Energy Bill [HL]

Lord Foulkes of Cumnock Excerpts

Tuesday 26th April 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, the elected Members in the other place have sent a very clear message regarding the amendment made in this House on 12 April. The continued toing and froing on this issue is preventing the Bill proceeding to Royal Assent in a timely manner. Until that happens, we are unable to implement the much-needed measures relating to the Oil and Gas Authority. In the other place, there was much discussion of the importance of ensuring that the Bill now comes to a swift conclusion. The honourable Member for Aberdeen South, Callum McCaig, said, in relation to the Oil and Gas Authority functions:

“I urge the Government to put their eyes back on the ball and allow the Energy Bill to proceed. If we go back and forth with ping-pong we risk delaying that further”.—[Official Report, Commons, 20/4/16; col. 945.]

Indeed, previous representations from industry bodies such as Energy UK, RenewableUK and Scottish Power have also recognised the need for the,

“swift passage of the Energy Bill, with clear, fair and consistent RO grace period provisions”,

as those bodies have jointly said. We must move forward with the Bill to provide certainty in this sector and to allow projects to benefit from the investment freezing condition, which has been broadly welcomed by the industry.

Once again I find myself reminding your Lordships why the onshore wind measures were introduced in the Bill. The Government have a mandate to deliver on their manifesto commitment to end new subsidies for onshore wind. The Government remain intent on delivering this commitment and bringing forward the closure of the renewables obligation to new onshore wind in Great Britain. Noble Lords will recognise that the manifesto proposals were put before the country at the general election last year, which resulted in the present Government taking power. The Government have a mandate to act on this manifesto commitment, which was based on plans signalled well before the election. I know that the noble Lord, Lord Grantchester, was surprised by the result of the election but noble Lords should not be surprised that this action is being taken. It was very clearly stated in the manifesto and well signalled. Nobody should have been taken by surprise.

Back in March 2015, the right honourable Member for West Suffolk, Matthew Hancock, then Minister for Energy and Climate Change, stated in the other place:

“We have made it absolutely clear that we will remove onshore wind subsidies in the future”.—[Official Report, Commons, 6/3/15; cols. 1227-28.]

Prior to that, in December 2014, the Prime Minister said of wind farms in a House of Commons Liaison Committee:

“We don’t need to have more of these subsidised onshore, so let’s get rid of the subsidy”.

The Government, the Prime Minister and Members of the elected Chamber have continued to make their position clear.

Members in the other place have removed Amendment 7T, inserted after our previous debate on the Bill. Amendment 7T would have allowed certain projects, which did not have planning permission as of 18 June last year, into the renewables obligation beyond the early closure date. I say again: these projects did not have planning permission as of 18 June last year and therefore do not meet the grace period criteria proposed by the Government. Amendments such as the one removed in the other place would lead to an increase in deployment under the renewables obligation, which would come at a cost to consumers. As my honourable friend the Minister of State for Energy and Climate Change, Andrea Leadsom, noted in the other place:

“Opposition Members suggest that just because there is local agreement, it is fine to add to the bills of all consumers across Great Britain, but that is simply not the case. It is our duty as consumer champions—at least on the Government Benches—to keep down the cost to consumers, and this is what we will do”.—[Official Report, Commons, 20/4/16; col. 952.]

The policy set out by the Government strikes a fair balance between protecting consumers and addressing the concerns of industry. Noble Lords should take careful note of what Members in the other place have said and should not seek to undo the position by amending the Bill again. I beg to move.

[Lord Foulkes of Cumnock (Lab)]

My Lords—

Motion A1 (as an amendment to Motion A)

Moved by

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[The Lord Speaker (Baroness D'Souza)]

My Lords, I should inform the House that if this amendment is agreed, I cannot call Amendments A2 to A4 by reason of pre-emption.

[Lord Foulkes of Cumnock]

My Lords, I am grateful for that explanation. My Amendment A2 is dealt with in this grouping, so it would be appropriate for me to speak to it now, as I understand it. One of my noble friends said to me earlier, “This issue is hellishly complicated” —I am not sure whether that is an unparliamentary phrase or not—and then added, “I do not think all these three amendments make it any simpler”. I apologise if that is the case.

