Electricity Capacity (No. 2) Regulations 2019

Debate between Lord Grantchester and Lord Henley

Wednesday 17th July 2019 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his explanation of the regulations before the House this evening. As he stated, they follow up on the Government’s Electricity Capacity (No. 1) Regulations 2019 passed in April. That brought forward modifications to the capacity market that would operate during the standstill period following the legal challenges to the state aid provisions. These were made on the assumption that the Commission’s and the Government’s positions were indeed correct and lawful.

These regulations continue on that assumption and reintroduce T-3 auctions to take the place of the consequentially delayed T-4 auctions, which will now take place in 2020, after which the outcomes and judgments will be known. In response to questions from your Lordships’ Secondary Legislation Scrutiny Committee’s 53rd report, the Minister’s department replied that the Commission’s investigation is expected to conclude before this winter and that delay into 2020 is very improbable, and that on the judicial review, the UK court hearing is most likely to take place in October. These auctions will not be taking place under any scenario other than a status quo achievement for the Government.

Bearing in mind that the UK’s state aid rules under the authority of the CMA will not diverge from the EU state aid rules in either a deal or a no-deal scenario, the Minister is suddenly in a strong position to declare that nothing has changed. But of course, nothing can be taken with any great certainty. That was the position in the debate on the earlier regulations. The circumstances of the T-3 auction do not differ from that position at all. It is a provisional auction in the sense that whatever is collected or potentially disbursed will be held until the EU study of its processes for defying adherence to state aid is published.

The concerns that were voiced around the House on April’s regulations are still valid as there has been no further consideration of the fact that the court judgment was not merely a matter of process on state aid but included factors relating to demand-side management in the capacity auctions. It is not a foregone conclusion that business will continue as usual. The noble Lord, Lord Stunell, reminded the House of that tonight.

In response to questions regarding the department’s plan B on an adverse judgment, the Government’s reply will be that they will make necessary adjustments. But what is the department’s timing on publishing its five-year review of the capacity market under the Energy Act 2013? Will that be before any judgment, such that the review may need to be withdrawn subsequently? Is the review now ready, after the Minister in the other place stated that the Government’s intention was to publish this summer? As the capacity market is still in the same position as last April, and the UK has an 11% margin in supply, I repeat: what is the rush?

In saying that, I repeat that I appreciate that the continuity and consistency of the capacity market is important to industry, and Labour would not wish to undermine either the security of electricity supplies or industry confidence in the capacity market as an investable mechanism to drive through change, bring about cost savings and value for money.

However, in one respect, the T-3 auction proposed under this order would help clarify the trend in clearance prices. In February 2017, the T-4 auction cleared at £22.50 per kilowatt. In February 2018, the T-4 auction cleared at £8.40 per kilowatt, and the latest auction in December 2018—admittedly the T-1 auction following the court hearings—cleared at a mere 0.4p per kilowatt. Ministers have repeatedly stated that having an 11% margin on supply was an indication that the capacity market was working well. What does the Minister expect the results to be for these forthcoming auctions? Does the latest price indicate that the capacity market is not needed, that there is ample capacity and that payments will be virtually nil for standing by to supply into the market? I echo the remarks of the noble Lord, Lord Teverson, about storage, and other aspects.

Labour does not oppose this order. It is important that the current chaos in the capacity market is resolved as much and as soon as possible. The regulations, although provisional, will stabilise the market, and judicial resolutions to the situation should be forthcoming shortly. Nevertheless, some serious probing is needed with regard to the future direction of policy in the capacity market.

Questions around the future of the capacity market are highlighted by the inclusion of subsidy-free renewable technologies to bid into the capacity market through this order. The capacity market was introduced to enable the energy market to transform from one based on fossil fuels to one based on new low-carbon technologies, while maintaining security of supply.

The Minister may say that it was always anticipated that the capacity market framework would allow the participation of renewable technologies at some point, so he is now confirming that this is that point. Despite any margin of supply, does the Minister expect that the capacity market will be a permanent feature? Can he clarify the difference under paragraph 7.14 of the Explanatory Memorandum whereby some renewables are excluded should they receive support from contracts for difference, the renewables obligation or the feed-in tariffs, whereas other participants receiving other forms of support can have their capacity payments adjusted to reflect other state support payments? Paragraph 7.15 states that regulation 49A of the principal regulations for low-carbon generation support is amended to allow this change.

The Minister in the other place stated on this point that onshore wind, offshore wind and solar technologies will now be able to participate, and the noble Lord the Minister has repeated that. Now that the Government believe that the capacity market is the right mechanism for achieving security of supply at the lowest cost to consumers, can he now give a further update on the position of onshore wind? As it is the cheapest source of low-carbon energy, is it now a hollow achievement for it to be allowed to bid into the capacity market when it is banned from obtaining planning permission? Can the Minister now publicly endorse that onshore wind will be allowed to bid into the CfD framework on an equal basis?

In the report Quantifying Benefits of Onshore Wind to the UK, published yesterday by Vivid Economics—a group that does scenario modelling for the Treasury—it was stated that UK customers could achieve a £50 annual saving to their bills through onshore wind being made available. Will the Minister give his assessment of this report and indicate when onshore wind may participate in the UK’s energy market?

Finally, under paragraph 7.18 of the Explanatory Memorandum, it states that other technical issues have been addressed in this order. They do not seem to be material, but nevertheless I would be grateful if the Minister could write to me with an indication of which have now been improved. With the misgivings stated, I can approve the order before the House tonight.

[Lord Henley]

My Lords, I am grateful to all three noble Lords for their interventions and I will try to deal with as many of the questions as possible. I believe I have a certain amount of time in which to respond. I am not quite clear when the usual channels want to return to other matters but I imagine that, whenever it is, it should be seen as a limit rather than a target. Therefore, I will try to keep my responses as brief as possible, and there are possibly one or two that I hope noble Lords will accept in writing. I am thinking particularly of the last point on the Explanatory Memorandum made by the noble Lord, Lord Grantchester.

I think we are all, to some extent, singing from the same song sheet in that we all have the same clear aim of wanting to head in the direction of getting to zero carbon by 2050, as we made clear in our recent announcement. It might be that others feel that it can be done quicker or in different ways, but we are all trying to do the same thing and to see that we achieve increasing amounts of electricity generation by low-carbon means. As noble Lords will be aware, we have achieved a great deal—consumption is down to something of the order of 5% coming from carbon.

We also believe that the capacity market is the right mechanism for delivering security of supply at the lowest cost to consumers. I will write to the noble Lord, Lord Teverson, who asked for detailed figures on the overall costs of that over the years. The noble Lord, Lord Grantchester, asked whether we could speculate about future auctions in the light of the continuously lower prices achieved at repeated auctions. Obviously, it would be wrong for me to speculate in any way about what price might be obtained—that is not what one does in advance of an auction—but it is encouraging that the price has come down. We still believe that that process is necessary and the right way to deal with these matters.

The noble Lord, Lord Grantchester, also asked about the five-year review. I can tell him that it will be published soon. I cannot give him a precise date at this stage but I will say “soon”, “shortly” or something of that sort. However, it is certainly on its way and I very much hope that we can look at it in more detail in due course.

I turn now to the points raised by the noble Lord, Lord Stunell, particularly about the judgment of the European court and the decisions by the Commission. He said that the judgment was more than just procedural. The court identified elements of the capacity market which should have given the Commission doubts about whether the scheme was compatible with state aid requirements. That meant that the Commission should have conducted an in-depth investigation before deciding whether to approve the scheme. Importantly, however, the court did not rule that the design of the capacity market was incompatible with state aid requirements or direct that changes be made to the mechanism. We have carefully considered the matter. When I say “we”, I mean department officials and my right honourable friend the Minister for Energy. I cannot confess that I have read the detailed paragraphs that the noble Lord referred me to, but we have carefully considered each of the issues raised in the court judgments, and we remain confident that the design of the capacity market is compatible with the state aid requirements, including in the way the system is designed in respect of demand-side response.

Climate Change Act 2008 (2050 Target Amendment) Order 2019

Debate between Lord Grantchester and Lord Henley

Wednesday 26th June 2019 Lords Chamber

[Lord Henley]

My Lords, I have mentioned the Treasury review, which will be available when it comes out in due course, but that question is a matter for the Committee on Climate Change, which is independent. The committee will no doubt—I hope—consider my noble friend’s request and make that information available to him.

The second big topic I want to address in the limited time for which I feel the House will tolerate my speaking is the beginning of the question of how. I have made clear that the energy White Paper will come forward later in the summer. At this point, I have to say that, if noble Lords can be a little patient, there will be more to come before the House and more to hear. There have been accusations that, although we have met the first three carbon budgets, we are not on track to meet the fourth and fifth. We are over 90% of the way to the fourth and fifth carbon budgets, even before many of the policies and proposals in the clean growth strategy have had an opportunity to bite. But we recognise that there is a need to take further action and we are delivering that.

I shall give a few examples. I am thinking about complaints from my noble friend Lord Deben about housebuilding standards and a point made by the noble Lord, Lord Fox. The future homes standard provides that new-build homes will be future-proofed with low-carbon heating and world-leading levels of energy efficiency by 2025. We have published the carbon capture and utilisation action plan. We have announced £60 million for the next contracts for difference auction. But I note the point made by the noble Baroness, Lady Brown, about the offshore wind sector deal, which she has championed. She also very kindly mentioned the fact that I had spent lunchtime—and missed my lunch—addressing that conference, but I still had time to come here and deal with this important business. I am grateful for having had the opportunity to do so. We have also increased support for the transition to zero-emission vehicles to nearly £1.5 billion.

We are doing a lot; there is more to do. The order is about legislating to end our contribution to one of the most serious environmental challenges we face: climate change. We aim to be one of the first countries and one of the first major economies—if not the first G7 country—in the world to legislate for that net zero target. I believe we are doing, and achieving, a great deal. I do not believe that the amendment in the name of the noble Lord, Lord Grantchester, takes us any further. In fact, it is an unhelpful distraction. He said that it was likely to be misinterpreted; I have to say that it was, and is. I hope he will feel able to withdraw it.

[Lord Grantchester]

My Lords, I am grateful for all the contributions to today’s debate. We should not make the order contentious but we should point out where the Government are falling short. The debate should not disguise that this is a momentous occasion, and I am honoured to be able to approve the order today. The Government are right to adopt Labour’s policy by amending Section 1 of the Climate Change Act 2008 to create a more ambitious target. Indeed, it may be the only way to avoid a carbon catastrophe and the horrors that will be realised if the world does not come together to prevent a 1.5-degree temperature rise by 2050.

However, I regret that we are going about this in the wrong way. Net zero emissions by 2050 is an enormous aim, and it needs more than rhetoric to be realised. We need to develop alternative energy sources on a scale never seen before. The Government must urgently commit to a green industrial revolution and a transformation of energy in the UK, harnessing the resources of the state and the private sector to invest in the infrastructure. However, for an issue that will have such enormous ramifications, the Government have not outlined the route ahead. It is only right for Parliament to be given the information to consider such changes in full, and that Parliament must be able to appreciate the necessary implications of all actions.

The Government cannot simply lay this instrument and hope for the best. Challenging times are ahead and the lives of each of us will change. We now need a commitment that the absolute priority is overcoming this existential threat to our planet. Should circumstances change and it becomes apparent that the Government must bring the target forward, we need a guarantee that they will be prepared to do so.

According to the best scientific advice at the moment, the new target of net zero emissions by 2050 is the right path for the UK to avoid the greatest challenge the planet has ever faced. Because of the urgency of the climate challenge, I understand that, in these unusual and exceptional circumstances, no consultation is being undertaken and there is very little information at this stage. However, I wish through this amendment to put the Government on notice that they must come forward with full information on how the UK will fulfil the statutory commitment. I think the House is in unison on this, and I ask it to underline the challenge to the Government by voting for the amendment.

Renewable Energy

Debate between Lord Grantchester and Lord Henley

Wednesday 5th June 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, I, too, thank the noble Lord, Lord Cameron, for introducing this debate and emphasising that what we in this country should be doing is playing to our strengths. He mentioned that, unlike a lot of other countries, we have an awful lot of tides, just as we have an awful lot of wind, and that we should certainly make use of them. I hope that I will be able to set out what we are doing, what we feel we can support and what the constraints will be in the short time available to me.

I was very pleased that, in the main, everyone—excluding the noble Baroness, Lady Maddock, and the noble Lord, Lord Grantchester—took a relatively positive line on what we were doing. I think that we have a pretty good story to tell in this country. Over the past 30 or 40 years, under a variety of different Governments, we have reduced our emissions. My colleagues and I have said on many occasions that we have reduced them by more than 40% while seeing the economy grow. We want to continue that process.

I make clear in the presence of my noble friend Lord Deben that we will be responding to his committee’s report, with its challenging targets, in due course. My noble friend and other noble Lords would not expect me to presume on my right honourable friend the Secretary of State by responding at this stage. We have been set challenging targets. We will want to make progress towards them. We will want to continue to provide leadership for the world, as mentioned by the noble Lord, Lord Grantchester, the right reverend Prelate and the noble Lord, Lord Giddens, who talked about the failings of Brazil and America to acknowledge that there is any problem at all. Again, I remind the House that we are anxious that we should get the opportunity to host COP26 next year, and support from all sides of the House would create a very positive approach.

Living where we do, we obviously want a diverse electricity system that provides homes and businesses with secure, affordable and clean power. However—we keep coming back to this—we want that power at a cost that is both acceptable and supports continued growth. On many occasions, noble Lords have talked about the fact that costs come down. We have seen that with wind, solar and tidal; I am grateful to the noble Lord, Lord Berkeley, for his comments there.

There is some doubt about whether one will see costs come down in quite the same way for a technology that is not exactly new and, as the noble Lord reminded us, is largely about pumping a lot of concrete and rock into the ground; after all, concrete is not the most carbon-friendly material. One cannot see technology reducing costs there in the same way as it has done for wind and solar. Again, as the noble Lord, Lord Cameron, said, we must play to our strengths; we will do so for wind because we are a very windy spot. To do that, we obviously need to continue to bring down the costs of all forms of low-carbon generation; I am grateful to my noble friend Lady Bloomfield for mentioning how many there are. As the noble Lord, Lord Teverson, said, we have not seen the same cost reduction in areas such as nuclear as we are seeing with solar and wind.

I have some criticism of the noble Baroness, Lady Maddock, for taking a rather negative approach to what the Government are and have been doing. We are investing a great deal of public funds—some £900 million—in innovation, including a further £177 million to reduce further the cost of renewables and up to £100 million in leading-edge carbon capture and storage and industrial innovation. That is to drive down the costs there and, as I said, we have seen remarkable cost reductions over the year. We have seen low-carbon generation rise from 54% in the third quarter of 2017 to a record high of 56% in the third quarter of 2018, due to that increased renewables generation.

It has been a record-breaking year. I will give noble Lords some figures, although I will probably be able to give even better ones in a few weeks’ time. We have gone a whole fortnight without any coal-fired generation, which we aim to get rid of. This is in a country where, some 70 years ago, a Labour politician said:

“This island is made mainly of coal and surrounded by fish”.


Anyway, we are getting rid of the use of coal to generate electricity; as I said, we have just gone another fortnight without using any. Last year, there were nearly 1,800 coal-free hours over 10 weeks in total—so we are making progress.

I will deal with one or two individual issues. Since all noble Lords mentioned Swansea Bay, it is right that I address both that and the programme for six tidal lagoons proposed by Tidal Lagoon Power Ltd. I repeated the Statement made by my right honourable friend in another place on costs. We made it quite clear that the costs of that particular programme did not meet our requirements for value for money. I appreciate that the noble Lord, Lord Giddens, had some queries about that, as did other noble Lords, but we published a summary of our value for money analysis. The figures were clear; even the developer himself conceded that the project required a CFD strike price three times that of onshore wind.

Further, that issue was looked at by both the Welsh Affairs Select Committee and the BEIS Select Committee, which published details of the additional requests from the Swansea Bay developers over and above a 35-year CFD at £92.50 per megawatt hour. It was expensive. That fact was echoed by the National Infrastructure Commission in its national infrastructure assessment, published last July, which stated that,

“tidal lagoon power will remain an expensive technology in the future. The extra benefits which arise from its predictability are not enough to offset its higher capital costs. And it will never be a large-scale solution: an entire fleet of tidal lagoons would only meet up to 10 per cent of current electricity demand in the UK”.

