Great British Energy Bill

Lord Hamilton of Epsom Excerpts

Committee stage
Wednesday 22nd January 2025 Grand Committee

[Lord Cameron of Dillington (CB)]

My Lords, I ought to report on Amendment 111 in the name of the noble Lord, Lord Offord. The assessment of the effects of offshore wind farms on the environment, with particular reference to sea-birds, has been ongoing for some years now. That does not necessarily undermine the future of the amendment, but it indicates that it might not be necessary.

The UK Centre for Ecology & Hydrology—the CEH—has been monitoring sea-birds in the North Sea since the 1970s. It largely studies birds on the Isle of May, just off the coast of Fife, but also sea-birds up and down the east coast of Britain. Over the past decade, these studies—largely funded by wind power operators, but also by the Scottish Government, the RSPB and others—have been extensively monitoring the effects of offshore wind farms on sea-birds. Admittedly, having to cope with and discount the simultaneous effect of bird flu has meant that this has proven a very complicated exercise recently but, with bird flu now on the wane, colonies of sea-birds seem to be flourishing in spite of the growth of offshore wind farms. The jury is still out, but the effect of these farms seems pretty low compared to that of bird flu and the new climate change-induced phenomenon of marine heatwaves. The latter winter current changes affect the growth and presence of sand eels, which are hugely important to the winter diet of many sea-birds.

The point is that the bottom tip of a marine turbine blade is 30 metres above sea level. That is pretty high and nearly all sea-birds fly below it. Kittiwakes are the notable exception but, even here, the CEH is helping the wind farm operators to examine how to minimise their losses. One solution is to paint one of the three blades black, which seems to have a beneficial effect. It is also helping to mitigate overall losses by building artificial nesting sites for kittiwakes on the Yorkshire cliffs, for example. The intention is that the overall kittiwake population should not be affected.

It is possible—and the jury, as I say, is still out on this—that offshore wind farms actually help sea-birds flourish. Most birds thrive relatively well during summer months, but they suffer and sometimes die from lack of food in winter months. While the recent cessation of sand-eel fishing by UK fishing boats has helped—they are now not allowed to fish for sand-eels—the Danes continue this practice in considerable quantities. However, neither the Danes’ nor other fishing boats tend to fish inside wind farms for fear of snagging their nets. Thus, wind farms have become a sanctuary for sand-eels and other fish and could therefore be having a beneficial effect on the overwintering of sea-birds. But, as I say, the jury is still out.

The environmental assessment of offshore wind farms is already happening, is based on data going back to the 1970s and seems to indicate so far that their environmental effects are not hugely harmful.

[Lord Hamilton of Epsom (Con)]

I should like first to speak to my noble friend Lord Fuller’s Amendment 113, on tidal energy. I ask the Minister what the position is on the Severn because, in theory, the Severn bore has immense capacity to generate electricity, going upstream and downstream. It always strikes me that if we are looking for tidal energy, the Severn bore offers better opportunities than almost anything else. I am told that when people looked at this, they found big problems with flooding land further upstream, which would have led to enormous compensation claims from farmers and so forth. I should be grateful if the Minister filled us in on the Government’s thinking on the Severn, because it strikes me that if we could create tidal energy there, that would be very beneficial to the country as a whole.

Amendments 111 and 112 address environmental considerations. We have seen in the newspapers today that the Government are bringing forth a Bill that will say that in future, environmental considerations will not be taken into account in quite the same way in respect of building projects. Can the Minister update us on the Government’s thinking on that Bill, when it is likely to appear and what it is likely to say? We are all interested in this issue. Will it read directly across to energy projects, as it does for construction projects? We have heard from the Prime Minister about this wonderful tunnel they have been building on the HS2 line to preserve bats, which is costing £100 million. Then, we heard that it was not going to preserve the bats after all, and they were all going to die somehow. We want to be updated on the Government’s thinking on that. We get all these remarks from the Prime Minister, but they are significant in terms of the environmental concerns associated with construction projects. What I really want to know from the Minister is whether this is going to read straight across to energy projects in the same way and make it easier to get other construction projects going, such as housing. I should be grateful if he filled us in on that when he sums up.

[Lord Howell of Guildford (Con)]

My Lords, I declare an interest as an adviser to a company deeply involved in the energy transition, particularly in some of the switching station construction, which, obviously, is the land-based part of the vast increase in electricity from wind pylons that is planned—necessary, in fact, for us to begin to get anywhere near the clean electricity volumes we require for the modern economy.

We all heard President Trump making some ambitious statements yesterday. He was very strong on the fact that vast investment would be required in clean electricity—indeed, electricity of all kinds, in his case—to cope with the great new data systems that he has persuaded private industry to co-operate with the state in building. I think he said it would be $500 billion, or £300 billion; whatever the figure was, it was enormous, and the amount of electricity will be colossal. Running the data centres that will be required, which we are trying to build here as well, can drain entire systems of electricity. The demand is vast. This relatively small area, worth £8.4 billion—he calls it “peanuts”, and it seems nothing compared with these figures—will be part of this, and it will obviously have a very large footprint: a major environmental impact.

My noble friend Lord Hamilton spoke about tidal power and the Thames Barrier. To give a little history—I am sorry, but it is relevant to where we are now—he will remember, because I know he has a crystal-clear memory, that, 40 years ago when he was my Parliamentary Private Secretary in the Department of Energy, the first folder on my desk on day 1 of moving into the job was a gigantic report on the Severn barrage. The conclusion was that it would not work and would have a huge environmental impact on nature and the surroundings, rather on the scale of the idea that has now been floated down at Hinkley—that some kind of marshland development should be promoted, which will also have an enormous impact and is causing a lot of protest. So, this is not a new question. We have been talking about barrages and tidal energy and its capacities, and the undoubted impact it can have in specific areas on a rather small scale, for at least 40 years, and we will no doubt be talking for the next 40 years.

In a specific situation it makes sense but, generally, as part of the huge electricity supply that we are now contemplating, as NESO told us only yesterday, we are now moving towards the base camp, to use its language—to this colossal increase in clean electricity by 2030. Just as we are at that point, we can now see that these small additions help, but they will not be part of the central solution.

My noble friend Lord Fuller raised a number of very interesting questions. He also made a general point which is relevant to this amendment as well as others: where are we on new thinking about public purposes harnessing private money? It is an old and obvious question. It is particularly obvious now, when the modern state has vast amounts invested and huge duties to fulfil. In fact, some of them are too vast for the state to cope with in its present form. It has no money, or, rather, it is underwater in debt, as the entire nation is—indeed, the entire world is—and it is hesitant to raise more by taxation and therefore has to look to the poor old consumer and the taxpayer for anything it can raise.

The private sector has the money. The sovereign wealth funds, pension funds and investment pools around the world have vast amounts of money and are looking for places to invest it, but they cannot find them. Somewhere in between those two—the Government having all the demands and the private sector having all the money—there has to be a reinvention of the co-operation between the state and the private sector, which the ideologists in our various parties will not like at all, but that is where we are going. We had a try with the private finance initiative, which was invented by the Conservative Party and taken up with some enthusiasm by Labour, now in government again, and then it ran into difficulties.

I believe that there used to be a unit in the Cabinet Office looking at this whole new area—I hope it is still there somewhere—of having new kinds of co-operation in the digital age between the Government, or the state, and private sources of money. I would quite like to know from the Minister whether that unit is still operating and, I hope, having some very new ideas, and not just in this area. The same problem arises in a vast range of areas.

As to the impact on the environment, which this amendment so rightly focuses on, something of this kind has got to be included in the Bill. It would be a dishonest Bill if it did not have something addressing these issues. I mentioned the switching stations; I am not quite sure how many new ones we will require between now and 2030. I think that two have just been started. I have a figure of 13 switching stations around the coast of this country. Whether they will be built in time, I very much doubt but, if they are, I would like to know what sort of impact they will have on the environment.

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[Lord Howell of Guildford (Con)]

I had actually finished but I spoke repeatedly to the environment amendment. I mentioned it six or seven times. I am not sure what the noble Earl’s motive is. I thought that ought to be clear. Is it not clear?

[Lord Hamilton of Epsom (Con)]

Can we just return to the Severn barrage? I agree that, 40 years ago, my noble friend was looking at this and that I was looking over his shoulder at the time. The concerns about putting in a barrage on the Severn were mainly about flooding a whole mass of land further upstream. This was in the days when farmers were expected to grow food. It is rather changed now; we expect our farmers to have immense environmental concerns and, in many cases, the whole grant system is skewed towards people having nature reserves on their farms rather than producing food. Surely, if a lot of this land got flooded that would be incredibly encouraging for people who want to encourage wading birds and all the rest of it. I am sure there would be enormous environmental benefits, rather than a downturn in the prosperity of the land which then got flooded by the barrage.

[Lord Roborough (Con)]

My Lords, I briefly address Amendment 113 in the name of my noble friend Lord Fuller. I declare my interest in the ownership of salmon fishing rivers.

Proposals that I have seen in the past for energy generated from tidal turbines have tended to be located where currents are strongest. By definition, this is where sea movement is constricted by narrower channels —between islands, between islands and the mainland, in estuaries or on prominent headlands around which currents and tides race. These locations are precisely where the movements of migratory fish species such as salmon and sea trout, as well as saltwater species, will be concentrated. The wild Atlantic salmon is already an IUCN red list species and the greatest of care must be taken with any further risk to the survival of every individual fish, given that the species is so threatened.

For these reasons, I strongly support my noble friend’s amendment and those of my noble friend Lord Offord of Garvel, which he and my noble friend Lord Howell of Guildford have spoken to very convincingly. I urge the Minister to take these concerns seriously and consider incorporating environmental protections in this Bill.

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Moved by

[Lord Hamilton of Epsom]

118B: After Clause 7, insert the following new Clause—
“Investment in subsidised renewable energy projects Great British Energy must not invest in any project that relies wholly or in part on subsidies from the UK Government.” Member's explanatory statement
This amendment would prevent GB Energy from investing in projects which rely on UK Government subsidies.

[Lord Hamilton of Epsom (Con)]

My Lords, the concern that we have here is all to do with financing projects, and the worry that the Great British Energy fund will be used to bolster the financing of some highly speculative energy projects that the private sector is not prepared to back. Those are the ones that will be moving in the Government’s direction and they will be very speculative. They may well not make money; they may be almost doomed to lose money when they start.

There is a great concern here that, when the Treasury is raking around to get contributions for a highly speculative scheme, it will be looking for Great British Energy to put some money into the pot in addition to taxpayers’ money. One thinks here about the development of batteries or energy storage—which is all very controversial—and the whole business of storing CO₂ emissions and pumping that into existing oil wells. I am not sure that the technology for that has been completely satisfied. It all seems to be rather speculative as to whether it will ever happen.

That is the worry that many people have about this Bill. There is a very lively private sector that is happily picking all the low-hanging fruit when it comes to profitable ventures in the energy field. If we are not careful, Great British Energy will be left with everything else that is far from profitable, is extremely speculative and may well lose taxpayers’ money in the process. We want some reassurance from the Minister that this will not happen. Otherwise, it really will be an abuse of taxpayers’ money if Great British Energy just gets involved in all the things that the private sector is not prepared to back.

There are so many different areas that are very speculative when it comes to energy. We had a great debate about hydrogen in the past, for instance. My noble friend Lord Roborough and I do not in fact agree that there is a future for hydrogen. We do not seem to have had any great elucidation from the Minister on this; I do not know whether the Government think that hydrogen is a good idea or a bad one. Either way, it is a typical example of a very speculative form of alternative energy that could cost a fortune to develop and lose people an awful lot of money if it did not work out at the end of the day.

The point of my amendment is that I am very concerned that the Great British Energy fund will be used for these very speculative ventures and I am not sure that that is really what the taxpayer is looking for. I had an issue with what my noble friend Lady Bloomfield said about all the profit that would be made by Great British Energy. I am not sure that it will be making any profit; I think it is much more likely that it will make thundering great losses and all the billions of pounds that are put into it will merely disappear with very little to show for it in the future.

[Lord Frost (Con)]

My Lords, I speak to Amendment 130 in my name. I begin by noting my interests as set out in the register; I have a new interest as a director of Net Zero Watch.

Amendment 130 would postpone the entry into force of much of this Act until the Secretary of State publishes a comprehensive report setting out the full costs of the renewable energy industry. My noble friend Lord Hamilton has just set out the logic of having such a clause that delays the entry into force of certain provisions. From my point of view, the logic is that certain things need to be made clear before Great British Energy can effectively start its work.

It is in this area—the cost of renewables, the subsidies, the taxpayer support, the higher prices—that this problem of establishing the basis on which GBE is proceeding seems the strongest because it would be going into this without any reliable costings in this area and with a real sense that what is known about the costs of renewables is not being disclosed entirely frankly for full and honest debate. When we try to have a debate on this subject, we are often shot down by a statement that, whatever the costs, the costs of climate change are higher. But again, that is never set out. I was lucky enough yesterday to be able to ask the Secretary of State when the last cost-benefit analysis had been done on this subject, and he said it was in 2021. That was before the Ukraine war, which is used as the justification for the rush to renewables.

