Energy Bill [HL]

Lord Foster of Bath Excerpts

Committee stage
Monday 19th December 2022 Grand Committee

[Baroness Young of Old Scone (Lab)]

My Lords, I rise to support Amendment 192 in the name of the noble Baroness, Lady Hayman, which has been so ably introduced by the noble Lord, Lord Ravensdale. The crux of it is that it calls for joined-up policies around energy demand management, low-carbon heat and energy efficiency by requiring a national energy demand reduction strategy.

I have the privilege of sitting on your Lordships’ Environment and Climate Change Select Committee, and our current inquiry, as noble Lords have already heard, is into the boiler upgrade scheme. Indeed, we had an interesting session with the Minister last week. We have been hearing evidence from the UK and internationally, particularly those countries which are further ahead on air and ground-source heat pump adoption than we are. Both national and international witnesses have confirmed the importance of the key elements of this amendment.

The first is joining up policies by having multiple instruments clustered together and working to maximise uptake of grants and loans. Regulatory bars on old technology should be signalled in advance, but not too far in advance. There should be public information campaigns and effective campaigning for the positive promotion of energy demand reduction.

The second feature that comes clearly in this amendment is that low-carbon heat is not enough. Our housing stock is among the worst in western Europe. Low-carbon heat needs to be linked much more closely than it currently is with effective energy efficiency programmes, and both need interlinked targets so that progress can be co-ordinated and measured. The whole issue of rising energy prices has brought this into sharp focus. We expect to see nearly 11 million households in fuel poverty this winter. Many of those households live in houses that typify the UK as having the worst-insulated housing stock in western Europe.

There needs to be huge progress in energy efficiency as part of the mix but I caution an overreliance on EPCs as a means of judging that, because they are very imprecise instruments. In fact, they can have some peculiar outcomes: if you have an air source heat pump installed in your building you will not necessarily get a higher rated EPC as a result. We have to be sure that we are not inadvertently placing a trap for ourselves for buildings, particularly old and heritage buildings, that will never reach EPC band C.

The third element of the integrated strategy the amendment calls for is the issue of skills in installing and maintaining low-carbon technologies, and in installing energy-efficiency measures. Energy-efficiency skills are much more timeworn and easier. Skills for installing low-carbon technologies are more complex and we are only at the beginning of the road. NESTA has estimated that there were around 3,000 heat pump engineers as of July. It projects that we will need around 27,000 heat pump engineers if the Government are to meet that target of 600,000 installations a year by 2028. There has to be a really big investment in skills programmes. I had a figure that I have now lost, but the German Government have put about €28 million towards skills improvement. We need to be in that ballpark.

The fourth thing is public engagement. I commend the Government for, at long last, having lurched into action with their “It All Adds Up” campaign, but that is rather late in the day and very much short term in the face of price rises. It needs to be sustained and not overly to rely on social media and the public being left to seek out digital sources. I am glad that it will contain a couple of TV ads, but you do not get much television advertising for an £18 million budget these days.

The national energy demand reduction strategy that the amendment proposes would be well worth while in bringing these issues together in a co-ordinated way.

[Lord Foster of Bath (LD)]

My Lords, I will speak to Amendments 197, 198A, 198B and 212. While I acknowledge that there are some differences between the targets referred to in Amendment 192 and my own, I nevertheless support the principles behind the amendment from the noble Baroness, Lady Hayman, which was so ably introduced. The main purport of my amendments, and part of her Amendment 192, relates to energy efficiency and the important, urgent need to improve that in some 19 million homes across the UK. which are currently classed as energy inefficient—those rated below EPC band C. I say in passing to the noble Baroness, Lady Young, that I entirely agree that we urgently need to address the way we take the measurements that we currently use in our very out-of-date EPC system.

I have raised the issue of energy efficiency on numerous occasions in your Lordship’s House and have arguing for a crash programme of energy efficiency to reduce fuel consumption and fuel bills for years to come. Yet, sadly, even in the past year, work on home energy efficiency has plunged by 50% and is now at its lowest level since 2018. A decade ago, 2.3 million homes had energy-efficiency measures being installed; now it is nothing like that.

--- Later in debate ---

[Lord Foster of Bath (LD)]

Before the Minister sits down, could he clarify whether the Government believe that the 2017 Clean Growth Strategy, which talks about achieving EPC band C by 2035 for all homes where this is feasible, affordable and cost-effective, is a target or now just an aspiration? Could he be clear on the language? He used “aspiration” a minute ago. In the documentation, and in every letter he has written to me and in every answer, it has been described as a “target”. I just want to be clear.

[Lord Callanan (Con)]

I think we are getting into semantics here. I am not sure there is a huge difference between them. My point is that it is not helpful to embed it in primary legislation. It is a target; it is an aspiration; it is something we are working towards that we want to try to deliver, but it is a complicated area with a lot of difficult policy choices and potentially a huge amount of expenditure.

[Lord Foster of Bath (LD)]

In the light of that, if “aspiration” and “target” are the same and the Minister is not therefore resiling from the 2017 document, could he tell me why the noble Lord, Lord Greenhalgh, and, more recently, the Secretary of State for Environment, Food and Rural Affairs have argued that there is merit in putting environmental targets into legislation? I do not understand where the problem comes. The Minister says the Government need flexibility in the way this is delivered. I do not disagree with that. I am sure that new technology will come along that will perhaps help to do this more efficiently, effectively and quickly. I hope that is the case, but the way in which a target is achieved is totally different from having that target. The industry has been absolutely clear that it is very keen to see a statutory target to give it the confidence it needs.

[Lord Callanan (Con)]

I disagree with the noble Lord. I have had many discussions with businesses and companies in this area, and we are providing the policy certainty they need. It is clear what direction the country is going in. We have listened to a lot of the feedback, have set out longer delivery programmes for the various schemes that we fund directly and are giving the certainty that people need. It does not make any difference to the industry, in terms of the policy landscape, to enshrine a target in primary legislation as opposed to it being an aspiration, a target or whatever other language the noble Lord prefers.

Energy Prices Bill

Lord Foster of Bath Excerpts

Committee stage
Monday 24th October 2022 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am very sorry, but the Companion is quite clear: if you were not here at the start of the debate, you are unable to speak.

[Lord Foster of Bath (LD)]

My Lords, I am sad that we cannot hear the words of the noble Baroness, and I very much support her amendment, because she, like me, believes that this Government are not doing anything like enough to reduce energy consumption, the amount of energy expended nor making the most efficient use of the sources of energy available to us.

Other countries are doing far more than we are. Germany, for instance, is rushing to try to reduce its energy consumption by 20% in a very short space of time; we are doing very little about that. On energy efficiency, it was only 11 days ago that the European Union countries got together to celebrate Energy Efficiency Day, and Mr Frans Timmermans, the Commission vice-president responsible for the Green Deal, stated the bleeding obvious, because he said:

“saving energy, not using energy, is the cheapest energy”.

I agree with him, given that it is perfectly possible, given the Long Title of the Bill, as my noble friend on the Front Bench pointed out, to have done far more on these issues.

In truth, from this Government, we have had scheme after scheme which has floundered and left the industry in total disarray. As a result, since I was a Minister with some responsibility for this, the amount of energy efficiency work in this country has declined by a staggering 90%. It has gone down by 50% in the past 12 months alone. What we get from the Government is a lot of fine words—the Minister trots them out from time to time—from various government documents. The trouble is that if you follow through on what is said, you discover that there is not much action to back it up.

As an example, the Clean Growth Strategy, a document produced by this Government in October 2017, stated very clearly that:

“The Government will look at a long-term trajectory for energy performance standards across the private rented sector, with the aim of as many private rented homes as possible being upgraded to EPC Band C by 2030, where practical, cost effective and affordable. We will consider options with a view to consulting in 2018”.


The consultation took place, and was in fact extended because of Covid to 8 January 2021. That was 21 months ago, yet we have still not had any evidence of a response from the Government. When are we going to get the results of the consultation and the action promised by the Government around privately rented homes?

The situation is made even worse when you look at socially rented homes, in which the vast majority of those who are less well off are living. Five years ago, that same document said that the Government were going to

“look at how social housing can meet similar standards on the same timetable.”

I understand that consultation is needed before you can go ahead, but one would have thought that by now the consultation would have started. Yet in a letter to me and many other noble Lords in the last few days, the noble Baroness, Lady Scott of Bybrook, wrote:

“The Government has now committed to consulting on introducing standards in the social rented sector. This will happen within six months of the Social Housing (Regulation) Bill gaining consent”.


The consultation has not even started for something promised five years ago.

We have a lot of fine words from the Government, but in many areas the action does not take place. This is why it is so important that we have Amendment 8 on the statute book, at least in the very minimal way that requires the Government to give us a report on what is happening and what the benefits really are.