I appreciate that other tidal projects are being looked at. For example, the Mersey and the Solway—in my part of the world—were mentioned. Officials and Ministers in the department have had several meetings with those promoting such things. We will continue to hold meetings and talk to developers. For example, the Solway Firth tidal lagoon project is at much too early a stage of development: to date, the engineering details have not been finalised and the developers have not yet applied for the consents and licences that would be required to develop the site. Obviously, we will continue to look at that project, take an interest and make a decision in due course on whether the project is good.

As the noble Lord, Lord Grantchester, mentioned, it is important to take environmental considerations into account, but there has been no detailed monitoring at this stage. For example, no seabed surveys have been undertaken on the sites; I am thinking in particular of the one in the Solway. So at this stage we must proceed carefully before going further.

Other noble Lords, of which the noble Lord, Lord Cameron, was the first, mentioned the possibility of tidal stream energy. Again, that should be looked at. The Government have provided long-standing and targeted support for the development of both wave and tidal stream energy. Since 2003, we have provided £175 million of innovation funding in the wave and tidal sectors; we have provided almost £80 million of that since 2010.

That has supported many firsts, including the wold’s first megawatt-scale tidal stream turbine, SeaGen, which was deployed in Strangford Lough in 2008. There has been much mention of Orkney, including by the noble Lord, Lord Berkeley, and the noble Baroness, Lady Maddock. I visited Orkney last year and met her colleague, Alistair Carmichael, and saw some projects that are being tried out there, with government money going into them. The world’s first pre-commercial array, the 6 megawatt MeyGen project off Caithness, received £10 million from BEIS innovation funding and is supported under the renewables scheme.

There have been some successful small-scale tidal stream tests over recent years. They are still at an early stage of development but they might be at the point where, as with wind, the price could come down—although I suspect that, for some of the bigger tidal barrages, the prospects are possibly less good. However, it must still be viewed in the context of the falling costs of other forms of low-carbon generation such as offshore wind. At the moment, their costs are five times that of offshore wind. I assure noble Lords that officials, Ministers and my right honourable friend Claire Perry will continue to engage with the sector to better understand its cost-reduction potential.

Finally, I reiterate that we will publish the energy White Paper in the summer, which will build on my right honourable friend’s strategy address in November of last year, setting out four guiding principles for electricity policy and addressing the challenges arising from the radical transformation of the energy system over the coming decades. It will take a long-term view of the energy system, out to 2050, and show just how we can deliver our climate change goals and the aims of the industrial strategy. At that point, or sooner, I hope that my right honourable friend will be able to respond to my noble friend Lord Deben and his climate change committee report.

I appreciate that my time is up. I hope that I have given a partially positive view of what the Government can do. There will be more we can do and further developments in all forms of renewable energy. Tidal may be part of that, and all forms of tidal—whether by barrage or otherwise—will be looked at.

[Lord Grantchester]

I appreciate that the Minister is under tight time constraints, but as the energy White Paper approaches, could he give us a detailed answer on how the control of low-carbon levies will operate?

[Lord Henley]

The noble Lord will have to be patient and wait for the White Paper. No doubt we will respond and he will have an answer in due course.

Businesses: Technology

Debate between Lord Grantchester and Lord Henley

Wednesday 10th April 2019 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, before asking my question, I congratulate the noble Lord the Government Chief Whip on the achievement of his family business, Taylors Bulbs, in reaching the celebratory milestone of 100 years in business. My best wishes to him and his business for the next 100 years.

The noble Lord, Lord Holmes, is correct to identify and endorse huge commercial opportunities. However, a PwC report in 2017 highlighted that AI and wider automation could result in up to 30% of UK jobs being dispensable. Change can be painful. What steps are the department taking to ensure that all employees benefit from these developing technologies, such as by an improved leisure/work balance, and that AI does not simply lead to mass redundancies?

[Lord Henley]

The noble Lord takes a depressingly pessimistic view of that PwC report. It pointed out that advances in that sector could lead to growth of £230 billion between now and 2030. That is to be welcomed. It also pointed out that jobs would disappear, but I think it went on, as did another report to which I referred the other day, to point to a very large number of new jobs in the sector, which would probably be more highly paid and more highly skilled and which we could provide in this country.

Fuel Poverty

Debate between Lord Grantchester and Lord Henley

Thursday 4th April 2019 Lords Chamber

[Lord Henley]

On that last point, I assure my noble friend that we estimate that the price cap will save consumers something of the order of £1 billion annually on their bills. On his first point about setting the levels of subsidy for renewables, it is important to provide the appropriate subsidy to see that we get the appropriate developments in renewable energy. As my noble friend will be aware, we have seen a dramatic drop in the cost of producing offshore wind, for example; the same is true of solar and we hope those trends will continue.

[Lord Grantchester (Lab)]

One of the key aspects in reducing fuel poverty is giving people the tools to manage themselves, through the infrastructure development of smart meters. On this development curve, can the Minister give the House a measure of success regarding how many households have been drawn out of fuel poverty by their introduction?

[Lord Henley]

My Lords, the noble Lord is right to talk to the importance of smart meters. We hope that by 2020, every household will have been offered a smart meter. Most people are satisfied with them and, if used properly, we expect smart meters to enable consumers to take something of the order of £300 million off their fuel bills.

Electricity Capacity (No. 1) Regulations 2019

Debate between Lord Grantchester and Lord Henley

Wednesday 3rd April 2019 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his introduction and explanation of the regulations before the House. They are necessarily very technical and controversial as they involve the capacity market, state aid and a judicial review of the actions being taken by the Government.

This instrument was the subject of a lengthy report from Sub-Committee A of your Lordships’ Secondary Legislation Scrutiny Committee. The Government are embarking on a high-risk strategy and the committee’s 20th report concludes with the recommendation that,

“the House may wish to explore further how the Government are proposing to ensure that the Capacity Market can continue to operate in the future”.

The noble Lord, Lord Tope, raised this issue among his concerns.

As the Minister has explained, the situation arises following a case brought by a demand-side response provider, Tempus Energy, to the European Court of Justice that the construction of the capacity market discriminates against its interests. The European Commission has suspended the state aid clearance following the ruling, producing what may possibly be a lengthy standstill position that will impact on delivery year T1 2019-20, which is due to begin on 1 October 2019 and could continue beyond October 2020. Does the Minister agree that a delay of this magnitude beyond 2020 could bring about a complete suspension, or indeed termination, of the capacity market mechanisms with a high degree of certainty that that may result in unwinding the whole scheme, which has been in place since 2014? What is the Government’s risk assessment of that outcome?

I appreciate that the Minister is in severe difficulty as this period brings into play the interplay between the UK’s exit and the complexities around the state aid regimes of the EU and the UK post any implementation period and deal or no-deal scenarios. The Government seem to be making risky assumptions that not only will the ruling be swift but that this is only a procedural issue on the implementation of the state aid approvals. Does the Minister agree that the judicial review case negates those assumptions and that the robustness and fairness of the capacity market is secure?

The noble Lord, Lord Stunell, has raised serious issues in relation to this situation and the way the Government have implemented the scheme. Perhaps I may further underline the contention that the capacity market has not been entirely equal in the Government’s assessment to providers and that the Government appear to be adjusting the mechanisms as they consider their approaches to the first five-year review? Would not a safer and less risky strategy have been to halt all auctions and bring forward the review of the workings and results of the capacity market against the original objective; namely, that the capacity market was set up to bring forward long-term new technological capacity to reform the energy market away from fossil fuels?

As the Minister has explained, the UK has an 11% capacity margin and these T1 auctions are mostly short-term capacity builders. Can he outline how and why a suspension pending these reviews while the ruling is being reconsidered could be interpreted to undermine more longer-term solutions coming on board? I appreciate that the confidence of industry investors is crucial, but what is the rush? This shadow system outlined in the Minister’s remarks at the beginning, on the assumption that the ECJ ruling is merely procedural and confirmatory, appears to have the backing of industry generally. I am grateful for the considerations on the issue from Simon Markall on behalf of Energy UK.

I appreciate that continuity and consistency of the capacity market is important to industry and that competition between technologies could be maintained through policy evolution. Any perceived lack of level playing field in winning CM contracts could be solved while maintaining the working capital and cash-flow stability of the market through these shadow, deferred, contingent mechanisms under the instrument. Labour would not wish to undermine either the security of electricity supplies or the market that relies on this scheme. We understand that, over the longer term, industry confidence in the capacity market as an investable mechanism is an important driver for change, with cost savings and value for money overall. Nevertheless, there are concerns that the transfer from fossil fuels towards renewable and nuclear fuels is not proceeding at pace—as the debate yesterday on the climate emergency revealed.

The capacity market has brought forward essentially only one combined-cycle gas plant of 400 megawatts against recent open-cycle gas plants, which are more polluting. The Government have given contracts to diesel generators—more polluting than coal—when they refused to set a decarbonisation target for 2030. The response that the nuclear industry is in turmoil despite a sector deal agreement underlines the situation. The 2 gigawatts of new interconnectors is slightly beside the point.

I assure the Minister that I appreciate that progress has been made. I welcome the share of electricity from low-carbon sources now reaching 56%. Nevertheless, the issue is not being taken seriously enough or the necessary pace of change being achieved. I ask the Minister to commit to publishing the Government’s five-year review of the electricity market reform this summer and for it to include a full review of the capacity market. Can he assure the House this afternoon that the Government have a full appreciation of all the risks by outlining all the discussions the Government have undertaken with the Commission? With that assurance and the assurances that the Treasury will guarantee all the conditional payment obligations to be underwritten, that his department will continue dialogue with all parties on this review and that this instrument is supported by industry, I am happy to approve it today.

[Lord Henley]

I am grateful to the noble Lord, Lord Grantchester, for his support for this instrument, and I look forward to that support in a few minutes when I conclude my words. At the same time, he called for a halt. Since we are talking about security of supply, I simply cannot go along with him. It is the Government’s view, widely supported by the industry, that the capacity market is the best way to deliver security of electricity supply at the lowest cost to consumers. We will debate this matter tomorrow at Question Time. It is important that we have security of supply and that we have it at the best price. As I said in my opening remarks, our current security of supply positon is robust. I cited the figure that we reckon the margin this winter will be— over 11%, the highest for five years. That shows that the market works.

A number of concerns have been raised and a number of questions put, and I hope I can deal with them. I will first get on to the question of uncertainty and engagement that the noble Lord, Lord Tope, raised, echoed by the noble Lord, Lord Grantchester. It is important to recognise that there is uncertainty. We appreciate that any judgment of the Court of Justice of the European Union creates uncertainty and potential difficulties for the industry.

As I made clear, the Commission is investigating the scheme, and recently confirmed that it is moving on to the next phase. This is an important step as we work to reinstate state aid approval for the capacity market as soon as possible. We are working with the Commission to ensure that we have everything necessary to reconsider the scheme as quickly as possible. I assure the noble Lord, Lord Tope, that we will continue to engage regularly with stakeholders; we will provide them with updates on progress and the re-notification process, and clarity on arrangements during and following the standstill period.

We are confident that the Commission will approve the scheme following its investigation. We hope that that investigation will conclude ahead of October 2019, the start of the 2019-20 delivery year. We consider it very improbable—although it is possible—that the decision will be delayed into 2020. In the unlikely event of a negative state aid decision, or no decision, by October 2020, the instrument will terminate capacity agreements and, as I said in my opening remarks, any entitlement to receive capacity payments. Supplier payments then held by the settlement body will also be returned, which will ensure that supplier payments cannot be held indefinitely.

The noble Lord, Lord Tope, asked about the position after a no-deal Brexit. The Government have made it clear that no deal is exceedingly unlikely. However, while the UK remains a member state or is subject to an implementation period following a negotiated withdrawal, the current state aid regime will apply and the Commission will need to approve the scheme. The Government intend there to be a domestic state aid regime after the UK leaves the EU. The draft State Aid (EU Exit) Regulations 2019 are currently before Parliament. In a no-deal exit, the UK will be subject to a domestic state aid regime, for which the Competition and Markets Authority, rather than the Commission, will be the regulator. This assumes that the draft State Aid (EU Exit) Regulations are agreed by both Houses and made. If, at the time the UK leaves the EU, the Commission has not yet approved the scheme, it will then be a matter for the CMA to investigate and approve that scheme.

The noble Lord, Lord Tope, asked whether the decision of the court itself was purely procedural. This question was echoed by the noble Lords, Lord Stunell and Lord Grantchester. The court gave examples of where the Commission should have had doubts and should have investigated them, but it did not rule that the design was incompatible with state aid requirements. We have carefully considered each issue raised through that court judgment and remain confident that the design of the capacity market is compatible with the state aid requirements. We cannot pre-empt the outcome of the Commission’s investigations, but we are confident that the scheme will be approved by the Commission following investigation, not least because it has approved six other capacity markets since 2014.

The noble Lord, Lord Stunell, asked whether the capacity market did not sufficiently support demand-side response. As I made clear, the purpose of the capacity market is to ensure security of supply, at least cost, for the consumer—something we all desire to achieve. It is technologically neutral and allows all types of capacity, including DSR, to participate without discrimination.

The design of the capacity market provides for features that support demand-side participation, including lower credit cover, participation as price takers and three metering options. The Government are also taking broader action to support DSR, as set out in the smart systems plan. The five-year review of the capacity market, which the noble Lord, Lord Grantchester, asked about, will also explore further ways in which DSR participation can be supported.

The noble Lord, Lord Grantchester, also asked about the judicial review and the case raised by Tempus. We are confident about our position. The Government will robustly defend this challenge and, as I said, we are confident in the steps we are taking to reinstate the capacity market and to operate the scheme to the fullest extent possible during the standstill period within state aid constraints.

Turning to renewable generation and carbon reduction, the noble Lord, Lord Grantchester, implied that we were not serious about switching to low-carbon electricity generation. As he will be aware, we are committed to switching away from coal. We have announced that we will be giving up coal in 2025 and increasing the share of renewables and gas in electricity generation while reducing the cost of renewables. We have seen a dramatic reduction in the cost—I recently cited the figures for offshore wind—and we have invested £92 billion in clean energy since 2010. We have quadrupled our renewable electricity supplies since 2010 and the share of electricity generated from low-carbon sources reached a record high of 56% in the third quarter of 2018, with 33% from renewables. I hope the noble Lord will accept our commitment in that area.

Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019

Debate between Lord Grantchester and Lord Henley

Tuesday 26th February 2019 Grand Committee

[Lord Grantchester (Lab)]

I am grateful to the Minister for his full and thorough explanation of the regulations before the Committee. Once again, I note that this instrument is brought forward under a no-deal scenario, such that it merely transposes existing regulations into UK jurisdiction with no appreciable policy differences. I am therefore happy to approve the instrument: it does exactly what it says on the tin.

However, I would add that, as they would normally be negative instruments, I am grateful to your Lordships’ Secondary Legislative Scrutiny Committee for recommending that they be upgraded to the affirmative procedure. I agree that they are important for the internal energy market and, more importantly, for the all-Ireland energy market.

We are nevertheless concerned that, in future scenarios, interconnectors will become a key feature in the supply of electricity to the UK and to the EU. How it will operate effectively into the future is a matter of anxiety.

At present, it is an integrated seamless supply, and the single energy market should be able to operate unimpeded in any situation after withdrawal. Last week, Munir Hassan, head of clean energy at CMS, told Utility Week that even in the event of no deal the internal energy market “just has to continue”. In view of this, and of the fact that the internal energy market is seamless, will it be a bit less easy to understand the nature of the electricity market should frictions be put in place with changes between the all-Ireland energy market and the UK, and across the interconnectors into the EU? Is the Minister confident that these regulations and others will enable all that to happen with seamless continuity?

As a result of these regulations, powers will be transferred to UK organisations such as the Gas and Electricity Markets Authority, represented by Ofgem. I Fourth Delegated Legislation

Committee ask again: what organisational and budgetary support will be offered to these groups by the Government to allow them to cope with every necessary increase in workload?

There is also concern over how the all-Ireland energy market will operate in relation to the EU internal market through southern Ireland and into the internal energy market of the UK. I agree that the regulations are largely technical in nature but they assume agreement. We can agree to a grid agreement update, but this nevertheless brings philosophical anxiety.