The NESO report was produced last autumn. It shows that both the pathways to decarbonisation of the energy grid in 2030 are more expensive than doing nothing. That is even clearer if you eliminate the vastly inflated carbon price included in those costings. My right honourable friend the shadow Secretary for Energy Claire Coutinho said last week that internal work within the department on the full system costs of renewables, which she commissioned when she was Energy Secretary, had been stopped. That work would have given us the data that would have enabled the report that my amendment requires.

To conclude on this point, I refer to a blog by Sir Dieter Helm, a well-known expert in this area and not someone with whom I agree on the fundamentals of climate change. He says in this blog, written last week, on the prospect of renewables costs falling:

“It would be wonderful if it was true, but sadly it isn’t anytime soon”.


He goes on to say the UK and the EU are

“telling fairy tales that ‘it’s all going to be cheaper’ here”.

He is one of the biggest experts in this area. We need honesty and GBE needs clarity about the reality on which it is proceeding with its work. That is why I have tabled my amendment, and why we need a proper report and clarity. GBE needs a reliable starting point so that its actions can be tested against reality and we can be sure that it is acting properly in the public interest. I hope the Minister looks at the issue with that in mind, and perhaps gives this amendment sympathetic consideration.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to all noble Lords who have taken part in this debate, which reflects previous debates in Committee. It started with the noble Lord, Lord Hamilton, being worried that GBE will invest badly, not make money and invest in speculative projects, which he thought the Treasury might encourage it to do. My experience of the Treasury is that that is not how it works out in practice. Our challenge is encouraging the Treasury to make investment decisions, and the scrutiny with which it approaches this matter can be described as vigorous.

[Lord Hamilton of Epsom (Con)]

Does the Minister anticipate that the Treasury will have a veto on anything that Great British Energy invests in?

[Lord Hunt of Kings Heath (Lab)]

No, I do not imagine the Treasury will have a veto, but I think it will keep a careful eye on the work of GBE. I have already mentioned in previous debates the number of controls that will be in place.

Noble Lords argue this many ways around, but we are trying to reach a middle ground where we get the benefits of a company with people on the board who are very experienced in this area making hard-headed commercial decisions, because we want GBE to be successful and to make a profit. On the other hand, it is also a public sector body accountable to the Secretary of State and therefore subject to the normal public sector controls. The skill of the GBE board will be to find a way through this, and that is why we wish to give it as much operational independence as possible.

At the risk of repeating myself on the cost issue, in its whole-system analysis undertaken for the previous Government, my department concluded that a renewables-led system, complemented by flexible technologies to ensure that supply and demand are balanced, alongside technology such as nuclear, would form the cheapest foundation for a future decarbonised power grid. Since that analysis was published, a range of external commentators, such as Energy Systems Catapult and the Climate Change Committee, have published analysis which reaches similar conclusions.

Noble Lords have quoted Dieter Helm and other commentators but I believe that there is a general consensus on the broad make-up of the most cost-effective future systems, although there will be some disagreement over potential technologies in future. For instance, the noble Lord, Lord Hamilton, raised hydrogen, and, in our short debate on small modular reactors in the House this afternoon, there was a question about value for money in their development. I readily accept that; however, we think that the general mix is the most cost-effective way to go forward.

Amendment 118B seeks to add after Clause 7 a new clause that would prevent GBE investing in any project that relies wholly or in part on government subsidies. I am not in favour of that. First, GBE is operationally independent, so commercial investment decisions need to be made separately from government decisions on subsidy provision. Secondly, GBE will be focused on driving clean energy deployment through its functions. The Government provide different subsidies in different ways across the energy market, so limiting GBE’s activities to areas where there are no government subsidies would unnecessarily constrain the company.

Coming back to a point from the noble Lord, Lord Hamilton, the advice we have had from the Climate Change Committee is that CCUS would enable us to have the lowest-cost pathway to net zero. It described it as

“a necessity, not an option”

for maintaining our climate commitments.

The way in which GBE will interact with existing and new government policies and influence the energy system will clearly be determined on a case-by-case basis. We will clarify the relationship between existing schemes and GBE in due course. I assure the Committee that we are currently seeking advice on Great British Energy’s compliance with the Subsidy Control Act in both its establishment and operation.

Amendments 129 and 130 propose additions to Clause 8. In essence, they seek to delay the commencement of the Act until the Secretary of State publishes a report on the appropriateness of further government subsidy for offshore wind developments, as well as a comprehensive report detailing the full costs to consumers and taxpayers of the UK renewable energy industry. Noble Lords will not be surprised to hear that I resist these amendments. We want to see Great British Energy get set up as quickly as possible and get on with the job. Frankly, I do not see it as necessary for those reports to be published.

On Amendment 129, as I said in our debate on the previous group, we are committed to increasing radically the deployment of offshore wind, which provides us with secure, domestically generated electricity. As I have already mentioned, we want 42 to 50 gigawatts of offshore wind by 2030, up from 15 gigawatts today. The contracts for difference scheme is the Government’s main mechanism for supporting new renewable electricity generation projects. We continue to evolve that scheme to ensure that it is aligned with the Government’s wider objectives. In addition, the clean power action plan that we published last year reconfirmed our view, and that of NESO, that clean power can be delivered by 2030 without increasing costs to the consumer and with scope for lower bills.

Overall, I really think that GBE should now be allowed to get on with the job. I do not believe that putting in amendments that would prevent it investing in schemes that attract subsidies is the right way forward. The Government would certainly resist that.

[Lord Hamilton of Epsom (Con)]

My Lords, my concerns remain. This is such a thin Bill and commits the Government to so little—other than spending other people’s money in inordinate quantities—that one can see the potential for things going wrong very easily. I beg leave to withdraw my amendment.

Amendment 118B withdrawn.

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[Viscount Trenchard (Con)]

My Lords, it is disappointing that no financial framework details were included in the Bill, as they should have been. Amendment 125, which will be spoken to by my noble friend Lord Offord, would ensure that the Bill cannot come into force until the Secretary of State has laid before Parliament, together with a Motion for resolution in each House, a revised financial framework document. This would improve transparency and accountability, which are in short supply in this Bill, as has been noted by many noble Lords.

I have also added my name to Amendments 126 and 127 in this group, which would essentially require the Government to explain the impact of their proposals on the number of jobs in Aberdeen and would require a report on the cost and viability of their net-zero targets. I fear that the negative approach to the oil and gas industry based in Aberdeen will lead to more job losses than will be created by the location of GBE in that city. I am also not at all sure that the type of people being made redundant by oil and gas enterprises being forced to destroy economically beneficial businesses are the same type of people GBE will wish to recruit. It is clear that the Government’s decision to locate in Aberdeen was intended to mitigate the damage to that city’s economy, but I am not at all sure that that will be the case. I support my noble friend Lord Hamilton in calling the Government to account on these matters through tabling these two amendments.

As I said at Second Reading, we cannot rely on renewables to continue to decarbonise the grid, or even begin to replace our much larger industrial energy consumption, which is still dependent largely on oil and gas. My noble friend Lord Frost explained on 14 November, and again today, how serious a problem the intermittency of renewables is. It is essential that the Government think again before confirming the premature ending of oil and gas, at least until more serious attention has been paid to the possibilities that nuclear may offer. In this regard, we should be a little bit more like France.

[Lord Hamilton of Epsom (Con)]

My Lords, I speak to the two amendments in my name. The first, Amendment 126, is about the jobs in Aberdeen. Unfortunately, this amendment gets involved only in the number of jobs that are created by Great British Energy in Aberdeen. As my noble friend Lord Trenchard has already referred to, it does not make any reference to the number of jobs that have already been destroyed by the Secretary of State for Energy in not granting any more licences in the North Sea, which will have—

[Lord Hunt of Kings Heath (Lab)]

It is all very well the noble Lord saying that, but I remind him that a lot of jobs were lost on the UK continental shelf during his Government’s stewardship.

[Lord Hamilton of Epsom (Con)]

Yes, but the fact that a number have gone already because the industry is declining is not a compelling reason for destroying even more, in my view—but I hear what the Minister says.

Of course, this contrasts tremendously with the inaugural address from President Trump, saying, “Drill, baby, drill”. He is quite keen on expanding the oil industry in the United States, which is interesting because he slightly gives the impression that the United States has been rather laggardly in producing oil. I have some quite interesting statistics from the Library that indicate that, throughout the Biden years, despite all the green initiatives that were produced, the United States was actually the biggest producer of oil in the world. In 2020, it produced 11.3 million barrels a day, and in 2023 it produced 12.9 million barrels a day. Of that, it was using about 8 or 9 million barrels for its own consumption and exporting the rest. The idea being put out by the Trump regime that drilling for oil will somehow be a new venture is quite interesting; it has been going on, fit to bust, under the Biden Administration—you slightly wonder how that ties in with all the green credentials that he was boasting about, when they were producing these vast quantities of oil. They were way ahead of the Russians, who were the second-biggest producer of oil, at about 10 million barrels a day.

We are now in an interesting situation, as there seems to be a recognition by the Trump regime that we will go on needing hydrocarbons and oil way into the future. At the end of the day, the idea that we can somehow phase all this out in this country slightly defies credibility because, as we have discussed already, the reserves of oil are higher than they have ever been, and we will go on needing it for quite some time. It is rather extraordinary that we do not produce our own oil in the North Sea for our requirements. As it is, we will have to import it from other places, creating CO₂ emissions and so forth on the way.

[Earl Russell (LD)]

I was listening to what the noble Lord was saying, and the truth is that North Sea oil is declining by 7% a year—which will not change—and that we have the third-best wind resources in the world. North Sea oil will never meet our energy needs and, if we do not find alternative forms of energy, we will be dependent on the international markets, which will mean huge variability, no security and huge cost to our bill payers. Surely the best thing to do is use the third-best renewable resources in the world that we have to back that up with a system that works.

[Lord Hamilton of Epsom (Con)]

I find that an interesting comment because, at the end of the day, wind energy is totally dependent on the feed-in tariffs that end up on everybody’s electricity bills. That is one reason why we are paying such enormous sums of money for electricity at the moment. The idea that wind is somehow a cheap option does not seem to be quite working out.

The broad point is that anybody who looks at the energy demands of this country knows that we will go on needing oil for quite some time to come. It seems extraordinary that we then depend on imports of oil from around the world, with all the CO₂ emissions that go with that, rather than producing our own. I can see no logic in that at all. The production of oil in the North Sea may be declining, but that does not mean that we should not, therefore, give licences to produce more oil from the North Sea if we actually need it in this country. That seems inexplicable when we are importing it from elsewhere.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, I do listen carefully to what noble Lords have said. Our final debate in Committee, as the noble Lord, Lord Vaux, suggests, takes us back to some of the early debates and concerns that noble Lords have. I am particularly grateful to the noble Earl, Lord Russell, for his support. The point he made is that the cost of doing nothing will, in the end, be much more expensive than the cost of net zero. I say to the noble Lord, Lord Hamilton, that sticking to oil and gas is certainly not a free lunch, either. The noble Earl also pointed to the declining reserves in the UK continental shelf. This is a fact of life and why there were losses of jobs in Aberdeen under the previous Government. I will come back to the issue of Aberdeen in a moment.

Clearly, the effect of the amendments will be to defer the commencement of most provisions in the Bill until several requirements have been met. They include the laying before and approval by Parliament of a framework document and statement of strategic priorities, the publication of an outline statement of strategic priorities, the publication of an assessment on the expected impact of the Act on the number of jobs in Aberdeen and the publication of a report on the cost and viability of the Government’s net-zero targets. We have already discussed many of these matters in Committee and the Committee will be aware of the Government’s views and intents on this.

Our aim is to get this Bill on the statute book as soon as we can. It is also our clear intention that the statement of strategic priorities cannot be produced without the full involvement of Great British Energy in order to get its expertise, including that of the newly appointed non-executive directors, to inform the statement. This is why we do not believe that we can publish the statement of strategic priorities either during the passage of the Bill or before Royal Assent. Once parliamentary approval is given, we will ensure that we move as quickly as we possibly can to produce the statement.

On accountability, in the end, Ministers will agree with the statement that we are accountable to Parliament. I do not think your Lordships’ House is backward in holding Ministers to account for what they do. We have the Select Committee process, there are numerous opportunities for scrutiny of what we decide in relation to the statement and, of course, the statement is also subject to revision from time to time.

On the framework document, I suppose I can only repeat what I said before. We are committed to producing a framework document. It will, as framework documents do, cover the governance structure, the requirements for reporting and information sharing, and the financial responsibilities and controls. I have given this assurance from the Dispatch Box, so that is a government statement of what is going to happen. The framework document will be extensive and will follow the normal course of action. I hope that assures noble Lords that everything is being done in a proper way and with proper accountability, ensuring that Great British Energy is subject to the appropriate controls—as is only right for a body that is ultimately responsible to the Secretary of State for its activities.