In relation to that, I acknowledge that the Minister pointed out at Second Reading that the Government have introduced one new scheme relating to energy efficiency, called ECO+. It will somehow run alongside ECO4, which was preceded by ECO1, 2 and 3. However, we do not know how that will work. It would be helpful to have a little more detail about how the two schemes will work together.

I have a specific question to ask the Minister about this new wonder-scheme. We know from all the evidence that the previous ECO schemes have been raising improvements to people’s homes. The Government claim that those schemes have led to improvements saving people up to £1,000 a year. Looking at the ECO+ documentation, my understanding is that the scheme is in fact expected to lead to a saving for consumers of about only £200 a year. The difference between the savings of the early ECO schemes and what appears to be that of the new scheme is huge. I hope that the Minister can explain to me why that is the case.

I have a couple of amendments down, which I will speak to very briefly. Amendment 10 is based on something from the Government’s own document. On page 12 of this year’s British Energy Security Strategy—which, incidentally, they described as ambitious—it says:

“We will cut the cost for consumers who want to make improvements”


to energy efficiency by

“zero-rating VAT for the next five years on the installation of energy saving materials”.

Some of that was introduced by the then Chancellor—I cannot remember how many Chancellors ago that was—back in the Spring Statement. I welcomed this at the time, but I genuinely do not believe it went anywhere near far enough. A large number of energy-saving materials were not included in the list.

At Second Reading, I raised one such example: retrofitting a battery to an existing solar heating scheme. Introducing a battery makes a system infinitely more efficient, which is a benefit to the homeowner and a benefit to the nation as a whole because more energy can be put back into the national grid, not least at times of high demand. At that time, I proposed that VAT on additional, retrofitted batteries should be zero-rated. Batteries needed to be retrofitted because, when many schemes were first introduced, batteries were either too expensive or people did not see the benefits of them.

I then looked at some of the other items that were not in the list. I was staggered to discover that something as simple as double-glazing was not included. The figures are staggering: 86% of homes already have double-glazing but a high proportion—more than a quarter—is old fashioned and nowhere near as efficient as modern double-glazing. The relevant associations which produce the figures are firmly of the view that, if all windows could be brought up to current standards, a staggering £14.5 billion could be saved.

I am not asking the Government to pay for all the double-glazing to be done. However, we know from all the research evidence that reducing VAT would significantly help many people take on the additional burden of uprating their windows to modern double-glazing standards. Evidence has shown the impact of the reduction in VAT in other areas. I am convinced that reducing VAT on double-glazing and on some of the other items mentioned in Amendment 10 would be of enormous benefit.

Finally, I turn to Amendment 11 in my name. I draw the Minister’s attention to my earlier speeches. He has heard me speak on this subject in one form or another on numerous occasions, so I will not repeat it all. Suffice to say that all the evidence shows that this Government claim to believe that putting targets into legislation is beneficial for driving forward investment. I have 60 quotes from current and former Ministers and from government departmental documents that back up the claim that targets put into legislation ensure that action happens.

Amendment 11 is simple. It seeks to put into legislation the targets that the Government have already set for improving the energy efficiency of our homes. It would bring fuel-poor homes up to EPC level C by 2030 and all the rest of the housing stock by 2035. In this country, unlike, for instance, in the countries of our neighbouring friends in the European Union, we have far less efficient homes—15 million homes are below the appropriate energy efficiency targets set by the Government.

The industry has made it very clear that if it is now to invest in the research, training and equipment needed to start doing more work in this field, it needs to have the confidence of targets placed into legislation. The Government have refused this on numerous occasions so far, and not once have I heard a good reason from any Minister. I am optimistic that, on this occasion, I might get a decent reply. I look forward to hearing it.

Energy Prices Bill

Lord Foster of Bath Excerpts

2nd reading
Wednesday 19th October 2022 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, on these Benches we too support the broad thrust of the Bill, but like the noble Lord, Lord Lennie, we wonder what it might look like by the time it gets to us in Committee just next Monday. We also share the concern of the Delegated Powers and Regulatory Reform Committee about the unfettered powers being given to the Secretary of State without any time constraint—powers that enable the Secretary of State to make large changes to the sector without consultation or the right to appeal. As others will no doubt point out, we are concerned that the measures in the Bill treat renewables such as wind and solar less favourably than oil and gas. However, I will concentrate on two issues not covered in the Bill which I believe should be.

The Long Title of the Bill is:

“A Bill to Make provision for controlling energy prices; to encourage the efficient use and supply of energy; and for other purposes connected to the energy crisis.”


So, in addition to pricing and supply, the Bill is also meant to be about the efficient use of energy, yet it is hardly mentioned. Unlike those in many other countries, it seems our Government have no strategic interest in encouraging anyone in the UK to save energy. The International Energy Agency describes energy efficiency in priority terms as the “first fuel”. It reckons that at least half of the improvements needed to deliver net zero by 2050 will come from greater energy efficiency. However, in the UK, far too many people cannot use energy efficiently: their homes leak heat because they are poorly insulated. Around 15 million homes are below energy performance certificate band C. In other words, 15 million homes are inadequately insulated, so they cost more to heat—on average, almost £800 a year. Yet in the absence of a clear national programme, home insulation work has plunged by 50% over the past year, leading Doug Parr of Greenpeace to say:

“It’s frankly astonishing that this dip in insulation rates comes at exactly the time we should be ramping up this proven, long-term solution to the cost of living crisis.”


Even the Conservative-inclined Sun newspaper said in August:

“Householders faced with astronomical heating costs need lagging for their homes, not a government lagging behind.”


So, measures to improve energy efficiency should be a top priority for the Government, with a clear strategy and evidence of real commitment.

As the Minister knows, I have spoken many times about the need to establish the Government’s own energy efficiency targets in law. I have argued that it is the retrofit industry that will deliver the Government’s energy efficiency targets, but the industry has lost confidence after being let down by numerous failed schemes. The industry has shrunk, and the amount of energy efficiency work has fallen dramatically. The industry itself argues that to persuade it now to invest in research, training and equipment, it needs the confidence that putting targets into legislation would give. Conservative Ministers, including the current Chancellor, have claimed numerous times to believe in doing just that—enshrining targets into law. A Defra document states:

“A legally binding long-term target gives a clear signal to industry of the direction of future government policy. This may increase investor confidence and encourage industry to invest in infrastructure and research that will drive innovation”.


The Government have two main targets: for all fuel-poor homes to be EPC band C by 2030; and for all remaining homes to be EPC band C by 2035. However, to date, the Government have refused to put those targets into law to make them legally binding as the industry has requested. I have received no credible explanation for this failure, so I will table an amendment to the Bill in Committee. Last night, your Lordships agreed an amendment to the Social Housing (Regulation) Bill which did at least put an energy efficiency target for social housing into legislation. I hope noble Lords will agree that all the Government’s energy efficiency targets should follow suit. I hope the Minister will explain in detail the Government’s plans in relation to energy efficiency and why it is absent from the Bill.

I now turn to another issue I recently raised which I believe should form part of the strategy to improve the supply of energy: the role that solar energy can play. Residential solar systems are already very popular, reducing bills and often being able to supply excess energy back to the grid at times when it is under pressure. I recently installed solar panels on my own home, adding to the 1.2 million homes that have done the same. Together, these domestic solar PV systems have the same generation capacity as the forthcoming nuclear plant at Hinkley Point. We should be encouraging more households to do the same and helping those with existing systems to get them working more efficiently.

In the March Spring Statement, it was announced that certain energy-saving materials would be eligible for a 0% rate of VAT on both labour and parts, and I welcome that. Solar panels and batteries, which store energy from solar panels for later use, are covered if fitted at the same time, but any battery added separately at a later date is not covered. Retrofit batteries will continue to be subject to VAT at 20%. Modern solar systems usually include a battery, but many systems installed just a few years ago do not. With more efficient and cheaper batteries now available, it makes sense for those with older systems to add a battery. The solar energy their panels generate can be used far more efficiently to the benefit of the home owner and the country overall. However, the 20% VAT rate is likely to deter many. I believe that retrospectively added batteries should also benefit from zero VAT and will bring an amendment to that effect in Committee.

Indeed, there are many other energy-saving items such as double glazing and draught excluders which are not covered by the zero VAT rate. Their take-up would increase were they to be included, which would again be to the benefit of the home owner and the country. I hope the Minister can share his view on this proposal.

[Lord Framlingham (Con)]

I am listening to the noble Lord’s speech with great interest. I understand that there are thousands and thousands of acres of factory roofs in this country. Would it not be a very good idea for them all to be encouraged to have solar panels?