Lastly, there is concern that the Explanatory Memorandum has not been amended in relation to the upgrade to an affirmative instrument. Under a negative instrument, there are often sections dealing with compliance with the European Convention on Human Rights, but that has not been included. These points may not be strictly material to the upgrade, but nevertheless it would be informative to understand from the Minister why there has not been a redrafting in relation to the affirmative procedure.

[Lord Henley]

My Lords, as I made clear, these are pretty technical regulations that are designed purely for no deal. We laid a package of five instruments to resolve those inoperabilities across the body of retained EU law. As I think the noble Lord, Lord Grantchester, implied, although the committee that looked at them—I am trying to remember which committee it was; I think it was the Secondary Legislation Scrutiny Committee—recognised that they were absolutely necessary, it felt that the cumulative effect of all five warranted the affirmative rather than the negative procedure. That is why we are here today. Whether that means that the Explanatory Memorandum needs an upgrade, I really cannot tell him. I will write to him and deal with that point if it needs dealing with.

The broader question from both noble Lords, but particularly from the noble Lord, Lord Fox, is whether we would continue to participate in the internal energy market in the event of a deal. In the political declaration we agreed that we should put in place mechanisms as part of the future relationship to ensure as far as possible continued efficient electricity and gas trade over the infrastructure linking the UK and the EU, supported by technical co-operation. Further details are obviously a matter for negotiation. It is our position to seek a deal, and I reiterate that the regulations are for a no-deal scenario only.

It is worth reminding the noble Lord, Lord Fox, if he was being overly negative, that interconnectors are already in place between the UK and France and other countries. There is advantage for both parties in continuing to make use of them.

Shipments of Radioactive Substances (EU Exit) Regulations 2019

Debate between Lord Grantchester and Lord Henley

Tuesday 26th February 2019 Grand Committee

[Lord Grantchester (Lab)]

I also thank the Minister for his introduction to the regulations. I confirm my understanding that they just cover the situation under a no-deal outcome and that if there is a deal, these would fall into the future relationship category, subject to negotiation. One might think that even a no-deal situation would lead to a deal of some sort downstream.

Labour agrees that we must have an effective, operable statute book under all circumstances at the time of EU exit and therefore does not oppose the regulations. That is not to say that we are at all happy in the round with having to face a no-deal scenario, which is not supported.

The regulations provide continuity and certainty regarding Euratom and the compliance with nuclear safeguards that the House agreed to last year. The Minister mentioned that the regulations will be implemented through the relevant competent authorities in the UK: necessarily, the Office for Nuclear Regulation for nuclear site licences, but also the Environment Agency in England, the Scottish Environment Protection Agency, Natural Resources Wales and the Northern Ireland Environment Agency, regarding their different agencies for non-nuclear licences.

As the noble Lord, Lord Fox, said a few questions about the regulations were necessarily explored in some depth in the other place. First, on whether the regulations apply only to imports from the EU to the UK, I wondered whether existing agreements on exports to the EU, currently operable through Euratom, would continue to apply. The second point regards the obvious obligations for exporters in EU member states that would fall away. Would a new system be under discussion with Euratom in a no-deal scenario, or would that happen only under negotiations on the future relationship? That is an important point to distinguish under a no-deal scenario.

Once again, I have noted and am grateful that the regulations were drafted in collaboration with the devolved Administrations, all the relevant agencies and the ONR. However, what about Euratom, which will need to continue to be the regulating authority of the Euratom membership? Has it been included in these discussions such that it is happy that we will be fully compliant with IAEA regulations—something that the Minister will have ensured in any case?

As the noble Lord, Lord Fox, said, in the other place, there was a query about the extent of the application to both sealed and unsealed sources. The Minister in the Commons stated that unsealed sources are not covered by the regulations, so it is a completely different matter with a completely different system. Against that, the Explanatory Memorandum states at paragraph 2.2:

“The Regulation covers both ‘sealed’ and ‘unsealed’ radioactive sources”.


There is confusion because that apparently was not made clear by the Minister in the other place, so it would be excellent if the Minister could reconcile that to us and follow up the queries to which I, my noble friend Lord Jones and the noble Lord, Lord Fox, drew attention.

Otherwise, I am content with the regulations.

[Lord Henley]

My Lords, I thank the noble Lords, Lord Grantchester, Lord Fox and the noble Lord, Lord Jones, of Wales, as we shall now refer to him, if he is happy—I am sure he will be—with such a grand title.

--- Later in debate ---

[Lord Henley]

My honourable friend is always correct, but, as the noble Lord knows, even Homer nods, and he might not have been quite as correct as he normally is on every occasion. As I said, I would prefer to have that dealt with tomorrow, between my honourable friend and Mr Whitehead.

The noble Lord asked also about the impact on exports and the reciprocal nature of this. I am afraid I cannot give him any figures about how much is going the other way. If there are some figures on that, I shall certainly write to him. The position in relation to UK exports into the EU obviously sits entirely within the EU’s competence after exit. Operators have been advised that they should seek guidance from the EU and member states on any future requirements on exports to the EU. In that respect, I assure the noble Lord, Lord Grantchester, that we will continue to maintain close relations with Euratom, just as relations with the International Atomic Energy Agency remain important. It is keen that we bear in mind the standards that it will wish to maintain in this area, just as we have always done. I made it clear throughout the passage of that first bit of Brexit legislation, the Nuclear Safeguards Act—which I am sure noble Lords will agree seems quite a long time ago—that we would continue to maintain close relations with those bodies, and I make it clear it now. I think it was the noble Lord, Lord Fox, who asked whether this was the last bit of EU exit legislation relating to nuclear matters but then thought that the next instrument also dealt with such matters. The next statutory instrument is not technically an EU exit regulation, so I think my honourable friend was correct in saying that this was the last of our EU exit statutory instruments on nuclear matters. As he is aware, we still have to deal with quite a number of other EU exit SIs and legislation.

I think that deals with almost all the questions noble Lords asked. The final one was on the competence of the various environmental agencies and whether they have the appropriate skills. All the environment agencies have been dealing with these matters already, so there will be no extra burden on them and no extra skills to acquire. They will continue to work in this field.

[Lord Grantchester]

Can the Minister confirm that it is about not just their skill set but their resource levels, which must be adequate to take on these tasks? It would be useful to have his confirmation on the financial implications of that.

[Lord Henley]

I cannot give the noble Lord any precise figures at this stage, but I can make it clear that they will continue to be adequately resourced for whatever they need to do. I commend the regulations to the Committee.

Carriage of Dangerous Goods (Amendment) Regulations 2019

Debate between Lord Grantchester and Lord Henley

Tuesday 26th February 2019 Grand Committee

[Lord Grantchester (Lab)]

My Lords, I am grateful to the Minister for his explanation of the order before the Committee today, and for providing us with updated information on its passage in the other place. The noble Lord, Lord Fox, said that it is not entirely to do with a no-deal scenario; hence I am a little perplexed as to how this order is split—if that is the right word—into parts that will be nullified and those that will not at the relevant outcome.

I also reiterate that we found it unfortunate that Euratom was swept up into the withdrawal letter, and hence into the withdrawal agreement, and that we need to leave Euratom at the same time as we leave the EU. That is deeply regretted, but I am grateful to the Minister for his updating remarks on the order in the Commons regarding the Transfrontier Shipment of Radioactive Waste and Spent Fuel Regulations 2008.

We see no issue with the order in general; however, I have noted the circumstances on which the Minister reported, and which have been taken up in other contributions around the Committee, around radioactive emergencies, notably in relation to exposure to risks for emergency workers. I welcome the consultation and the Government’s response: this does indeed strengthen the UK’s emergencies preparedness and aligns with IAEA best practice and the highest safety standards. I also welcome the fact that under the regulations the ONR has a duty to provide information to the public about the nature and effect of a potential radioactive emergency and that they introduce a national reference level below which exposure must be kept.

I put on record that it is of great benefit that there is now a duty to have a handover report to a recovery phase in any emergency and that training will be provided to give clarity to workers, including those that the noble Lord, Lord Fox, asked about, who might suddenly come within the bracket of the emergency regulations, though they may not necessarily have been designated as emergency workers.

The Minister paid regard to the setting of the definitive reference level that was part of the debate in the other place. Emergency workers will be exposed to levels potentially above the general level of 100 millisieverts, to a higher level of 500 millisieverts: this is well above the level that workers were exposed to at the Chernobyl disaster, which reached 350 millisieverts. I recognise that this level is in compliance with the EU directive, but will the Minister say whether it is future policy to look at this more closely and perhaps see what can be done to reduce this in order to be less above the level that would pertain in an ordinary situation? I know that an emergency could entail a wide divergence to very high levels; nevertheless, if he can say something about that, it would be helpful.

I also notice that the ONR will publish guidance. Will that have a statutory reference in relation to health and safety at work? Will it include action to be taken should there be a series of spikes that could cumulatively expose a worker to a level well above that which is generally provided for? Is there any responsibility to an emergency worker should he be put into such a position? With those questions, I am happy to pass the order today.

[Lord Henley]

My Lords, again I thank all three noble Lords for their contributions; in particular I thank the noble Lord, Lord Jones, for his insights on CP Snow, particularly The New Men. It is a long time since I read any CP Snow, but I feel that I must go back and read some.

Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Tuesday 26th February 2019 Grand Committee

[Lord Henley]

The noble Lord would like a higher figure than the one we came to after considerable consultation—the increase from the £2,500 we originally proposed to £3,500, which is what these regulations are about. He has suggested, and I presume this is official Labour Party policy, a figure of £5,000. I suspect that if we had suggested £4,500 or £5,000, he would have suggested £6,000, so I do not think we can win on this. The simple fact is that we thought it right that those landlords who are not making any contribution should be encouraged or made to make some contribution. We are talking only about those 6% of properties that fall below the standard I set out in my opening remarks. The implication behind that is that the landlords of the other 96%—it is actually 94%, I am grateful to the noble Lord, Lord Fox—are doing the right thing, as any sensible landlord would do. It is not just about being good to their tenants—although that has an obvious benefit in encouraging tenants to stay and reducing the amount of void time—but much of the expenditure on improving the property will improve its capital value and be of benefit to the landlord. So although I believe, as a good Conservative, in the rights of property, I think it is right that we offer some encouragement to landlords—and this is more than encouragement—to spend money on maintaining their properties and ensuring that their tenants and the wider public benefit from improving the energy efficiency of those properties to at least band D and to higher bands in due course.

[Lord Grantchester]

I thank the Minister for stating that the added benefit of the rise from £3,500 to £5,000 produces a very considerable increase in the number of properties that would then comply. This would provide a win-win scenario whereby the tenant had reduced future bills for maintaining the property and the landlord saw an increase in the value of his property of more than £8,000: the impact assessment puts the increase at £8,500. Both these figures are considerably higher, so we would have preferred to have seen a £5,000 limit in the regulations.

[Lord Henley]

Again, I note what the noble Lord says; I imagine landlords up and down the country will be listening to his words. We had to make a decision based on a number of factors, but also on the viability of the whole sector. We did not want to see the whole sector being adversely affected on the basis of further modelling of the costs and benefits of the £3,500 cap. The noble Lord, Lord Grantchester, also asked why it had taken so long—four years, as he said—to lay this SI. It took time to build consensus among the wider stakeholder base and to consult properly, which on this occasion was welcomed by the noble Lord, Lord Fox.

The noble Lord, Lord Fox, then confused me by referring to the 2016 debate, implying—I am sure he did not intend to—that that was the debate on these regulations. That debate was to postpone the launch of the exemptions register by six months. It did not relate to this amendment to include a landlord contribution. All this does is to seek that the landlord should make a contribution. These regulations were debated in another place on 14 January this year. They were introduced by my right honourable friend Claire Perry, and it is open to the noble Lord to look at the First Delegated Legislation Committee from that date in Hansard. What happened in between? The 2015 regulations were made on 26 March 2015 and the provisions we propose to amend came into effect in April 2018.

The noble Lord then asked if the register will be made public. Yes, the register opened in 2017, and information registered on it is publicly available and searchable. The noble Lord, Lord Fox, regretted the inclusion of that in the £3,500 cap. We acknowledge that that has an impact on the scale of the improvements that can be delivered, but we nevertheless believe that that is offset by the increase from £2,500 to £3,500. The noble Lord, Lord Grantchester—being more severe than me—would like to take that yet further. Again, these are questions of balance and I believe we got it right with £3,500, even though the £3,500 includes that.

The noble Lord, Lord Fox, asked if the amending regulations are asking landlords to provide three installer quotes and whether that was making it too onerous and complicated. The requirement to provide three quotes applies only where the landlord is looking to avoid making any improvements and to register an exemption on the basis that even the cheapest improvement would exceed the value of the cap. Our analysis showed that virtually all properties can receive at least one measure costing less that £3,500, so we expect this exception to be invoked very rarely. The noble Lord will know that it is plain common sense to get more than one quote. If they are using it to seek an exemption, it is quite right that there should be three.

--- Later in debate ---

[Lord Grantchester]

Will the Minister write to me on how many would be exempt and how many would fall into the regulations with which he says they would then have to comply? My understanding was that more would be exempt, and there were a very limited number of occasions on which property in multiple occupancy would have to abide by the regulations.

[Lord Henley]

I offer to write to the noble Lord. I will see if we have the sort of figures that he wants on HMOs and whether I can bring a bit more detail on that.

Finally, I make it clear that the Green Deal has not been cancelled. It still exists. The Government ceased funding it in 2015 but the mechanism remains active and private finance continues to operate in the sector.

Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Tuesday 22nd January 2019 Lords Chamber

[Baroness Altmann (Con)]

I hesitate to participate in this debate, given that this is a very complex issue, but I imagine that members of the public and the industry would wish to be assured that the House is scrutinising issues of such significance from the point of view of public safety. I note that the Secondary Legislation Scrutiny Committee drew these draft regulations to the attention of the House in view of the important issues of public policy.

I note from the committee’s report that there will be ways in which our nuclear safeguards will be deficient after March 2019 relative to Euratom, notwithstanding that they meet international obligations. I would be grateful if my noble friend could help the House understand in what way those deficiencies will manifest themselves in the event that we leave with no deal or, if we leave with a withdrawal agreement, during the interim period—before, as I understand it, our standards will meet the Euratom standards by the end of 2020.

[Lord Henley]

My Lords, I hope that I can deal with most of the points that have been made in the debate by noble Lords. If I miss any, perhaps on Regulation 4, we will be able to catch up on them. The noble Lord, Lord Redesdale, said that he had only one speech for both sets of regulations but I am sure that he will want to come in again if I fail to address his points.

First, the noble Lord asked whether we needed an NCA with Euratom. I can give an assurance that an NCA is not required for these regulations. Secondly, he regretted what he described as the demise of the nuclear industry. It is sad that last Thursday we had to make the announcement that I think he was referring to. I offered to repeat the Statement made by my right honourable friend in another place but, sadly, the House did not feel that necessary.

It is obviously a difficult situation, although I do not accept that we are looking at the demise of the nuclear industry—I think that it has a future. Being one of the world’s great optimists, the noble Lord should remember that some of the problems facing new developments in the nuclear industry—and we are still committed to seeing what we can do there—are possibly down to the success that we have seen in renewables, with the costs of offshore, onshore, wind and solar coming down. That makes the costs of nuclear, for example, much harder to deal with. We would like to bring those costs down but I do not think that they are likely to drop as much as has happened in the case of some renewables. Similarly, the costs of renewables include the cost of electricity storage, which, again, is coming down. Therefore, I suspect that the noble Lord, rather than being a Jeremiah, should always take a positive approach to changes and always look on the bright side of life, if that is possible.

I turn to the noble Lord, Lord Adonis. I am grateful that he referred to the debate in another place on 14 January, and I will certainly pass on to my honourable friend Richard Harrington the noble Lord’s welcome for his response to that debate, which I think dealt with most of the points that he raised. However, in my incompetence, I muddied the water and raised further points for the noble Lord. I hope that I will be able to deal with his concerns relating to additional qualifying material and the extra information required for the Secretary of State.

On additional qualifying material, all operators will provide accountancy and control plans to the ONR. That is a new requirement, which will come into effect in January 2021. The noble Lord also asked about the principal requirements of Regulation 45, which concerns the notification of receipt, production and transfer. That regulation requires an operator of a qualifying nuclear facility or other person to notify the Secretary of State of the receipt of a relevant item or qualifying nuclear material, the production, processing, derivation or fabrication of a relevant item from another relevant item or from obligated qualifying nuclear material, and the proposed transfer of a relevant item, together with details of the transferee and their location.