All three amendments are very similar to each other, but perhaps rather immodestly, I think mine makes the issue a bit clearer than the others, particularly in relation to one case that the Minister knows I have a particular interest in—I know this sounds like special pleading, and I will come to that in a moment—which is the Sorbie project near Ardrossan in North Ayrshire. I know representations have been made to him about it, and I tried to intervene—I should perhaps have got up a bit earlier—to try to get some clarification in relation to Sorbie. Government legislation can be interpreted in different ways, and if the Minister had been able to say then that Sorbie is covered by his amendments and that they will be interpreted as allowing it, it would have saved me having to speak at all. That would have been merciful, but I will speak and then see if he can say in his reply whether or not it is included.

The key difference is that my amendment expressly covers the situation where the planning authority’s decision to grant planning permission was subject to a planning agreement being entered into. I do not think that the wording of the amendment of the noble and learned Lord, Lord Wallace, covers that scenario.

The lawyers who have been advising me say that my wording removes any uncertainty over whether a planning authority decision which was subject to a planning agreement being entered into can actually meet the criterion, “a grant of planning permission was resolved”. With my wording, Ofgem would not be able to say that if the planning authority made the decision subject to the planning agreement being entered into, it would not qualify.

Ultimately, the difference between the amendments is very slight and—this is the point—Ofgem might take the view that “resolved to grant” would include where this was subject to a planning agreement being entered into, because the most likely reason for a delay between a planning authority decision and planning permission, or a decision notice, being granted is that a planning agreement was required. So the principle behind both amendments is the same: that a planning agreement delayed the grant of the permission. My wording is slightly clearer on that point.

My noble friend Lord Grantchester’s excellent amendment in Motion A4 is the same as that of the noble and learned Lord, Lord Wallace, subject to one difference. As I understand it, my noble friend’s new amendment requires the planning permission to have been granted within three months of 18 June 2015, that is, by 18 September 2015. This amendment would not work for Sorbie or for Crookedstane, as the decision notices were not issued until December 2015 and January 2016 respectively. I am arguing that they should be included.

Subsection (f) of my amendment is specific to Sorbie, as it clarifies the different legislation which applied to this project as it was dealt with under delegated authority in Scotland. The existing legislation does not deal in any way with a planning application which was processed under delegated authority under the Planning etc. (Scotland) Act 2006.

I want those included. It may be a bit of special pleading, but I think that noble Lords who heard me last time will agree that it is a very good case, and I want to mention it briefly again. Sorbie Farm is a dairy farm in North Ayrshire. The price of milk was going down, and it was in financial difficulties. It was advised to diversify, and one of the obvious ways of diversifying in that area was to plan a wind farm, and it decided to go ahead in that way. A great deal of effort was put into it, and a lot of investment; the farm had already invested a great deal.

If the amendment were to be carried, it would in no way challenge government policy or the whole principle. Whether or not we agree with the points made by the Minister in his introduction, that would not be contested. The position in relation to Sorbie was that North Ayrshire Council approved it in June 2014. However—my noble friend Lady Liddell will understand this very well—it was called in by the Scottish Government due to an aviation objection which was subsequently withdrawn. The application was then granted on appeal in November 2015. Although the grace period wording would, on the face of it, allow the project to proceed, it is threatened by what those advising me consider to be inadequate drafting in the Bill, which my amendment is intended to clarify. It is not clear whether the approval date would be November 2015 or the original date when it was approved.

If the Minister can consider the matter and let me know at some point during the debate that Sorbie would be included, I would certainly be happier—no, I will not say that; I am never happy about government legislation, but I would be less distressed by it as it goes through.