We think that it is a very good thing that GBE will be based in Aberdeen; a significant proportion of GBE’s staff will certainly be based there. We think that Aberdeen will benefit from new jobs in the economy created because of GBE’s investment in renewable energy projects. I understand and very much accept the need to ensure, as we have talked about, a just transition for the people involved in the oil and gas sector. We want to do everything we can to enable offshore workers to lead the world in the industries of the future, which is why we are working very hard with businesses, employees and workers to manage our existing fields for the entirety of their lifetime and are putting in place programmes to support a transition. It is interesting that research from Robert Gordon University shows that 90% of oil and gas workers have medium to high transferable skills for offshore renewable jobs; knowing the skills that people who work in the North Sea bring to the jobs they do, that does not surprise me.

This is all I will say to the noble Lord, Lord Hamilton, in relation to President Trump’s decisions: it is interesting that, in his first term, the US actually saw quite a drive into renewable energy. It may be that we will still see the same direction under the new Administration in the end; that is for the US Government to decide. We as a Government are sticking to the Paris Agreement and to the need to get to net zero and clean power as soon as we possibly can.

[Lord Hamilton of Epsom (Con)]

There are interesting comments in the press that, although President Trump is committed to increasing the amount of oil the United States produces, that is very much dependent on the price. The frackers of oil and gas in the United States will frack it if they can get a good price for it; if the price drops, they will hold back, so it does not follow that he will actually increase the oil production of the United States by saying, “Drill, baby, drill”.

Great British Energy Bill

Lord Hamilton of Epsom Excerpts

Committee stage
Wednesday 15th January 2025 Grand Committee

These amendments, if refined with these principles in mind, could help ensure that GBE operates as a nimble, effective organisation that serves the long-term interests of our nation.

[Lord Hamilton of Epsom (Con)]

My Lords, I, too, speak in support of these amendments. It is definitely important that accountability is brought to bear here. Of course, one has the constant worry that the private sector is going to pick up all the low-hanging fruit, which is quite profitable, while GB Energy is going to be left with all of the much more speculative stuff, which will probably lose money for the taxpayer.

I want to refer in particular to subsection (2)(d) in the new clause to be inserted by Amendment 96 in the name of the noble Earl, Lord Russell, which refers to

“a just transition to green energy”.

I use that as a bit of a hook on which to return to the question I asked in Committee on Monday; I should have intervened and asked the Minister to answer before he sat down, but I had a problem at that stage, which is why I have given him advance notice today. I hope that the Minister will be able to answer my question for me because there is a dispute on our side. My noble friend Lord Fuller is a great exponent of green liquid hydrogen. Let us face it: if we could manufacture it effectively, it would be a bit of a silver bullet in solving many of these problems. But, at the same time, my noble friend Lord Roborough said that it will always be much too expensive to produce. I was slightly surprised by this because, like my noble friend Lord Fuller, I have always taken the view that the technology will develop as it goes along and the price will start to come down. It used to be the policy of the previous Government to support hydrogen; it is certainly supported by JCB.

[Lord Ashcombe (Con)]

I thank my noble friend for letting me speak. I wish to correct the record: it was actually me who described what my noble friend is describing, not my noble friend Lord Fuller.

[Lord Fuller (Con)]

Although I do of course wish to be associated with those remarks.

[Lord Hamilton of Epsom (Con)]

I cringe, with apologies to my noble friend Lord Ashcombe; I did not realise that it was he who said it. Anyway, whoever said it, I very much supported the view that it might well be possible for the price of liquid hydrogen to come down as the technology developed and got better.

My noble friend Lord Roborough said to me that it was always going to be expensive. I said that it was being manufactured by wind turbines in the North Sea at the moment, but as we have already discussed, the problem with wind is that it is intermittent. The wind gets turned off every now and then, the windmills do not turn, and electricity is not generated. Apparently, it is very expensive to replace all the filters, and so forth, and you need to have a constant supply of electricity to produce hydrogen.

What is felt about this on the Opposition Benches does not really matter; what matters is the attitude that the Government are taking towards liquid hydrogen and whether this is something that Great British Energy will be investing in or not. I would be grateful if the Minister would tell us where the Government stand on liquid hydrogen, as it is an important component of having clean energy for this country.

[Lord Petitgas (Con)]

My Lords, I also support these amendments aimed, like others, at greater accountability and transparency of the delivery of GBE. In particular, I support Amendment 95 in the name of the noble Earl, Lord Russell, on budgets. It is all very well to check on delivery and ask for more reports, but you only get what you measure. It needs to be set against a budget and objectives. I have found the objectives in the Bill to be a little vague. I am therefore in favour of Amendment 95 to the extent that it will allow us to set reporting and disclosure against a set of objectives, and a certain budget. I would also add additionality in there, as that is the only way to understand whether the delivery has been effective.

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[Lord Hamilton of Epsom (Con)]

May I press the Minister a bit harder on green hydrogen? If my noble friend Lord Roborough is right and, whatever happens, it will be much too expensive to produce, then we surely have to look elsewhere. What is the Government’s attitude towards liquid hydrogen as a fuel for the future?

[Lord Cryer (Lab)]

I am grateful to the noble Lord for that question. I cannot add anything to what I said before. GBE will look at a range of technology and sources. The whole of energy policy is predicated on security of supply and range of supply, because at various times in British history, although those two things have not been absent at the same time—or perhaps they have, briefly—there have been times when one or the other has been absent. If it is possible for hydrogen to play a part in that security of supply and range of supply—it certainly would on the latter—I do not see why that should not be part of the nation’s energy supply in the future.

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I agree absolutely with the spirit of the amendment of the noble Baroness, Lady Bloomfield, on biodiversity, but I say again to the Minister, as I did briefly in a previous Committee sitting, that what I see as essential and what I am used to in working with the Green Investment Group since its privatisation is that there needs to be a strong external audit of individual investments in terms of their carbon reduction and protection or promotion of biodiversity. Again, that should not be in the Bill, but it is something that I would hope very much the board of Great British Energy would insist on—if nothing else for its corporate reputation.

[Lord Hamilton of Epsom (Con)]

My Lords, I am a little confused by this conversation, because I always understood that oil rigs encouraged shoals of fish, providing them with a safe haven under which they thrived. If they thrive under oil rigs, why should they not thrive under wind turbines as well, if they are pinned to the bottom of the sea?

I agree that, if they are floating ones, it is more debatable whether fish could thrive under them, but, in my view, it does not necessarily follow that having such industrial structures in the sea goes against nature—it might actually go some way towards protecting it.

[Lord Teverson (LD)]

The noble Lord raises an important issue. As we know, when Shell wished to dispose of one of its oil rigs in the North Sea, to which a number of environmental NGOs strongly objected, there was a fair bit of scientific evidence that it made a positive contribution to North Sea biodiversity. Indeed, off the coast of Cornwall, an ex-naval vessel was sunk in order for it to become a reef, which increased biodiversity. We should not just reject the fishing industry’s views on this. The problem with offshore wind farms compared with oil rigs is the quantity—that is, the size of the area that would be an exclusive zone. That is the issue, but I take the noble Lord’s point.

[Lord Hamilton of Epsom (Con)]

I am grateful for the noble Lord’s intervention. May I take him up on his point about the Ministry of Defence, which I used to work for at one stage? He said that the people there were very much against such schemes, but I think that it is mainly to do with communications: if their radar and other communication systems are blocked by wind turbines, they will object to them. That is understandable. We should not paint the Ministry of Defence into the position of being anti all forms of renewable energy because I do not think it is; however, it is always concerned if it cannot reach out and listen to the enemy, wherever they may be, because there are wind turbines in the way. This is an interesting subject that probably needs looking into rather more carefully—it is certainly not as straightforward as some of my noble friends make out.

[Lord Teverson (LD)]

I shall not prolong the conversation tonight but the noble Lord is, once again, absolutely right about national defence, radar and being able to see an incoming attack with missiles or whatever. The problem was that the Ministry of Defence did not man that area enough. Decisions were extremely slow. There was a rumour—of course, I have no proof of this —that it used to use its slowness and its objections to insist that developers helped it upgrade its military equipment. I do not know whether it was true—I am sure that it was not, of course—but that was the perception. The main problem was the slowness of response.

Great British Energy Bill

Lord Hamilton of Epsom Excerpts

Committee stage
Monday 13th January 2025 Lords Chamber

There is also other legislation, such as the Proceeds of Crime Act. Recently, a brave Uighur woman called Rahima Mahmut, who has spoken at meetings here in your Lordships’ House, gave evidence about the case that the Uighur community won in the Court of Appeal in the UK. They were able to demonstrate that goods they had identified had been made by slave labour. At what risk are we placing companies that will be trading, because we have turned a blind eye to the realities of what is happening on the ground? I hope that, when the Minister responds to these amendments, he will be able to answer that. Certainly, from my point of view, if these amendments come forward again at Report, I will readily support them.

[Lord Hamilton of Epsom (Con)]

My Lords, it is always a great pleasure to follow the noble Lord, Lord Alton. We have to admire his doggedness in bringing up the question of slave labour in China. As we are totally dependent on so many different exports from China to this country, it is something that we have to bear in mind all the time. I wish him the best with his endeavours, although I do not hold out an awful lot of hope, as the problem is that China produces everything so much cheaper than anywhere else.

I support my noble friend Lord Petitgas in his amendment. He has outlined the real problem of investing billions—let us face it, it is billions—of pounds of taxpayers’ money in energy projects. The problem is that the only ones that will become available for the taxpayer, and for the Minister to make his decisions upon, will be projects rejected by the private sector.

The fact is that the people who invest in renewable energy are not the people who particularly believe in renewable energy; they believe in making money. The whole technique when putting up a wind farm or a wind turbine is that you test the amount of wind, look at the feed-in tariff from the consumer, do your cash-flow adjustments from there, borrow the money and put up the turbine.

My Amendment 85A is to do with the whole question of emissions, about which I am very worried. My amendment says that there should be an annual report,

“which must include information on carbon emissions resulting from each of”

Great British Energy’s

“investments in renewable energy technology”.

We have reached the point where we have to look much more closely at the whole question of renewable energy. People think that, if you put up a wind turbine and the wind blows, that is all free, and that you do not create any carbon emissions in putting up a wind turbine. I am afraid that is not true: you do. You create a tremendous carbon footprint when you create the steel. I gather we cannot make it in this country any more, so we have to import it, and there is an increase in carbon emissions when bringing it in. At the end of the day, a serious carbon imprint is involved in putting up a wind turbine. The great advantage of a wind turbine is that, once you have got it up, from thereon in the chances of creating a carbon imprint are rather less.

The same applies to solar panels. As we have discussed, solar panels are highly likely to be manufactured in China, and they have to be transported here. The Chinese are creating massive carbon emissions with their industry, which we basically exported to them. When we talk about carbon emissions, we are talking about global emissions; we are not talking about individual emissions here.

My real problem is with growing crops and trees which then get burned. Because these are a renewable resource, this is then taken as a renewable source of energy. I have a slight problem with that. Take the very extreme example of oilseed rape, which is grown in this country. When you come to think of it, you create a carbon imprint when the tractor tills the field and sows the crop. I am not an expert in the growing of oilseed rape, but I suspect it needs spraying and fertilising and so forth. All of this adds to the carbon impact. The seeds that come off oilseed rape are then compressed to produce a form of vegetable oil, which is then refined. All of this has a carbon footprint. Eventually, it is burned. I gather that it is proposed to be used for aircraft as a substitute for aviation fuel. When you burn aviation fuel, you are creating a carbon imprint.

This does not affect national Governments quite so much because the whole business of the carbon imprint of aviation is not counted against the targets for a particular country. The problem of CO₂, as we know, is a global problem. If we want to clean up the planet generally, we cannot ignore aviation.

Many of us also have quite serious worries about Drax power station. For a long time, it was importing the offcuts of North America’s timber industry to burn at the power station. There is obviously a serious carbon imprint involved in cutting down trees, stripping the unwanted bits off them and loading that on to ships, which bring it over the Atlantic to this country. Have we really taken into account the CO₂ emissions this whole process at Drax power station creates? It is rumoured that Drax has moved on to saying that it can take all this bark and stuff and turn it into aviation fuel. That will have the same problems as using oilseed rape. There is a massive carbon imprint all the way through.

We are trying to talk about reducing the carbon imprint, and it strikes me that with some forms of renewables we are increasing the carbon imprint unnecessarily. Surely what we should be doing is looking at hydrogen and seeing if we can get that down to a more manageable cost. That could be used in its compressed form in aircraft, heavy vehicles and so forth. The great advantage of hydrogen is that, when it is burned, it produces no carbon. I worry that, although we think we are doing something to help the planet, we are not. If we take that extreme example and go on looking for aviation fuel from oilseed rape in perpetuity, then, in the name of some renewable crop, we will be having very large carbon emissions right the way through the process, in perpetuity.