I turn to the process for NCAs and the questions raised by the noble Lord, Lord Grantchester, particularly in relation to Japan. I made it clear that we had concluded new agreements with Canada, the US and Australia. The situation is slightly different with Japan, in that, as I think I made clear in my opening remarks, a bilateral NCA is already in place. It will remain in place following the UK’s departure from the EU and therefore it is not necessary to conclude a new one. We have had detailed discussions on this and are in negotiations to ensure that we have appropriate arrangements in place with Japan to allow the agreement to remain operable after our exit from Euratom.

I note the remarks made by my noble friend Lady Altmann on the comments from whichever committee it was regarding these orders. I give an assurance that, with these orders, we are making sure that we have broad equivalence; we will have the same protection in place as existed before.

[Lord Grantchester]

It appears that there may be an issue with Japan. The Minister says that there is an agreement and we do not need to do anything but also that there are discussions about whether the agreement will remain operable. Could he clarify whether there are any issues at all with Japan?

[Lord Henley]

I am not aware of any issues. As I said, we have an NCA in place with Japan that goes back to 1998. That will remain in effect but, obviously, we want to continue discussions just in case. If I can help the noble Lord any further I will write to him, but that will probably not be necessary.

Transfrontier Shipment of Radioactive Waste and Spent Fuel (EU Exit) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Tuesday 22nd January 2019 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his introduction to the regulations before the House, which were excellently portrayed and explained by his department’s officials in the accompanying Explanatory Memorandum.

Under the UK’s commitment to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management, the present regulations, drawn up while the UK was a member of the Euratom community, become inoperable on exit as internal mechanisms in Euratom members will need to be replaced as far as the UK is concerned. Radioactive waste and spent fuel cannot be moved between countries without these authorisations.

As has been explained, the duplication of authorisation with Euratom countries looks unavoidable, not only because the UK will be treated as a third country but because UK businesses will need to go through both domestic and Euratom procedures. As the Minister stated, this will give rise to a marginal additional cost of compliance, as was also explained in the impact assessment. This is not meaningful, but it allows me to probe into the future a bit.

The Minister will remember the debates during the passage of the then Nuclear Safeguards Bill when he was emphatic that, post exit, the UK would seek to maintain a close working relationship with Euratom. Although the regulations are limited to radioactive waste and spent fuel, does the Minister see any quick, easy wins whereby, at the very least, procedures on this and other exchanges with Euratom members could be administratively streamlined without transgressing the important management of cross-border shipments? More widely, the House would be pleased to receive any further updates from the Minister on the shipping of medical isotopes, which was of such initial concern during the passage of that Bill.

[Lord Henley]

My Lords, I start with the point made by the noble Lord, Lord Adonis, when he referred to orders that seem to have been removed from the Order Paper. I did not quite catch the details, but I think they related to non-invasive species or something of that nature.

Justification Decision Power (Amendment) (EU Exit) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Tuesday 22nd January 2019 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, the Minister is correct to portray the order before the House today as merely a technical replacement justification power, where “justified” means that the benefit resulting from the practice outweighs the risk and potential health detriment it may cause, under the ionising radiations regulations or the directive. These regulations are a first step towards regulatory approval for any new class or type of practice involving ionising radiation, such as a medical treatment or new nuclear reactor design. These activities are important, and it is important that they are regulated properly. To my mind, they are as needed in any situation as they are needed for exit from the EU. To me it is a straight transposition from an EU-derived power to a UK power to give effect to the UK’s exit in domestic law. There should be no issues with this order.

This is the latest type of Brexit—I am calling it a continuity Brexit—to allow EU-derived legislation to continue to have effect in domestic law, and this order is merely a replica of previous ones. I approve the order today.

I understand that the Government Whips’ Office in the other place has a new sweetie box as a reward system, whereby Ministers are rewarded for each successful continuity order passed before exit day. I trust that the Minister will be rewarded with a bonus issue for this order.

[Lord Henley]

On that last point, I have had an assurance from my noble friend Lady Vere that a reward will be on offer—but let us wait until we have got through all four of these before I rely on the generosity of her offer: she might change her mind later.

Let me deal with the points that have been raised. The noble Lord, Lord Pannick, asked when these were published. I can assure him that they were published on 23 November last year. The instrument makes absolutely no changes to policy: it is just a technical amendment to ensure the continued operability of the justification regulations, and therefore a public consultation was considered unnecessary and inappropriate. Subsequent regulations made using the power contained in this instrument will continue to be subject to the consultation requirements, where the justification regulations impose on the making of justification decisions.

Electricity and Gas (Powers to Make Subordinate Legislation (Amendment) (EU Exit) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Tuesday 30th October 2018 Grand Committee

[Lord Grantchester (Lab)]

My Lords, I thank the Minister for his introduction to the regulations—the first of many to come concerning the UK’s exit from the EU. The Committee will consider many technical energy matters. It will not be entirely simple to identify the crucial elements and their implications. However, I will echo the remarks of the noble Lord, Lord Teverson, on the more challenging aspects of the regulations on wider-ranging topics, such as the internal energy market and the position of the island of Ireland.

On the face of it, the instrument seems simple enough. It moves powers held by the European Commission to a domestic authority, giving the Secretary of State power to alter them—in this case, referring to European network codes and guidelines—and adopt the amendments overall as “retained direct EU legislation”. Later amendments that will not come into force by 29 March 2019 will not be regarded as retained direct EU legislation. They will be resolved, perhaps even revoked, by exit day under separate secondary legislation, along with elements of retained EU law where the Secretary of State considers that the EU instruments retained in law will not be capable of operating in isolation from the rest of the EU instrument. Powers are also taken in the SI to amend the provisions of REMIT, an EU regulation concerning wholesale market integration and transparency, to apply internally to the UK and not to have to report to EU authorities.

Some amendments will be made by affirmative procedure and some negative. As your Lordships’ Secondary Legislation Scrutiny Committee concluded, all is so clear, so far. Perhaps the Minister can confirm first whether all these amending instruments will be amending only: that is, not enabling new powers through secondary legislation. That does not seem to have been commented on.

More importantly, this question brings up the whole issue of the internal energy market. Unlike Euratom and other bodies established by treaty, the IEM is merely a collection of agreements among member states on how the European energy market is to be conducted. It has been stated many times that it would be advantageous for membership of the IEM to be retained, or a close association with it. How far could any statement go when it is not really a distinct entity? This order would be regarded as a contingent action, to be effected and commenced if no suitable alternative arrangement for energy trading through interconnectors can be put into place—rather like the contingent nature of the Nuclear Safeguards Bill, now an Act, as the Minister will remember. Can the Minister clarify whether this is the Government’s intention or whether, as the memorandum seems to suggest, the order will apply regardless of any deal and be part of a signal to break with the IEM under all scenarios? Will he also clarify the Government’s general intention toward the internal energy market?

Very pertinent in this respect is the position regarding Northern Ireland. Ireland, north and south of the border, already operates under an all-Ireland grid. Given the possibility that Northern Ireland will not operate its own grid requirements at Brexit, is it intended to break up the Ireland grid? While paragraphs 7.12 and 7.13 of the Explanatory Memorandum deal with the position as now, when there is not a functioning Executive, is it intended that Northern Ireland will function on different codes from the rest of Ireland at Brexit? Can the Minister explain what is intended and how it will work on a United Kingdom basis with Northern Ireland and the Irish grid?

While an effective system must be in place upon Brexit, does this order—while enabling continuity for UK authorities—close the door on options for a better working of the energy system after Brexit through close association with the internal energy market? Can the Minister provide the Committee with any further clarity? If any of his remarks can assure the Committee on this point, I can confirm the order today.

[Lord Henley]

My Lords, I am grateful to both noble Lords for their comments. As the noble Lord, Lord Grantchester, rightly said, this is possibly the first of many statutory instruments that will come before the House, possibly as negative orders. He will remember that, if I have this right, I wrote to him and to the noble Lord, Lord Teverson—or if I did not, I copied a letter that my right honourable friend Claire Perry sent to colleagues in another place—about these orders back in August of this year. I will double check whether I did. All I know is that she wrote on 14 August; I thought that I had copied that letter but if not, I will make sure that I have.

The reason why I mentioned it is that I have given a commitment to write to noble Lords as other orders come forward. As I made clear in my introductory remarks, these orders merely give certain powers to the Secretary of State to make powers that previously existed with the EU. Obviously, those powers are to make further orders that will come forward. It is, one might say, quite a complicated landscape and—both noble Lords will have heard the discussions on earlier orders—we might have found it easier and speedier if I had written to them in advance. I thought that I had.

Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Wednesday 17th October 2018 Grand Committee

[Lord Grantchester (Lab)]

I, too, thank the Minister for his introduction to the regulations. Although limited in scope and somewhat technical, they are crucial to highlighting and building energy efficiency into everyday activities. We greatly welcome that.

As the Minister said, the regulations introduce mandatory requirements on emissions, energy consumption and energy efficiency action for large, unquoted companies. They also extend the reporting requirements for quoted companies to bring both, along with large limited liability partnerships, in line with common reporting requirements. Such organisations must set out their activities and performance in each year’s annual report. The intention of the changes is to compensate for and extend the reporting requirements previously obligated by the carbon reduction commitment, which is to end in April 2019. The new reporting requirements are to be in place after that date.

I have always thought that an organisation’s annual report is a very important document that sets out its strategic direction and how it has performed against its objectives. It should be a good promotional tool for its activities. Last week, the Intergovernmental Panel on Climate Change brought out a special report to warn again of the dangers of climate change without serious corrective action being taken on emissions, decarbonisation and energy efficiency. Previously, Labour supported and advocated companies reporting their activities in a coherent regime.

Regrettably, although the new measures are welcome they do not exactly replicate all that was in place under the carbon reduction commitment. Primarily, there was a league table of companies’ performances alongside the report. In the regulations, there is no measure of comparative performance and no means of producing such comparisons other than by a time-consuming and expensive trawl through all company reports, which may—or, more likely, may not—be reported in strictly comparable terms. While the regulations are prescriptive regarding what should be reported and how, there appears to be some leeway in the regulations whereby reports could mislead or be non-comparable in their meaning, particularly in terms of the possible distribution of reporting among subsidiaries of the main company. Does the Minister recognise the deficiency that there will be a lack of full comparability of reports because of the absence of a mechanism to allow performance to be compared and graded?

As what gets measured gets attention, how are companies to understand how they compare to their peers? Surely the full impact of these energy use indicators in annual reports is not being utilised as a competitive challenge for improvement. As the clean growth strategy states, businesses need measures,

“to improve their energy productivity, by at least 20% by 2030”.

The CRC was due to run until 2043. Here I echo the questions asked by the noble Lord, Lord Teverson, in his analysis of the CRC and its workings. The impact assessment outlines that the policy will be reviewed in 2024. That is some time away, especially given the timeframe in which the intergovernmental panel stresses mitigating measures need to be taken. How will any comparative analysis take place under these regulations? Indeed, will the Government undertake any analysis of the results of this reporting prior to 2024, and how will they measure success? Will government incentives be brought to bear on poor performance, not merely on reporting?

While we are in favour of these regulations today, there are nevertheless serious issues to address in which these regulations have perhaps not been as constructive as they might have been. Climate change is one of the most pressing issues of our age. The intergovernmental panel issued a special report last week between its fifth and sixth reports to underline its most recent assessment that there could be a very limited number of years, may be as few as 12—that is, until 2030—in which the world’s increase in temperature could be limited to less than 1.5 degrees above 1990 levels. I thought it was strange that the Conservative Government came out with a Ministerial Statement on Monday extolling all the achievements that have been secured when we all know that greater progress was made under previous Labour Governments and even under coalitions. Indeed, under the Conservative Government from 2015 progress has slowed, with a litany of cuts and policy reversals that I need not list at length today. Suffice to say that the UK is possibly no longer on track to meet the fourth, but more definitely the fifth, carbon budget.

I have one question for the Minister on the Government’s Statement on Monday. Labour has a policy of net zero emissions above 1990 levels by 2050, subject to the advice of the climate change committee. On the back of the report last week the Government have asked the CCC to advise on when and how we could achieve a net zero target. Whether they have precluded the CCC assessing and issuing immediate advice, it must advise on actions to secure net zero emissions to start at the end of the fifth carbon budget. That carbon budget is set to conclude in 2032. So the CCC cannot issue guidance or recommendations to begin until two years after the IPCC estimates that the world will be in a dangerous condition, recording in excess of its maximum 1.5 degrees above 1990 levels. The CCC advice will need to work hard and fast to secure a net zero target by 2050. I ask the Minister to answer on this feature of Monday’s announcement. Do the Government have some strategic assessment by which they have decided to limit the CCC’s advice until after 2032? The Government’s self-congratulatory words must be met by coherent and comprehensible policies. Winning slowly on climate change is the same as losing.

[Lord Henley]

My Lords, I thank both noble Lords for their interventions. I rather regret the unnecessarily party-political line that the noble Lord, Lord Grantchester, took. Perhaps he could instead have taken that by responding to Monday’s Statement, which we offered to the Opposition but they did not wish to have it repeated in this House.

I welcome the fact that the noble Lord, Lord Teverson, highlighted that it is Green Week. I think the Government have been doing their bit to highlight the achievements that we have made in Green Week. I hope the noble Lord, Lord Grantchester, has received a number of invitations to some of the events that we have been holding to highlight the achievements of this Government, the previous coalition Government and—dare I say it, on this occasion, because, unlike the noble Lord, I do not want to be party political—the Labour Government who left office in 2010. In 2008 that Labour Government brought in the Climate Change Act, which had cross-party support. The noble Lord will find that Ministers—I am going way beyond the regulations, but it is worth getting this on the record—have been making it quite clear that over the past 10 years this country, again with cross-party support with the Labour Government, the coalition Government and the Conservative Government, has achieved great things on this front, particularly when he compares what we have done in carbon reduction with other G7 countries. Would he have liked us to have followed the route of Germany, which is now burning more coal than it has for many years while we are on the road to seeing coal disappear from energy generation by 2025? It is down to some 7% of our energy needs at the moment from 40% only a few years ago. The Government are very proud of those great achievements but we also pay tribute to the Labour Government who brought in the 2008 Act and the coalition Government, of which I was a part and the noble Lord, Lord Teverson, was a supporter. So in this green Britain or green UK week, whatever its long-winded title is, let us pay tribute to what we have dealt with as a country.

Oil and Gas Authority (Offshore Petroleum) (Disclosure of Protected Material after Specified Period) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Thursday 19th July 2018 Lords Chamber

[Lord Grantchester (Lab)]

I am grateful to the Minister for his explanation of the statutory instrument before the House today. I understand that it is among the last necessary to commence the provisions of the Energy Act 2016, and I am happy to approve it. As the Minister said, the Act set up the Oil and Gas Authority following the 2014 Wood review into the future of the UK’s offshore petroleum industry with the objective of maximising economic recovery—MER—of offshore petroleum reserves. With powers to offer necessary information, the OGA, through these regulations will now be able to make this information public after a specified period.

I am grateful that, through this MER, the Minister can confirm—with the noble Baroness—that the petroleum industry could create £140 billion of gross value added for the UK and create many thousands of jobs. Most notably, information disclosure could facilitate the reuse of reservoirs and infrastructure most necessary for the development of carbon capture and storage, previously damaged through the Government’s cancellation of CCS projects. Remarks from the Minister in his reply confirming the Government’s commitment to help economically viable ways to develop CCS would be most welcome.

The success of these regulations is very much dependent on the OGA’s ability to assess the commercial sustainability and confidentiality of any pertinent information that it proposes to disclose. The memorandum gives confidence that the Government and the regulator have worked extensively together through consultations and reviews to reach a satisfactory point whereby companies can share and the OGA can publish information sensitively, in a balance between the objective of maximising economic activities and the company’s economic interests. I understand that the appeal mechanisms are included in further provisions of the Energy Act and, if the OGA and the industry can develop a modus operandi to the satisfaction of both parties, that is to be applauded. Will the Minister commit to reviewing and making a statement on this in due course as the success of MER is transparently demonstrated?

