through its own change from its history to today, or indeed the 150 years’ experience of RICS.

[Lord Best]

I want to offer my support to the noble Baroness, Lady Hayter, who has done so well in getting us to this point with CMP. It is so disappointing for those of us who have supported her efforts to hear of this last-minute significant hitch. The reason that a number of us were very supportive of CMP being introduced was not because of the 60% but because of the 40%. It was not just to make sure that the 40% had some insurance so that landlords’ and tenants’ money was properly protected. It was rather more sinister than that: it was to drive out that part of the 40% that just would not be able to get insurance, because when their accounts were viewed by those providing insurance, they would be told, “I’m sorry, we’re not insuring you”. This was, and I hope still will be, a way of weeding out the fly-by-night agents who set up shop and who we do not need in this business.

Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Lord Deben Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 19th June 2018 Lords Chamber

[Lord Shipley]

My Lords, this part of the Bill is about empty dwellings. My noble friend Lady Pinnock asked some important questions about the meaning of “unoccupied” and “substantially unfurnished”. I want to address a crucial, related issue: second homes that are substantially, although not completely, unoccupied. The Minister may be aware of a parliamentary petition to close the loophole that allows second home owners to pay business rates rather than council tax. The petition states:

“In England, second home owners can avoid council tax by claiming to be a business if they say they are available for letting for 140 days a year—they do not have to actually let at all. As their rateable value is below £12k, they also qualify for 100% small business rate relief—so pay nothing”.


In Southwold on the Suffolk coast, where many houses are second homes, research by Liberal Democrat colleagues suggests that this loophole may cost the local council about £500,000 a year in lost revenue. Crucially, second home owners in England only have to say that their properties are available for letting to qualify as a business, even if they are not actually let.

However, in Wales—the Minister will know that many good ideas come out of Wales—it is a requirement that any house designated as a business, rather than being liable for council tax, must be let for a minimum of 70 days. In one sense, that number is comparatively low, amounting to just over two months a year. However, it is a very important figure because it effectively prevents a second home owner avoiding paying council tax by registering the house as a business and then falling below the small business threshold.

In discussion on the Bill, the Member of Parliament for Totnes, Sarah Wollaston, asked:

“Will the Minister also use this opportunity to ensure that those who own second homes are contributing their fair share through council tax, and that they are not able to sidestep that by opting to pay business rates and then claiming eligibility for small business rate relief?”


Dominic Raab, the Minister of State for Housing, Communities and Local Government, replied:

“We have also made changes on holiday homes in the context of council tax and stamp duty. We will keep the point she raises under due consideration”.—[Official Report, Commons, 23/4/18; col. 649.]


Indeed, the Government have done that, but I hope that they will review this issue in much greater detail because the impact of both the reforms I mentioned—council tax and stamp duty—has been limited. I also hope that, when the Minister said that the Government would give it due consideration, it was not an attempt to push the issue into the long grass, but rather an acknowledgement that the department is indeed giving it due consideration.

Returning to Suffolk for a moment, I want to pay tribute to the work of local campaigners there for what they have undertaken so far. The Suffolk coastal communities embrace some of the largest proportions of second home owners in the United Kingdom. This impacts on the cohesion of these communities and pushes up house prices, reducing the available housing stock for local people.

I want to acknowledge that many second home owners do pay council tax. They can contribute to community life and they might hold a property as part of their future retirement plans to live in the area. However, business rates relief exists to help struggling businesses, not second home owners. Will the Government look at this issue in much closer detail and order an urgent review of the whole system? It is not that I am against second home owners: I am not against them. However, it does seem to be unfair that people who can afford two homes are subsidised by people who cannot afford to own one home.

[Lord Deben (Con)]

My Lords, I support the comments that have just been made. As the former Member of Parliament for Suffolk Coastal and as someone of whom, if you asked him where he really lived, the answer would be in Suffolk—although not coastal Suffolk—I am the owner of a second home. It is a situation in which I am happy to pay my council tax in full, as I do in on my small flat in London. That is how we operate, and I think that is right. One just has to recognise that there are circumstances in which people have to work in one place and live in another, and that is absolutely acceptable.

I emphasise the point about the coastal communities of Suffolk, which I represented for so long. I saw the change; it was fascinating. Southwold was but latterly added to my former constituency—as they moved me closer and closer to the sea, people said that they were trying to tell me something. It has very largely become a place of second homes, and so has Aldeburgh and, increasingly, many other villages round about. It is a real problem for community cohesion; I understand that, having committed myself to the view that people should be allowed to have—and very often need—a second home. However, I do not support the idea that people can avoid their proper contribution to the community by using what has elegantly been referred to as a loophole. It is worse than that, because they are telling a direct lie. They are not running a business; they have no intention of running a business. They are trying to get the business rate and then not to pay it because they have the small business special arrangement. Of course, however, you can be a small business even if you do not let anything. It is not difficult. We could all be a small business if making nothing were the purpose of being a small business. With my family, I own and run small businesses, but we intend to make a profit, otherwise there is not much point in us doing it. However, to run a small business in order not to make a profit and to get the profit from the community is entirely unacceptable.

I want to make some difficult comments. I have now been in one or the other House of Parliament for a very long time. It does not matter which Government are in power—or which mixture, as sometimes it is a coalition—when they want to avoid dealing with something, they always promise the most careful consideration and the most urgent assessment of the real issues that may well arise. They warn that there may be other unintended consequences, meaning that one should not move too quickly. Sometimes they suggest that, although they have looked at it, they have not found quite the right answer, but the House can be assured that such an answer will be found, but not yet. I say to my noble friend, whom I respect enormously, as he knows—I have told him so from time to time—that Wales is right on this. Wales is right on quite a number of things in the climate change committee. I have to remind the United Kingdom Government how much better in some things Wales and Scotland are at moving on climate change. It is not surprising that Wales is right on this.