We have to look at the whole question of renewable energy and what form it takes. We need an audit which tells us how much carbon imprint is being made by producing fuel in this way, whichever fuel it is, so that we can make a more objective judgment about whether this is helping the climate and helping to meet CO₂ and net-zero targets, or doing the precise opposite.

[Lord Bruce of Bennachie (LD)]

My Lords, I rise briefly to speak to Amendment 60, and also to Amendment 74, tabled by the noble Lord, Lord Berkeley. Amendment 60 relates to the Government’s projection of 650,000 jobs. This is to be achieved over five years, when we achieve net zero. It is a very ambitious target. I hope it can be achieved, but there are questions related to where those jobs will come from, whether we have the skills and whether jobs will be lost in the process as well.

I make no secret of the fact that I live in the north-east of Scotland and I represented the constituency of Gordon for 32 years. I have monitored the oil and gas industry from its very early days in the North Sea right through to the present, and the massive contribution it has made to the UK economy throughout that time—not just in terms of money but in terms of technology, the balance of payments and skills. I accept that the Government have said that we will continue to operate our North Sea oil and gas fields and that we will continue to have oil and gas in the mix, to and through net zero.

My basic concern on jobs is that we do not expand jobs in renewables at the expense of the naturally declining jobs in oil and gas: that we do not accelerate that process, especially as we do not quite know how fast we can achieve this creation of jobs. We do know right now that we have at least 200,000 people employed directly in the oil and gas industry, and many more in the supply chain, which, of course, is also part of the supply chain for the renewables sector. Not all of the skills are directly transferable, but many of them are. Provided that the transition is orderly, just and sensible, it will be possible for the decline in the oil and gas industry to be orderly while we expand the renewables sector and hopefully deliver the jobs that the Government are looking for.

I was surprised that, when I suggested that we were going to have oil and gas in the mix to and through net zero—which all projections from all sources say we will—there were people who thought we should just shut down our oil and gas now. There are people who say that. When I asked, “Why would you do that?”, I was told, “Well, you can set an example to the world. Yes, we will need oil and gas, but plenty of other people produce it, so we will just import it”. So we close down our own industry and then import it from other people—further away, with a higher carbon footprint and less efficient—so undermining UK technology and expertise. So my plea is: let us have the jobs, but not at the expense of existing jobs. Let us have an orderly transition that maximises them both.

I was at an awards ceremony for the industry in Aberdeen last month, and what impressed me was the wonderful array of bright, young people engaged in the sector who were very committed to the transition to net zero. But they were equally aware that oil and gas were part of the transition and that many of the supply-chain companies were now investing in technology relevant to the industry, including subsea connections, cabling and electronics. A lot of the things that have been developed in the North Sea are transferable to oil and gas, and that is a welcome factor; but let us not accelerate the loss of jobs while we build the new ones up. That is the simple point that I wish to make.

Turning to the amendment of the noble Lord, Lord Berkeley, I am in the same situation as him, so I declare an interest. I live in a village in Aberdeenshire where we do not have gas. In the dying days of the nationalised British Gas, I was involved in a fairly high-profile argument with the then chair of British Gas, Sir Denis Rooke, making the point that he and his company, in the run-up to privatisation, were not interested in extending the gas network. I had some success: I sort of shamed him into it and managed to get some substantial extensions in the dying days of British Gas in my own constituency. I was also right that, once British Gas was privatised, there was no more extension of the gas network beyond what already existed. Those were the days when everybody wanted gas, and gas was the option.

For many parts of the country, however, gas is not an option and the main alternative is oil. The House of Commons produced an interesting report at the end of last year, which I had a look at. I point out to the noble Lord, Lord Berkeley, that it says that the number of households off the gas grid is 4.5 million—a higher figure than his. I do not know which is right, but it is quite a lot.

It then did an analysis of the proportion of households that use oil for central heating. In England and Wales, it was 3.5% in total; in Scotland, it was 5.1%; and, in Northern Ireland, it was 49.5%. I suggest that that is an issue. The other point—and, again, I thank the House of Commons Library for this—is that it gave a constituency analysis. The overall figure does not quite focus on some of the communities that are much more dependent—ones that I know well—so I picked out three constituencies to give the House an example. The highest was Caithness and Sutherland, where 31% of households have oil central heating. The second-highest was my former constituency of Gordon and Buchan, at 26%, while the neighbouring constituency of West Aberdeenshire and Kincardine was 22%.

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[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, I am very grateful to the noble Earl, Lord Russell, because it seems to me that we have “enjoyed” what essentially has been a rerun of previous debates, with Second Reading-type speeches, when the key concern, as the noble Baroness, Lady Noakes, suggests, is Clause 6 and the power of direction.

So I do want to come back to the intent of Clause 6. First, we want GBE to be operationally independent. A founding principle of GBE is that it should be independent as far as possible in executing its functions. The Bill is focused on making the minimum necessary provisions to establish the company. At Second Reading, some noble Lords opposite accused the Government of drafting the Bill in a way that meant we would use Clause 6 to micromanage GBE. We have always maintained, as the noble Baroness, Lady Noakes, rightly pointed out, that this is a backstop provision, yet now noble Lords opposite seek to micromanage both the Government and GBE by these various amendments, most of the issues in which we have already debated.

Secondly, we have set up GBE as a company for long-term success and as an enduring institution. Some of the amendments, which include short-term targets, would be wholly inappropriate in legislation. Indeed, it would be more appropriate for the Secretary of State to set priorities via the statement of strategic priorities in Clause 5, of course within the framework of Clause 3.

My third point is the intended use of the power in Clause 6. Let me make it absolutely clear, as I have done in the past, that the power to give directions to GBE is intended only for urgent or unforeseen circumstances. These amendments would widen the intention unnecessarily. The noble Baroness, Lady Noakes, is right about the relationship between government and such organisations. She and I have both had experience in relation to the NHS; it is a slightly different set-up, but we are talking about the relationship between a government department, the Secretary of State and public bodies. She will know that there the Secretary of State has always had a power of direction, but I think it has had to be used only a handful of times. The reason of course is that chief execs of NHS bodies understand that the Secretary of State is able to set the overall direction of the National Health Service without having to call on what is essentially a backstop power.

My fourth point on a number of the amendments is that the existing reporting requirements are set out in the Bill, which makes provision for GBE to produce and publish an annual report and accounts. They will undergo external audit; they will contain information on the activity of the company over the year; and they will also include reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures. GBE may also make information available through reporting, such as when projects or investments are announced. We think that that is sufficient accountability.

On some points raised by noble Lords on Amendment 59, we believe that in an unstable world, the only way to guarantee our energy security and protect bill payers permanently is to speed up the transition from fossil fuels to home-grown clean energy. This is consistent with advice from the Climate Change Committee and it is why we have set an ambitious target to reach clean power by 2030, which the independent NESO considers achievable. We believe that the key role of BGE is focused on driving forward deployment.

I say to the noble Viscount, Lord Trenchard, and the noble Lord, Lord Howell, that I agree with them on the importance of nuclear power. But I say to the noble Lord, Lord Howell, that this is the second time he has tried to divert the Government from supporting Sizewell C. I say to him that this is a massive development and we are moving to final investment decisions over the next few months. It will produce 3.2 gigawatts, it is a replica of Hinkley Point C, 80% above ground, and we have the regulated asset-based approach which will bring in private sector expertise and disciplines. So, in agreeing with him on the importance of small modular reactors and advanced nuclear reactors, we should not underestimate the potential of Sizewell C—and indeed Hinkley Point C when it comes on line, I hope at the end of this decade.

Of course I take the points that data centres will need a lot of electricity, that grid capacity issues are vital and that we need more investment in the grid. I also take the point made by the noble Lord, Lord Berkeley of Knighton, about the beauty, or not, of pylons. I of course accept the point he makes, but we are going to have to have more pylons. None the less, they will have to go through vigorous planning and meet environmental protection requirements.

On jobs and Amendment 60, GBE aims to revitalise the UK’s industrial areas and we think that, by situating its headquarters in Aberdeenshire—which I am sure the noble Lord, Lord Bruce, will welcome—it will be able to leverage the skilled workforce available there and throughout Scotland. More broadly, we have set up the Office for Clean Energy Jobs to promote clean energy employment and focus on skills development and training in the core energy and net-zero sectors.

Amendments 61 and 76 concern supply chains, which are of course very important indeed. GBE’s founding statement has already made it clear that my department expects the company to prioritise the development of supply chains and to report to government on progress. To come to the noble Lord, Lord Alton, of course we have debated these matters over the years and I absolutely understand where he is coming from. But it will be for GBE as an operationally independent company to determine the projects and technologies it chooses to invest in, in accordance with its objectives. It will be expected to respect human rights under the Human Rights Act 1998 and it will be subject to the provisions on forced labour and supply chains, both under the Modern Slavery Act 2015 and the Procurement Act 2023.

We recently set out our Clean Power 2030 Action Plan, which requires significant deployment of solar electricity—noble Lords are right on that. Developing sustainable, diverse and resilient solar supply chains, free from forced labour, is important for the Government. As the noble Lord, Lord Alton, knows, we also have the Solar Taskforce, which will be looking at these matters.

On Amendment 63 on the cost of fulfilling the company’s strategic objectives, I can assure the noble Lord, Lord Petitgas, that the Secretary of State will set ambitious but achievable objectives for Great British Energy that can be achieved through the funding envelope. GBE will be backed, as noble Lords will know, by a capitalisation of £8.3 billion over this Parliament, and its objective is to crowd in additional private sector investment. However, it will be subject to HM Treasury’s value-for-money guidelines and, like existing publicly financed institutions, its investments will be subject to safeguards and risk assessments.

On Amendments 69, 70 and 85A, on the impact on carbon emissions of GBE’s investments, the company is committed to advancing the deployment of clean energy to aid the Government’s goal of decarbonising our electricity system by 2030. The amendments would require a report to be produced for every investment made by Great British Energy, which seems neither proportionate nor effective. On importing energy into the UK, we acknowledge that reliance on imported fossil fuels presents economic and security risks, as evidenced by the situation following the Russian invasion of Ukraine. The best response is to increase domestic power generation through renewable energy sources and nuclear power, while simultaneously transitioning to more sustainable methods for heating homes, fuelling vehicles and powering industry. These can substantially mitigate our exposure to volatile international markets and energy price fluctuations. We see GBE as being at the heart of those efforts.

[Lord Hamilton of Epsom (Con)]

Does the Minister accept, however, that converting oilseed rape into aviation fuel does not produce clean energy?

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[Viscount Trenchard (Con)]

My Lords, I congratulate my noble friend on his clear and well-argued introduction of his amendments in this group, to most of which I have added my name. As he said, the taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of his money. State-owned companies do not have a great track record in realising a strong, positive return on their invested assets.

Unless GBE does that, it is likely to have a negative, rather than a positive, effect on wholesale electricity prices. Amendment 62 will ensure transparency on that. GBE intends to invest in and de-risk projects involving new clean energy technologies. It is clearly necessary to have full transparency as to the rate of return on each of the investments that GBE achieves. The amendment would require GBE to consider every single investment it makes in terms of the impact that it will have on electricity prices in the future. Does the Minister not agree that this would be a good discipline for GBE? Amendment 64 would ensure that we have such transparency on the whole portfolio of GBE’s investments across the board.

Amendment 71 contains a requirement for a cost-benefit analysis of the price of electricity generated by each of its investments compared with that of electricity generated by gas. We certainly need to know that. Many of us think that we are already saddling the consumer and industry with unnecessarily expensive electricity. The grid is always bound to draw electricity from renewable sources when they are available, in priority to gas. This means that gas power stations are constantly being fired up and down, and are seldom operated at full capacity. This distorts the price of gas, which in turn distorts the price of electricity because gas power stations produce much cheaper electricity when operated consistently at or near full capacity than they do under the current modus operandi. The price of gas used in the cost-benefit analysis required by this amendment ought to be the price achievable from constant operation rather than the distorted price resulting from prioritisation of renewable sources.

I also refer briefly to Amendment 75. It is clear that the main purpose of GBE’s collaboration with the Crown Estate is to build a large number of offshore wind farms in coastal waters. This amendment will require GBE to consider carefully the environmental impact of its activities on marine life and inshore fisheries, among others.

The Government have made much of their determination to cut energy bills. Their refusal to accept Amendment 71 and other amendments would show that they are less than certain that their plans will result in lower energy prices. I look forward to hearing the Minister’s response.

[Lord Hamilton of Epsom (Con)]

My Lords, I was speaking to the noble Lord, Lord Mandelson, the other day. This was when he was chasing around after the chancellorship of Oxford University. I said to him that I thought he would serve his country much better in Washington than in Oxford. I congratulate him on becoming our ambassador in Washington. I think he will do a very good job.

I mention the noble Lord, Lord Mandelson, because a quote attributed to him is that, “When politicians try to pick winners, the losers invariably find the politicians”. People should recognise that the track record of politicians in trying to pick winners is absolutely abysmal. Invariably, political considerations and jobs come into it; profitability is the last thing that is ever considered.