[Lord Foster of Bath (LD)]

Indeed. The noble Lord is absolutely right. I was going to come on to that point. The UK Warehousing Association says that if we could get solar panels on all its warehouses, we would get 15 gigawatts of energy. The difficulty—perhaps the Minister can comment on this—is that there is difficulty in many cases with connecting to the grid. We need to find ways to help them achieve that for the benefit that the Minister just mentioned. I hope we can hear the Minister’s views on these issues, without him just shrugging them off as he has in the past, saying that this is a matter for the Chancellor.

Just like warehouses, other forms of non-domestic solar are vital; solar farms provide one such example. But we hear from media reports—the Minister can perhaps confirm whether this is true—that the Environment Secretary wishes to prevent new ones being built on the apparent basis that they are a threat to food security. Yet solar farms are a major UK success story that does not require subsidy. The chief executive of the trade association Solar Energy UK told the Financial Times last week that there is more than £20 billion of private capital in the project pipeline—investment, as well as the jobs and extra finance to support farmers it would bring, that would be lost under the Environment Secretary’s apparent plans. Yet there is no serious evidence to suggest that solar farms present a threat to food security. In fact, the opposite is true. Land around and under solar farms can and does support the UK’s nature recovery and biodiversity targets with wildflower meadows, ponds and wetlands. Solar farms drive investment, create jobs and generate clean electricity. I hope we will hear from the Minister that what we hear about the Environment Secretary’s views is incorrect.

As I said at the beginning, we support the main provisions of the Bill, but believe it is a missed opportunity to, for example, set out a clear strategic plan for addressing energy efficiency and expand and make better use of solar energy.

--- Later in debate ---

[Lord Callanan (Con)]

There are separate provisions allowing generators to invest in clean power. The aforementioned contracts for difference scheme is doing exactly that, providing the incentive for them to invest in clean power. We have increased the number of CfD rounds that we have launched. As the noble Lord, Lord Teverson, said, this has proved to be an immensely successful scheme. I pay tribute to the officials who designed it. It has been so successful that most of the rest of Europe is proposing to adopt a very similar scheme for their own wind generation. It is precisely because that mechanism exists and provides guaranteed revenue for their investments that those incentives that the noble Baroness refers to already exist.

The right reverend Prelate the Bishop of Manchester, the noble Baroness, Lady Young, and the noble Lord, Lord Grantchester, all raised important points regarding the default tariff cap. The energy price guarantee will now determine the prices that households pay for their energy. However, we are retaining the price cap to help deliver this energy price guarantee. Clause 20 will ensure that Ofgem continues to calculate the cap level to determine what it costs an efficient energy supplier to provide a household with gas and/or electricity. Of course, this will not determine the prices that householders pay, but it will enable the Government to identify what level of support is needed to deliver the prices in this energy price guarantee. The price cap is a mechanism that has been proven to prevent excessive charging and to reflect the real costs of supplying energy. Retaining it will ensure that suppliers price in line with the energy price guarantee and that public funds are used efficiently.

The noble Lord, Lord Foster, gave his view that the Bill treats renewables less favourably than oil and gas. No energy firms, however they produce, should be profiting unduly from Russia’s war in Ukraine, whether they generate low-carbon or fossil-fuel energy. Current price levels in electricity markets are far higher than any energy firm could possibly have envisaged or forecast, or would have predicted they would need, to continue investing in renewables.

Low-carbon electricity generation from renewables and nuclear will be key to securing more low-cost homegrown energy, which is why we continue to support investments in the sector. I remind noble Lords of the point I have made continuously: the schemes have been extremely successful. We have the highest proportion of offshore wind energy in Europe, by far. We have the second-highest proportion in the world, and we have extremely ambitious plans to continue investing and producing more of it, precisely because the scheme has proven so successful and is delivering much cheaper power. It is our flagship scheme and it has worked a treat, as I said—so successfully that other countries are now adopting it. In 2023, the scheme will move to annual auctions, helping to further accelerate the deployment of clean low-cost generation, which is something that I know all contributors will welcome.

The energy price guarantee and the energy bill relief scheme support millions of householders and businesses with rising energy costs. The Chancellor made clear that they will continue to do so from now until next April. Looking beyond that, I am sure noble Lords would be interested to know that the Prime Minister and Chancellor have agreed that it would be irresponsible for the Government to continue exposing the public finances to unlimited volatility of international gas prices. Therefore, it is the Government’s intention that, after this winter, support is better focused on the most vulnerable households and those least able to pay, with greater incentives to improve energy efficiency.

The noble Lord, Lord Foster, raised issues on the essential importance of encouraging solar energy use in households. I completely agree with the noble Lord. We are committed to solar power, which not only is good for the environment but at the moment represents the cheapest way to generate electricity in the UK, albeit intermittently. The British Energy Security Strategy sets out an expectation of 70 gigawatts installed solar capacity in the UK by 2035. To achieve that and meet this increased ambition, we will need a significant increase in both ground-mounted and rooftop solar in the 2020s and beyond. The noble Lord will be pleased to know that there is a healthy pipeline of ground-mounted projects, currently amounting to around 19 gigawatts across Great Britain, which either are in scoping or have already submitted planning applications.

The noble Baroness, Lady Worthington, asked me yesterday and again today about our negotiations with Norway.

[Lord Foster of Bath (LD)]

I apologise; I thought the Minister was going to continue points about solar. Before he finishes, could he respond to the question I asked on the Environment Secretary’s plans to stop further solar farms? Could he update us on that situation?

[Lord Callanan (Con)]

I have referred to the pipeline of solar for which planning permission has already been granted or that is in scope. I think the noble Lord can see that there is a considerable pipeline of solar plants that are already coming on stream and that our target remains in place.

Energy Bill [HL]

Lord Foster of Bath Excerpts

Committee stage
Wednesday 7th September 2022 Lords Chamber

[Lord Moylan (Con)]

My Lords, I have some sympathy with what the noble Lord, Lord Oates, has just said. My concern is perhaps even a little more profound than his because I do not understand what role the Government see for pumped storage in addressing the problem of intermittency of renewables. The noble Lord focused on the funding mechanism, but what role is it going to have? How large a part do the Government intend that it should play?

However, that is not my purpose in rising. My purpose is to speak to Amendment 225, which relates rather to gas, which is also there to be used to some extent to address the problem of intermittency. I am grateful for the support of the noble Lord, Lord West of Spithead, and my noble friends Lady McIntosh of Pickering and Lord Frost. The House had a Question on gas storage earlier today and the Minister made some helpful and informative comments in response, but it was largely a backwards-looking Question. It looked at decisions taken in the past, whereas this amendment is intended to look a little more forward. It would require the Government to provide gas storage onshore or under our waters equivalent to 25% of forecast annual demand. However, in a sense, the real purpose is to give the Government an opportunity and to elicit from them some sense of their plans for addressing this question. In the past few months, we have all seen on the television news and in the newspapers, and been gripped by it, that while Germany has been busily filling up its capacious gas storage facilities, we have none whatever, so I think the Committee and the public will be interested to know what the Government intend, if the Minister is capable of giving us an indication today.

I shall make just two points about the amendment. To those who say that we are phasing gas out, I say that the amendment is worded to require 25% of forecast demand, so if the demand comes down, the amendment still works and the amount stored can be adjusted. I think I am a correct in saying—this emerged at Second Reading—that nobody in the House believes that demand for gas is going to fall to zero, even if it is to fall to quite low or even miniscule levels, so the amendment still works and, planning over the long term and looking forward a number of years, it should be possible to make this workable.

Secondly, I put in 25% as a placeholder as much as anything else. I am very open to the Government making a case for why that number should be higher or lower and why government policy should not be 25% but more or less. I am even open to an argument that the number should be 0%. Indeed, reviewing what the Minister said today, he made the valid point that, unlike Germany, we already have a store, so to speak, of gas in our control; it just happens to be under the sea. I understand that there is a point there.

I think back to the United States in the 1970s, when the oil shock arrived. The United States decided that what it needed was a large oil reserve, so it started pumping oil into specially prepared caverns in the earth. Then I think it struck the US that it was pumping oil out of one bit of the earth and then pumping it into another, and that perhaps this was not as sensible as it might have been, so the policy was gradually abandoned.

The Minister may want to make a similar and parallel point in respect of our own gas reserves. He may say that zero is a perfectly reasonable amount for us to store. If the answer from the Government were zero, it would at least be a decision and a policy. We would be able to scrutinise it and understand the arguments for it. As I say, setting the number at 25 is very much a placeholder. I am not being in any sense dogmatic about what the number should be, but I do feel that the Government should have a number in mind, should be able to justify it—even if it is zero—and should be able, I hope, to tell us what it is.