We have to deal with this for a reason that is not just about equity—although that is very important—or the resources of Suffolk Coastal District Council; I do not have to declare an interest there because I live in the Mid Suffolk District Council area. That reason is social cohesion, in the sense that it annoys, upsets and very often angers people that their neighbours are not paying what they are paying for local services. I do not think it is acceptable or reasonable and it seems something very simple to change. All we have to do is what the Welsh have done. It would be jolly nice to acknowledge that the Welsh got there first and that we in the rest of the United Kingdom are following suit.

[Lord Kennedy of Southwark]

My Lords, briefly, I endorse the comments made in the debate so far, particularly those from the noble Lord, Lord Deben. He is absolutely right. Suffolk is a beautiful part of the world. I know that as well as him; I spend a fair bit of time down there. It is a wonderful place. He is absolutely right that people should not be allowed to pretend to have businesses and to take advantage of these things to avoid paying what they are supposed to pay to provide for local services. That is completely wrong. I hope that when the Minister responds to the debate he can give us some comfort that the Government will look at this. It is totally out of order. If someone lives in an area they should contribute to the services provided by the local authority.

Greater Manchester Combined Authority (Functions and Amendment) Order 2017

Lord Deben Excerpts

Monday 24th April 2017 Lords Chamber

[Lord Beecham (Lab)]

My Lords, I thought the Minister might have made a glancing reference to the present editor of the Evening Standard for his contribution in a previous life—well, not quite previous life, but shortly to be so—as the author of what is described as the northern powerhouse. Some of us, however, might regard it as something of a northern poorhouse in large parts of the area where there are very significant social problems.

The noble Lord referred to the consultation process, and it is certainly true that there was a process. I am not sure whether he is delighted with the response because, out of the 2.16 million people resident in the area, a grand total of 511 responded to the consultation—that is to say that there were 511 responses, although that does not necessarily mean 511 different people, since some of them may have replied to more than one of the propositions. It is not a matter that has apparently elicited any great enthusiasm in the area, although that does not necessarily disqualify the substance of the regulations from approval.

I would welcome comment on a specific issue. Paragraph 2.6 of the report that accompanies the order states that the Act will be amended to,

“provide that the Secretary of State may by order make provision for any function of a mayoral combined authority to be a function exercisable only by the Mayor and such an order may confer ancillary powers on the Mayor for the purposes of the exercise of general functions”.

On the face of it, that appears to give the Government the right to prescribe extra powers to the mayor without the agreement of the combined authority. Will the Minister say whether that is the case or, if not, assure the House and indeed the local authorities that that power is not to be exercised by the mayor without the consent of the combined authority?

[Lord Deben (Con)]

My Lords, I have raised this question before, but I do so again in the hope that this time the Government will listen. If one investigates these orders, in every case local authorities are being given powers that devolve to them choices and decisions that are more suitable for people living in the area. However, the other characteristic is that they enable local authorities to think in a much more holistic way to bring together housing, transport and planning. Yet as far as I can see the Government themselves are not learning their own lesson about how they do things in the centre. We still do things in the centre in precisely the siloed way that we are trying to avoid when it comes to devolution. We are about to have a general election, and this is an ideal moment for the Conservative Party, as represented by the Minister, to say that in future it will reorganise government so that government thinks in a non-siloed way.

I was rather unhappy with the comments of the noble Lord, Lord Beecham, which were a little curmudgeonly. After all, many of us have been looking for devolution for a long time. We thought that that was the essential way to reconnect politics with people; what they see in their locality matters a great deal. However, when we started to think about it we recognised that there was not much point in doing that if we merely replicated the siloed system at the centre. If in this most recent essay in better democracy we come to the conclusion that holistic thinking is the answer, should we not learn that lesson ourselves at the centre?

I hope that my noble friend will be able to say that he will take from this House the message to those concerned with the production of election manifestos—I hope the party opposite will do the same—that we all ought to be concerned with holistic government. If we have started to think in that way in relation to local authorities, we should do it at the centre was well.

[Lord Beecham]

Does the noble Lord agree that restoring the regional offices of local government, which the previous Conservative Government instituted, would be a helpful way of achieving the objectives to which he referred and with which I concur?

[Lord Deben]

I do not really want to politicise what is, I think, a generally accepted view about one successful and agreed part of the devolution proposals that we have at the moment. Let us keep to where we can be united and seek to get this Government and this Opposition in their various forms at least to agree on this simple concept. Let us have holistic government and not divided government.

[Baroness Pinnock (LD)]

We on this side support much of what is in the order. The extension of powers and functions to the mayoral authority in Manchester is to be applauded, especially as it moves some way towards those that are enjoyed in London. However, even in London, the decisions made by the mayor can be called to account by an elected body, the London Assembly. Manchester will have the leaders of the constituent councils, and a scrutiny committee will be formed from those constituent councils—that is all. No specific body will be elected for the purpose of calling the mayor and his decisions to account, but the more powers that are given to the mayoral function the more important that calling to account becomes.

The Minister has listed the significant powers that the mayor of Manchester is to have. They include policing, fire, strategic planning, transport and housing, and waste disposal is now added to that list. The only way in which the constituent members of the combined authority can call the mayor to account on the decisions and choices that he makes is via either the council leaders or a small scrutiny committee. I for one think that is inadequate, and I envisage a point further down the line when the mayor will make a controversial decision and local residents will ask themselves, “How did this happen? Who made the decision and why were we not involved?”.