One aspect of this was not highlighted by the memorandum. Some information revealed—for example, in relation to seismic survey results—could be sensitive and relate to national security. Are provisions in place for the Government to instruct and advise against the disclosure of certain information by the OGA? In its objective to maximise economic recovery, the OGA will certainly make information available that is of much use and interest to academics, researchers and companies generally in the sector. How does the OGA propose to make this information available? Will it have one preferred method? Will the Government work with the OGA not only to ensure that the information is made easily accessible and well publicised, but that it is effective? Will this be on an international basis? I would be grateful if the Minister could outline how Parliament will be kept updated on the progress of MER.

With that, I am happy to endorse the remarks of my honourable friend and shadow Minister in the other place, Alan Whitehead, that,

“this is a well-crafted set of regulations that should greatly enhance the ability of the industry and the general public to understand what is happening in the North sea, and, where appropriate, to be supplied with that material in a reasonably timely fashion”.—[Official Report, Commons, Eighth Delegated Legislation Committee, 17/7/18; col. 6.]

[Lord Henley]

I thank the noble Baroness, Lady Featherstone, and the noble Lord, Lord Grantchester, for their comments, and in particular the noble Lord, Lord Grantchester, for repeating what his colleague said in another place. He made it clear that these are, as he put it, well-crafted regulations. It is always gratifying to those of us who move these instruments in either House to hear that, but it is equally gratifying for our officials, draftsmen and others. I will make sure that those remarks are brought to the attention of those who are responsible for producing these regulations.

I am also grateful to the noble Lord for stressing that the aim behind these regulations is to reinforce the aim of the 2016 Act of maximising economic recovery. I shall therefore repeat the figure: we think that there is the chance of creating some £140 billion of additional gross value for the UK, which is very important to us all. It is also important for the oil industry in the north-east of Scotland, as we discussed only the other day when a noble Lord on the Liberal Democrat Benches asked a Question about the oil industry in Scotland. Maximising economic recovery is important.

I shall deal with the points made about carbon capture and storage. The noble Lord will understand that this has great potential in terms of helping to decarbonise the economy and maximising economic opportunities for the UK. Obviously we want the UK to become a global technology leader in this area by working with global partners to reduce costs and accelerate deployment. We set out in the clean growth strategy a range of actions in both the domestic and the international arenas to unlock the potential for CCS. Again, we are investing quite large figures—£100 million; I stress that it is £100 million, not billion—in innovation in this area. We should do what we can in this area.

The noble Lord also asked about a review. I should remind him that the Energy Act put an obligation on the Government to review the performance of the OGA every three years, and obviously that will include the disclosure provisions. On whether the Government can stop the publication of certain things, the OGA can advise against disclosure using powers under the Energy Act if national security requirements come into play. On how information and samples will be made available when published, the OGA is progressing plans to set up a national data repository for digital data in 2019, which will enable this type of data to be stored securely and sustainably. It will allow access and disclosure to be controlled by the OGA with information becoming accessible to the public once published. Other summary information and production information will be made available on the OGA’s open data pages on its website. Again, that will be available to academics at the proper time.

I think that those comments deal with all the questions that were put to me. I can confirm that, as I made clear in my opening remarks, this is the last piece of the jigsaw in relation to these matters following the Energy Act. I think that this is also the last occasion before the Summer Recess on which those of us who either speak for BEIS or respond to energy or BEIS questions from the Opposition Benches will be likely to perform. I therefore wish the noble Baroness and the noble Lord a happy holiday, and beg to move.

Warm Home Discount (Miscellaneous Amendments) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Thursday 19th July 2018 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his extensive introduction. I am happy to approve the regulations. The warm home discount, which comes through ECO, is one of the instruments used to support households in fuel poverty. The regulations extend the WHD scheme after its seventh year through years eight, nine and 10 until 2021.

The scheme also comes as a subset of the renewable heat incentive, which the House approved in May this year. This is also set to expire, in many regards, in 2021. Therefore, I repeat what we said on that occasion: that plans must be made and signalled for a long-term solution for heat decarbonisation, to provide certainty and clarity beyond this looming cliff edge.

Meanwhile, it is to be welcomed that these regulations provide continuity for the next three years until 2021. I agree that the best long-term solution for reducing household fuel poverty and bringing down the cost of heating a home is through improving energy efficiency. In this regard, I recognise the ambition to upgrade as many homes as possible to band C by 2035—but that is quite some distance away.

The interlinking of these measures was referred to by the Minister in his opening remarks. Will he provide any update specifically on the supposedly major push towards decarbonisation following the end of these schemes in 2021 as part of the clean growth plan?

Turning to the regulations, there are a few adjustments and amendments to the scheme that we would like to understand better. The WHD scheme has suffered in recent years from applying only to obligated energy companies which have more than 250,000 customers. While competition can be encouraged through more entrants into the market, can the Minister confirm with any figures whether there has been a noticeable cluster of suppliers just below this threshold? In that regard, I welcome the amendment to reduce the threshold progressively. Has the Minister’s department looked into the impact of thresholds on companies to determine whether ameliorating measures could be introduced?

These arbitrary boundaries have produced other anomalies, which the noble Baroness, Lady Featherstone, drew attention to in her remarks. While encouraging switching as a way to increase competition and reduce customer bills, many households have fallen foul of the eligibility criteria of the WHD scheme when changing suppliers that are on either one side or the other side of the threshold. Sometimes households have become victims of companies gaming the threshold by being moved compulsorily from obligated to unobligated companies. Reducing the threshold is helpful but does not directly help households caught by this bureaucracy.

I suggest to the Minister that measures could be looked at to alleviate the problem. At least, will he look to commit price comparison websites and switching advisers to adding the calculations necessary for WHD to apply when displaying or promoting alternative tariffs? The loss of the right to WHD on switching could negate any benefit and would further undermine the public’s confidence that the energy market works for them. With these comments, I am happy to approve the regulations.

[Lord Henley]

My Lords, I thank both noble Lords for their general welcome for these regulations, and their recognition that they allow us to continue with what we have been doing over this winter for a further three winters, but also to consult on the changes I announced earlier.

The noble Baroness asked how the consultation was marketed and whether we had enough responses to it. We worked very closely with consumer organisations, including Citizens Advice, but I will look at what she had to say and see whether we can improve in future and reach out to more people.

I noted the comments that both noble Lords made about energy efficiency. I also noted their general welcome for our progress in this area and the fact that we want to push along. It is obviously the right thing to do to make all homes as energy efficient as possible, and we will continue to do that.

As regards their comments about the thresholds, I remind both noble Lords that under the scheme other suppliers below the threshold will continue to be able to volunteer. I gather that there were three voluntary smaller suppliers. As I said in introducing the regulations, we will continue to reduce the threshold and will review it again after 2020-21. If the scheme were to continue, there would be a view to potentially setting the threshold to a minimum level of zero if the evidence supported that approach.

I particularly noted the point that the noble Lord, Lord Grantchester, made about some companies gaming the system. Therefore, it might be right to reduce it to zero in the future. However, for the moment, if we continue with the gradualist approach that I announced in introducing the regulations and review it in the future, I suspect that that will be the better way of proceeding so as to give new suppliers time to prepare in terms of both processes and pricing. I hope that that deals with most of the questions that noble Lords asked.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between Lord Grantchester and Lord Henley

Wednesday 18th July 2018 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, I am grateful to the Minister and I very much welcome this amendment in lieu of the amendment passed in your Lordships’ House on Report.

This is necessarily a Labour-inspired amendment. It addresses our concerns over the domestic energy market at the termination of tariff-capped conditions. On Report, the House supported the contention that there should be ongoing monitoring through the implementation of a relative tariff differential. The incoming chairman of Ofgem, Martin Cave, whose appointment is very much welcomed, has expressed scepticism before the BEIS Select Committee that a fully competitive market will have returned by the end of 2023, when tariff-capped conditions will ultimately end. He has expressed doubt that vulnerable customers will be able to access competitive deals within this timeframe.

Furthermore, the amendment on Report was explicitly designed to deal with the exploitative behaviour of suppliers, known as “tease and squeeze”, whereby customers are moved over time from a competitive deal on to a much higher rate. This behaviour operates now and could continue even if the market be deemed later to be operating under competitive conditions. There is the twin effect that vulnerable customers could continue to be at risk post 2023 and that this particular behaviour of “tease and squeeze” across the market will not be dealt with.

I am very grateful to the noble Lord the Minister, and to the Minister for Energy and Clean Growth in the other place, Claire Perry, for considering this most carefully and engaging with our team so constructively. I thank them for considering that Ofgem must continue to monitor the market and to take appropriate action, should pricing practices of suppliers continue to put customers under disadvantage through excessive charges. Too often in the past, Ofgem has not used the powers it has in order to combat anti-competitive behaviour and excessive pricing.

The temporary nature of the Bill is to correct a clear existing fault in the present operation of the market. But the action to be taken through this Bill must take account of all anti-competitive behaviour, including “tease and squeeze”, and once concluded under the terms of the Bill on or before 2023, to continue to make sure all customers will be protected, including special measures for vulnerable customers.

Most people admit that they find the monitoring and switching of tariffs cumbersome and confusing. The debate over energy market intervention has run for several years, and certainly for too long. I am very pleased that, last year, the Conservative Government finally conceded that action is urgently needed to tackle unfair practices and excessive charges. Customers have been paying up to £300 per annum more than they might have done under a more competitive market.

Both the Conservative Government and the Labour Opposition are committed to have this legislation on the statute book to bring real benefits to consumers this winter. Ofgem must fulfil its functions and be seen to take appropriate action. The industry must realise that unfair behaviour will not be tolerated. Consumers will be protected.

I would like to pay tribute at this stage to all the staff who have worked so hard at both ends of Parliament, and especially the Bill team at the department. I would like to thank my Front Bench colleagues, my noble friends Lord Stevenson of Balmacara and Lord Lennie, for their support and attention, especially at the early stages of the Bill when I was absent due to ill-health. I am very grateful to my noble friend Lady Crawley, who spoke so passionately about the need to tackle the “tease and squeeze” tactics so prevalent in the energy market, and on the Liberal Democrat Benches to the noble Baroness, Lady Featherstone, and the noble Lord, Lord Teverson, for championing vulnerable customers, where we are very much aligned. I certainly do not want to forget or underplay the crucial legislative support of our opposition adviser, Rhian Jones.

I very much support the amendment and the Bill and look forward to the benefits it will bring.

[Lord Henley]

My Lords, I thank the noble Lord, Lord Grantchester, for his intervention, in which he welcomed the amendment and acknowledged that a great deal of work has been done by me, my right honourable friend Claire Perry, the noble Lord and his colleagues, and others, both in the Chamber and outside it. I think we have reached a satisfactory conclusion that provides Ofgem—I am grateful for his welcome of the new chairman of Ofgem—with the appropriate powers to deal with these matters. I thank him also for acknowledging the importance of speed in this matter. That is why, as we said right back at Second Reading, it is important that we get the Bill on the statute book before we rise for the summer—the Chief Whip is sitting next to me, and I know we still have a few days to go. I hope that the noble Lord will not be ill during any further Bills and will not have to leave certain bits to his colleagues.

I welcome the intervention from the noble Lord, Lord Stoneham, in place of his friend the noble Baroness, Lady Featherstone. I am grateful for his confirmation that Liberal party policy is in favour of a relative price cap. I was rather confused at earlier stages as to what its policy was, but it is now on the record. I do not think it is necessarily the right way forward, but it is Liberal party policy and I am grateful for that explanation.

That leaves me with only one final duty: I ask the House to support the Motion.

Contracts for Difference (Miscellaneous Amendments) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Monday 9th July 2018 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, once again I thank the Minister for his explanation of these regulations, which in general we support. I understand that the Government are beginning to be congratulated on allowing onshore wind, in some shape or form, to finally compete in the marketplace for renewable generation. We note that the Conservative Party manifesto introduced a ban on onshore wind and are pleased to be able to welcome this small element of it coming on to the market, albeit in a highly constrained way. These remote islands must, by definition, be 10 kilometres off shore; over 50 kilometres of cabling must be used, of which 20 kilometres must be under sea. I was wondering how important it was that these so-called onshore wind turbines must not be seen and whether I would be able to see them if I went to the top of Blackpool Tower. I am teasing the Minister, but this seems to be a risible attempt to allow some kind of offshoring of onshore wind. I am sure we could all enjoy some of the programmes which could be made around these regulations.

To be more serious, because of these definitions, we feel that we are looking at a more expensive offshoring of onshore wind being favoured over the less expensive contribution of near-to-onshore wind. Regrettably, the costs to the consumer will therefore be more than if the Conservative Party had been able to allow onshore wind to compete openly and genuinely in the marketplace. With that, I approve the regulations.

[Lord Henley]

My Lords, I am grateful to the noble Lords, Lord Grantchester and Lord Redesdale, for their comments and general welcome to the SI. I am also grateful to the noble Lord, Lord Grantchester, for reminding the House of the figures which I did not give. The remote islands in question are at least 10 kilometres off the mainland and connected to it by at least 50 kilometres of cabling, of which 20 kilometres are under water. He then referred to ascending Blackpool Tower. That is something which I have not done for over 50 years because—sadly—neither we nor the party opposite still go to Blackpool for our party conference. Perhaps that might change, but I do not have any current plans to ascend the tower. When I do next get an opportunity to do so, I will see what I can see from there, particularly in relation to offshore wind.

I am also grateful to the noble Lord, Lord Redesdale, for reminding the House how effective and useful wind, particularly offshore wind, can be and—as I made clear in my Statement on Swansea the other day—how its cost has come down well below nuclear. However, we have no plans to reconsider our position on onshore, other than in relation to the remote islands referred to in these regulations which are suffering from particular problems. These are places which are over 10 kilometres and 50 kilometres of cabling away from the mainland. The wind there can be very good but the costs can be greater and some help is therefore needed. The noble Lord, Lord Redesdale, also asked whether we were aware at the moment of problems with contaminated feedstock and biofuels. We are not aware of anyone currently doing this, but there is obviously a potential for it. We therefore considered it necessary to take action; I am sure he would agree.

I think I have dealt with the questions raised by both noble Lords and commend these regulations to the House.

Renewables Obligation (Amendment) Order 2018

Debate between Lord Grantchester and Lord Henley

Monday 9th July 2018 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his explanation of this order, which seeks to control the costs of supporting two forms of renewable energy generation under the renewables obligation scheme: in former fossil-fuel generating stations using as fuel biomass, or a mixture of biomass and fossil fuels—called co-firing. It also requires a declaration to be provided by certain stations when claiming support for combined heat and power generation, and clarifies the greenhouse gas emissions trajectories with which certain CHP stations must comply.

It must be said at the outset that although this RO scheme has not yet come to an end, it is now closed to new applicants and has been superseded with a contracts for difference scheme. It also needs to be said that, in 2011, the Government introduced the levy control framework to govern the budget for low-carbon electricity schemes, including the RO scheme, which are paid for through consumer bills.

The operation of the LCF has come in for considerable criticism for being opaque and disingenuous, such that in the Autumn Budget 2017, the Conservative Government announced the control of low-carbon levies to limit new levies until the LCF can be seen to be falling. The scheme here is set to achieve a further constraint on expenditure by setting a limit on the number of ROCs that can be applied for. It is fair to say that in the other place there was a long debate on whether this order would achieve the intention, as the amount of expenditure can vary according to the price of ROCs in the market.

The accompanying documentation to the order appears to confuse the process of creating a ROC, which is done by the generating station producing a certain amount of power and hence creating a ROC, and accounting for the value attached to that ROC, which is created and varies according to the demand for ROCs by suppliers which are obligated to purchase them from generators to meet their renewables obligation quotas. However, it does not follow that the reduction in the number of ROCs issued translates directly into savings in overall amounts paid for ROCs, and hence savings on customers’ bills—an amount set against the LCF—because ROC prices vary with supply and demand against the obligation level. The reduction in supply may send the value of a ROC up because more people are bidding for fewer ROCs to meet a fixed obligation level. The calculations attached to the SI do not appear to take this factor into account, but instead treat the estimated range of income as a fixed range determined by the number of ROCs.

As part of the consultation, several comments reflected that this could lead to discouraging biomass in a co-firing plant. This order could have a perverse effect and the proposals could potentially place more coal back on to the system, and do not properly account for the mechanisms behind ROCs. We therefore have great reluctance in passing the SI and suggest that the Government should take the measure away and recast it. It is a complex jigsaw that seeks to use the number of ROCs as a way of constraining expenditure, when the price of ROCs is not set but can vary. There are serious misgivings that the scheme will not do what it claims. However, as a scheme that is now replaced by the CfD scheme, the situation may be contained over time. With that, I can reluctantly approve the order.