[Lord Foster of Bath (LD)]

My Lords, I fully support the amendments in the name of my noble friend Lord Oates and that in the name of the noble Lord, Lord Moylan, and others. They seek, in effect, to get more information from the Government about their plans in relation to energy storage.

My Amendment 240 is also about storage but, in this case, the storage of solar energy, the use of which is growing at an incredibly rapid pace. There are already something like a million domestic solar systems installed around the UK, and residential solar deployment is at a record subsidy-free level according to Solar Energy UK, which represents many of the UK’s solar firms. This is perhaps unsurprising given the benefits of generating your own electricity at home. This is also good news for the Government since, if we are to meet our net-zero target by 2050, we need as many of the 29 million homes in UK as possible to decarbonise. Solar is of course part of that solution.

At this point I should draw attention to my interests. I recently installed solar panels on the roof of my home, together with one battery; it is the battery element that is relevant to my amendment. It was great news when, in the Spring Statement delivered on 23 March, the then Chancellor, Rishi Sunak, made the very welcome announcement that certain energy-saving materials would be eligible for zero-rate VAT on both labour and parts. This change was effected through the Value Added Tax (Installation of Energy-Saving Materials) Order 2022, which added a list of energy-saving products eligible for the zero rate to Schedule 8 to the Value Added Tax Act 1994, which is relevant, as noble Lords will see in a second.

Solar panels are the only solar-related items specifically included in this list. Batteries that store the energy from solar panels when it is not needed, and which can be used at a time when it is needed or to supply energy back to the grid, are not listed. However, the energy-saving materials and heating equipment VAT notice 708/6, which relates to the earlier Act, states:

“The installation of certain specified energy-saving materials with ancillary supplies is zero-rated in Great Britain.”


I can find no reference to “ancillary supplies” in the Value Added Tax Act 1994, which the Chancellor’s Spring Statement amended. However, HMRC has said that, in certain circumstances, batteries are in fact included. It has said that, when batteries are sold as part of the installation of a solar array, they are to be treated as an ancillary supply and so also qualify for zero-rate VAT. However—this is the crucial point—they would not qualify if installed separately at a later date.

A neighbour of mine, Mr Geoff Makepeace, installed a solar array with batteries a while ago; it was before the Spring Statement, so he did not benefit from the zero rate of VAT announced in it. However, keen to get increased benefit from his solar system, he sought advice: should he increase the number of solar panels or the number of batteries? The advice was to install another battery. He followed that advice but was subsequently surprised that his bill included £567 for VAT at 20%.

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[Lord Foster of Bath (LD)]

To be absolutely clear, it would apply to all batteries that receive their supply from solar panels.

[Baroness Worthington (CB)]

In which case, I am even more supportive, because it is absolutely clear that installing solar panels is a fast way to reduce demand for fossil fuels and to increase resilience. If it can then be stored, even more resilience will be added to the system. So this would seem to be a very sensible amendment, and I thank the noble Lord for his meticulous detail in spotting this.

Green Skills

Lord Foster of Bath Excerpts

Wednesday 9th March 2022 Lords Chamber

[Lord Callanan (Con)]

Indeed, my noble friend makes a very good point. The UK is responsible for only 1% of worldwide emissions; it is very much a global problem that we have to work internationally to tackle. There are many exciting new developments in a whole range of industries and technologies that we want to encourage as much as possible. Technology could be our friend here.

[Lord Foster of Bath (LD)]

My Lords, over one-third of our homes are inadequately insulated, and yet after many failed green deals, the industry that will actually deliver the solution to the problem has lost confidence. It says that if it is going to invest in research, equipment and skills training, it wants the confidence of the Government’s home insulation targets placed firmly into legislation. Why have the Government refused?

[Lord Callanan (Con)]

We are working very closely with the retrofitting insulation industry. The noble Lord is aware that we are spending billions of pounds helping low-income families to upgrade their accommodation in the low-income private sector, social housing and through local authorities. This is a well-advanced programme, and we also have the ECO scheme which spends up to £1 billion a year on green retrofitting measures, so there is a lot going on this sector.

Nuclear Energy (Financing) Bill

Lord Foster of Bath Excerpts

Committee stage
Tuesday 8th March 2022 Grand Committee

Moved by

[Lord Foster of Bath]

3: Clause 2, page 2, line 8, at end insert “and
(b) a geological disposal facility for the disposal of high-level nuclear waste has been constructed in the United Kingdom and is operational, such that the full life costs of construction and decommissioning of a nuclear energy generation project can be accurately quantified prior to designation.”Member’s explanatory statement
This amendment would prevent the Secretary of State from designating a company under the Act until such time as a geological disposal facility for the disposal of high-level nuclear waste has been constructed in the United Kingdom and is operational.

[Lord Foster of Bath (LD)]

My Lords, on behalf of my noble friend Lord Oates and—I am sure—with his agreement, I beg to move Amendment 3 in his name.

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Moved by

[Lord Foster of Bath]

4: Clause 2, page 2, line 14, leave out from “project” to end and insert “will result in value for money, as evidenced by the publication of the Value for Money assessments conducted to date.”
Member’s explanatory statement
This amendment would require the Secretary of State to provide stronger evidence that the project will result in value for money through publication of such assessments carried out to date.

[Lord Foster of Bath (LD)]

My Lords, I begin by declaring a couple of interests. First, I should place on record that I live quite close to Sizewell. I say to the noble Lord, Lord Howell, that if only the current construction of Sizewell C were done in the way in which they built Sizewell B, with much of the material brought in from Sizewell A, some of the objections in the locality—not all of them—would certainly disappear. Secondly, and I say this particularly to the noble Baroness, Lady Worthington, for whom I have enormous respect as she knows a great deal about this, I know a little bit because I used to be a physics teacher, but I do not think that that holds much water these days—it was a long time ago.

My amendment is in a long grouping of amendments, but all seem to cover roughly the same theme, that of transparency and trying to ensure that we have as much information available to us as we can before fundamental decisions are made and this Bill goes through. There are many amendments covering issues to do with the designation procedures and so on. I note, for instance, that my noble friend Lord Oates in his Amendment 13 asks not only for more information on what impact the RAB will have on consumer bills but for that to be independently checked—something that Citizens Advice, for instance, has long been campaigning for.



My noble friend also raises a really interesting issue in Amendment 6. It is about getting some assurances that the station or generation system to be built will be able to deliver and will not have a number of outages, or perhaps will not even work at all. Of course, that is already being experienced by the Taishan EPR new build in China, which has been offline for the past eight months after only two and a half years in operation.

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[Lord Foster of Bath (LD)]

I have enormous respect for the noble Lord—indeed, I think that he has asked some very pertinent questions—but he has spent his time criticising the amendment when the Bill that he is perhaps going to support later currently says that

“the Secretary of State is of the opinion that designating the nuclear company in relation to the project is likely to result in value for money.”

So the value for money is already there; my amendment seeks to have it published so that we can see what basis has been used. I think that the noble Lord should be addressing his questions to the Government, not to me.

[Lord Howell of Guildford (Con)]

What I am saying is that, if the Secretary of State decides to publish his value for money assessment, that assessment will of course include the long-term national security concerns of this nation and a variety of other advantages of moving into a proper low-carbon electric age. That kind of value is not one that the noble Lord is going to agree with, so the disagreement will continue. Value is a totally subjective aspect; that is so with many national projects, but particularly with this one.

If I may say to the noble Lord, Lord Stunell, the rather endearing Lib Dem concept that no public subsidy could possibly be involved—that is, nuclear is all right but there must be no public subsidy—is an absurdity. Of course there is going to be public concern about the national security of this nation; public concern is something that will have to be paid for, either through subsidy by the taxpayer or by ordaining the Government to raise the money in some other way. The latter was the proposition for Hinkley C, which was allowed to have a strike price that was at that time almost twice the going rate for electricity kilowatts per hour from coal, oil or anything else, including renewables. Things have changed since then; now that electricity and gas have soared, perhaps the strike price is quite reasonable compared with other fossil fuels. That raises the question of contracts for difference; perhaps it was not quite such a bad prospect as some of us thought.

Anyway, that is beside the point. The main point is that value is utterly subjective and must contain all kinds of assessments by the Secretary of State, his colleagues and the Government about national security and its contribution to our long-term aim of a decarbonised world, as well as a vast range of other considerations—all of which have to be balanced out in taking these difficult political decisions. We can argue until kingdom come but the reality is that judgments have to be made, and they are much bigger than value in the narrow sense.

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[Lord Callanan (Con)]

Moving on to the second part of Amendment 16, the Government are in full agreement that nuclear could have a role in low-carbon hydrogen production. I was delighted to discuss this in a meeting with the noble Baroness, Lady Worthington, earlier this week—or was it last week? I have lost track of when it was. Of course, this could potentially include the Sizewell C project if it goes ahead. It is for this reason that the Government are looking to stimulate private investment in new low-carbon hydrogen production. We have consulted on the appropriate hydrogen business model, and we included a lot of this in the UK’s first hydrogen strategy, which was launched in August last year.