That is the danger, which I would urge the Minister to consider and rectify at some point in the future, particularly as money is now involved. This has already been pointed out, but I will quote from Part 5 of the order, which relates to funding. It states that,

“the constituent councils must meet the costs of the expenditure reasonably”—

whatever that means—

“incurred by the Mayor in, or in connection with, the exercise of the functions specified”.

That, it goes on to describe, is regardless of whether the constituent councils agree, because there only has to be a majority decision among the leaders of those councils, which means of course that local taxpayers in one of the constituent councils could be asked to contribute to a scheme with which their leader does not agree. I find that quite disturbing. There ought to be a mechanism for reaching difficult decisions that enables all local councils to agree to them. That in my view means the kind of set-up that we have in London with the London Assembly.

Obviously there is much in the order about devolution that I agree with and that is right, because we will have a body with a strategic vision for the conurbation of Manchester. What is not acceptable in my view is the lack of democracy that attaches to that, and the dangers of investing all those powers in one person. I hope that the Minister will be able to respond to these concerns.

Wales Bill

Lord Deben Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Tuesday 15th November 2016 Lords Chamber

[Lord Deben (Con)]

As the longest serving Fisheries Minister—the longest serving in history, I think—and with my Welsh connections, I warn the Minister that it would be a good idea to do as is suggested by the amendment but also to be extremely careful. The fisheries issue is going to be one of the most difficult that we face, because the fishing industry has been misled into believing that if you remove yourself from the common fisheries policy you are somehow perfectly free to do what you like. In fact, almost every fishery that we have is a common fishery with one other European nation, if not more. We are therefore going to have to deal with these things on a common fisheries policy basis anyway. It is thus crucial that our structure internally provides no possibility of any misunderstanding. I rather like this amendment because it removes what would otherwise be a misunderstanding.

I hope that the Minister will understand and perhaps mention to his fellow Ministers that this is a long and hard row to hoe, if you can hoe rows in the sea. We will have to learn that we still have to live with each other even outside the European Union. Whatever you think about the policy, it is going to have to be common because there will be no other way of doing it. Therefore, getting it right internally will be crucial if we are to get it right externally, assuming that we continue with this disastrous policy.

[Lord Crickhowell (Con)]

My Lords, I plead total ignorance of the licensing regime. Are we satisfied that whoever is in charge of it, the fishing boats are actually going to be Welsh? I ask only because I seem to recall that long ago, when I was the Member of Parliament for Pembroke, Spanish fishing boats registered in the port of Milford Haven and somehow avoided the licensing regime. The licensing regime may now have dealt with that effectively but I should like confirmation that that is so.

Wales Bill

Lord Deben Excerpts

Committee: 1st sitting (Hansard) : House of Lords
Monday 31st October 2016 Lords Chamber

[Lord Carlile of Berriew]

I am delighted to hear that. My noble friend’s sense of justice certainly does not in any way imitate that of Lord Jeffreys of the Bloody Assizes.

However, what I am suggesting is that the presidency of a Wales division of the High Court would have real attractions within Wales.

I would also like—I know that the noble and learned Lord, Lord Judge, would associate himself with this—to praise the actions of the current Lord Chief Justice, the noble and learned Lord, Lord Thomas of Cwmgiedd, who was born in south Wales and has frequently reminded us of that fact. Indeed, the noble and learned Lord, Lord Thomas, has evolved what was introduced by the noble and learned Lord, Lord Judge, and given further credibility to the respect that is given to Wales as a jurisdiction where relevant and appropriate.

One group who have hardly been mentioned in this debate is the poor old litigants who go to law in Wales. I had the great privilege of representing Montgomeryshire as its Member of Parliament for 14 years. It sits on a long stretch of the Welsh border. It is quite common for a customer to walk into an estate agent in, say, Llanfyllin, and negotiate the purchase of a property in another branch of that estate agency in Shrewsbury. It is very common—I may have done it myself—to go and look at a new car in Welshpool, but negotiate the price of that new car with somebody in Shrewsbury or some other English town. It is important for Wales that we develop as strong a financial services industry and venture capital industry in Wales as possible, but we need those English and foreign investors who want to take part in such transactions to have the confidence that they work in a predictable legal environment.

This is my final example, although I could give dozens. We need to be sure that those who face a trading standards dispute that arises with a company that operates both in Wales and in England are not faced by someone like myself scratching their expensive head in chambers and saying, “Oh, we’ve got a private international law issue here; a conflicts of law issue on which I will have to write you an extremely learned opinion”—at whatever my hourly rate for the time being happens to be. I do not think that we should inflict those disputes and problems on litigants. Inevitably, that is what would happen after time.

There are many common law jurisdictions around the world and they of course pay enormous respect to the decisions of what was formerly the House of Lords and is now the Supreme Court, and pay lower levels of respect to senior courts as you go down the hierarchy of courts. But inevitably there would be judgments in a separate Welsh jurisdiction that would be inconsistent with judgments in the English jurisdiction or any other common law jurisdiction such as the Scottish jurisdiction—which, as the noble and learned Lord, Lord Hope, knows, has a different origin—or for that matter the jurisdiction in Northern Ireland.

While I would not wish to leave things necessarily as they are and I welcome the proposal made by my noble friend of a detailed and one-off review, creating a completely separate set of law for Wales would be to turn the clock backwards rather than forwards and would have damaging effects on potential litigants in Wales and on the economy of Wales

[Lord Deben (Con)]

My Lords, we are present at one of the most unusual occasions that I can remember. This is an occasion on which lawyers almost universally want to have a less complicated system in which they are less able to find reasons for charging people more money for doing more work. As the House knows, I have a particular penchant for intervening in debates that are largely among lawyers because it is important that they should not be allowed to have unique control over the way in which the law is worked. It therefore pains me to say that I am entirely on the side of the well-argued case put by the noble Lord, Lord Thomas of Gresford. He has explained exactly why there was no need to go down this route.