[Lord Henley]

My Lords, I am grateful to the noble Lord, Lord Grantchester, for his comments. He started off by saying that he had some doubts about the order, as to whether it would lead to lower costs, but as I made clear, we have made this intervention because we wish to see lower costs for consumers. That is why I made it clear that, on average, without this order, we would see additional costs to the consumer of about £2 per household and higher figures for business users and considerably higher figures for some of the more energy-intensive users. I think it is right that we should make such an intervention in the way that we are to achieve those ends. I am therefore grateful that the noble Lord ended by at least agreeing to support the order in full today.

The noble Lord was also worried that there would be an impact on the ROC market. We believe that the mechanism is compatible with the operation of the renewables obligation and will not lead to the market shortage that he was worried about nor inflate the price. The annual obligation set by BEIS fixes the cost of the renewables obligation and provides for the demand of ROCs. The obligation level is calculated by estimating the number of ROCs likely to be issued during the obligation year and then inflated by a 10% headroom to ensure that there is still demand for ROCs, even if the actual number of ROCs issued turns out to be higher than estimated—for example, if it is windier or sunnier than forecast when we set the obligation. The impact of the caps on generation are factored into the annual obligation calculation, so it will be lower. All else being equal, demand will not outstrip supply. However, I am more than happy to write to the noble Lord in greater detail about how we feel that the market works.

As regards the questions from the noble Lord, Lord Redesdale, on how the long-term strategy will affect combined heat and power, the purpose of the instrument is to control the unexpected costs from biomass, biomass co-firing and conversions, and to protect consumers. It certainly does not affect support for renewable heat. Remembering both the noble Lord’s and my interest in anaerobic digestion from my time in Defra, I can also give an assurance that this affects only biomass co-firing and biomass conversion and has no effect on anaerobic digestion. I hope that, with those comments, noble Lords will agree to the order. I beg to move.

Nuclear Sector Deal

Debate between Lord Grantchester and Lord Henley

Thursday 28th June 2018 Lords Chamber

[Lord Grantchester (Lab)]

I welcome the announcement and this nuclear sector deal, as it will become an important part of the Government’s industrial strategy. It is excellent news for the nuclear industry. Britain was the world leader in nuclear technology, and this has the potential to put Britain back into a more competitive position against other nuclear nations. I stress to the Government that they must deliver on their commitment, announced today, to achieve these aspirations. Huge sums are being invested by the US and China. Will the Government work with these very large programmes overseas?

It is good news for R&D and the international fusion programme at Culham, and for the development of SMRs. That there is a launch event with the Minister, Richard Harrington, in Trawsfynydd underlines the industry’s importance in the north Wales-Cheshire economy, where there is no hard border. Being in the north-west, I know this will be very safe. I ask the Minister whether Trawsfynydd will be the site for a G4 reactor. It is good news that emphasis will be given to innovation. If the UK is to be on the leading edge, the Government must commit the sums necessary.

I ask the minister that his department commit that the Government will look at all technologies in developing better ways for decommissioning and all technologies available for SMR, even established technologies, such as pebble-bed or HTR, which the Chinese will soon be commissioning as the first in the world. Can the Government give these assurances? How deep is the Government’s commitment? Could the UK become a centre for manufacturing?

[Lord Henley]

My Lords, I welcome the welcome of this deal by the noble Lord, Lord Grantchester, and I am pleased to be able to say how happy I am that he is happy that this is good for north Wales and Chester, his part of the world. I cannot give precise confirmation in answer to his question about Trawsfynydd, but I can confirm that there is new money coming in—money for advanced manufacturing and construction programmes from the Government, and money to invest in the national supply chain.

We also expect to see a 30% reduction over the years in the cost of new-build projects and also—very important for my part of the world, west Cumberland—reductions in the cost of decommissioning of some 20% over the years. This is a good deal not just for north Wales but for the whole country.

Hinkley Point C

Debate between Lord Grantchester and Lord Henley

Tuesday 26th June 2018 Lords Chamber

[Lord Henley]

My Lords, there is absolute clarity, and there was absolute clarity in the original Written Ministerial Statement made by my honourable friend—I shall just double-check which one it was—my honourable friend Mr Fallon, back in July 2013. That is all of five years ago, and he made it absolutely clear that these particular benefits would not come into play until Hinkley Point was operating. That will, as I said, be in 2025. So there is clarity there. Other benefits are obviously coming through the work of construction, and improvements to local infrastructure are already happening; I think that EDF has already spent £45 million to date on assisting the local community with accommodation, economic development, education and skills, transport, environment and more. Obviously there is a certain amount of disruption; that is a matter for the original planning consent. Economic benefits are on their way and are coming—but what the noble Baroness asked about will not come into play until 2025.

[Lord Grantchester (Lab)]

I support the Question asked by the noble Baroness. I thought that there were to be two phases to the benefits. There was to be an initial first phase, to which I think the noble Baroness was referring, which will be company supported. My question is about the fact that, when we consider the technicalities of these community arrangements, it looks as if the taxpayer is funding more of the benefits than the company. My interpretation of the Written Ministerial Statement made all those years ago was that there would be a two-year gap between the end of phase 1 benefits and the start of phase 2 benefits, so can the Government look at whether the company can bridge that gap and make further contributions during this period?

[Lord Henley]

My Lords, again, there is no lack of clarity on this. The Statement made five years ago—“all those years ago”, as the noble Lord put it—made it absolutely clear that the approximately £128 million which was likely to come through business rate retention would come after the plant became operational. Meanwhile, there will be the benefits that I enunciated, which will come through the company building this project. On top of what I already mentioned, there is the spend it is making down the supply chain in the west of England—£450 million so far. So considerable benefits are already on their way, but business rate retention does not come into play until later.

Scotland Act 2016 and Wales Act 2017 (Onshore Petroleum) (Consequential Amendments) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Thursday 21st June 2018 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his explanatory introduction. As he says, this instrument devolves Section 45A of the Petroleum Act 1998 to the devolved Administrations of Scotland and Wales. As obligations for plugging and abandoning wells are included in the licence conditions, Section 45A, relating to the financial ability of the relevant party, is a key part of the licensing regime that needs to be devolved.

I have only one curiosity to be satisfied in agreeing to the regulations. The territories of Scotland and Wales are defined in area according to the Territorial Sea Act 1987, which defines the onshore area to include up to 12 nautical miles offshore. Could there be a situation whereby an offshore activity could be undertaken under onshore petroleum legislation? I am sure the Minister may reply that up to 12 nautical miles offshore is, in fact, onshore territory. May I follow that up with a further question? Should there be a well or field that straddles the border both within and without the 12-mile limit, who would have to apply the wisdom of Solomon to adjudicate on whether it was onshore or not? While the Minister puzzles over the question, I am happy to approve the regulations.

[Lord Henley]

My Lords, I thank the noble Lord, Lord Grantchester. I certainly puzzled over the question, and I imagine that those who advise me in these matters are also puzzled. The simplest thing would be to say that I will write to him in greater detail on the Territorial Sea Act 1987—an Act we all wish to know more about. I am grateful to the noble Lord for his assiduous study of it.

I am also grateful for the comments of the noble Lord, Lord Bruce. As he rightly says, there is not much that I can do in the way of commenting on this—I certainly cannot engage in theological discussions between the Executive north of the border and the judiciary. It will be a matter for them to resolve. All I can say is that, like him, and unlike his party—I have had this discussion with his noble friend, the noble Baroness, Lady Featherstone, on a number of occasions—I am a great believer in looking at the facts on these matters, and a great believer in the possible economic benefits to this country and north of the border for the extraction of shale gas. I hope he will continue to do his work within his party. I did not quite discover what the views of the noble Lord, Lord Teverson, were on this; he indicates that he wishes to remain silent on these matters. He can discuss that with the noble Baroness, Lady Featherstone, in due course.

There are great opportunities in the extraction of shale gas, and we should look at the facts when it comes to that. Obviously, with the passing of these regulations, that and all the other activities will become a matter for the Scottish Government, but I hope they will listen to the noble Lord, Lord Bruce, and not other siren voices, on this matter.

I think I have dealt with all the questions, other than the rather technical ones from the noble Lord, Lord Grantchester, on the Territorial Sea Act 1987.

Offshore Combustion Installations (Pollution Prevention and Control) (Amendment) Regulations 2018

Debate between Lord Grantchester and Lord Henley

Thursday 21st June 2018 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, once again I thank the Minister for his explanation of the regulations before the House. This instrument widens the scope of the 2013 regulations to include both the industrial emissions directive, IED, which applies to large combustion plant over 50 megawatts, and the medium combustion plant directive, MCPD, which applies to plant with an individual thermal input of up to 50 megawatts.

Previously, the control of pollutant emissions from large combustion plant was not seen to be relevant for offshore facilities. Controls from the MCPD need to be extended to regulating emissions harmful to human health and the environment. The objective of these regulations is to control atmospheric emissions from offshore combustion plant that previously had been limited to onshore facilities under the Department for Environment, Food and Rural Affairs. The Explanatory Memorandum explains:

“The amending of the existing Regulations and widening of permit requirements are already familiar to offshore operators, who will receive a single permit covering all the qualifying combustion plant for each installation”.


We welcome this rationalisation. The memorandum further explains that OPRED, the offshore regulator mentioned in the previous regulations, will have its duties extended to implementing the instrument and will be able to recover its costs through fees charged for permits. Rather like the noble Lord, Lord Teverson, I assume from the previous regulations that OPRED will have the sanctions we have just approved to ensure compliance.

I understand that there are two large offshore plants over 50 megawatts, as the Minister explained, and 13 smaller offshore plants covered by the MCPD. However, the memorandum explains that implementation will apply to plants covered by the MCPD according to a timetable, whether they are new or already in existence. Further expanding on the words of the noble Lord, Lord Teverson, new plants will need a permit from 20 December 2018. However, if they are already in existence, implementation is phased according to whether they are greater or smaller than 5 megawatts. Those greater than 5 megawatts will require a permit from 1 January 2024 and those less than 5 megawatts will require a permit from 1 January 2029—five years later. This begs several questions. First, for what reason are existing plants given this grace period of five or 10 more years? I would be grateful if the Minister explained. Secondly, why is a distinction made between plants over or under 5 megawatts? Of the 13 plants covered, how many will fall each side of the line? What is the significance of that, and does it lead to a discrepancy on costs or to competitive distortion between the various plants? The consultation did not give rise to any comments on this point.

The consultation merely gave rise to issues regarding the ease of monitoring and access to exhaust stacks on existing facilities. I am glad to see that the department is aware of this and that OPRED will be taking a pragmatic approach. However, there could well be issues regarding the monitoring of carbon monoxide for its effects on human health. Can the Minister assure the House that this pragmatic approach will not give rise to possible monoxide risks to human health? With the assurance that these issues are not material, I am content to approve the regulations today.

[Lord Henley]

My Lords, I thank noble Lords for their comments and interventions, and I hope I can deal with most of the points raised. I can give an assurance yet again to the noble Lord, Lord Teverson, that OPRED will continue to be the enforcing authority for the offshore oil and gas sector, but the emissions will be monitored by the operators, which have a duty to report them annually to OPRED. OPRED will then take note of them.

The noble Lord, Lord Bruce, intervened with his concerns about the industry, which he voiced in a Question earlier this week on the position of oil and gas in the UK. We understand his concerns about the industry, which is why in the consultation we wanted to know about the concerns of the offshore operators and how they are getting on. As I made clear earlier, when we originally transposed this directive there were no combustion plants of the size we are talking about, but the nature of the extraction of oil and the sort of oil that is being extracted, some of it being much thicker, has meant that there are bigger, heavier machines. That is why we have to bring in these regulations—to deal with that growth. That is what we are doing and why we want to consult on it.

I can assure the noble Lord that Norway will be following us in doing that as this directive applies to EEA states. It is difficult to say how the costs of compliance for us and for Norway may differ, but it is possible that they will be broadly similar, given that its approach to transposition should essentially be the same.

I think the noble Lords, Lord Bruce and Lord Teverson, asked why we were allowing some plant to operate in a non-compliant mode and why we were phasing implementation. This obviously follows the consultation, and OPRED appreciates that it would be difficult for some operators to ensure that some plant, with safety and environmentally critical elements, continued to comply with the relevant deadlines. OPRED certainly wishes to work with the operators in these circumstances on a case-by-case basis in line with the regulations.

Plant plays a critical role in the safe operation of stabilising and processing hydrocarbons by providing the heat and power I referred to in dealing with oil. Should one or more of those plants be prohibited from operating, it could result in implications for safety in processing the hydrocarbons, with the consequence of hydrocarbons then being lost. One has to balance pros and cons in that field, and for that reason it is clear that a degree of phasing has to come in. That is why we made it clear that further medium combustion plants and phased implementation will apply where prescribed for new plant after December 2018, for existing plant with megawatt thermal input of greater than 5 megawatts but less than 50 megawatts from January 2024, and so on.

Lastly, the noble Lord, Lord Grantchester, asked whether the civil sanctions regulations would apply to these regulations. Yes, civil sanctions regulations will apply to these offshore combustion insulation requirements.

I hope I have dealt with all the questions.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between Lord Grantchester and Lord Henley

Committee: 1st sitting (Hansard): House of Lords
Monday 11th June 2018 Grand Committee

[Lord Grantchester (Lab)]

Good afternoon and welcome to Committee stage. Amendment 1 would ensure that the cap is introduced as soon as possible and proposes that, from the passing of the Bill, Ofgem should seek to bring in its provisions within five months. We all realise the importance that Ofgem attaches to the time it needs to get going with the provisions and the modifications to the licence conditions that need to be in place for this to happen.

The amendment would make sure that there is no drift in that process. It is very important for various reasons. First, fuel poverty is of great importance to an awful lot of people who struggle with their energy bills. The UK has the second-worst rate of excess winter deaths in Europe. Two-fifths of those aged over 65 surveyed by comparethemarket.com said that they would ration their energy use over the winter because of increasing costs.

The other aspect of which we must be cognisant is the change in energy use as British Summer Time comes to an end. First Utility’s analysis of energy usage data around daylight saving from the last three years revealed an average 18.7% rise in electricity use as we move from British Summer Time into Greenwich Mean Time. Cold weather payments are very effective for each seven-day period of very cold weather between 1 November and 31 March. We therefore place great emphasis on Ofgem maintaining the process and having all the necessary conditions in place for the Act to commence. I beg to move.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, I hope we shall make rapid progress on the Bill. I thank the noble Lord, Lord Grantchester, for moving his amendment so quickly. I shall just point out that it refers to,

“28 October 2018 or five months after this Act is passed (whichever is the sooner)”.

As it is already June and Royal Assent is unlikely to be before July, whatever happens, the amendment could mean only 28 October because five months from Royal Assent would obviously be after that date. However, I share the noble Lord’s desire to see the cap in place as soon as possible. Certainly, we would like to see it in place before the end of the year so that millions of families have protection for the worst of the winter.

The noble Lord referred to the fact that the nights start drawing in on 28 October. Actually, they start drawing in from the middle of this month, in a couple of weeks’ time, which is rather depressing. As he suggested, that means bills start climbing in those months. That is why we are pressing on with the legislation and I am grateful for the co-operation of all Members in getting this on the statute book as quickly as possible. We are aiming, subject to the will of Parliament, for the Bill to be passed before the Summer Recess.

The Bill already requires Ofgem to put the cap in place as soon as is practicable. Ofgem’s chief executive, Dermot Nolan, has committed to imposing the cap in the minimum timeframe that it can manage without risking the integrity of the process of consultation, notification and modification of supplier licences. Mr Nolan said as much in his evidence to the BEIS Select Committee.

Good progress has already been made. Ofgem has published a number of working papers setting out its emerging thinking. This culminated in a consultation on the design of the cap, which was published recently. The consultation sets out a clear timetable for implementation of the cap by December 2018. Ofgem will be ready, after the Bill is passed, to undertake the relevant statutory consultations and make the licence modifications that the Bill requires.

We appreciate the desire to hold Ofgem to a date by which the cap will have to be in place. However, the amendment potentially risks the integrity of the cap if it means that, to meet that date, Ofgem may have to radically speed up its design and consultation processes. Doing that would hugely increase the risk of a successful legal challenge—something that we will discuss later on—and that is likely to delay the implementation of the cap.