However, as I made clear to the noble Baroness, I do not consider that this Bill is the right place for such an amendment. The purpose of the Bill is to facilitate investment in the design, construction, commissioning and operation of nuclear energy generation projects. It is therefore more appropriate, in my view, that hydrogen production specifically should be taken forward using a different vehicle. It is for this reason, and those given previously with regard to incentivising plant availability, that I am not in a position to accept Amendment 16.

Prior to turning to the next amendments, let me address the questions asked by the noble Baroness, Lady Worthington, and confirm for her benefit that any payments received by a nuclear company above its allowed revenue would not be received by the Treasury. Instead, they would be returned to the suppliers who were levied in the first place. They who would then have the choice of whether to refund the payments to consumers in a competitive market situation. As the noble Baroness mentioned, the process is similar to the CfD model under which consumers will ultimately benefit from a cheaper system.

Amendments 4, 13, 37 and 38 were tabled by the noble Lords, Lord Foster, Lord Teverson, Lord McNicol, and the noble Baroness, Lady Bennett. Each amendment addresses the important subject of consumers and value for money. On Amendments 37 and 38, I of course agree on the importance of protecting vulnerable consumers from increases in their energy bills, but let me reassure all noble Lords that the need to protect consumers’ interests is very much at the heart of the Bill. The nuclear RAB model will be regulated by Ofgem, whose principal objective, as enshrined in statute, is to protect the interests of all existing and future consumers, including consumers who are claiming universal credit and other legacy benefits.

Ofgem is also a statutory consultee for significant decisions in the Bill relating to whether a nuclear company should benefit from the RAB model. In addition, the Bill requires the Secretary of State to have regard to the interests of existing and future consumers when making any modifications to a nuclear company’s licence. So I make it clear that the Government intend to protect all our most vulnerable energy consumers in what is a very difficult market at the moment, given the record high gas prices, but we believe that Amendments 37 and 38 are not the best way of ensuring this and that a more holistic strategy for supporting vulnerable energy customers is preferable, as the noble Lord, Lord Wigley, commented in the debate.

The Government are taking a number of actions to help low-income households. I will list them for the Committee. They include the warm homes discount, which provides eligible households with a £140 discount, and the Chancellor confirmed on 3 February the Government’s plans to expand the scheme by almost one-third, raising the number of beneficiaries from 2.2 million vulnerable households to more than 3 million. We are further supporting consumers through the cold weather fund and the household support fund. I think that those measures are a more appropriate way of protecting vulnerable consumers, and I hope that I have been able to reassure noble Lords who tabled these amendments that the design of the RAB model and the revenue stream that will flow from that are such that the interests of vulnerable consumers are and will be the highest priority for us.

On Amendments 4 and 13, I stress to the Committee that we have sought to establish a transparent designation process that requires the consideration of whether designation of a nuclear company is likely to result in value for money. This process requires the Secretary of State to prepare draft reasons for designation, to consult on those reasons with specified persons, including independent regulators such as Ofgem, and to publish a designation notice setting out the final reasons for designation. This final notice would include designation against the criteria of being likely to result in value for money, which the noble Lord, Lord Foster, asked about in the debate.

Given all that, I am confident that the process is sufficiently transparent. Through consultation with Ofgem we will ensure that consumer impacts are fully taken into consideration and accounted for. Value for money is and always will be a core part of government approvals beyond the designation of a nuclear company as a designated company’s licence conditions are negotiated and as part of any capital raised for a project. Therefore, I hope the noble Lords who tabled Amendments 4 and 13 will not press them.

Finally, on Amendment 26 from the noble Lord, Lord Foster, let me gently point out that the amendment would remove the obligation for the Secretary of State to have regard to whether the nuclear company has appropriate incentives. I am not sure that that was the intention of the noble Lord, so perhaps he will have another look at it and will feel able not to press it because ensuring that projects have appropriate incentives forms a vital part of the RAB model. We have learned from the experience of projects in the US—the noble Lord quoted them to me at one of our meetings—and elsewhere that incentivising developers to deliver to cost and schedule will be important to ensure value for money for consumers. As the noble Lord, Lord Foster, questioned in the debate, we expect that such incentives will include an appropriate risk-sharing mechanism between consumers and the nuclear company and its investors. We would not expect the bill payer to bear all the risk.

We expect that incentives would be included in the modified licence conditions for the nuclear company, and so would be consulted on and published as set out under the provisions of the Bill. These incentives would be overseen by Ofgem in its role as the independent regulator.

In conclusion, I hope I have been able to satisfy noble Lords on all these measures and provided the appropriate reassurance that the Bill introduces a robust and transparent process for the approval and awarding of the benefits of a RAB model to nuclear companies, and that there are appropriate checks and incentives in place to protect consumer interests—which should be at the forefront of our thinking. Therefore, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Foster of Bath (LD)]

My Lords, I am enormously grateful for the opportunity to listen to so many noble Lords who have contributed to the debate. It has been a masterclass in what we mean by value for money. I am enormously grateful; I have learned a great deal about whether or not we should be just using commercial accounting or incorporating opportunity costs. Should we define opportunity costs in the way that the noble Baroness, Lady Bennett, and others have defined them? It has been incredibly illuminating.

My amendment was very simple indeed. The Government said they were going to do an assessment; all I wanted them to do was publish it. I am enormously grateful that I got the support of the noble Baroness, Lady Worthington, for that. Sadly, despite all the Minister subsequently said, we have not yet heard whether the value for money assessment is or is not going to be published—and, if it is, when that would be.

We then come to the interesting issue of the amendments surrounding the designation process. I am enormously grateful to the noble Lord the Minister, who enables me to sit down while we vote again.

[The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)]

There is a Division in the House. The Committee will adjourn and return as soon as agreed after Members present have voted.

--- Later in debate ---

[Lord Foster of Bath (LD)]

As I was saying, we come to the second string of things that were debated, in relation to the criteria surrounding the designation process. We heard something wonderful: a Government who admit that they are a listening Government. “The reason we haven’t published the designation criteria is that we are listening to what you lot have got to say.” Well, I say to the Minister that by the end of this evening at 8.45 pm he will have heard what has been said not only in the other place but in this place, so presumably there will be the opportunity to draft the designation criteria in time for the further stages of the Bill. So I hope that, before I sit down, he will intervene on me and make a clear promise that we will get at least a draft of the designation criteria before the final stages of this Bill are passed. I happily give way to the Minister.

[Lord Callanan (Con)]

Like all government documents, they will be published at the appropriate time, and I will be sure to let the noble Lord know when that is.

[Lord Foster of Bath (LD)]

We have had a masterclass in defining things such as the value for money study; we are getting a masterclass in ministerial obfuscation. My question to the Minister was, “Are we going to see it before we complete all stages of the Bill?” To which the Minister replied that it would be published at an appropriate time. I think we can draw our own conclusion: we are not going to see it, and that is deeply worrying.

The Minister followed exactly the same procedure in relation to the issue of appropriate incentives. He is absolutely right that my amendment would remove them altogether from the Bill, but I began by saying that it was purely a probing amendment so that we could actually get some information from the Government about another issue about which we do not know very much. I am grateful that the Minister says that appropriate incentives will include the appropriate sharing method between the developer and the consumer, and I am grateful that we now know that that is going to be part of it. Of course, however, he has not told us what that percentage sharing would be—another piece of information that we do not have.

In relation to a more general point, we got this wonderful statement from the Minister that the Committee can be assured—and I feel so much better for this now—that appropriate incentives will be imposed. That is jolly good, but I would certainly like to know—and I suspect other Members of the Committee would as well—what is being imposed and how it is going to work. It is deeply disappointing: there is so much information that the Government should be providing but have failed to provide. They expect us to stand up and vote for this piece of legislation when most of the basics are simply not being provided. Nevertheless, we will have another opportunity to raise this, so I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

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[Lord Wigley (PC)]

My Lords, I will speak very briefly indeed. I have added my name to Amendment 27 in this group alongside that of the noble Lord, Lord Foster; I did so with particular regard to my strong feelings on new paragraph (e), proposed by the amendment, which concerns

“how decommissioning costs of the project will be met”.

Of course, this issue appears in sub-paragraph (iii), proposed by new Amendment 5, which refers to

“an estimate of the costs of decommissioning the project”.

As I indicated in our earlier debates, I feel that this is a critical aspect of the Bill that needs to be covered and where assurance needs to be given, whatever the mechanism of doing so. I would have thought that the Government could recognise that and say that, whether or not these amendments meet the standards that are acceptable to them, there may be some way of giving an assurance that the questions asked by these amendments can be answered—and that the answers will be forthcoming to this Committee.