Notwithstanding all that, and the special pleading for Sorbie, I support the amendment proposed by my noble friend on the Front Bench. It does not challenge the Government’s policy; it does not undermine the manifesto on which they were elected; it does not threaten any of the basic policy, but it brings justice to developers who were encouraged to develop renewable energy projects and who, in some cases, have invested up to £1 million each in getting them off the ground—or on the ground. They did it in very good faith, and then the ground was taken from beneath their feet by this Bill, which they were not expecting. The specifics of it were not included in the manifesto.

I hope the Minister will give serious consideration to accepting the amendment put forward by my noble friend Lord Grantchester, and even more serious consideration to accepting that Sorbie should not be excluded on the basis of this legislation as currently drafted.

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[The Duke of Wellington (Con)]

My Lords, I immediately declare an interest in land in South Ayrshire, as detailed in the register of interests.

I support the Minister. Recently, I read very interesting figures showing that, in Scotland, there is now 16 gigawatts of installed or consented capacity of onshore wind farms, against a peak demand of 6.5 gigawatts. The shocking figure has emerged that, in 2015, £90 million was paid in constraint payments—that is, to pay wind farm owners not to allow their turbines to turn. Surely this is mad economics. There is no justification whatever for allowing any extension of the deadline for subsidies to wind farms that are consented, and I therefore urge noble Lords opposite to support—

[Lord Foulkes of Cumnock]

Will the noble Duke not admit that we are not looking to extend the deadline at all? The Government are proposing to bring it back, so it is not an extension but a reduction in the deadline. Since I used to represent his interests, if not get his vote, I hope he will consider that.

[The Duke of Wellington]

My Lords, my understanding is that the Conservative Party announced in its manifesto that it wished to terminate these subsidies earlier than originally anticipated. That is a manifesto commitment that we in this House are now asked to agree. My argument would be that, however deserving the case may be, there is no justification for extending beyond the deadline established in the Bill. That is why I urge noble Lords opposite to support the government amendment.

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[Lord Bourne of Aberystwyth]

We Conservatives have put forward our own definition of justice, rather than seeking to put a gloss on it in a way that is helpful to the noble and learned Lord’s argument.

The essential difference is one of deployment. Every proposal put forward by the noble and learned Lord would increase deployment. We feel that we are doing the right thing in balancing the interests of investors with the wider interest, what was in the manifesto and votes in the other place.

The noble and learned Lord raised the issue of steel, suggesting that this measure would make a massive difference and therefore we have to adopt it. As is widely recognised, the Government are committed to doing everything they can on steel, and indeed are delivering—on procurement, on relief on energy costs, on action against dumping. I hope that we will have his support in those matters.

I turn to the noble Lord, Lord Foulkes, who, with his customary passion and fervour, put forward arguments in relation to an area that he knows well. I respect where he is coming from—of course, I understand that—but I do not think that there is any ambiguity in relation to Sorbie. I have checked this and do not want to give a running commentary on planning issues—I should not seek to do that and it would be unwise to do so—but it seems to us that it is very clear that Sorbie falls the other side of the line. I do not think that there is any ambiguity there but, as I said, I cannot really give a running commentary on it.

[Lord Foulkes of Cumnock]

I do not seek a running commentary; I just seek a specific answer to a specific question. Sorbie was approved well in advance. It was delayed because of the aviation objection, which was subsequently withdrawn. Therefore, it is reasonable to assume that it was approved prior to the relevant date, and that is an interpretation that could be put on it by the department or by Ofgem. I am seeking an indication that at the very least the Minister will have this examined to see whether that is a possible interpretation of the current position.

[Lord Bourne of Aberystwyth]

The noble Lord is being very creative. I do not think that there was any legal doubt about it. He has referred to it previously as a technicality in a broader sense. I will write to him if I am wrong on that. We will double check but I do not think that there is any uncertainty in relation to that matter.

I move on to what was said by the noble Baroness, Lady Worthington, in relation to CFDs. That of course goes wider than the current debate, which is focused on wind deployment, but I take on board what she said. We have made statements about new technologies within CFDs. The CFD system is designed with this in mind. As I think the noble Baroness knows, CFD auctions for less-established technologies will be taking place later this year in relation to pot 2, and further details will be issued in relation to that.