Therefore, it is essential that we support these amendments. They are asking for some degree of accountability for Great British Energy, which will have billions of taxpayers’ money. If we are not very careful, it will go to all the projects that have been rejected by the private sector as not being viable and will invariably lose money. That should be of great concern to us all because it discredits government and wastes taxpayers’ money.

[Lord Teverson (LD)]

My Lords, can I make a comment on that? I am a trustee of the green share in the Green Investment Bank, which was privatised by the Tories after it was set up by the coalition Government. It was a very profitable operation, although it was fully publicly owned. The issue was that it was almost too conservative in terms of making money under Treasury rules, so it did not make as much of a difference—it did make a difference—as it should have done. One of the risks is that GB Energy could be too conservative because the Treasury is too close to it and will not let it do the innovation that needs to happen for decarbonisation to take place by 2030.

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[Lord Bellingham (Con)]

My Lords, I support my noble friend Lord Fuller, who put forward a very convincing argument, supported by my noble friend Lord Roborough.

I will make three very brief points. First, surely one of the key lessons of the Ukraine crisis concerns food security. That means taking very seriously our attitude to grade 1 agricultural land. I do not agree with the noble Baroness that this is not the right mechanism for trying to entrench the value of that land. This is a narrow amendment that seeks to put the responsibility on Great British Energy, which is, after all, being created by statute. I can think of no better way of trying to curtail the use of this land in ways that undermine food security.

Secondly, I hope the Minister will find time to comment on the point that my noble friend made on tenant farmers. If a landowner, large or small, decides to embark on a solar project, that is something that he has the right to apply for: it is his land and, arguably, farmers are being encouraged to diversify. If there is a tenant on that land—for example, a family who might well have an expectation to go on farming that land for at least one more generation, maybe for 40 or 50 years—under the 1948 Act, the farmer in question cannot be kicked out if the landowner wants the land for farming. However, if the land will be allocated for other uses and permission is given for a solar array on that land, the tenant has no choice but to vacate his farming operation.

Of course, there will be issues with compensation, but we are talking about a situation that could be incredibly damaging and unfair to a group of farmers in this country. It is a large group of farmers, who are already under a lot of pressure because of other government policies. I urge the Minister to look specifically at that point. If he cannot respond to it today, could he ensure that he writes to Ministers in other departments to clarify it?

Finally, the Government have been quite cavalier in appreciating and valuing local opinion. I will give an example from Norfolk. I declare my interest as a landowner in Norfolk, although what I will discuss is nowhere near where I live. There is a group of solar array applications east of Swaffham on the A47. I think there are five sites—my noble friend Lord Fuller will correct me if I am wrong—amounting to 6,000 acres and straddling about four villages east of Swaffham. There is a huge amount of local opposition. Does the Minister think it right that these people should be ignored? Would it not be far better if the applications went through a local planning process? Indeed, there would be an appeal—but, if so, the local residents would obviously have the chance to put their point of view. Currently, there is a feeling that, in the interests of trying to get these key infrastructure projects through, local people are being ignored and cast to one side.

With those few remarks, I support my noble friends Lord Fuller and Lord Roborough, and wish them well with their amendments.

[Lord Hamilton of Epsom (Con)]

My Lords, first, I assure the noble Baroness, Lady Young, that I will not speak for 12 and a half minutes.

As I have established, I know a little about agriculture but not an awful lot. Something that occurred to me was that if you want to put up a massive solar plant covering a large area of agricultural land, you want low, sloping, south-facing land. That strikes me as precisely the same as the thing you want to grow crops on, so there is a direct conflict here between food production and solar panels. I point that out to the Committee because this is a vexed problem to which there is no easy solution.

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[Lord Teverson (LD)]

I understand the issue of public expenditure, travel and all that, but the noble Earl specifically names a culprit in his amendment. That is what the Committee looks at and what it tries to get into Bills, so the amendment specifically aims at that organisation rather than the broader canvas.

[Lord Hamilton of Epsom (Con)]

My Lords, I support these amendments. I have certain reservations about my noble friend Lady Bloomfield’s Amendment 78, because it assumes these investments will make money. I have a bit of a problem with that. The real difficulty, as we have discussed, is that all the low-hanging fruit when it comes to investment in renewable energy has already been picked by the private sector. It does this quite simply by calculating a return on guaranteed income. Therefore, what worries me is that Great British Energy will be left picking up the bits that other people do not want to touch. The chances of it making money are probably quite small. Of course, it will have to count off the losses against the profits, so you need to have something at the end of the day. I know that the noble Lord, Lord Teverson, has achieved something little short of miraculous by investing other people’s money and actually making money, but that is an exception rather than the rule. The chances of Great British Energy squandering billions of pounds of taxpayers’ money are rather higher than it making any profits for anybody.

Clearly, accountability is very important when it comes to these sorts of sums. We should do everything we can to ensure that taxpayers’ money is looked after in the best way possible. Everybody should have great reservations about believing—to come back to the point I made earlier—that politicians are able to pick winners. The record on this has been absolutely abysmal. The chances of more money being lost than made are, I am afraid, very great indeed.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I urge the Minister to give serious consideration to the amendments in this group. They are designed not only to strengthen the accountability and transparency of Great British Energy but to ensure that the promises made to the British public, particularly on national security and economic prudence, are fully delivered. During the last election, the party opposite made numerous promises to the British people, including a commitment that Great British Energy would first and foremost protect and benefit the British people. At the same time, we must remember that this is not just about creating another energy company but about establishing a cornerstone of national resilience—an entity that must operate with the highest standards of responsibility, transparency and accountability to the taxpayers who are entrusting it with significant public funds.

My noble friends’ amendments reflect three core principles: fiscal restraint, operational transparency and the safeguarding of national interests. As we consider these amendments, whether on reinvesting profits into the company, ensuring strict investment criteria or introducing greater scrutiny of foreign involvement, I urge us to draw from the examples set by the erstwhile UK Infrastructure Bank. When the bank was established, it was supported by clear frameworks for accountability, transparency and rigorous oversight, ensuring that taxpayer money was spent efficiently and aligned with national priorities. Let us learn from this experience and ensure that Great British Energy, in its critical role in our national energy strategy, is similarly held to account.

We must remember that the future of energy is not just about ensuring supply but about safeguarding our economy, our security and the well-being of future generations. By taking these steps, we will ensure that Great British Energy not only is accountable to the public but operates with the highest standards of governance, efficiency and integrity. The amendments before us are crucial to delivering that vision and I commend them to your Lordships, but at this stage I beg leave to withdraw my amendment.

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[Viscount Trenchard (Con)]

My Lords, although I have already spoken extensively about the need for GBE to pay much more attention to nuclear power, I am glad that we now have a separate nuclear group of amendments. My Amendment 85B requires GBE to consult with GBN prior to investing in nuclear energy projects. A reader of the Bill and of the Explanatory Notes would probably take the view that it is not the Government’s intention that GBE should have any involvement with nuclear power. The word “nuclear” does not occur in the Bill and occurs only once in the Explanatory Notes, which inform the reader that the Secretary of State’s powers to give directions to GBE are consistent with the powers the Government have to direct comparable institutions such as GBN. Does the Minister agree that it is a bit of a stretch to argue that GBE and GBN are comparable institutions?

We have been told that GBE will be capitalised with £8.2 billion for the purposes of making investments in green energy. As I pointed out at Second Reading, a look at GBN’s accounts shows that it had only £342 million on its balance sheet at 31 March 2023. How can these two bodies be regarded as comparable?

On 17 December, the Minister told the Committee that

“we also need nuclear as an essential baseload for our energy generation, and gas as the flexible energy generation which you can turn on and off”.—[Official Report, 17/12/24; col. 177.]

I will make two observations on the Minister’s statement. First, to use gas power stations only as a balancing item for renewable energy is a very expensive way of using them, because they are constantly being fired up or down. Gas’s role in electricity pricing also distorts the price upwards, in a manner most damaging to the consumer’s interests.

I will not comment on CCUS, except to say that if only the Government would consider a funding commitment for nuclear of even one-tenth of that which they have made for CCUS—£21.7 billion—it would make an enormous difference to the prospects of British nuclear energy projects becoming viable and attracting funding from the private sector.

I was happy to hear the Minister confirm that we need nuclear as an essential baseload for our energy generation, but he has not convinced me that he recognises the urgent need to prioritise new nuclear projects now. He also said:

“Great British Energy and Great British Nuclear are already talking very closely together, and he can be assured that this will continue”.—[Official Report, 17/12/24; col. 209.]


This may be true, but the Government’s intention seems to be for GBE to concentrate initially on its clean energy superpower mission. The statement after the first energy mission board did not even mention nuclear at all. The Minister said at the Peers’ drop-in session before Second Reading that he did not expect GBE to invest in nuclear projects in its early years, and, as I mentioned in an earlier debate, he did not answer the noble Baroness, Lady Winterton, clearly when she asked him whether GBE might invest in an SMR project in South Yorkshire.

It is hard to escape the impression that, besides the two gigawatt projects at Hinkley Point C and Sizewell C, the Government see other nuclear as something that comes later—first SMRs and then later, AMRs—ignoring the important fact that some AMR technologies are more advanced than some SMR technologies. Can the Minister tell the Committee why GBN is prioritising SMRs over AMRs, which is surely an illogical approach, as some AMR technologies are more advanced than SMR technologies? Those that are ready now for commercialisation are being artificially held back.

I blame the Government for continuing the approach of the last Government in failing to recognise the potential of supporting a much quicker move to market for some AMR technologies, which are being sidelined by the limited scope and budget, and the slow pace, of the Government’s AMR research, development and demonstration programme, whose aims are merely to demonstrate high-temperature gas reactor technology by the early 2030s, in time for potential commercial AMRs to support net zero by 2050.

My Amendment 85B would ensure that GBE recognises that nuclear projects must form a part of its early investments. Amendment 85C would require GBE to monitor the impact of its nuclear investments on its ability to attract investment from the private sector in nuclear energy projects. I believe the latter could be substantial. Why does the Minister think that two important gigawatt projects initiated by Japanese companies—Toshiba’s NuGen project and Hitachi’s Horizon project—failed? Does the Minister not recognise how much better our energy security would be if either or both those projects had proceeded to successful deployment?

I have also tabled Amendment 118C, which adds a reporting requirement for GBE to undertake a review of the impact of this Act on the competitiveness of the UK nuclear industry compared to other countries. If GBE working with GBN acts as a catalyst in the adoption of new nuclear energy projects, their competitiveness will progressively increase compared with other countries. In September 2024, the International Atomic Energy Agency revised upwards its annual projections for the expansion of nuclear power for a fourth successive year. World nuclear capacity is now projected to increase by 2.5 times the current capacity by 2050, in the IAEA’s high-case scenario, including a significant contribution from small modular reactors.

The website Global Petrol Prices shows some interesting statistics. The price of electricity for businesses in the fourth quarter of 2024 in the UK was 51.7 cents per kilowatt hour, double that in Germany, where it was 23.5 cents per kilowatt hour, and three times that in France, where it was 17.4 cents per kilowatt hour. RTE, the electricity transmission network of France, showed that last Saturday nuclear accounted for 73% of French electricity generation, hydroelectric power for 12%, solar power for 7%, and wind power a mere 3%. It is very clear that the enormous cost of electricity for British businesses is now massively reducing their competitiveness compared with their French competitors. The more nuclear power we have, the more competitive it will become, and as the cost of electricity falls, the more competitive our businesses will become.

Does the Minister not agree that the economic growth that we all need so urgently can only be achieved by a radical adjustment to our energy policy? We need rapidly to commission more nuclear capacity—large, medium and small. I am not sure that all these amendments are perfect, but if he does not like my amendments as drafted, can he come back with some better ones to ensure that GBE, working with GBN, will ensure that much greater support will be given to nuclear projects so that nuclear can play its proper part—a much larger part—in our energy sector in the decades ahead? I beg to move.

[Lord Hamilton of Epsom (Con)]

My Lords, it seems quite extraordinary that no reference is made in this Bill to nuclear because, let us face it, if you want to have clean energy generation, nuclear is the only thing that is available at the moment. My noble friend Lord Trenchard must be right when he says that we should be much more seriously considering both small modular reactors and large ones for our energy supply in future, because that is going to be the only way we really get clean energy. I find it quite extraordinary that this has all been parked somewhere separately when it all should be integrated. We should certainly be looking at the potential for nuclear, because that is where the future lies.

[Lord Offord of Garvel (Con)]

My Lords, I express my gratitude to my noble friend Lord Trenchard for tabling the amendments that we are discussing in this group. All three amendments address a matter that many in this House have questioned—that being GB Energy’s role and involvement in the production of nuclear energy and its relationship with Great British Nuclear. Amendment 85B requires GB Energy to consult with GB Nuclear before it invests in nuclear energy. Amendment 85C requires GB Energy to report on the impact of its investments in nuclear energy and private investments in the UK nuclear industry. Amendment 118C ensures that the Secretary of State reports on the impact of the Bill on the competitiveness of the UK nuclear industry.