As I said, I agree with the noble Lord that the aim must be to get the price cap in place as early as possible before the cold weather arrives. However, there is nothing to be gained by making this a statutory deadline and it potentially creates new risks for the implementation of the cap. I hope that with that explanation the noble Lord will feel able to withdraw his amendment.

[Lord Grantchester]

I thank the Minister for his explanation of the timing behind the Bill. We certainly agree that the schedule is a very tight timetable for everything—all the consultations—to take place. However, we feel that the Bill has been very well flagged up to all the companies concerned and to Ofgem. I am sure it is making progress even now on what needs to be done to get the Bill enacted as soon as possible. I agree that, looking at the scheduling of the amendment with where we are now, 28 October would be the default. Nevertheless, we are keen that we keep a tight look, as we go through the Bill and when we come back for Report, at all the progress that has been made. With that in mind, I beg leave to withdrawn the amendment.

Nuclear Safeguards Bill

Debate between Lord Grantchester and Lord Henley

Ping Pong (Hansard): House of Lords
Wednesday 6th June 2018 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, it is a moment to be enjoyed when a Government Minister brings back to your Lordships’ House an amendment that all sides can resoundingly support. This amendment in lieu is in essence the amendment agreed on Report—admittedly, more deftly drafted—to ensure a responsible, less risky and more certain transition from the Euratom-monitored safeguarding regime to a uniquely robust regime operated by the ONR to full international recognition. The final version of the Bill is a vindication of the work of your Lordships’ House and the Government are to be congratulated on finally getting the legislation correct in the other place. While some noble Lords would contend that the Government had no need to trigger withdrawal from Euratom, given the difficulties around the notification letter and the Article 50 Bill, the House was right to focus this Bill on securing that the withdrawal from Euratom should proceed on a sound basis, satisfying all the contingencies that could arise during the process. This amendment in lieu allows the House to reflect on the fact that it has fulfilled its role successfully. Let us examine that in detail.

First, the Bill strengthens Parliament’s oversight and improves transparency by putting the Government’s reporting commitments on a statutory basis. Secondly, on the recommendations of your Lordships’ Delegated Powers and Regulatory Reform Committee, the Bill puts a further definition of “civil activities” on the face of the Bill and sets a time limit on the Government’s use of so-called Henry VIII powers. Thirdly, the Bill provides further information to the report that the Government will be making periodically. It may include arrangements with Euratom relating to nuclear research and development, as well as the import and export of qualifying nuclear material such as medical isotopes. The facility at Culham and the JET programme will be pleased with this outcome.

Finally, in this amendment in lieu the Government are agreeing that the practical realities of the UK’s withdrawal from Euratom will need to be recognised. The Euratom arrangements will cover all the conditions and standards to allow a continuation of trade and non-proliferation certification without disruption, interruption or dilution. At all times, whether phased or not, the UK’s withdrawal will not be put at risk and will not jeopardise the present status of operating within fully recognised international IAEA standards in place. The implementation period is still to be fully agreed and put on a statutory basis. It will qualify under Section 3(b) as a corresponding Euratom arrangement. This will allow a further period in which the Government can recruit and train inspectors. In addition, from exit day, we are satisfied that, where needed, the amendment would cover the six vital agreements necessary to maintain the status quo. Two of them cover agreements with the IAEA and there is one for each of the four countries with nuclear co-operation agreements: namely, the USA, Canada, Japan and Australia.

I am grateful to the Minister for his letter following our meeting to discuss the amendment. Together with the Minister in the other place, Richard Harrington, and the noble Baroness, Lady Vere, he has put considerable effort into recognising and addressing valid concerns in both Houses throughout this process. I thank him and his team for co-operating with us on the Bill. The nuclear industry can be reassured that it may not need to face a cliff-edge moment and that the UK will continue to work constructively with Euratom. All sides recognise that the UK still has some way to go, yet we now have the right framework to bring that about.

In conclusion, I thank the House for its support and those who have participated so persistently and decisively in the Bill, namely the noble Lords, Lord Broers, Lord Warner, Lord O’Neill, Lord Carlile, Lord Teverson, Lord Hutton and Lord Fox, the noble Baronesses, Lady Featherstone and Lady Neville-Rolfe, and the noble Viscount, Lord Hanworth. I certainly cannot forget my noble friend Lord Hunt on the Front Bench, with the expert assistance of Grace Wright in Labour’s support team. This Bill has been a fusion of all the talents: it is a job well done.

[Lord Henley]

My Lords, I thank the noble Lord, Lord Broers, for both his support for the amendment and for setting such a good and welcoming tone for the debate. I thank all other speakers for their positive remarks—although I accept that there are still challenges ahead, as the noble Lord, Lord Teverson, put it. As I made clear during the passage of the Bill, I want to continue to provide information to the House as we proceed to make sure that everyone is happy with what we are doing to ensure that the right arrangements—or the appropriate insurance policy, as my noble friend Lord Inglewood and the noble Baroness, Lady Featherstone, put it—are in place.

The House will be aware that the passing of this Bill is just one of the steps needed to establish new nuclear safeguards arrangements for the United Kingdom. It is only one aspect of the Government’s efforts to maintain close and effective arrangements on civil nuclear co-operation, safeguards and safety with Euratom and the rest of the world. To that end, we have made good progress both at home and abroad. The Office for Nuclear Regulation has enhanced its organisational capacity and capability to deliver the future safeguards regime. I assure the noble Lord, Lord Hunt, that we have increased its available funding to £10 million, which includes the procurement of the new IT system. I assure the noble Lord, Lord Teverson, that we will do all that we can to make sure that the system is appropriate. We are also recruiting and training a large number of new inspectors and strengthening the institutional capacity to deliver the project within budget.

We will soon consult on nuclear safeguards regulations. An early draft of that was provided to this House. The department and the Office for Nuclear Regulation will continue to engage stakeholders individually and through wider events. I assure the House that only this morning, in Vienna, the IAEA board of governors formally approved new bilateral international safeguards agreements with the United Kingdom to replace the current agreements, which include Euratom. We expect that they will be signed tomorrow. The conclusion of these agreements, which will take effect once Euratom arrangements cease to apply to the UK, once again demonstrates this Government’s sustained commitment to the civil nuclear sector, international safeguards and nuclear non-proliferation.

I can further reassure the noble Lord, Lord Teverson, that on 4 May, as I think he is aware, the Government signed a new nuclear co-operation agreement with the United States of America. That will be ratified by Congress and laid before Parliament before ratification in the UK. Again, I will make sure that the House is kept informed of that process. On further NCAs, good progress continues to be made to put in place respective arrangements with Australia, Canada and Japan ahead of March 2019. Again, I will inform the House when that happens.

As part of EU exit negotiations the UK and the EU have agreed the terms of an implementation period, as the House will be well aware, running until the end of December 2020. That means that existing Euratom arrangements, including international agreements, would continue during this period.

I hope that I have given all appropriate assurances to noble Lords who have taken part in the short debate on this Motion. I beg to move.

Smart Meters Bill

Debate between Lord Grantchester and Lord Henley

Committee: 1st sitting (Hansard): House of Lords
Tuesday 24th April 2018 Grand Committee

[Lord Henley]

It is not simply a matter of writing a letter to the individuals concerned. One letter would not be enough. The energy suppliers must show that they have made reasonable efforts with all their customers while allowing a degree of flexibility in certain circumstances. The rollout obligation puts that onus on them. Ofgem has made it publicly clear in an open letter that it will need to adapt its approaches to consumer engagement, using other approaches where necessary. It is not merely a letter, but it must make a genuine attempt—merely making a solitary offer is not sufficient—to get hold of those people to make an installation.

[Lord Grantchester]

I shall interject very quickly to follow up on my noble friend’s comments. There has been a lot of confusion about what sort of meter will be installed. The Government have backed away from SMETS 1, but I am also hearing industry commentators suggesting that if SMETS 1 meters can be interoperable, the process should continue beyond October as they will then be interoperable as though they were SMETS 2 meters. So if, as we are hearing from other commentators, people are standing down staff from being able to put meters into premises where they have said yes because of the unavailability of SMETS 2 meters, that in itself will mean there will be a considerable delay to implementation. In the circumstances, it is rather unclear to the consumer what exactly their expectations will be and what will be delivered by what date—hence my argument. The Minister needs to appreciate that there is probably still a lot of confusion out there regarding what meters will be done by what date, when they might be installed and when any benefits will be appreciated.

--- Later in debate ---

[Lord Grantchester]

Before the noble Lord sits down, could I just come back to the NAO report, just to be clear in my mind about exactly what is happening? Am I to understand that the NAO is still planning to report by July 2018 on the cost-benefit analysis of introducing smart meters? The noble Lord has correctly said that the NAO has already done two reports—in 2011 and 2014. It is now four years since the report of 2014 and I understood that the general consensus was that it was about time to do another cost-benefit analysis, in order to prove to consumers that what is happening is for their benefit, even though the costs are going up. However, if the review is being shelved, it is important to know that. We understand that it was not part of any legislative programme but that it was going to improve consumers’ perspectives on accepting an offer that would be beneficial to them. Can the Minister be precise: is the NAO report going ahead in July 2018 or not?

[Lord Henley]

I do not know about the precise timing of that report. Obviously, that has to be a matter for the NAO. We will respond at that moment, but I do not think it is necessary for the Government to delay what we are proposing to do. As the noble Lord, Lord Teverson, said, there has already been too much delay. We will await with interest the report from the NAO.

[Lord Grantchester]

I do not think that the NAO wants to cause any delay. I understood that it did not have the resources to undertake this work and therefore that it would not happen, although it is crucial for the continuing rollout that consumers can easily see the benefit over and above the cost of the programme. It is not easy to understand it within their own bills, but if the NAO produced a report showing that overall it was beneficial to consumers that this was going ahead, it could be very constructive in allaying some people’s fears that this is not for them because of the cost. I want only to understand whether the NAO still has a commitment to produce the report this year.

[Lord Henley]

Again, I do not know about this year. I understand that the NAO still plans to undertake a review. It has not confirmed its timetable. Obviously, that is a matter for the NAO. When there is a new cost-benefit analysis, obviously we will look at it—but I cannot go into the NAO’s timetable.

--- Later in debate ---

[Lord Grantchester]

I support Amendments 6 and 11 which are also in this group. In Amendment 6, the noble Baroness, Lady Maddock, seeks a review of the code of practice energy suppliers must follow in the installation of smart meters. We agree with that as a necessary and constant reassessment of best practice should become part of any post-rollout review.

Similarly, Amendment 11, also in the names of the noble Baronesses, Lady Maddock and Lady Featherstone, calls for a review of the use of data from the operation of smart meters. I am grateful to them and my noble friend for highlighting some of the problems that could arise if we are not careful in this operation. We agree that it should be kept under constant review by the department to make sure that the risk of errors and non-compliance is kept to a minimum.

[Lord Henley]

Like the noble Lord, Lord Grantchester, I take it that we are dealing with Amendments 3, 6 and 11. The noble Baroness, Lady Maddock, caused me some confusion when she said Amendment 7. However, I am sure she meant Amendment 6 if she did say Amendment 7. I take it she was speaking to Amendment 7, and I will come to it in due course. I will deal with the amendments in the order in which the three leads took them and so I will deal first with Amendment 3, then Amendment 11 and then Amendment 7. If I get confused in my note I hope the noble Lord, Lord Grantchester—who is always quick on these things—will stop me.

I will also take note of the points raised by the noble Lord, Lord Campbell-Savours, and his general remarks about service charges in flats and the consumption of water by himself and others. Obviously that is wide of the Bill. I am sure the noble Lord uses appropriate amounts of water and comes to the House as clean as he always should be. We will read nothing into the amount of water that appears on his service charge. However, he makes a perfectly good and valid point about what people can understand from information about the use of a particular flat or residence by the consumption of gas, electricity or whatever. I hope that can be partly dealt with in what I have to say about security but it might also be helpful if I write to the noble Lord and others about it in due course.

Amendment 3 asks GCHQ to undertake an annual risk assessment of smart metering’s vulnerability to cyberattacks. Considerable effort has been invested by the energy industry as a whole and by government—including the National Cyber Security Centre, which is part of GCHQ—in designing security protection into the end-to-end, trust-based security architecture. Robust security requirements have been developed for smart metering equipment, the DCC and participating organisations, as well as assurance on the implementation of these requirements. These are a fundamental part of the smart metering regulatory framework.

In April 2016, the NCSC technical director published a blog on the security of smart meters in which he stated,

“we’re confident that the Smart Metering System strikes the best balance between security and business needs, whilst meeting broader policy and national security objectives”.

The NCSC continues to be fully engaged on smart metering, providing an annual threat report and practical guidance.

Underpinning the security requirements, assurance and governance arrangements currently in place is a security risk assessment. This has been through a number of iterations on the back of public consultation to ensure emerging and future security threats are appropriately addressed. This is in turn informed by the annual threat assessment that the NCSC provides. Additionally, each organisation must carry out an assessment of its processes for the identification and management of risk at least annually.

The end-to-end security model is also subject to ongoing monitoring and review. Smart metering regulations require that a review of the end-to-end security model is undertaken at least annually. This is undertaken by industry in the form of the Smart Energy Code security sub-committee, which is independent of government and composed of security experts from industry. Industry is also subject to an independent security assessment prior to using systems and annually thereafter. This assessment is set against a security controls framework, which is detailed in regulations. This is the basis for a consistent level of review across all organisations and provides a guide to the types of evidence that should be provided to demonstrate compliance.

Based on the detail I have just outlined, an additional security assessment annually by GCHQ, most likely by the NCSC, is unnecessary given the existing and ongoing risk management and security assessment arrangements and the close engagement GCHQ and the NCSC have had and continue to have in relation to smart metering. I hope that the noble Lord will feel that his amendment is largely dealt with.

I move to Amendment 11, tabled by the noble Baroness, Lady Featherstone, which deals with data privacy. It refers to data obtained by energy suppliers, both as a result of half-hourly settlement and due to smart metering in general. This data has the potential to deliver benefits for consumers, suppliers and the energy system, but we recognise again that appropriate safeguards are required on who has access to data, in which circumstances and for which purposes.

--- Later in debate ---

[Lord Henley]

If the operator could not cope with the noble Baroness, obviously they probably need further training. I think that is probably a matter for that particular supplier. There is guidance for them and they should take every opportunity to treat all domestic customers fairly and to be as transparent and accurate as possible in their communications. I hope that they will continue to do so. I note what the noble Baroness said.

I hope I have dealt with the three amendments in sufficient detail and I hope that the noble Lord will feel able to withdraw Amendment 3.

[Lord Grantchester]

I thank the Minister for his comprehensive reply. Initially I was slightly alarmed when he talked about the national infrastructure having to be a balance between security and business needs. I would have thought that our national infrastructure is critical and must be entirely secure at all times. However, he went on in his reply to further elaborate that energy threats are assessed each year and I was very satisfied that the situation is under constant review, so I am very happy to withdraw my amendment.

Nuclear Safeguards Bill

Debate between Lord Grantchester and Lord Henley

Report stage (Hansard): House of Lords
Tuesday 20th March 2018 Lords Chamber

[Lord Grantchester]

I commend the noble Lords, Lord Teverson and Lord Warner, for bringing back this amendment on Report. It concerns an important issue: that the UK must address the skills that are needed in the UK. The problem of labour supply with the necessary skills beyond those present and available in the UK will need to be addressed by several industries—and none more crucial than the power industry, in relation not only to new build but to the continuing need for decommissioning.

EDF is certainly correct to identify the importance of the specialisms needed to deliver Hinkley Point C on time. The noble Lord, Lord Warner, drew attention to this and to the Immigration Rules. With restrictions on freedom of movement, currently no route is identified for the many categories of workers to enter the UK under the points system in order to fill the vacancies envisaged. It is crucial that the Minister’s department underlines the importance of the issue to the Home Office and comes up with a solution. It will be needed in the best interests of the UK’s civil nuclear industry.

[Lord Henley]

My Lords, I am grateful to the noble Lord, Lord Teverson, for moving his amendment, and for the contributions of other noble Lords. I accept that it will continue to be important to attract—as the noble Lords, Lord Hunt and Lord Warner, and my noble friend Lord Selborne put it—the brightest and the best, to ensure that we maintain our excellence in the nuclear field. This amendment, however, is somewhat more limited in scope than that. Our future immigration system will be set out shortly and it would not be right for me to go into it. As my right honourable friend made clear in his Statement on 11 January, we will ensure that businesses and communities, as well as Parliament, have the opportunity to contribute their views before any decisions are made about the future system that the Home Office will be developing.