However, there is one thing that I hope my noble friend will help me with. I do not understand why the Government have set up a working party at this point which it appears will not report in a way that can help this House and which appears to be dilatory in the invitations it has issued. My concern reflects a point raised by my noble friend Lord Crickhowell: this House deserves better. I would like to know what the working party concludes. It would be easier for us to make proper decisions were the working party to give us its information before we make them. The reason I have risen to speak is not only because of my long-standing interest in Welsh affairs but because this House is very often treated rather poorly by the system. If we are to do the job of careful examination of Bills properly, we should have the information beforehand and not be told that there is a working party which will report afterwards. By then we will have missed the opportunity of being informed and doing our job properly.

I hope that my noble friend will not take it amiss, but this is a case which I have had to raise constantly in this House because it has become something of a habit not just of this Government but of previous Governments—to suggest that because they are having discussions, it does not count that we cannot have discussions as a result of their discussions. Discussions between civil servants, however noble, are not the same as discussions between parliamentarians, so we ought to have the information before we finalise our views.

Electricity Supplier Payments (Amendment) Regulations 2016

Lord Deben Excerpts

Wednesday 2nd March 2016 Grand Committee

[Lord Grantchester (Lab)]

I thank the Minister for his introduction to the regulations. As he rightly says, they are mostly technical in nature and do not impact on policy to any large degree. The ESO regulations around the CFD counterparty to raise funds are largely operational and, quite understandably, are likely to be subject to amendment through operational experience in order to improve efficiency and increase transparency with a view to reducing the costs of the scheme for suppliers and their consumers.

All the amendments included in the regulations appear sensible and come with a very large acceptance on the part of stakeholders, both through consultation responses and through discussions at a stakeholder event in October last year. The main amendments are largely financial and will lead to changes between the balance of funding moving more towards the interim levy and away from the reserve payments. Notice periods for changing the interim levy rate will become more flexible, deadlines will become more helpful, and generally information, data and recognition of commercial sensitivities will improve the scheme’s operations. Within the structure of the scheme, that is commendable.

However, seeing the details of its workings, the CFD counterparty mechanism struck me as somewhat cumbersome. While I am sure that there are unlikely to be major changes to the structure, nevertheless the Minister might enlighten the Committee about why the scheme is set up with quarterly contributions to reserve funds and a yearly operational costs levy for the capacity market settlement body.

I understand the reasoning behind setting up the CFD counterparty in relation to Treasury implications and as the mechanism through which CFDs will be administered and paid, but I understand that suppliers strongly urged the Government to allow the CFD counterparty to operate a working capital model for funding cash flow and building reserves as a more commercial way to operate. Surplus levies could then be rolled into subsequent levy periods to smooth out volatility of payment. Can the Minister confirm whether reserves and operational cash flow costs are to be reconciled to suppliers every year and balanced?

In the reconsiderations of the scheme, did the Minister’s department put any thought into whether working capital arrangements at a marginal cost to public borrowing requirements could be less cumbersome and less costly to operate? In trying to widen and increase the pool of supply participants, are the Government confident that the costs on small independent suppliers are not constraining their participation? I am sure that the Minister will confirm that the CFD counterparty body will be audited, but are there other operational cost checks on the operation of the body?

Perhaps I may widen my remarks beyond the supplier obligation to CFDs in general for a moment. I take the opportunity today to ask the Minister whether the Government will set any technology requirements or specific exclusions for participants in the next auction. I am thinking here of onshore wind and solar technologies. Can the Minister confirm that they will still be allowed to participate so that these technologies can develop and generators will have a continuing route to market for returns on their investments? With the challenge of climate change and the changes required of the UK energy market, we wish to be technology neutral.

[Lord Deben (Con)]

My Lords, I declare an interest as chairman of the Committee on Climate Change, and I want to comment on these documents.

It is extremely helpful to have had the Minister’s clear explanation. Of course, congratulating a Minister means that you are then going to use the word “but”, and that I intend to do. One problem is that the public find all these matters impenetrable. I recognise that they are technically very complex, but I ask the Minister to seek better ways of explaining the system to a wider range of people. I spend a lot of my time doing that, and I hope that I get it right, but one of our difficulties in trying to convince people of the battle that we face on climate change is that many of the arguments are not easy to understand. Therefore, a constant desire to try to explain what we are doing and how it works in language which normal people can understand is very important. I do not expect, and I am sure that no one here would say, that the statutory instruments here will advance that cause. However, I do not want us to miss the opportunity of saying that what the Minister has so clearly said really needs to be said more widely, because there are many for whom difficulty arises simply because they do not understand.

Feed-in Tariffs (Amendment) (No. 3) Order 2015

Lord Deben Excerpts

Tuesday 2nd February 2016 Lords Chamber

[Viscount Ridley (Con)]

My Lords, like the noble Lord, Lord Teverson, I was not here at the start of the debate, but I hope the House will indulge me if I add a few short remarks. The noble Lord, Lord Grantchester, said that the policy of feed-in tariffs has been highly successful. What do we mean by that? It has been highly successful in taking money off people and giving it to other people. As my noble friend Lord Cavendish said, something in the order of £1 billion a year is now going through this programme. It is going, on the whole, from the poor to the rich because electricity bills are a bigger part of poor people’s bills than they are of rich people’s bills, and most of the people who can afford to put up the upfront costs of drawing down feed-in tariffs are on the whole rich people.

