Energy Bill

Debate between Lord Gardiner of Kimble and Lord O'Neill of Clackmannan

Thursday 11th July 2013 Grand Committee

[Lord Gardiner of Kimble]

My Lords, I am particularly grateful to the noble Baroness for this opportunity to consider this clause, which will enable the Secretary of State to charge fees for providing energy resilience services in the event of a disruption or threatened disruption to energy supplies. It will allow the Government to recoup some or all of the costs of the services provided to businesses, and to set appropriate fees for these services.

The clause does not set the rate of any fees or charges. It will enable the Secretary of State to set fees either through secondary legislation or through administrative means and, as such, to recoup some or all of the costs of providing the service. It cannot and will not be used as a revenue-raising measure; that is not the purpose of this provision. The services will be provided on a discretionary basis, because businesses can choose to take advantage of them or not, based on balancing the effect on revenues and meeting contractual obligations against cost of the service.

The services which the Government may provide, to help improve the resilience of the energy sector, are those such as making available personnel, supplies, equipment or other assets, to businesses. Examples of where the Government could provide a service for which it might be appropriate to charge businesses include: provision of personnel in event of widespread impacts on workers due to flu or industrial action; equipment or vehicles which have greater flexibility in extreme weather conditions, allowing companies to carry out repairs or clean up more effectively; and provision of assets to enable a critical component of the supply chain to remain viable in the short term and until alternative options are identified.

The need for this power became apparent last year when there was a threat of industrial action by drivers, which would have caused widespread disruption to fuel supplies across the UK. As a result of that, the Government have set up a military fuel school to train military personnel to drive commercial fuel tankers. Drivers could be deployed to haulage companies in the event of a future dispute of this nature, and this power would enable us to charge those companies for some or all of the costs incurred by Her Majesty’s Government—which is to say, the taxpayer.

My noble friend Lord Roper raised the Delegated Powers and Regulatory Reform Committee, and the recommendation for the removal of subsection (3)(b) which enables the Secretary of State to set the levels of the fees by means of a direction to be laid before Parliament, as well as by means of regulation. The Government are considering all the committee’s recommendations very carefully and will respond in due course. However, I take this opportunity to clarify why we feel that this provision is important.

The requirement for the services proposed is likely to arise in the event of a significant unexpected disruption. This may be necessary to plan and provide services in a situation of emergency and urgency. There may well be situations where it would be appropriate and feasible to set out the level of fees to be charged for a particular service in secondary legislation, and the Government would aim to do so in those circumstances. However, it is likely that there may also be circumstances where it is not feasible to work within the timetable required for secondary legislation, and the flexibility afforded by ministerial direction would be required for those sorts of situations. Lack of this flexibility may make the services difficult to deliver within the optimum timescale. At worst, it could render timely delivery completely unfeasible, with the consequential loss of benefit to businesses, the economy and consumers.

My noble friend Lord Roper mentioned other matters in relation to the publishing of the department’s reply. We will be happy to make it available. It will be published on the department’s website as promptly as is possible. That is in hand.

My noble friend Lord Jenkin made some points. I will say that these powers are not connected with, and would not apply to, provisions elsewhere in the Bill on the security of electricity supplies and capacity market provisions.

For the reasons I have set out, and given the importance of the provision for improving national resilience, the clause should stand part of the Bill.

[Lord O'Neill of Clackmannan]

Will the Minister clarify one point? If there is an official strike, for which due notice has been given, and military personnel are used as strike-breakers, companies will have to pay the Government for the use of the strike-breakers. In that event, what would the companies have to do to recoup the money that they had been forced to lay out to pay for the strike-breaking? Would they have recourse to the courts? Would they be able to sue the unions for the money involved in the strike-breaking activity?

[Lord Gardiner of Kimble]

My Lords, this provision is not designed to interfere with the normal relationships between employers and employees. Wherever possible, the Government’s preference is for the supply of fuel to be maintained by the normal, civilian supply chain. Military personnel would be deployed only where this is not possible. Ministers will take a decision to deploy military personnel only where there is a threat of significant disruption to fuel supplies. Industrial action in this sector can have a very serious impact on the UK economy, as well as endangering the health and safety of our citizens.

[Lord O'Neill of Clackmannan]

The Minister did not answer the question. If the Government impose a charge on companies in the event of an industrial dispute where military personnel have to be responsible for driving tankers, what redress will the companies have to recoup the money that they will have to pay to the Government to fund the strike-breaking exercise?

[Lord Gardiner of Kimble]

We do not anticipate that the companies could recoup in those circumstances.

Energy Bill

Debate between Lord Gardiner of Kimble and Lord O'Neill of Clackmannan

Tuesday 2nd July 2013 Grand Committee

[Lord O'Neill of Clackmannan]

For the convenience of the Committee, would the noble Lord tell us for how much longer we will go on this evening? I was under the impression that we would finish at 7.30 pm, but we also had a target number of clauses to reach. The target is still some distance away and we are now well past 7.30 pm. Could we have some indication of what is happening?

[Lord Gardiner of Kimble]

My Lords, that is the estimated rising time and we agreed with the opposition Whip that we would continue with this last group because we are behind schedule in terms of the clause target. This is the last group that the Committee will consider today.