Nuclear energy will be critical to achieve the Government’s net-zero targets. However, historically, those on Government Benches have dismissed nuclear’s role in the energy mix. Let me draw on the Government’s own nuclear record. Since the 1970s no new nuclear power stations have been built under a Labour Government. Instead, all nuclear power stations still in operation were commissioned under Conservative Governments. Labour’s longest-serving shadow Energy Minister, Alan Whitehead, even said that we do not need nuclear. I disagree, and I am sure many in this House do too and I call on the Minister to update Labour’s thinking on this matter.

If the Government, via GB Energy, recognise the importance of nuclear, it is only right that they consult with GB Nuclear before investing in nuclear technology. Can the Minister confirm exactly what relationship is envisaged between GB Energy and GB Nuclear? Have the Government already consulted with GB Nuclear on the functions of GB Energy, and if so, will they continue to do so? We urgently need the development of new nuclear sites, as energy generated from nuclear technologies is both reliable and low carbon. Therefore, it is essential that GB Energy and GB Nuclear have a more formal collaboration. Industry bodies such as the Nuclear Industry Association have called for greater clarity on the interaction and relationship between the two organisations.

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This would then allow hydrogen turbines to produce power in the event of another Dunkelflaute at times of shortage. This would prevent the situation we had last week, when the potential generation and imported amounts of powers were only just able to keep up with demand. Unfortunately, when we are short of wind and solar, so very often are our friends on the continent. It is essential that blackouts are avoided at all costs and in this manner, it might be possible to do so. Would the Minister confirm that this hydrogen storage and generation is something very much under consideration in the current plans?

[Lord Hamilton of Epsom (Con)]

My Lords, I am very keen that my noble friend Lord Ashcombe should reintroduce the whole prospect of hydrogen, because I thought that it was rather rubbished by my noble friend Lord Roborough, who said that it was all going to be much too expensive. I think that the future lies in hydrogen, and I hope that it will be developed much more cheaply, so that it can be available for so many different uses, not only in power stations but also in aircraft, heavy vehicles and so forth. As I understood it, it was being developed and the price was coming down, but maybe I am completely wrong on that. I would be very grateful to hear from the Minister what the position of liquid hydrogen is: whether it is still prohibitively expensive and not likely to be a solution to our problems or whether the future lies in liquid hydrogen.

[Lord Offord of Garvel (Con)]

My Lords, as we have heard throughout the debate on this Bill, as well as in the other debates in this House on the future of our energy, we know that renewable energy by its nature will always be unreliable. It is, by its nature, intermittent. Many of us have expressed concern that this undeniable fact will result in shortages. As has been mentioned by my noble friend Lord Murray, last year Europe in fact experienced several episodes of Dunkelflaute. On the other hand, as has been highlighted by my noble friend Lord Ashcombe, what happens to energy supply in periods of persistent sunshine and wind?

Unfortunately, we find ourselves in a position in which the national grid is unable to cope with excess renewable energy supply. Grid capacity is a particular challenge for the offshore wind sector, because those sites are necessarily located far from sources of demand. Currently, the national grid pays renewable energy generators billions to reduce supply when there is more renewable electricity than the grid can manage. This problem will only be compounded by the Government’s ambition to build renewables faster than we can develop and connect them to the grid.

With that in mind, we should address the fact that the timeframe for obtaining grid connections for a new energy project can reach 10 years. Not only this, but a project without a grid connection today may not come online until well after the Government’s target of grid decarbonisation by 2030. There is no doubt that the renewable energy projects that will supposedly be supported by the establishment of Great British Energy will face the same connectivity difficulties.

As my noble friend Lord Ashcombe highlighted, over £1 billion was coughed up by bill payers last year to pay renewable energy generators to curtail excess supply, including £20 million in one day alone. This will only worsen under the Government’s agenda, and it will be consumers who will bear the cost via their energy bills. If renewable generation is scaled up so rapidly without the grid capacity to transmit it to the areas of high demand, those curtailment payments will only increase. We know that excessive curtailment fees are already being paid to wind farm operators who are generating more power than can be used. This is paid to get operators to switch off their wind farms and avoid overloading the grid. How ridiculous is that? We expect these curtailment costs only to rise under the new Government’s regime, and by 2030 it is possible that there will be a staggering £20 billion a year in subsidies and in maintaining back-up grid capacity. That equates to roughly £700 per household each year.

I turn to the amendments in this group in the name of my noble friend Lord Murray of Blidworth, which I support in their entirety. Amendment 85E requires Great British Energy to

“report annually on the impact of each investment it makes on the levels of curtailed renewable energy in the UK”.

Amendment 85D requires Great British Energy to

“invest in additional energy storage infrastructure to store excess renewable energy”,

and thereby minimise the cost of curtailing excess supply. In tabling these amendments, my noble friend has addressed many of the issues that I have discussed.

It is essential that the establishment of Great British Energy does not cost the taxpayer more than the already allocated £8.3 billion, and that it assesses the impact of its investments on the cost of wasting excess supply and prioritises the means of storing renewable energy. I hope that the Minister will agree.

Great British Energy Bill

Lord Hamilton of Epsom Excerpts

Committee stage
Tuesday 17th December 2024 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I begin by apologising that I did not take part at Second Reading and earlier parts of Committee—noble Lords had my noble friend Lady Jones of Moulsecoomb with them then. I am pleased to report that her hip operation on Friday went well, and she should be back soon after Christmas, but in the meantime, noble Lords get me stepping in on this Bill.

I want to speak on this group particularly, because I feel like we are having a bit of a déjà vu revisit over again revisit. It is worth reminding your Lordships of the last energy Bill this House debated, under the previous Government, which I was thinking of as the noble Baroness, Lady Boycott, was speaking. On that Bill, it was the community energy amendment that we stuck out on until the absolute bitter end, through several cycles of ping-pong, so it is worth stressing to your Lordships how strongly community energy has won support previously. I very much hope that we will see that continue, or, better still, that the Government will hear the level of enthusiasm for community energy and act accordingly before or on Report.

Amendments 46 and 50 are well worth stressing. They would insert into the strategic priorities the objectives and plans having a direction, rather than the possibility that some of the earlier amendments covered. I also commend Amendment 51A, tabled by the noble Lord, Lord Whitty. This, in shorthand, is the just transition amendment. Just transition has to be the foundation for communities who have often suffered a great deal from different government policies and who need to be treated fairly this time, just as all communities affected need to be treated fairly. That is the just transition we need.

Finally, I will say just a couple of sentences on community energy. This is the way in which we can deliver real prosperity to communities, enabling people to invest in their own renewable energy and to use it to get the profits. This is the way we can get enthusiastic consent for renewable energy schemes.

[Lord Hamilton of Epsom (Con)]

My Lords, I first apologise to the House. On the first day in Committee, I extolled the virtues of small modular reactors and said that Rolls-Royce were in a very good position to supply these, because I knew about what they had done on nuclear powered submarines. I then remembered afterwards that I am a shareholder of Rolls-Royce, although not a big enough one to bother the Registrar of Lords’ Interests. I hope that I can now apologise unequivocally to the House that I did not mention this earlier, and that noble Lords will forgive me for not having raised it at the time.

I will pick up the remarks of the noble Baroness, Lady Boycott, who said how popular net zero was. I would slightly caveat that, because at the end of the day, the whole concept of net zero is extremely popular until people have to start paying for it. It was certainly a big problem when it became apparent that people were going to have to pay £15,000 for a heat exchanger to replace their gas boilers. I know that this proposal has now been withdrawn, but that was just an example of the problems caused by careering very fast towards a very near date of net zero, because the bills start rising all the more markedly.

One could argue that people are already paying some of the highest prices in the G7 for energy, and that is largely to do with our drive towards net zero, which has not produced cheaper energy now. We just have to hope that it does in the future, but there is no evidence of that actually happening, and I am not sure there is much in this Bill, either, to encourage one that we are going to see a great era of cheap energy.

It is quite interesting that the newspapers today said that we had reached 70% of energy being produced by renewable sources—wind, solar and so forth. What they did not mention was that the week earlier, we had gone through a period when the whole country was covered in cloud and there was no wind whatsoever, so we had a combination of neither solar panels nor wind turbines working. At that stage, 70% of our energy was coming from natural gas. It veers from one extreme to another. The problem with most forms of renewable energy is that they do not work all the time. If they did, it might be possible to get the price down to something slightly more reasonable. We need to be very wary.

The noble Lord, Lord Whitty, raised the problem of training enough people to carry out all the tasks that we are envisaging. There seem to be a number of things that are checking the process and involve the spending of money of one sort or another. I am far from sure that we are going to see all this forthcoming in the timescale to hit these very near targets for when we want to reach net zero in this country. We must be wary of being too optimistic that somehow GB Energy is going to solve all these problems. I do not think there is any evidence whatsoever that it will do so.

[Lord Teverson (LD)]

My Lords, I want to reassure the noble Lord, Lord Hamilton, that there is a form of renewable energy that can be on all the time, and that is geothermal. We are developing that quite rapidly in Cornwall and it has been proven worldwide. Recent reports have said that, if we were to roll it out, costs could reduce by something like 80%.

[Lord Hamilton of Epsom (Con)]

At one stage, I was involved in geothermal energy in Cornwall. We had a problem in that, when we pumped cold water down into very hot rocks, there were small earthquakes, which rather upset people locally.

[Lord Teverson (LD)]

There were a number of issues previously about that. Of course, geothermal originally required a certain degree of fracking, but that is no longer necessary. Since the development of United Downs, there have been no such earthquake tremors, all of which were very low indeed. But it is an issue for the public and one that needs to be recognised.

Coming back to what the noble Baroness, Lady McIntosh of Pickering, said, I want to thank her for bringing out some of the issues that we looked at in the sub-committee, and I congratulate her on being the champion of fishers that I know she is. On the issue of solar energy and the take of land, I do not think that we should in any way be questioning or pessimistic; indeed, solar should not be on high-grade agricultural land, but we should look at dual use of these areas. Even where there is solar on grade 3 or grade 4 agricultural land, it is not inevitable that this should be its only use. I would like to see the equivalent of a Section 106 agreement in the planning regime to say that there needs to be allied agricultural use on that land such as harvesting the grass, grazing or biodiversity objectives, which are absolutely possible.

However, I really wanted to intervene on community energy and re-echo what the noble Baroness, Lady Boycott, said. The great thing about community energy is not just the transition but the involvement of people in making that transition happen. It makes them part of the great process that we have to go through, and that is why it is essential that achieving this is part of Great British Energy’s remit.

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[Lord Hunt of Kings Heath (Lab)]

I do not really know why the noble Lord is baffled by what I said. I thought I clearly said that we wish Great British Energy to have as much operational independence as possible, within the constraints of Clauses 3 and 5. At this stage, I cannot tell him what will be in the statement of strategic priorities, because it is being worked on, but it will have sufficient detail to make absolutely clear the Government’s priorities within the constraints I have suggested, while allowing Great British Energy the breadth and room to move in the way it thinks best.

On the issue of jobs, which my noble friend Lord Whitty was absolutely right to raise, all the organisations he mentioned have a role to play to ensure not just that we create the required jobs but that we can fill them. The issue is not so much lacking jobs for the future but enabling enough people to come forward to be given the right training and skills to fill them as effectively as possible. There is a clear message in the action plan we published last week:

“The wider transition to net zero is expected to support hundreds of thousands of jobs, with Clean Power 2030 playing a key part in stimulating a wealth of new jobs and economic opportunities across the country. These jobs will cross a range of skill levels and occupations, including technical engineers at levels 4-7 … along with electrical, welding, and mechanical trades at levels 2-7, and managerial roles including project and delivery managers at levels 4-7. Many of these occupations are already in high demand across other sectors”.


We have within the department the Office for Clean Energy Jobs, whose role is to co-ordinate action to develop a skilled workforce to support and develop our clean power mission.

I should mention the nuclear industry. I am at risk of repeating myself, but other noble Lords have enjoyed doing that during our deliberation. The Nuclear Skills Taskforce calculated that we need 40,000 extra people working in the nuclear sector—civil and defence— by 2030. That is in five years’ time. That goes up into the 2040s. There is a huge job to be done, and I believe it is my department’s role to work with industry and all the other organisations to spearhead that.

[Lord Hamilton of Epsom (Con)]

Does the noble Lord share my concern that the nuclear power station being built in Somerset is costing four times as much as an identical one in South Korea? Does he have any plans to bring the price down for future nuclear power stations?

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[Viscount Trenchard (Con)]

My Lords, I agree with my noble friend Lady McIntosh that the Bill is defective so far in terms of parliamentary scrutiny and involvement. I have added my name to Amendment 51, so ably proposed by the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Noakes. It requires the Secretary of State to prepare the statement of strategic priorities for GBE within six months. That is quite an easy target. Perhaps when the Minister thinks about this—of course, I am very optimistic that he will come back with his own proposal to deal with the lack of accountability—he could suggest a shorter timescale within which the Secretary of State might lay out the statement of strategic priorities. As has been said, at Second Reading many noble Lords expressed the view that it is a pity that that is not in the Bill.