That is not the measure of success surely by which we should judge this policy. The noble Lord, Lord Teverson, just said that it should be judged by its impact on the climate. So how much has it reduced carbon dioxide emissions? How much bang for that enormous billion pound buck are we getting? The answer is: a trivial effect. We know that solar power, which is the bulk of the feed-in tariffs, produced 1% of our electricity last year. Therefore, the emissions reduction cannot be more than 1%. It is probably a lot less because of back-up and other issues. We know roughly where it is and we can therefore make a rough calculation as to the costs per tonne of carbon we are buying these omissions at.

The figure for those who were lucky enough to get Ed Miliband’s first tranche of feed-in tariffs is close to £1,000 a tonne. Not even the noble Lord, Lord Stern, thinks the social cost of carbon is anything like that. He says that it is about $29 per tonne. More recent estimates, because of cuts in the feed-in tariff, show that that number has now come down to something like £200 a tonne, but it is still 10 times higher than the social cost of carbon. We do not have a successful policy. We are doing it on the backs of relatively poor people. It surprises me that the two parties opposite should in this case be taking the side of the Sheriff of Nottingham rather than Robin Hood.

[Lord Deben (Con)]

My Lords, as chairman of the climate change committee, I declare an interest. I also declare a clear view that my job is to be entirely independent on these issues. Therefore, it is with care that I am going to try to navigate the discussion that we have had so far.

The climate change committee has clearly stated that we have a requirement, if we are to meet our statutory ends, to meet first of all the fourth carbon budget and then the fifth carbon budget which has been presented to the Government. The Government have committed themselves to the fourth carbon budget, and they must legislate on the fifth before the end of June. That is in the Act. No doubt, Ministers will be thinking very carefully about how they will do that because there is no elbow room in the fifth carbon budget. It is as generous as it is possible to be while still meeting the targets that were laid down—reducing our emissions by 80% by 2050—not by the climate change committee but by the Act itself.

In dealing with the Government’s proposals here today, it is not for the climate change committee to argue that the Government should not do this, should do that, or should do the other. It is for the committee to remind the Minister that the Government are committed to delivering reductions in emissions. The mechanism used must indeed be for the Government—that is the democratic balance we have established in the Climate Change Act.

--- Later in debate ---

[Lord Donoughue (Lab)]

My Lords, I will be brief but I have to say that I regret—although I am not surprised—that the Liberal Democrats have brought forward this Motion. I think it is the first time in 31 years in this House that I have publicly supported a Conservative proposal but on this occasion we should acknowledge that the Conservative Secretary of State has at last done something not to halt but to slow what has been going on for some years, which has been rightly described as a massive transfer of wealth from the poor to the rich.

As a member of the Labour Party for 62 years, I have always opposed that kind of approach, and for some time I have been rather surprised that my own party seems not only to connive at it but to have initiated much of it. It is a massive transfer. It is the ordinary working families that pay the higher energy prices that come from green taxes. They pay through their income taxes, supporting subsidies—I have to say that there are people here who seem to be subsidy addicts. It is employers and those giving jobs to working people who suffer from these higher energy prices. The decent working men of Redcar and Port Talbot have suffered from having higher costs, although mainly because of the Chinese moves. I recently met an employer in heavy manufacturing who demonstrated to me how his high energy costs were a major factor in putting his business at risk and where he, too, might have to make working men unemployed.

There is a major issue for me, as a Labour person, about how my party supports such measures to transfer massive wealth from the poor to the rich. There are one or two in this House who make millions from renting wind turbines, having solar panels and so forth. I am sure that they will declare their interests when they speak but that troubles me in particular. The right reverend Prelate said that it is only a little. Well, for many people a little is a lot. I notice that nobody supporting this Motion, other than him, appears even to defend the fact that this imposes such a burden on the working people. It is a small amount but it is part of a process that produces a massive burden on them.

I understand the desires to go for a green environment, where possible. I should point out to the noble Lord, Lord Deben, that while I very much enjoyed his contribution I was reminded that his father was an Anglican vicar. I think that he would have been proud of that speech, which could well have come from many of the pulpits that I have enjoyed. I noted that he claimed to be independent. I totally accept that, as I am independent in my lifelong support for Northampton Town Football Club and the Northampton rugby club, but it is a certain kind of independence. When the noble Lord very impressively and emotionally attacks those who question his position, of whom I am one although I question only part of it, he says that we do not accept climate change and all that goes with it. I have to tell him that I accept climate change; I do not know a single sceptic who does not. For me, climate change is what has always happened, in cycles. It is happening now and we accept that. I accept that the globe is warming and that human activities play a part in it. I do not know where these straw men are who seem to agitate the noble Lord so much. We wish to question—

[Lord Deben]

My Lords—

[Lord Donoughue]

The noble Lord spoke for a long while.

[Lord Deben]

If the noble Lord accepts climate change, why has he opposed every single measure to try to do something about it?

[Lord Donoughue]

It is the old problem: I do not know what evidence the noble Lord bases that on. He does not know what I have supported in the past, so I will not accept that, but we will not delay the House for longer on this. It is about querying arguments in the true Enlightenment tradition and questioning where the burden of the price goes. What we object to, although nobody proposing the Motion seems to have reservations about it, is that the less well-off in this country pay through regressive green taxes—

Paris Climate Change Conference

Lord Deben Excerpts

Tuesday 15th December 2015 Lords Chamber

[Lord Bourne of Aberystwyth]

I thank the noble Baroness very much indeed for her typically generous comments and associate myself with what she said relating to the noble Lord, Lord Stern, and the entire team in DECC. She rightly mentioned Pete Betts. I spoke to him today; he is up and fighting the case, even given the massive involvement that he had. I also mention in that context Ben Lyon, who was also a key negotiator. They and the entire team worked incredibly hard.