--- Later in debate ---

[Lord Grantchester]

I thank the noble Lord, Lord Teverson, for raising the important issue of the information technology systems necessary for nuclear safeguards. I also saw the written Q&A from the noble Lord and I thank the Minister for replying so swiftly. In Committee, the importance of understanding the full inventory costs in IT management systems was debated. The Government clarified that the full implications of the mechanisms that the ONR will need to set up are matters that could be included in each report that the Government will undertake. It can only build confidence that Parliament will be reassured through any audit process that the UK’s regime will be costed, reported and certified to be robust.

[Lord Henley]

My Lords, I am grateful to the noble Lord, Lord Teverson, for moving his amendment. He and the House really want two things. They want substantive reassurances and details of further reporting. I asked to have this amendment grouped with Amendment 6, which to some extent deals with this matter. We propose to put such reporting on the face of the Bill, and progress with the information technology systems required for the safeguarding regime will fall within that reporting duty. I hope that the noble Lord will feel that he does in due course get sufficient information. In the meantime, I will give an update about what is happening. As the noble Lord, Lord Fox, said, I might have to write with further detail later on, but let us see how the quarterly statements take place to see whether they provide sufficient information. If not, noble Lords can come back to me.

The overall system of safeguards is generally referred to as a state system of accountancy for and control of nuclear materials. The noble Lord referred to that in my original Written Answer. That is also known as an SSAC. The last time I came across SSAC it was the Social Security Advisory Committee, but that was in another world and another place. We will not go there now. As part of this, the ONR plans to put in place an IT system which it refers to as the safeguards information management and reporting system. I do not know how you pronounce “SIMRS” so we shall refer to it by its initials. The SIMRS is aimed at enabling the ONR to obtain and process the information necessary to ensure timely submission to the International Atomic Energy Agency of the reports required by any future safeguards agreements with the agency. The SIMRS will also enable submission of any specific reports required by supplier states as part of nuclear co-operation agreements.

The ONR has estimated that it will cost some £10 million—the figure I gave some weeks ago in Committee—to establish a UK SSAC, and the SIMRS is included as a part of this overall estimate. A pre-qualification questionnaire in relation to the SIMRS was recently advertised on the Government’s digital marketplace. Sixteen suppliers responded, of which six have been invited to respond to the invitation to tender by 6 April. Responses to that tender will provide more certainty on estimated costs, and the ONR expects to let the contract in early May.

I of course take note of what the noble Lord, Lord Warner, warned about IT systems from his experience with the health service and the Home Office. We are all aware of problems that new IT systems can have. I do not think that what we are proposing here is on the scale of what the National Health Service needs, but I accept that there can be problems. We and the department have a duty to examine that as carefully as we can. I give an assurance that we will do that as far as is possible.

Put very simply, that is where we are at the moment. We will keep noble Lords updated. We have accepted my Amendment 6, as amended by the amendment moved by the noble Lord, Lord Hunt. There is no need to further complicate the Bill’s proceedings by adding this amendment, which duplicates what we already have. Therefore, I hope that the noble Lord will feel able to withdraw his amendment.

Smart Meters Bill

Debate between Lord Grantchester and Lord Henley

2nd reading (Hansard): House of Lords
Tuesday 13th March 2018 Lords Chamber

[Lord Henley]

The noble Lord knows that we are not going down the route of saying that everyone will have one, but we hope everyone will see the benefits of them and that everyone will be offered one, and I hope that offer will be more than just the email that the noble Lord suggests. It is difficult to persuade people to change. Some months ago we discussed the ease with which one can change one’s electricity supplier. However, because of inertia, few people do. The easier that it becomes and the more benefits that there are, the more people will switch supplier. The same applies to smart meters: people will adopt them as they see the benefit. We shall continue to push suppliers to do what they can, because of the benefits. That is not only those benefits to consumers that we all recognise, but those to the country through reducing our overall electricity consumption by evening it out and those other benefits identified.

[Lord Grantchester]

I thank the Minister for giving way. It is the responsibility of Ofgem to report on the companies’ taking all reasonable steps to offer consumers a smart meter.

[Lord Henley]

The noble Lord is absolutely correct. I apologise for not making that clear. There will be information available from Ofgem.

On rollout, I agree with points made that there is more that we can do to engage with customers in moving to smart metering. This is important and we shall certainly do more. As noble Lords will know, we have required the establishment of Smart Energy GB. This is an independent not-for-profit organisation leading the centralised programme to raise national awareness alongside activities to drive behaviour change and help consumers to benefit from smart working. The situation is changing. I think that the noble Baroness, Lady Maddock, quoted figures about satisfaction rates, but on awareness of smart metering, this has increased from some 40% to over 80% in three years and has driven demand for millions. Research shows—I believe that this is a figure that the noble Baroness quoted—that some 80% of consumers who have smart meters would recommend them to friends and family.

The question of safeguards, safety of data and related issues, is a concern of my noble friend Lady Manzoor, the noble Lord, Lord Whitty, the noble Baroness, Lady Maddock, and others and it is something to which we shall come back in due course. National smart meter infrastructure has been developed from the outset in consultation with experts from industry and government including the National Cyber Security Centre, which is part of GCHQ. The smart meter security model establishes physical, regulatory and operational security controls backed by independent security assurance arrangements. For instance, critical commands will only be accepted by the smart meter if they are issued by the responsible energy supplier and authenticated through strong encryption. Moreover, they have to be countersigned independently by the DCC.

The Government have also put in place a strict data access framework that protects consumers’ privacy. This is important. I think that this was at the heart of some remarks of the noble Baroness, Lady Featherstone. Households will have control over who can access their detailed energy consumption data and for what purposes, except where this is required for regulated purposes—that includes billing.

I am beginning to run out of time. I shall write in greater detail. The final point that I shall address now is that of the noble Lord, Lord Broers. He highlighted the importance of more work to ensure that a promise of a connected home was delivered. The noble Lord will be aware of a joint BEIS-Ofgem smart systems and flexibility plan that was published in July 2017. That reaffirmed that smart meters are the foundation of a smart meter energy system. It included a commitment to work with industry to develop standards for smart appliances that will allow consumers to provide flexibility and benefit from demand-side response.

I appreciate that I was asked many more questions and that there is much detail that will need to be gone into. What I hope to do is to write a letter as soon as possible to all those who took part in the debate detailing all those points that need to be covered. The important point is that we can then sit down—or stand up—and discuss these matters in detail in Committee, make sure we have the Bill right when we send it back to the Commons and make sure that we can look forward to broad, sunlit, happy uplands. As I said, I will continue to be the optimist rather than one of the series of Eeyores I have heard speaking on this occasion. I look forward to a bright future for smart meters, whether that is SMETS 1, SMETS 2 or even SMETS 3 as mentioned by the noble Lord, Lord Lennie.

Nuclear Safeguards Bill

Debate between Lord Grantchester and Lord Henley

Committee: 2nd sitting (Hansard): House of Lords
Thursday 1st March 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, I start by offering my apologies to the noble Lord, Lord Grantchester, as he did not receive a copy of that letter. I will make sure that copies are made available. I thought that I had arranged for copies of all the letters—those I sent on the 20th, the one on the 28th to the noble Lord, Lord Carlile, and the one from my noble friend, I think again on the 28th, to the noble Lord, Lord Teverson—to be placed in the Library. After 40 years in this House, I still do not quite know exactly what that means—I think one can go along to the Library and get a copy, but I leave that to noble Lords. I will certainly make sure that copies are made available to all those who want them.

[Lord Grantchester]

One does not wander to the Library just in case there might be something there, so it would be useful.

[Lord Henley]

I fully accept that. I think the idea is to make it clear that they have been made public and are available. I will make sure copies are made available to noble Lords.

Before dealing with precise matters relating to the amendment, I shall say a word or two about the implementation period and transition because that was raised by my noble friends Lady Neville-Rolfe, who has great experience in this matter as a former Minister in the department that I have the honour to represent, my noble friend Lord Trenchard and the noble Lord, Lord Teverson, who was in receipt of a letter from my noble friend Lady Vere. The second paragraph of that letter sent on the 28th stated that details and terms of an implementation period have yet to be agreed, that it is assumed that the United Kingdom will no longer be a member state of the EU or the EEA during the implementation period, that the base case for the length of the period is around two years and that the UK will continue to mirror the EU acquis—the entire EU legal framework—during that period.

We also note that the Commission has published its draft of the withdrawal agreement. The noble Lord, Lord Teverson, referred to this. It is just a draft at the moment. The exact content of the United Kingdom’s withdrawal agreement from the EU will be a matter for negotiation, and we are working hard to deliver the best possible outcome for the UK while making good progress on negotiating our deep and special future partnership with the EU. I do not think I can take the noble Lord or the Committee any further on that matter at this stage.

Amendments 7 and 18 ask for much greater consultation to be set down in law. My noble friend Lady Neville-Rolfe was rather worried by the precedent, should it be enacted, that we make a Written Ministerial Statement at certain stages. I hope I can give the appropriate assurances about what we intend to do to keep Members of the Committee and the House fully informed about what we are doing over the course of the coming year.

First, I shall clarify my Second Reading response to a question from the noble Lord, Lord Hunt of Kings Heath, I think, about the potential cost to industry of the new regime. I referred only to the cost to the ONR of setting up the domestic regime. The department has already committed to allocate to the ONR the funding necessary to establish the new regime. In respect of ongoing funding—the matter which this amendment is aimed at addressing-–I can make a clear commitment now that a decision on cost recovery and charging arrangements will be subject to close engagement with industry and other key stakeholders, as well as public consultation.

We intend to publish a public consultation and an impact assessment on the regulations later this year. I repeat to the Committee that we have made those regulations available in draft already. It is estimated that the ongoing costs of operating a domestic safeguards regime—

--- Later in debate ---

[Lord Henley]

I will make it available in the Library, as well as to other noble Lords who want copies of it.

To summarise briefly what I tried to set out in that letter, and for the benefit of the Committee, we are working closely with the ONR to ensure that it will be in a position to regulate the new safeguards regime. The ONR is in the process of expanding its safeguards function by recruiting and training additional inspectors, building additional institutional capacity and developing the necessary IT systems. I want to stress—having made a visit to Sellafield, which has two of the three sites in this country where nuclear safeguarding takes place, with a senior representative from the ONR and others—that on the information given to me it is my assessment, based on current progress, that the ONR will be in a position to deliver to the international standards as required by the IAEA on withdrawal from Euratom in a year’s time, in March 2019.

[Lord Grantchester]

At this stage, I intervene only to ask: is the Minister aware of the full costs of all the measures to be implemented to enable the ONR to go ahead with this regime, or is that work still in progress?

[Lord Henley]

As I said earlier, we think that the costs will be broadly in line with the current costs of what we pay to Euratom, which is £9.5 million a year. But there may be certain funds to pay for the changeover, which again I dealt with at Second Reading by saying that money would be made available for it. Ongoing costs will be broadly in line with where we are, and that will be satisfactory.

[Lord Grantchester]

I apologise for coming back to the Minister but, as I understand it, we are talking about two items. One is the ongoing cost of £9.5 million, which I quite agree is defined already by the EU’s contributions to us for the Euratom programme. I meant the full cost of the set-up, which initially had a £2.275 million contribution from the contingencies fund. What does he think the full cost will be, and is he happy and confident that it will be kept within that contingency fund? Has he now completed the inventory and can he update us on what the full cost may be of implementing all the measures necessary?

[Lord Henley]

I think I answered that question at Second Reading and gave a figure to the noble Lord. Rather than trying to guess or remember what I said on that occasion, I will write to him. But I am perfectly happy that we have made that commitment. There will be sufficient funds and then there will be ongoing costs—the noble Lord is right to distinguish between the two—and again, we are happy about that.

Nuclear Safeguards Bill

Debate between Lord Grantchester and Lord Henley

Committee: 1st sitting (Hansard - continued): House of Lords
Thursday 22nd February 2018 Lords Chamber

[Lord Henley]

The noble Lord talks about international obligations. The important thing to remember about the initials IAEA is that the first letter stands for “International”. It is an international body, we have been signed up to it since 1957 and we continue to be so. It will offer those guarantees.

[Lord Grantchester]

I hesitated to respond to the Minister because I was not quite sure what he was saying. Is he saying he accepts our amendment, because he seems to be saying that we will maintain our standards to the Euratom standards?

[Lord Henley]

As all noble Lords will know—particularly those who have been on the Front Bench in government from time immemorial—the lovely word “resist” appears at the top of the brief. No, I am not accepting the amendment. It does not add anything to the Bill. All I am doing is providing the appropriate commitment that we will meet the right standards at the right time.

[Lord Grantchester]

My Lords, I am still confused by the way the Minister goes from one stance to another, saying that he will meet these standards but somehow feels it is inappropriate to have that on the face of the Bill.

I am not satisfied with the Minister’s responses and I do not think the rest of the Committee is either. This is the key challenge to the Government—that they can and will do what they propose in order for there to be a credible nuclear industry in the UK, operating to Euratom standards. The noble Lord, Lord Fox, made a compelling remark earlier, saying that the Government have not appreciated the situation and undertaken a risk assessment of their handling of Euratom issues. On a corporate risk register—one axis being low and high impact, and the other axis being high and low probability—leaving Euratom must be placed at the worst quartile: high probability of an unsatisfactory outcome, coupled with high impact.

We will certainly be appreciating the Government’s response across all the Committee’s amendments, in order to determine the best framework to propose on Report. I beg leave to withdraw the amendment.

Taylor Review

Debate between Lord Grantchester and Lord Henley

Wednesday 7th February 2018 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for repeating in the form of a Statement the reply to the Urgent Question in the other place on the Government’s response to the Taylor review of modern working practices. This is a very disappointing government response. Against the challenges thrown up by employers using technological innovations in drawing up job specifications, pay and conditions, the Government should focus on the definitions of categories of employment to be clarified and monitored by the Employment Agency Standards Inspectorate. Enhancement of rights merely with payslips and written terms does not go far enough. Will there be clarity in the employment laws in relation to how workers are employed in the so-called gig economy? In the case of a dispute, to whom does a worker go? How will the state take responsibility for enforcement? What rights will apply to which workers on day one of employment, and how will they apply to those on zero-hours contracts? Will any new right to request a more stable contract result in an obligation on the employer? Will the role of trade unions be enhanced to protect and guide their members through any new procedures? A far more comprehensive response will be required after the consultation.

[Lord Henley]

I am sorry that the noble Lord was disappointed with my response, as I think that we went a long way. He failed to recognise that we are announcing further consultation on some of the grey areas in which there is a lack of clarity. The noble Lord will be aware that we have the Employment Rights Act 1996, and the law on the subject has grown and developed as a result of cases in the courts since then. We all accept that there are grey areas in which there is a lack of clarity regarding employment. That is why my right honourable friend wanted to set up this review and why he has responded with the Statement on good work today. He has also responded with a series of consultations, the first and most important of which is the consultation on employment status. We have responded as we did to get that correct so that we can then move on to legislate where it is necessary. We look forward to helpful contributions from the noble Lord and his party in due course.

Carbon Capture and Storage

Debate between Lord Grantchester and Lord Henley

Wednesday 20th December 2017 Lords Chamber

[Lord Henley]

Well, my Lords, we are where we are. I rather agree with my noble friend about the importance of zero-carbon options, and that is why we want to look at carbon capture and storage. But we should look not only at zero-carbon options but also at low-carbon options.

[Lord Grantchester (Lab)]

My Lords, the clean growth strategy will still keep the UK on track to miss the fourth and fifth carbon budgets. The report of the noble Lord, Lord Oxburgh, whom I congratulate on his drive to take this technology forward, went into detail on how CCS could help to achieve these budgets. As for the energy-intensive industries, would the Minister agree that CCS would be a better value answer to these polluting industries than merely giving them dispensation from paying for climate control measures that every other industry has to adhere to?

[Lord Henley]

My Lords, I do not accept what the noble Lord says about us missing the fourth and fifth targets. We will do what we can to meet them; it will be difficult, but that is why we made it quite clear in the industrial strategy and the clean growth strategy why we want to invest in this area.