I apologise to the Committee that I was not able to be present on the first day, when we discussed the objects which refer to clean energy but with little detail. It is very unclear, as other noble Lords have said, what Great British Energy is going to do and particularly how it will relate to other companies and entities in the same space.

I also support Amendment 52 in the name of my noble friend Lady Noakes. It is right not only to prepare the statement of strategic priorities but to give both Houses 40 days to approve it or not. On reflection, I also agree with the noble Lord, Lord Vaux, that it perhaps should be subject to the affirmative rather than the negative procedure.

I look forward to hearing my noble friend Lord Effingham speak to Amendment 57. He rightly proposes that the consultations with devolved Administrations should take place before the publication of the statement of strategic priorities. However, this only goes to show how essential it is, as many of us believe, that we have a co-ordinated national strategy, given that devolution has taken place over many areas of our national life, as it would be cheaper and make more sense. But we are not in that place, and we have to take account of the settlement of the devolved Administrations that exists. So, it is obviously absolutely essential, and I hope the Minister will confirm that he will make sure that the policies put forward and GBE’s strategic priorities will not be squabbled over by the devolved Administrations.

My noble friend Lady Noakes, with her usual forensic expertise, has also identified that the articles of association of GBE need to make sure that it is able to prepare the strategic plans, and that the articles must empower the company to do that. It must reflect the Secretary of State’s statement of strategic priorities.

Lastly, I also support Amendment 119, proposed by my noble friend Lady Noakes, which deals with the accountability and other provisions which must not take effect until after the statement of strategic priorities is laid before Parliament.

[Lord Hamilton of Epsom (Con)]

My Lords, I too support the amendment of the noble Lord, Lord Vaux. It strikes me that the real problem with the Bill is that if nothing happens with GB Energy, the Secretary of State intervenes. On the whole, politicians intervening in investment decisions does not have a very good history, and an awful lot of taxpayers’ money has been wasted. Therefore, it would be a very good idea if there was a system of reporting back to Parliament.

The real problem with the whole energy scene in this country is that the private sector is well in there already. I am not sure how committed these people are to energy, but they are certainly very good at crunching the numbers. Of course, with any project, they establish that the supply of, say, wind, is reasonably constant in a certain area. Then, the key thing is the feed-in tariff that they negotiate. That gives them a guaranteed cashflow. Among other things, with wind turbines they even managed to negotiate that they get paid when the wind is blowing and nobody wants the energy. So, if you can do that, it seems to be relatively easy to make money on these things.

If you want to put up wind turbines, there is no problem getting private finance. It is the more vexed areas of energy where you will find people with DeLoreans appearing, saying, “I’ve got a wonderful scheme all organised for carbon capture”, or something that is incredibly difficult in technological terms—or indeed nuclear fusion, come to that, which is another very hard nut to crack. It would be wonderful if we could have nuclear fusion power stations pumping out energy, but we are still a very long way from getting there. What guarantees do we have that taxpayers’ money will not be ploughed into these things and an awful lot of money completely wasted?

I would like to pick up some remarks from my noble friend Lady McIntosh of Pickering. She was concerned that GB Energy would have great problems raising finance. That is not quite the way it works. You actually get tiered finance when it comes to some of these projects, and I can tell noble Lords what the tiers will be: a whole lot of outside investors will get their money back almost whatever happens, and all the high-risk capital will be produced by GB Energy. GB Energy will be the one that will lose absolutely everything if it goes wrong and make a minimal amount of money if it goes right.

We need to be very wary about all this, which is why I support these amendments. It is important that Parliament has some check on all this and is able to say whether it thinks it is a good idea or a bad one. That discipline on the Secretary of State will be very important. Otherwise, I see politicians wheeling off, backing all sorts of incredibly speculative ventures and losing taxpayers’ money as a result. I am not sure that anybody in this House wants to see that happen.

[Lord Teverson (LD)]

My Lords, perhaps I could come back into the real world. I agree with the amendments and their purpose but let us be clear: there is a duopoly in this Parliament that stops negative or fatal resolutions ever being passed in either House. We may say that we agree that an affirmative or negative resolution is needed on something equivalent to secondary legislation. In this Parliament, the practical effect—in relation to what is already in the Bill—is zero because the Labour and Conservative Parties have a duopoly agreement that they will not vote fatally on secondary legislation Motions. To the outside world, all the rhetoric in this debate looks great but, even if it went into the Bill, the effect would be zero. I wanted to make that point because I believe that if you look at this with a democratic point of view from outside this building, the workings of secondary legislation in this Parliament would be seen as completely fatuous.

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[Lord Howell of Guildford (Con)]

My Lords, I support my noble friend Lord Trenchard’s amendment to Amendment 56. He knows a great deal about the oncoming revolution in civil nuclear power, which does not seem to have quite arrived in the Government’s thinking. They are still contemplating building backward-looking, out-of-date technology structures. That will all emerge as we debate it.

I also ought to declare my interests. The noble Lord, Lord Ravensdale, rightly reminded me that that is what I should have done. I do indeed have registered connections with energy-related companies.

I am left almost bereft of words of surprise and dumbfounded that my noble friend’s amendment is not assumed to be vital to the entire structure and operation of this project. I am talking particularly about including Great British Nuclear in the Bill. The National Wealth Fund will also be in the game, as it will look at sites and at projects, but Great British Nuclear and Great British Energy need not only to talk to each other. It is always nice to talk and so on, but they are treading on exactly the same immensely complicated ground, on which the most intimate integration and co-operation will be required.

I refer first to transmission and the whole question of redesigning our transmission grid over the next five years, if we can do it. As a matter fact, I do not think it can be done, but if it could, it will need to get electricity, first, from the North Sea to the switching stations, most of which have not even been started—one or two have—and then to the markets where electricity is consumed. That raises a whole lot of questions about transmission that we will discuss later. Secondly, it will need to get electricity from new nuclear sites, which I hope will be covered—I think they will in other countries—by smaller nuclear reactors, advanced boiling water reactors and others, all in the 250 megawatt to 400 megawatt range.

The process of siting these reactors is already going on. More than one government agency, including GBN, is putting around consultation documents to see what we mean by siting. Is it just that we will use disused sites—the old Magnox sites? Can we reuse them? I suppose we cannot if we persist with Sizewell C, but if we had the wisdom to postpone it, that site could be covered with eight or 10 SMRs. To get a sensible balance by 2050, let alone 2030, we will need about 500 SMRs of various designs across the country, sited mostly, I imagine, on disused or current nuclear sites but maybe on other sites as well. These are possibilities on which the public have had no say at all so far. I think their initial reaction will not be very well informed, because they have been told nothing about it. There is a whole operation of siting SMRs, combined cycle gas turbines and other energy installations. Heads have to be put together very closely so they do not end up in a glorious muddle on where things should be sited, who gets there first and that sort of thing.

Then, of course, there is the whole issue of how much electricity we will need. It is underneath our discussions now, but we know there is a hopeful view, which I think is still the Department for Energy Security and Net Zero’s view, that we have to aim for a couple of hundred gigawatts of cleaner electricity. We have now about 33 to 40 gigawatts of clean electricity—half our electric sector, which is 20% of our total energy care, so that is about one-ninth of what we need even to satisfy present demand. But there are stories in the papers—there is one this morning—indicating that demand is already surging far ahead of any predictions any of the governmental experts have made. This is a sign of something to come. In particular, if oil and gas are forbidden by 2030, so you cannot get oil or gas for your home and you cannot get petrol, the demand for electricity to replace all that will be absolutely enormous. Even if nothing very dramatic happens in the way of overall demand for power, it will be enormous.

Meeting this demand will require the closest possible co-operation between organisations such as GBN and GBE. The noble Lord, Lord Vaux, said that it was implied, perhaps wrongly, that he is against the Bill. I am not against it for the simple reason that we cannot be. Our constitution in this Chamber does not allow us to knock down the whole purpose of a Bill. All we can do is desperately try to improve something that we know will obviously be a nonsense in the end. The aim of 200 gigawatts always struck me as way below what will be needed; I think it will be more like 300 or 400 gigawatts of electricity in the all-electric age. There are 40 million vehicles in this country, vans and cars. Will they all be electric? If they are, that will use a lot of electricity, even if some of it can be fed back into the system.

But these issues sit above what we are dealing with now, which is how bodies we set up can possibly be kept apart when they deal with the same ground and the same issues—transmission and siting. I find it quite incredible. Perhaps I am being premature and the Minister will stand up and say that this obviously got left out of the Bill and must be put in it now so that those bodies should at least talk. Of course, they should do more than that; they should co-operate.

I support my noble friend Lord Trenchard, who has rightly spotted a great gap in the logic of this organised project. We should put this one right, which we can do, and recommend to our friends in the other place on the basis of the very considerable expertise that exists in this Chamber that this would at least repair one dislocation in this unhappy legislation.

[Lord Hamilton of Epsom (Con)]

My Lords, if I am brutally honest, I do not really like this Bill at all. It is a vehicle for a nationalised industry that should not even be set up by a Labour Government who want to gamble with other people’s money with no parliamentary scrutiny. Therefore, and on that basis, I really should support the amendment, because if they have to consult all these quangos and unelected bodies, which have made life such a nightmare for people for so long, they will never get anything done anyway, but that is just too cynical even for me. I have found that the Climate Change Committee represents a dwindling number of people in this country and basically keeps the Reform party in business.

As for the environmental committee, that is the one that, of course, the Government are going to ignore when they introduce their housing target of 1.5 million, because that has basically been blocking the number of planning permissions. Once again, I have a vested interest here: my family has land in Surrey that they are hoping to develop, so we are very keen on the recent Statement from the Deputy Prime Minister.

These quangos have not done anybody any good at all. The Government would be absolutely right if they resisted this amendment, because we have been run by these people for much too long and it is time that the country was run for the interests of the people.

[Lord Offord of Garvel (Con)]

My Lords, once again, I am very grateful to the noble Baronesses, Lady Young of Old Scone and Lady Bennett of Manor Castle, the noble Lord, Lord Ravensdale, and my noble friends Lord Trenchard, Lord Howell, Lord Hamilton and Lord Bourne of Aberystwyth.

Amendment 56 would require the Secretary of State to consult the relevant stakeholders before strategic priorities for GBE were published. Under this requirement, the stakeholders to be consulted would include, but not be limited to, the Climate Change Committee, the National Energy System Operator—also known as NESO—Natural England and the Environment Agency. Amendment 116 would introduce a new clause on the duty of GBE to contribute to climate-change and nature targets. This would require GBE to “take all reasonable steps” when

“exercising its functions and delivering on the objects in clauses 3 and 5”,

and

“all reasonable steps to contribute to the achievement of the targets in the Climate Change Act 2008 and Environment Act 2021”.

These objects reflect the values of climate and environmental responsibilities and sustainability which, within this House, are championed on all Benches. Great British Energy, and therefore the Secretary of State, have a unique opportunity to be involved in helping to achieve the targets of the Climate Change Act and the Environment Act. They are in a privileged position, undertaking meaningful actions to be involved in nature and biodiversity recovery. They can tailor their strategic priorities with the Climate Change Act and the Environment Act in mind. In fact, as a publicly owned company, GBE has a clear duty to protect and nurture the environment by consulting key stake- holders such as Natural England, the Climate Change Committee and the Environment Agency. The Secretary of State will ensure that the activities undertaken by GBE will be those which best help to tackle climate change, promote nature recovery and protect the UK’s environment.

At present, however, I do not believe that this Bill creates sufficient provisions to consult the relevant environmental agencies on GBE’s skeletal strategic priorities and plans; nor does it ensure adequate reporting measures, which we have discussed. In Committee and on Report on the Crown Estate Bill, we on these Benches scrutinised the unprecedented relationship between the Crown Estate and GBE. It appeared that this Government introduced this legislation with one major objective: to enable the Crown Estate to build more offshore windfarms in partnership with GBE. My noble friends acknowledged that it was important, when legislating, to increase commercial activity on the seabed around our shores, but a restriction must be placed on the development of salmon farms in England and Wales, especially given the damaging effects on nature and the environment resulting from salmon farms operated in coastal waters and sea lochs in Scotland.

As a result of the rigorous and critical debate on the protection of the environment and the preservation of animal welfare standards at Report on the Crown Estate Bill, this House successfully voted on an amendment requiring the commissioners to assess the environmental impact and animal welfare standards of salmon farms on the Crown Estate. It is evident that this House cares about environmental protections. Concerning this, I hope we might receive an encouraging response from the Minister on amendments discussed today.

Great British Energy Bill

Lord Hamilton of Epsom Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I approach this amendment, and many others that are coming, broadly with sympathy and understanding about the enormous complexities of what we are dealing with. Obviously, I also wish to see us succeed, in the sense that a nation with a bad, interrupted or poor energy supply will be a nation drained of blood. It will be an absolute catastrophe if we do not somehow get all this right; whether in five, 10, 15 or 28 years remains to be seen, but right we must get it, because the dangers are overwhelming.