The noble Baroness is right that this process at Paris represents a bottom-up approach, rather than the top-down one that we had in Kyoto. I therefore think that it is entirely the right approach. It is not right to say that this is not legally binding. Finance is obviously connected with performance. This is a treaty that we have every reason to believe will be adhered to. As she says, it is important that the United Kingdom steps up to the plate. We have provided strong leadership and we will continue to do so. We in the department are looking at ways to reduce demand on electricity, as we always do: we are looking at the cars issue across government, at what we can do through DCLG and so on.

The noble Baroness mentioned the Committee on Climate Change. My noble friend Lord Deben is in his place. As I understand it, the committee previously wrote to us and indicated that if it needed to reassess in the light of Paris it would do so and come back to us in the new year. I presume that that is still the position. Again, I pay tribute to what he did out in Paris because I know that he was also very strong there in supporting what was happening.

[Lord Deben (Con)]

Would my noble friend accept that the Paris result was remarkable and unprecedented, and that those who would cast doubt upon it are only undermining the way private industries know that they will have to change if they are to meet the world in which they will have to compete? The Climate Change Committee will give advice to the Government on what changes need to be made but, in the mean time, I hope my noble friend will accept that the fifth carbon budget is a crucial part of this continuum and that we need to have legislation on it as rapidly as possible. Does he also accept that he has promised that we will look again at the way we insulate homes and deal with energy efficiency? Will he also make sure that it is part of the policy that no new houses are built which have to be retrofitted very soon because they do not meet the sensible requirements of the Paris commitment?

The Minister ought to be congratulating himself. It is not a love-in to say that Britain has played a very important part in an unprecedented decision. The whole world has said that we know we have to act and those who refuse to know are undermining the future of our children and grandchildren. I say that particularly to those of my colleagues who continually undermine the duty we have.

[Lord Bourne of Aberystwyth]

My Lords, nobody should doubt the commitment of the Prime Minister and the Government to this agreement. The Prime Minister was out there at the start, clearly underlining support and the importance of protecting the small island developing states. He has welcomed this strong agreement. There is no shame attached to this country giving a lead on these issues, as we have on many others over the ages: we should be proud of it. I note what the noble Lord said about the fifth carbon budget. We will be looking at that and responding to it in the first half of 2016, according to the deadline which is set out. There was a commitment to insulation in the manifesto and there are ongoing developments in energy efficiency. The smart meter programme, which is coming on and will be delivered in totality by 2020, will be a strong driver of that policy.

Energy Bill [HL]

Lord Deben Excerpts

Wednesday 14th October 2015 Grand Committee

[Lord Howell of Guildford]

I thank the noble Lord for that. Turning to the amendments, they are very generous and I congratulate my noble friend on bringing them forward, even though they are rather extensive. They are what we used to call in the other place “liquid legislation”; that is, legislation going through Parliament that all the time is massively amended so that it changes from day to day. The amendments are indeed extensive but also very generous. This is a very exciting industry, part of the great low-carbon renewables transformation in the world that most of us want to see. All around the world, costs not only for solar power, which we were discussing earlier in the Chamber, but for all forms of wind power, onshore and offshore, and all sorts of other associated technologies are coming down dramatically. Really amazing technological advances are being achieved.

I listened to the expert legal commentaries of the noble and learned Lord, Lord Wallace, and I am all for speeding up the planning. However, it has to be remembered that what we are doing here is not legislating to stop all onshore wind. That is a vast industry that will continue and contribute to the energy transformation of the entire planet. What we are legislating for is to bring to a halt, with the various adjustments embodied in the amendments, further subsidy that falls upon consumers. This has to be weighed in the balance. We hear horrid stories about the closure of businesses; the Redcar steelworks is perhaps the most dramatic recent one. When you look at the small print, you find that one of the difficulties is that they are facing much cheaper imports from countries that are not carrying such heavy energy costs. We have to put that in the balance and not just ignore the other side of the argument. There are consumers and taxpayers, often poor households and consumers with very low incomes, at the other end of this process, and we cannot ignore their position.

In addition, it has to be remembered that many of the investors behind the projects we are talking about have not just entered into them entirely from the goodness of their hearts or because they want to save the planet. Investors enter into these great projects because they can make a profit, and I have nothing against that; that is excellent. Less excellent, however, is that they sometimes enter into them because the subsidies seem so juicy and attractive and they think that they are going to make exceptionally large profits. So I just say to my noble friend, and I am sure he would agree, that we should bring to an end—with these many concessions and in a very balanced way—this particular growth of additional subsidies. In future, let us make sure that investors in these industries understand, as I believe the wise ones do, that the projects that they want to go for are the ones that are really likely to be extremely profitable, particularly in Scotland, and very competitive with all other forms of energy. They should be careful if they think that they are just going to ride on an indefinite continuation of very large subsidies because Governments and policies change. Wise advisers to wise investors will always warn them that the best projects are those for which the subsidies are a minimal part of the reward, and the profitable and efficient operation of the industry itself, and the rapid adaption of new technology, are the larger part of the profit generated. In every case, we advise that subsidies can end.

[Lord Deben (Con)]

My Lords, in discussing these amendments, it is worthwhile reminding ourselves of the enormous success of the system which the Government and their predecessor put into place. The fact that these prices have fallen significantly is in part—indeed, in very strong part—due to the encouragement that this Government and the previous Government have brought to play. Sometimes, we talk as if all this technological advantage has just happened because people have been clever. Actually, it has not: a market was created. Certainly, the successes of offshore wind have been achieved because people had a proper market, with a proper continuum, and were therefore able to invest.