[Lord Foster of Bath (LD)]

My Lords, I am afraid that I cannot be quite as brief as the noble Lord because I have a number of amendments in my name. I am also conscious of the pressure on the Committee’s time, so I will do my very best to be as quick as I possibly can. I will concentrate rather more on Amendment 12 than on any other of the amendments in my name, that of my noble friend Lord Teverson and those of other noble Lords.

Basically, Amendment 12 would require the department to define “sufficiently advanced” in its guidance. What we know is that designation will come at a certain point. We have already debated the fact that we have no idea what the criteria will be and that we may or may not see them before we finish our deliberations on this Bill. However, we are at least grateful that the Minister is apparently listening to what we have to say. I hope that he will listen to this particular bit because the designation can come only when the Secretary of State is satisfied that the project is sufficiently advanced; this amendment merely requires the Secretary of State to be clear about what that means.

Earlier, I referred to the fact that I live near Sizewell so it is a particularly good example to use, not least because it is the only project in the offing that might use this methodology. In the case of Sizewell, it is worth being aware that the planning application has been submitted and is awaiting the decision of the Secretary of State. Yet, at the conclusion of the planning examination, numerous issues were outstanding. They still have not been sorted out.

They include the crucial issue of the design of the hard coastal defences. If you live near Sizewell, as I do, you know that the coast there is eroding incredibly rapidly. Three weeks ago, I went for a walk on the clifftop and saw, in a field where the crops were planted this year, that some of the initial plants have already fallen over the edge of the cliff. The erosion is very rapid; appropriate measures must therefore be put in place, yet this has not been done.

Moreover, nothing has been done to ensure that there will definitely be potable water. Frankly, if you have a nuclear power station with no guarantee of potable water, it is a completely pointless exercise; that work has not been done. Also, there has been no work to look at soil mixing and ground anchor trials, which are vital because a huge hole will be dug in the ground and we have to be sure that the whole thing is not going to collapse. There are numerous issues that have not yet been sorted at this stage.

Using those three examples, my question for the Minister is this: does he see that a designation could take place without those three things having been addressed, or not? Will there be sufficient progress? I seek a definition and an understanding. I have given some specific examples for the Minister to consider; I hope that he can tell me whether they have gone on.

The other amendment in this group, Amendment 18, aims to provide further transparency about how taxpayers’ money is going to be allocated and what taxpayers’ money is being used. The recent announcement of £100 million of taxpayers’ money being given to the project at this stage, before any decision has been made, does not look good locally. It almost appears as if the green light has been given to Sizewell before any of the issues that I have been raising have been taken into account. We need to have more transparency about the taxpayer contribution to projects.

Amendment 27 picks up an issue that was raised on an earlier amendment by my noble friend Lord Oates, so I will not go through it in any detail. It requires the Secretary of State to provide a report about the up-front and overall expected cost of the project, the likely cost of electricity going on to the national grid and decommissioning costs, which have already been the subject of much debate, so I shall not repeat that.

The subject of Amendment 28 was also raised in an earlier amendment by my noble friend Lord Oates. It is something that various consumer organisations have been calling for, which is that before final agreements are made, there should be an independent assessment of the information that is being provided to the Government. It would require an independent impact assessment to be conducted and to be approved by the House of Commons before licence modifications could be permitted.

The amendments in my name are all about transparency. If I go away at the end of the proceedings with one message, it is that at the moment the Government seem unable or unwilling to provide a great deal of information about the Bill. This is not about being pro or anti nuclear but about transparency, and at the moment I do not think we are getting anything like enough of it from the Government.

[Baroness Bennett of Manor Castle (GP)]

I rise to speak briefly to Amendments 5 and 12 in the name of the noble Lord, Lord Foster of Bath, to which I have added my name. On defining “sufficiently advanced” in guidance, two projects come to mind: Crossrail and HS2. We were told everything was fine and that there was a fixed budget. One of the most interesting discussions in the other place was when the Minister argued that the possibility of costs exceeding the cap as predicted was remote, which was a triumph of hope over experience. It is important that we have that amendment.

Coming back to some of our earlier debates, because this is news just in literally in the past hour, I have to note that the director-general of the International Atomic Energy Agency has expressed grave concerns about the safety of the Chernobyl nuclear plant where staff have not been able to move since the Russian takeover.

“I’m deeply concerned about the difficult and stressful situation facing staff at the Chornobyl nuclear power plant and the potential risks this entails for nuclear safety. I call on the forces in effective control of the site to urgently facilitate the safe rotation of personnel”.


I hope some people who contributed earlier in the debate will not be in a much worse situation when we come to Report.

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Moved by

[Lord Foster of Bath]

14: Clause 3, page 2, line 36, at end insert—
“(fa) the relevant upper tier local authority covering the site for the nuclear project;”Member’s explanatory statement
This amendment would require the Secretary of State to consult the relevant upper tier local authority before designating a nuclear company under section 2(1).

[Lord Foster of Bath (LD)]

My Lords, quite rightly, the Bill before us requires a degree of consultation. In the designation process, the Secretary of State is required to consult a number of people, with the nuclear company that he proposes to designate included among them. My amendment simply proposes that, in that list of persons or organisations with whom the Secretary of State must consult, the relevant upper-tier local authority should be included. The Minister may respond by reminding me to look at Clause 3(3)(g), which says

“such other persons as the Secretary of State considers appropriate”.

I imagine that that might well include the local authority, but so important do I believe it is that the relevant upper tier local authority be consulted that I think it should be added to the list.

To illustrate how important it is that people who are directly affected, or those who represent them, be consulted, it is worth considering the impact on local people in the area if the decision is made to go ahead with Sizewell C—incidentally, I note that the noble Baroness, Lady Bennett, has tabled another amendment about consulting local people. Of course, I support that, but a mechanism for doing that far more easily is by having in the list a representative body, which the upper-tier authority is.

Let us think about the impact that the construction of Sizewell C will have on local people. Of course, there are those who will argue that they will have the long-term benefit of nuclear power being provided and all the things that go with that—I take that on board—but, during the process, there will be some 6,000 construction workers, 76% of them coming from outside the area and requiring accommodation. A campus for 2,400 people will be built right on the boundary of an area of outstanding natural beauty and within half a kilometre of a small, beautiful hamlet of just 50 people. The impact on that hamlet will be quite unbelievable. Thousands of people are expected to commute to the two large park-and-ride sites that are going to be built north and south of the site. There are going to be 12,000 vehicles a day on the unimproved A12 and 600 HGV journeys a day through local villages for the first two years before the new relief road is built. It is going to have a significant impact on local businesses, including tourism; the tourism losses are estimated to be in excess of £40 million a year.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lords, Lord Foster and Lord Foulkes, and the noble Baroness, Lady Bennett, for their amendments relating to consultation with different persons. Regarding the amendments tabled by the noble Lord, Lord Foster, and the noble Baroness, Lady Bennett, I understand their desire to bring the local community into the process. However, the Bill is not the place to do this. It is concerned with the financing of nuclear projects, rather than planning and other regulatory approvals.

While the publicly available information about a project’s progress in seeking these approvals is likely to be relevant to decisions about which projects should benefit from the RAB model, the decisions themselves are separate and independently made. A company benefitting from the RAB model would receive revenue payments funded by licenced suppliers in Great Britain as a whole and, through them, consumers. It would therefore be wrong to grant a different status to either the local authority or particular groups of persons in respect of decisions made by the Secretary of State under the Bill’s provisions.

Both local individuals and authorities would be able to express their point of view regarding any new project through the planning process. They would, for example, have the opportunity to input their views during the hearings that would take place as part of the consideration of a project’s application for development consent. That is the right place and process for those concerns to be considered, rather than in discussions about a financing model that will impact all consumers.

I remind noble Lords of my noble friend Lord Callanan’s comments on, I think, the second group of amendments today about the productive conversations we have been having with the Sizewell C project team during the ongoing negotiations. It is our understanding that the Sizewell team intends to replicate the commitments made in the Hinkley Point C solidarity agreements, which represent a new and innovative approach to industrial relations. Our industrial relations at Hinkley Point have been extremely good and, while I take the point about Sizewell C, this is a Bill for a financing model that is supposed to be for generic nuclear financing; it is not specifically about Sizewell C. Were it to be used, for example, for Wylfa, I am sure that there would be different considerations but, again, that is not the specific intention of the Bill. This is about creating a generic financing model to finance any large-scale nuclear power plant in the future.