I declare an interest as chairman of the Committee on Climate Change. Although I have to sit on one side or the other, that makes me entirely independent on these issues. The fact that we can talk about offshore wind being competitive now, in a way that we had never thought of, is entirely the result of the foresight of all three political parties in various assemblies putting this opportunity in place. Let us not just say that the technology has improved so wonderfully that it is now in this new position; it is actually a very good example of the relationship between government and the provision of opportunity by others. Any new technology has to compete in a world where there are enormous advantages for old technologies, because of the investment they had in the past and a whole range of subsidies that happen throughout the world. That is certainly true of the fossil fuel industries.

I point next to the fact that one of the reasons why the cost has risen is that these technologies are actually more efficient than we ever thought they were going to be. When the Committee on Climate Change proposed that it would cost us some £7.6 billion to ensure that we were on track to decarbonise our electricity supply, and therefore on track for meeting our statutory requirement to reduce our emissions by 80% by the year 2050, the then coalition Government accepted that amount. It is actually costing more than that, partly because of the fall in the gas price. The gas price affects this because of course a contract for difference takes place, so when the price of gas falls the additional cost comes back. However, it is also partly because offshore wind is immensely more efficient than we thought it would be. It is putting more energy into the grid, which costs us more because that is the deal we have done. So the background to these amendments is one of success, not failure. We are not having to do this because it has cost us more by being a failure; it is because it has been a success.

The amendments seem to go a very long way towards meeting the one legitimate argument that needs to be faced: the reasonable expectation on the part of business that if it invests, it will get certain advantages from the Government. The Committee on Climate Change is primarily concerned not with means but with ends. We are concerned with delivering the budgets to which the Government and Parliament are committed. Frankly, Governments have every right to make changes if they want to, as long as the changes end up in such a place that we are able to meet the requirements of the carbon budgets laid down by Parliament as a result of the recommendations of the Committee on Climate Change. So I am very leery of being led into a position of saying that this or that mechanism is the right one. However, I have to say that it is very important that business should not get the impression that promises made are broken.

That does not mean to say that if you subsidise people now, you will always be subsidising them. That is not true. Sometimes, when I listen to some of the green organisations, you would have thought that the moment you promise to do something, you are then going to do it for ever, and that somehow you are letting people down if you do not. That is also not so. All I am saying here is that there are two different issues. On the one hand is the right and ability of the Government to alter, extend or restrict the subsidy that they offer in the light of changed circumstances and, on the other, the duty of the Government to ensure that they meet fully the obligations into which they have entered.

--- Later in debate ---

[Lord Deben]

My own view is that there is a significant argument as to whether that was “the promise”; it was the mechanism that was put forward. My concern now is about a perfectly reasonable assumption that the Government, in looking at the circumstances, have decided that the way in which the system works has to be severely altered. In doing that, I am concerned that we do not deal unfairly with companies that have entered into significant costs on the basis of what the law appeared to them to be. Why do I say that? I do not have a position to argue on behalf of the companies but I have a duty to argue on behalf of the future of our policies towards climate change. That means we have to ensure that the British Government are always seen as absolutely dependable. I warn that if we do not get that right, we will find ourselves in the position that some other Governments appear to be in. In general, the Government seem to have done precisely what they ought to in these amendments and I commend the Minister for putting them forward in this way. I speak in support of what he has done here.

However, during the course of the debate and discussions, the Minister will have heard a number of particular examples which sound as if they fall on the wrong side of the lines that have been drawn. My experience from many years as a Minister is that having one occasion which looks pretty unfair causes very considerable angst, not just to those people but much more widely, so that that one occasion begins to undermine the way in which the Government are seen. I want the Minister to look carefully just to make sure that where some of the examples which the noble and learned Lord, Lord Wallace, presented earlier are reasonable, we should find some way through.

Secondly, I do not know how much the Minister has to do with planning permission personally. I declare an interest in the sense that I help people to do planning permission for sustainable development—not anything to do with energy but on other things. Planners can take a very long time and when one is trying to work with them on a joint agreement, all these rules about having to provide an answer in four months can so easily end up as 14 months, and sometimes as 24 months. But you do that because you really want to get an answer which everyone is happy with. I therefore hope the Minister will recognise that if there are circumstances where it appears that another arm of government has made it impossible for people to meet the real and sensible restrictions which he is laying to achieve his ends, he will look particularly carefully at those circumstances. One area where people feel very unhappy is if they feel that one bit of government has made it impossible for them to meet the arrangements which another bit has perfectly properly put forward, so I hope he will look at that.

The third thing I hope the Minister will do is that when he talks about these things he will remind people of the enormous success of the policy, as I mentioned earlier. This policy has achieved a great deal. Britain was hugely at the bottom of the heap in the amount of renewable energy it had. We have done extremely well, which seems something to be very cheered about. I am pleased that my noble friend Lord Howell, as he always does, referred to this great industry. The renewables industry is a great industry and has emerged from circumstances in which it was rather laughed at by many people. It is now a serious industry with serious results and, importantly, providing for the absolute demand that we have to combat climate change—which, as I think almost all of us accept, is the biggest material threat to mankind.

As I have said on earlier occasions, these amendments—although they may not all be right—are important in order to emphasise that the Government have to follow what they have already done with their own amendments. They have to make sure that at no point does it look as though they have let people down, because it is very important for future policies that that does not happen. However, they are also important because they are testament to the fact that this Government have achieved so much, and I think that it is necessary for the wider community to become more interested in ends than in means.

I finish by saying that assessing Governments’ commitments on the basis of whether they happen to accept a particular way of doing something rather than on whether they are achieving the end that you want is a great mistake. We ought always to recognise that it is difficult to be government and it is easy to be opposition; it is easier to be green in opposition than it is in government. The judgment must be: have the Government achieved the end to which they have committed themselves? At the moment, the jury is out because we do not know the alternative ways of proceeding. However, it is perfectly reasonable for a Government to decide that it is no longer sensible to subsidise in one way rather than another or to subsidise in one way rather than have no subsidy. All that matters is that the Government can stand with their head held high and say, “We have met our obligations”. There are some examples here which I think it would be a mistake not to look at very carefully; otherwise, all the good intentions of these amendments might be much undermined.

[Baroness Worthington (Lab)]

My Lords, I am grateful to the Minister for introducing this session of the Committee. I should start by declaring an additional future relevant interest. I am in negotiations about taking up a position with an American charity that will be working on climate change and energy. I have not signed anything yet, but I think that it is material and that therefore I should declare a potential future interest.

I am grateful for all the contributions to this debate and, again, to the Minister for his introduction to these clauses. I am particularly grateful to the noble and learned Lord, Lord Wallace, for—as has been said before—his forensic description and critique of the amendments as we see them today. I say at the outset that we are, as I am sure are the Government, committed fully to decarbonising the UK energy system at least cost in a way that ensures that we maintain security of supply and, one hopes, engenders an industrial revolution that we can be proud of and export to the rest of the world. Within that, people will know that I have no particular love of any particular technology. I take a very broad view towards the groups of technologies that should be considered as we go forward in this endeavour.

In that spirit, I want to ask the Minister some specific questions relating to the amendments but also to a wider context. I am sure he appreciates that we are dealing with a somewhat febrile environment. There is now sufficient investor disquiet that people are watching very carefully for signals from the Government that this is not about the wholesale disruption of the renewables industry, and we must do everything that we can to reassure the industry that that is not the case.

I shall start with the more specific questions relating to the amendments. As was raised earlier, there are some anomalies. They may arise from the fact that it feels, in the words of the noble Lord, Lord Howell, as if we are in a liquid legislation situation, where we seem to be getting rather large chunks of detailed and complex legislation with relatively little time to assess it. I am therefore genuinely looking forward to the Minister’s responses because some of these anomalies seem to be substantial and we need a response.

The Government made this announcement on 18 June, in the first few weeks of government after the election, and then set about consulting. That is not normally the way around that we would expect a Government to behave, but there we are. We are where we are. Then, in the Minister’s own words, they consulted industry and hundreds of stakeholders. To my knowledge, however, although maybe I have missed it, we have not seen the synthesis of the results of that consultation. In normal proceedings, the Government would conduct a consultation and get the results back, and we would all be able to look at what everyone had said. As far as I am aware, we have not had that. That puts us at a great disadvantage. There is distinct informational asymmetry since the Government have been involved in all these conversations but Members of Parliament from other parties have not had that luxury. We have therefore found ourselves, in the past few days since these rather detailed amendments came forward, having to consult a large number of people to absorb their concerns, even though we have very little to go on in terms of being able to place them in context. Noble Lords will have noticed that we have not tabled any amendments to the amendments. This is because until this morning we have been receiving people’s feedback on these complex issues.

As the Minister said, this is a complex issue. Had the draftspeople who were writing the manifesto in April and May before the election realised quite the implication of those few words in the manifesto, would we have seen them appear? Regrettably, they have led to this huge amount of complexity and disquiet and a feeling among some investors that they have not been handled with due respect. They have seen what they thought were very sensible investment decisions being completely undermined by what to them was a very sudden and surprising announcement with very little signalling that it would take place.

The government amendments are intended to clarify, but unfortunately they just raise more anomalies. This has been raised already, but it might just be worth reiterating a couple of points. We have a situation now where the grace periods will apply to projects that have had a negative decision in planning overturned at appeal. That seems to fly in the face of Clause 65, which says that local people should have the final say. Here we have a situation where a project that clearly was not very popular has been appealed and is now going forward. Such projects will continue to be eligible. However, where we have the reverse—an approval by local planning but no written documents, so we have gone through the democratic process and had approval but have not yet received the written information—the guillotine comes down and you cannot go forward. That seems to be a very odd situation. Similarly, you may have got your approval, but if you have asked for a variation and are waiting for clarity on it, that too falls foul of this artificial 18 June deadline. I would like the Minister to respond to those concerns and explain why the guillotine is being interpreted in this way, which seems to conflict with the overall desire of the Government to keep local government and local decision-making at the heart of this.

Then we move on to the issue of whether investment has been frozen out by the uncertainty created by bringing forward this clause. Again, as a general point, this could have been so different had we not embarked on this endeavour, but there we are. We are where we are. I am repeating some of the technical questions that have already been asked so eloquently by the noble and learned Lord, Lord Wallace. We question why only lenders who have investor-grade credit ratings qualify. That seems quite restrictive and could freeze out very good potential creditworthy lenders who happen not to meet that particular criterion.

We would like to know exactly how the investment freezing will be interpreted. Do you have to prove that you have been frozen out for the entire time of the legislation from the start to Royal Assent, or just a part of that? How much of the delay counts and what does not count?

My final point has already been raised. Once you have proof that you have been frozen out, you have to show this by a certain date—I think it is March 31 2016. How long will it take before you get a reply? You have to have already built your project by December 2017. There is nothing in here to say that there must be a time limit by which any final decision is made. It could drag on. It has been said before that some of these things drag on for reasons outside government control. We need more clarity on how that will work practically. I know that it seems slightly odd to be arguing over and/or, but it is material about whether we are talking about a grace period for grid and radar delays or whether it is just grid as one category and radar as another. We need clarity on that.