Amendment 30 was tabled by the noble Lord, Lord Foulkes. I understand the noble Lord’s concern about the different position on nuclear energy that is held by the Scottish Government, but ultimately it is right that the relevant devolved nations have equal rights under the Bill. It would be wrong to allow the Secretary of State solely to have the power to exclude Scottish Ministers while retaining an unqualified obligation with regard to Welsh Ministers. While this provision requires consultation with those persons, it does not require that they agree with the proposed modifications for those modifications to be made. I further point out to the noble Lord that nothing in the Bill will change the fact that Scottish Ministers are responsible for approving planning applications for large-scale onshore electricity generating stations within Scotland.

I hope that I have shown noble Lords that their amendments are inappropriate in the wider context. I therefore ask noble Lords not to press them.

[Lord Foster of Bath (LD)]

My Lords, I am grateful to the Minister for her response, but I genuinely did not understand it and I apologise for that. The clause is about the designation of a nuclear company. That power rests in the hands of the Secretary of State, who will make the decision based on a number of criteria. As we pointed out, we do not yet know what those criteria are and we are not sure that we are ever going to find out. However, it is also going to be done after consultation, and the consultees are required to be a number of people, as specified in the legislation.

I sought to have local authorities included as a specified group to be consulted. The Minister’s response was that they would get their opportunity to raise their issues of concern in other fora, and that this is not the right place. However, I am absolutely certain that my amendment was intended to ensure that local authorities, representing local people impacted by the decisions that are taken, should be able to be involved in the designation of a company. It is, after all, they who will have done all the work and they who will have brought forward the planning application and the various modifications to it and sought money and received money from central government to help them get on with the task and so on. The designation of the company is critical. I therefore genuinely do not understand why the Minister says that it is inappropriate for this particular aspect of activity. I may be being stupid, in which case I will have time to reflect before the next stage and get a bit more informed before I come back. In the meantime, I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

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[Baroness Wilcox of Newport (Lab)]

I am moving Amendment 39 in the name of my noble friend Lord McNicol. It would require the Secretary of State to undertake an assessment of the case for establishing a state-owned entity to take over the delivery or operation of a nuclear project in the event that a nuclear company fails and cannot be saved or have its assets transferred. Having such safeguards is familiar to me from my time in local government, where every project brought risks of overrun and rising costs, despite our best efforts to nail down the terms and conditions.

However, let us not deviate from the ultimate aim of this Bill: to get power generated and distributed to homes and businesses across the UK. We sincerely hope that firms will not fail, but if they do there needs to be a clear process to ensure that plants are built and continue to operate. The Minister may well argue that the special administration regime does this, but there is still potential for further steps to be needed. Surely, we should define options in legislation now rather than wait for the worst to happen. “Fail to prepare”—I am sure noble Lords know the remainder of that phrase.

[Lord Foster of Bath (LD)]

My Lords, very briefly, there are two amendments in my name and that of my noble friend Lord Oates. I think we are all conscious that things can go wrong and there may need to be procedures to pick things up and move forward. We accept that might be the case. Sadly, it is the case for Taishan 1, as I mentioned before; after only a couple of years, it suddenly went offline. They do not even know what is wrong with it, and somehow they have to pick up the pieces.

I absolutely accept that there is a need to have procedures in place, such as a special administration regime. I merely suggest in Amendment 40 that, if that is the case and action needs to be taken, there should be a report covering the issues I have referred to in the amendment—the liabilities associated with the nuclear company, the estimated cost of getting it going again if it has been temporarily shut down, the lifespan of the nuclear power station and so on. It seems fairly straightforward.

Of course, the Minister will say that he cannot do it because that would be providing information which is somehow sensitive or commercial and it should not be done. In those circumstances, I cannot see anything commercial or sensitive about it, and it is something the public need to know; they will find someone else to do it or find a way of supporting the existing company to carry on doing it. It will be the taxpayer’s money, and the taxpayer has a right to know what it will be used on. That is why, in Amendment 43, I am basically saying that any payments that would come out in that process ought to be approved by an independent body—in this case I have suggested, perhaps slightly surprisingly, that the House of Commons should have the opportunity, as the elected body, to decide whether or not the money proposed to be spent is being spent wisely. With that, I look forward to the Minister’s response.

[Lord Callanan (Con)]

My Lords, I thank noble Lords for their brevity. I know that time is getting on, so I will attempt to be as brief as possible in providing noble Lords with the information that they properly seek.

Amendments 39, 40 and 43 from the noble Lords, Lord Foster, Lord Oates and Lord McNicol, have been grouped because they all relate to the special administration regime set out in Part 3. I remind the Committee of the purpose of the SAR. It is imperative that in the—hopefully, vanishingly—unlikely event of an insolvency we would be able to act quickly to ensure that a plant could commence or continue electricity generation. That gives an important protection to consumers. The special administrator has a duty, as per the Bill, to achieve this objective as quickly and efficiently as is reasonably practicable. I must add that these are powers that we hope never to have to use, but I agree with the noble Baroness, Lady Wilcox, that it is important to prepare in case we do. There is a very low probability of insolvency under a RAB model, but we need to prepare just in case.

It is for these reasons that I cannot accept Amendment 39. If the rescue of the company cannot be achieved, the special administrator will need to consider all options for a transfer, including, very possibly, a transfer to a publicly owned company. This may be supported by the Secretary of State where it would provide clear value for money for both consumers and taxpayers. The amendment implies that the special administrator would consider a transfer to a publicly owned company only if a transfer to a privately owned company were not feasible, so we would simply want to have more flexibility, or rather give more flexibility to the administrator in those circumstances.

It is essential that the administrator and the Secretary of State retain the ability to act quickly if all options to achieve the objective of the special administration have been exhausted. It is highly likely that in meeting their objectives, the administrator will consider various ownership structures for the project and their various relative merits. In placing a new reporting requirement on the Secretary of State to make this assessment and to publish it before acting, the amendment could frustrate this process and potentially delay exit from administration, which could cause additional cost to both consumers and taxpayers.

[Lord Foster of Bath (LD)]

The Minister just said that publishing a report could frustrate the way forward. Can he explain with an example how that would happen?

[Lord Callanan (Con)]

This is not a direct example, but, of course, the special administration regime has recently been used in the case of one particular energy company. I do not need to go into the specific example, but I was aware of a lot of the discussions that went on before it. Some of those were extremely commercially confidential because, of course, discussing possible outcomes results in potentially prejudicial publicity and might perhaps bring about the objective that we did not want. The company eventually went into a special administration regime, and information was published as soon as practicable about that. It is important in those circumstances to retain the flexibility. The Secretary of State’s discretion to act expediently would obtain the best outcome for consumers and taxpayers during the special administration.

Amendments 40 and 43 seek to place an additional reporting requirement on the Secretary of State which we consider would also impede the ability of the special administration to achieve its objective. In the case of Amendment 40, I remind the Committee that a special administration is a court-administered procedure and, in the circumstances, a nuclear administrator would be an appointee of the court. It is therefore important that we retain the established process and do not seek to put in place reporting requirements which could oblige the Secretary of State potentially to publish commercially sensitive material, which would then jeopardise a transfer. I cannot, of course, seek to predict the court process, but it is possible that that some aspects of the information that Amendment 40 seeks to have published would also be publicly available, such as through companies publishing their financial statements.

In the circumstances, should any licence modifications be made by the Secretary of State during the administration, the legislation determines that such modifications will—correctly—need to be published, except for any matters which are commercially sensitive or would be contrary to the interests of national security.

There are already statutory arrangements in place with regard to the costs of decommissioning in the Energy Act 2008. This requires an operator to have in place an approved funded decommissioning programme— as already discussed—before construction on a new project can commence. I expect that, as was done for Hinkley Point C, the FDP for any future projects would be published along with relevant supporting documentation —again, apart from material of a sensitive nature.

Turning to Amendment 43, again, I am unable to accept this amendment, because it would risk the ultimate operability of the special administration regime and consequently risk consumers being unable to realise the benefit of the plant they have helped to build. As we have seen during the recent energy supplier crisis, it is imperative, as in the example that I just gave to the noble Lord, Lord Foster, that a fully operational special administration regime can be stood up in the quickest possible timeframe to protect consumers. This includes allowing for requisite funding from the Secretary of State to be provided efficiently. In addition, if insolvency occurred when perhaps the House was not sitting, I am sure that the noble Lord would accept that this would also cause unnecessary further delay.

The amendment would also cause a level of uncertainty that could deter potential administrators from undertaking the appointment under the special administration regime. The administrator would need to be assured that funding would be available from day one of the SAR to ensure its operability and ability to deliver its objectives, which of course are to continue or commence the generation of electricity. If there are delays in accessing the required funding, that could result in outages and problems with security of supply. In the case of a nuclear power station, there are also safety considerations. Any lapse in funding could result in some safety-critical expenditure not being met.

I thank noble Lords for all their amendments and in particular for their consideration of these matters with regard to the special administration regime. I hope that I have been able to provide appropriate reassurance that we hope never to use the regime, but it is there to serve the crucial purpose of protecting the interests of consumers. We need to make sure in that case that it is fully operable, efficient and able to meet its objective that energy generation will commence or continue in the unlikely event of an insolvency. I hope therefore that the amendments will not be pressed.

Free Trade Agreement Negotiations: Australia

Lord Foster of Bath Excerpts

Thursday 24th June 2021 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

My Lords, I first thank the noble Lord for his kind comments. It is the case that politics sometimes enter into these matters in the other House. Maybe that is not a surprise, given the importance of these agreements. I hope the noble Lord agrees that when I comment on these matters in this House or in front of our very well-run IAC, I try to give my answers in a measured and constructive way.

[Lord Foster of Bath (LD)]

My Lords, I think I welcome the Minister’s comment that the House will have the opportunity to fully scrutinise the text of the agreement, which will be presented after signature, but given the limited parliamentary oversight arrangements in both Houses, will he commit to presenting the document immediately after signature so that the committees have sufficient time to review the agreement before it is formally laid under the CRaG arrangements?

[Lord Grimstone of Boscobel (Con)]

My Lords, I can certainly confirm that the House will be given sufficient time to scrutinise these agreements, not just because that is right in its own instance but because our International Agreements Committee will want to scrutinise them. Importantly, the new, independent Trade and Agriculture Commission will need time to scrutinise this agreement properly. The sequence of events will be that the agreement will be laid in this House after signing, these other matters of scrutiny will then proceed, and only when that is completed will the agreement be brought back to the House formally to take its chance under the CRaG procedures.

Turkey: Free Trade Agreement

Lord Foster of Bath Excerpts

Tuesday 27th April 2021 Grand Committee

[Lord Foster of Bath (LD)]

My Lords, I, too, serve on the committee and pay tribute to our excellent chairman. I also thank the Minister for his constructive engagement with the committee and my noble friend for securing this debate.

As we have heard, this is a rather modest FTA, which is explained only in part by Turkey’s continued customs union with the EU. The limited negotiating objectives rather suggest that the Government wanted a quick deal rather than a quality one and, frankly, nothing that the noble Lord, Lord Hannan, and the noble Viscount, Lord Waverley, said changes the fact that, given the strong hand we had, it is surprising that, rather than waiting two years before negotiating a more comprehensive deal, we did not seek more in this deal.

After all, the deal is vital for Turkey—its most important since the 1995 customs union with the EU, it says. They export more to us than we do to them. Without a deal, tariffs on exports to the UK would have cost Turkish losses of £1.7 billion, so it is disappointing that we did not seek to include more in the deal. After all, we are a service economy, yet trade in services is not covered, nor is investment, public procurement, digital trade and much else. As we have heard, Turkey has a poor record on human rights, yet, despite the Government’s vision of a values-driven free trade and the Minister’s claims that trade does not have to come at the expense of human rights, they are not covered. Given Turkey’s equally poor record on workers’ rights, it is disappointing that they too are excluded.

I very much hope that in the Minister’s response, as others have requested, he will say how all those issues will be discussed in the forthcoming discussions on an enhanced agreement, but there are a number of remaining questions. The committee sought an assessment of the additional cost of the FTA to UK businesses. While acknowledging that the administration costs of new customs paperwork, such as declarations of origin, could have “substantive impacts” on trade in goods, the Minister has still not provided any estimate, so I hope he does today. As with other agreements, the committee is anxious to compare the situation pre and post Brexit.

The Government are also confident that the impact on supply chains will be minimal, yet they describe the ending of the cumulation of content from other PEM signatories as “a notable difference”. Can the Minister tell us how a notable difference has only a minimal impact on supply chains?

On tariff rate quotas, which were resized and calculated on historic usage, can the Minister explain whether the new TRQs contain sufficient headroom to support UK businesses which seek to expand trade with Turkey? The noble Lord, Lord Lansley, discussed subsidy and state aid in detail, so I ask one simple question. We know that, under the deal, any disputes will now have to be referred to the WTO. Can the Minister explain how that will be done when there is no requirement for the parties even to notify each other of subsidies that have been granted?

Finally, picking up the point made by the noble Baroness, Lady McIntosh, I hope that the Minister will also update us on the current review of technical barriers to trade.

Green Homes Grant Scheme

Lord Foster of Bath Excerpts

Wednesday 6th January 2021 Lords Chamber

[Lord Callanan (Con)]

The noble Lord asks a lot of questions. I think his figures are incorrect. We had 58,000 applications and have issued almost 11,000 vouchers to those applicants. Another 11,000 are being processed and 35,000 have gone back to the applicants for further information or clarification of their quotes, et cetera. We keep all elements of the scheme under review. We announced the extension to March 2022 in response to the feedback we received from the noble Lord and others.

[Lord Foster of Bath (LD) [V]]

My Lords, the sector that will deliver home energy efficiency measures wants statutory targets, such as those for climate change, to give it confidence to invest in equipment and training. The Minister, Kwasi Kwarteng, in the other place has talked specifically of the benefits of statutory targets in driving action. Will the Government enact into legislation the targets for home energy efficiency they have already promised?

[Lord Callanan (Con)]

I cannot give the noble Lords a specific assurance on that. We keep all these matters under review.

Comprehensive Economic Partnership (EUC Report)

Lord Foster of Bath Excerpts

Thursday 26th November 2020 Grand Committee

[Lord Foster of Bath (LD)]

My Lords, as a relatively new member of the IA committee, I have been impressed by the expertise of fellow members; by the skill and professionalism of the committee staff, to whom great credit must go for this report; and by the dedication and, above all, patience of our chairman, the noble and learned Lord, Lord Goldsmith.

Whatever the merits of the Government’s claim that the Japan deal is more than a rollover of JEEPA, it should be welcomed as providing

“valuable continuity for businesses, consumers and other stakeholders”,

and as a stepping stone to joining the CPTPP. But it is nowhere near as ambitious as many had hoped. Agreement to negotiate a deal was not reached until January last year, but it was a further 17 months before negotiations even began, so they had to be conducted at pace. I congratulate our negotiators on what they were able to achieve in such a short time, but it meant that nothing that required any change to primary legislation in either country could be included. Hopes for an ambitious deal were dashed and many proposals from consultees had to be ditched, calling into question the claim that this is a comprehensive deal.

Indeed, as other noble Lords have already pointed out, there are several examples of the Government overselling the deal. I hope that the Minister will accept that criticism. I note also that the UK’s overselling is in marked contrast to the Japanese who, despite appearing to gain far more from the deal than we do, have been much more muted. But working out those gains is difficult given current limitations in economic modelling and because, unhelpfully, the Government have compared the deal against trading on WTO terms rather than against JEEPA. I hope that this will not be the case in future deals.

Operating on a compressed timetable reduced ambition, but it also meant confusion and disappointment for the numerous stakeholders. The intellectual property chapter provides a good example. Of those aspects impacting the creative industries, our report says that, despite government claims of significant improvements on JEEPA,

“many of the additions focus on future discussions and awareness raising about existing enforcement procedures in both countries, rather than securing new … protections.”

To protect IP, the creative industries had sought much more. They wanted tougher measures to enable blocking of websites containing illegal content, along the lines that we already have in our own Digital Economy Act —but they did not get them. Can the Minister confirm that the UK will be reliant upon Japan’s existing IP enforcement procedures and that the deal does not commit Japan to any specific changes to those procedures?

The other two creative industry asks—public performance rights and artist resale rights—were not achieved either. Does the Minister acknowledge that stakeholders were given inaccurate expectations of what could be achieved in the deal?

The creative industries and other sectors may benefit from provisions on digital and data. But, as my noble friend Lord Oates pointed out, there are concerns about those provisions. One is that they could herald the lowering of our current GDPR-based data protection standards, perhaps to enable us to gain admission to the CPTPP given the lower standards of data protection in the Asia-Pacific region. In JEEPA, onward data flows are specifically excluded. Under CEPA, however, data which flows from the UK to Japan could be passed to other countries, through trade deals that Japan has with those countries, where lower data protection standards apply, thereby giving reduced protection to the personal data of UK citizens. I am not a believer in conspiracy theories, so will the Minister give an assurance that nothing in this agreement, or any future agreements, will reduce the standard of protection of the personal data of UK citizens from what is currently enjoyed?

This is a welcome deal because of the continuity that it provides. But it is little more than a rollover deal, one which has been oversold by the Government, appears to be far more beneficial to Japan than to the UK, and for which the Government have not even provided analysis to enable comparison of it with what we currently enjoy.