I also declare my interests in the register as connected to energy-related firms. Also, at one stage in the not very distant past, I attempted to do the same two jobs as the Minister is trying to do now, which is, first, in his department, to begin to piece together in very precarious and dangerous world conditions all the necessary equipment and organisations for energy policy success and, secondly, to explain it all to the House of Lords. That is a double job, which I am sure he will try to do with all his abilities, but this is very tough going in a very dangerous area.

We now come also to a third vast task that lies behind these amendments in particular, which is: do we need entirely new relations, far away from the old polarities of left and right in politics, between the state, with all its overload and difficulties in the digital age, and the role of the markets and the private corporations in achieving the energy transition that we somehow have to achieve? That question hangs in the air. One can see these questions about the relationship between GBE and other bodies and whether it should collaborate and have minority stakes, and so on, as the shower of questions that come out of that task. I hope that somewhere, in government and indeed in the politics of all parties, that is being worked on. We have to develop a whole new generation of co-operation, particularly in the energy field and in infrastructure, to replace the difficulties and problems that we and Labour ran into with PFI 10 or 15 years ago, which was a good idea but it did not work, and unless we understand why it did not work, we will not get it right this time.

The amendments in the name of the noble Lord, Lord Vaux, are of course probing but are very interesting. I beg the Labour Government of today, who want a national reset, a renaissance and all that, not to fall for the old socialist Adam, which is that you can solve problems by creating more and more institutions, bodies and bureaucracies. That is not the way—we have to be cleverer than that. That is the old socialisation pattern, which always goes too far and never works.

So I am in considerable sympathy with these amendments and I hope that, when the Minister answers, he will show some sympathy for the importance of flexibility and the importance in the energy field of not making too many rigid definitions and delineations. The trouble, as we will find as we debate, is that everything is connected to everything else. We are trying to rule out nuclear in debates on later amendments, but in fact you cannot—nuclear is intimately connected with all other public investment decisions. We are trying to work out about the National Wealth Fund, which is very interesting. It is having a show here in Parliament tomorrow and I am looking forward to hearing its views in detail on its relationship with GBE.

We had the famous letter from the Minister, describing some of the connections and linkages that he wants to see developing, telling us how all these things are going to be linked together. He lists straight off six or seven organisations that have to work together: the National Wealth Fund, Great British Nuclear, the Crown Estate, the National Energy System Operator, the Climate Change Committee—and of course there are dozens of others beyond those. There is the office of energy resilience; there are regional co-operation planning organisations—dozens of them. I can hardly read my writing, but there is a list that practically goes off the page of organisations that think they are in the business of investing in either the supply chains or the actual projects related to energy transition.

This is the biggest thing since—in fact, it is far bigger than—the Industrial Revolution. It is the most enormous project ever undertaken in the modern world and certainly in this nation. There is a huge amount of co-ordination and tidying up to do before we have even started. Yet, in examining this one further new organisation, far from tidying up, we are tidying down—we are untidying—the pattern of the future. So these are very important amendments and I look forward very much to some clear answers on how we can go forward towards a greater effectiveness and focus in this whole area, rather than scattering assignments, arrangements and responsibilities in every direction, always with great complications and always at great cost.

[Lord Hamilton of Epsom (Con)]

My Lords, I support my noble friend Lord Offord in his amendment but, funnily enough, not for the same reasons that he does. He says that Great British Energy should become a subsidiary of the National Wealth Fund. I am very worried—I do not know whether anybody else is—about the enormous powers that Great British Energy will give to the Secretary of State. It strikes me that we are right back to Ministers choosing winners, when on the whole the role of government in choosing winners has been pretty abysmal.

I am old enough—I am reluctant to admit how old I am in case somebody suggests I should retire—to remember Ted Heath, who started out as being the “Selsdon Man”, supposed to believe in free trade and free enterprise, and then bailed out Upper Clyde Shipbuilders. I do not think he did that because he thought he was choosing a winner—I think he knew he was choosing a loser—but he was, of course, faced by critical political embarrassment at the fact that this shipbuilding company was going bust, and he had the thought that he would use taxpayers’ money to try to bail it out.

I have been reading that the fund will be have £8.5 billion of taxpayers’ money put into it and it will be sitting there and there will be the temptation for Government Ministers to say, “Oh well, we’ll bail out this or that company, or we’ll take a punt on the fact that we do not have a battery maker” and perhaps the reason for that is that the market will not support that; or, with electric cars, for instance, we are having great difficulty making enough of them. So we will see taxpayers’ money being put into ventures which the private sector would never support. But it will be done for good political reasons. No doubt, rather like DeLorean, we will find that the enterprise will be pitched in some part of the country where there is high unemployment and not enough activity and the Government might think that they will be able to buy themselves a few votes in those areas or whatever. But, for all the wrong commercial reasons, we will end up using taxpayers’ money on ventures that will never succeed and would have been picked up by the private sector if they were profitable.

This is what worries me about energy generally. We rather fancy that people who put up wind turbines are really concerned with renewable energy. I have to tell your Lordships that they are not; they are financiers. What they do, long before they put up any wind turbine, is put up an experimental one to find out how much wind is blowing over a long period, and then they work the feed-in tariffs and, by the time they have done all that, they then have a cash flow on which they can then borrow money and put up the wind turbines. So it is a financial venture which is basically controlled by government in terms of all the criteria that matter and I do not really see that venture capital using taxpayers’ money has any great role to play in this. So I support my noble friend’s amendment and hope that he puts it to a vote.

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I always enjoy the interventions of the noble Lord, Lord Hamilton. He said that Ministers should not be attempting to pick winners. I sympathise with that, but Ministers will not be attempting to pick winners. We will have an expert company—GBE—working under the framework of the Secretary of State’s strategies, as referred to in Clause 5. We have appointed a chair of great calibre.

[Lord Hamilton of Epsom (Con)]

Is it not the case that the Secretary of State can override the chair of Great British Energy?

[Lord Hunt of Kings Heath (Lab)]

The noble Lord is referring to a power of direction. We are coming on to relevant amendments later in the Bill, but let me make it clear that this power is often contained in legislation, although we believe it will be used very rarely indeed. I certainly would not expect it to be used. I think the noble Lord is suggesting that the Secretary of State will attempt to micromanage Great British Energy through the power of direction. I simply do not believe that this will happen under any Secretary of State.

I listened to what the noble Lord, Lord Vaux, said about duplication. At the beginning, we think it is sensible for GBE to use the National Wealth Fund’s expertise. He suggested that this is duplication; I think it is a pragmatic, sensible approach. We have certain expertise within the National Wealth Fund that can help as we establish GBE, but they are complementary functions. Having listened to the debate, I can assure noble Lords that my department will work closely with His Majesty’s Treasury to provide clarity to the market on how the two institutions will complement each other, and set out how this relationship will evolve in time.

I turn to Amendments 3, 4, 5, 6 and 7, tabled by the noble Lords, Lord Offord, Lord Vaux and Lord Cameron. There was an interesting discussion about whether GBE could or should be allowed to raise equity through the sale of shares while it remained majority-owned by the Crown. Amendment 3 proposes enabling external equity ownership of Great British Energy without its losing its status as a Crown-owned company. Similarly, Amendments 4, 6 and 7 specify enabling third-party ownership of up to 25% of the shares in Great British Energy without its losing its status as a Crown-owned company. Amendment 5 seeks to specify that Great British Energy is owned by the Secretary of State, rather than by the Crown.

We do not think that it is necessary for Great British Energy to sell its own shares to bring in external equity funding, or any funding, for its projects. In the case of the example which the noble Lord, Lord Cameron, gave, it would, though, be possible for Great British Energy to encourage private sector investment into the scheme to which he referred, or to co-invest with external partners, each taking an equity stake in a project that Great British Energy wished to support. I understand that the model has been used successfully by similar bodies, such as the former Green Investment Bank.

Clause 4 enables the Secretary of State to provide financial assistance to Great British Energy. This is so it can take action to meet its objectives. To be clear, our intention is for Great British Energy to become financially self-sufficient in the long term. It will invest in projects that expect a return on investments, but it would be prudent to ensure that the Secretary of State has the power to provide further financial support, if required.

Just as private sector companies would rely on the financial strength of their corporate group to raise funds, that could be the case for providing GBE with further financial support for specific projects in the future. However, we believe that any such financial assistance should be provided by the Secretary of State and, as such, be subject to the usual governance and control principles applicable to public sector bodies, such as His Majesty’s Treasury’s Managing Public Money.

It is also unnecessary to specify that Great British Energy is owned by the Secretary of State rather than the Crown. The Bill simply follows normal legislative practice in its drafting. For instance, Section 317 of the Energy Act 2023, which the Government of the noble Lord, Lord Offord, took through, expresses the ownership requirement for Great British Nuclear in the same way. Other legislation, including Section 6 of the Freedom of Information Act 2000, uses the same formulation. Clause 1(6) of the Bill explains that

“wholly owned by the Crown”

means that each share is held by a Minister of the Crown, which includes the Secretary of State, or a company wholly owned by the Crown, or a nominee of either of those categories.

We also think that it is entirely appropriate for the Secretary of State to be the sole shareholder in Great British Energy. I very much agree with the noble Baroness, Lady Noakes, on this. Introducing minority third party ownership, whether held by one minority shareholder or several, would add unnecessary complexity to its governance. A shareholder agreement or agreements would need to be put in place. They would need to cover elements relating to the control of Great British Energy, setting out which matters required approval of a simple majority of shareholders and which might require unanimous consent. For an organisation such as Great British Energy, playing such a key part in our mission to deploy clean energy—I take note of what noble Lords have said about parliamentary accountability—is it not surely right that Ministers both are accountable for their actions and can exercise full shareholder rights?

This has been an interesting debate. I am aware of noble Lords’ issues around the role of Great British Energy and the National Wealth Fund and its ability to draw in private sector investments, but we think—and it was a manifesto commitment—that this is a very important body that should stand alone. We are grateful that the National Wealth Fund is able to provide some support at the moment, but we think that this is the right way forward.

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[Baroness Noakes (Con)]

My Lords, I thank my noble friend Lord Frost for bringing forward this amendment. It crystalised in my mind that the Bill is a solution in search of a problem. It does not have a clear statement of what it is trying to achieve. Without that, it is likely that Great British Energy will end up with a set of activities that lack proper cohesion.

Like my noble friend Lord Frost, I have been searching back through what the Government have been saying, from the manifesto through to the “founding statement” and the Bill. The Government have been quite clear that they regard energy security and keeping bills low as important objectives of their Great British Energy project.

Being able to specify overarching objectives is logically separate from what we have in Clause 3: the objects of the company. These objects are designed to constrain Great British Energy to doing particular things that in turn will, in theory, deliver the objectives. If the objective is to deliver energy security, that can be delivered in a number of ways. Some could argue that having more oil and gas would be one way of giving us greater energy security. That is not the way that the Government have chosen, so through Clause 3 they restrict what Great British Energy will do to clean energy. As my noble friend Lord Frost said, after a number of years we should be able to judge whether they have achieved energy security through the way they have chosen to set up Great British Energy and the specific objects that it has been given.

My noble friend Lord Frost has outlined the way that the sands seem to be shifting on whether bills will be reduced. I heard on the radio this morning that the Prime Minister will reiterate his £300 promise this week. We look forward to hearing what he will say. Reducing bills and holding them down is clearly something that the Government have been promising for a good number of months by way of Great British Energy, and they need to be judged on whether they achieve that. They are choosing to do it through clean energy, as proposed in the Bill. We will need to look in due course at whether that objective has been achieved.

I have just a couple of drafting quibbles with my noble friend’s amendment. First, and most importantly, I do not think that the objective relating to bills should be confined to household energy bills. We know that the energy bills borne by British industries are ruinously high—much higher than those of all our competitors. Energy bills should be reduced for all energy consumers, not just households.

My second quibble is that the second objective in my noble friend’s amendment refers to “promoting” the UK’s energy security. I do not think it is good enough for this organisation to promote energy security; it should achieve energy security. I hope that, if my noble friend brings this amendment back at a later stage, he will bring a somewhat tougher version. However, these are minor quibbles with the drafting and do not detract from the fact that his amendment is very good.

[Lord Hamilton of Epsom (Con)]

My Lords, I would like to support my noble friend Lord Frost’s amendment because we have to judge this Bill on what it achieves, rather than on the processes it goes through. I have a slight problem, because it seems to me that if you want lower energy prices, you want to recognise the advances made by technology and have lower feed-in prices paid by the consumer. That is the way you get energy prices down; but, of course, if Great British Energy is investing in the companies, it wants the feed-in prices to be as high as possible, so the companies make profits.

It seems to me that there is a conflict here, with government standing on both sides of the commercial argument. Let us face it, my noble friend Lady Noakes is right: the price industry is paying for energy as a result of this extraordinary pursuit of net zero is making us extremely uncompetitive in world marketplaces and makes the reindustrialisation of this country something we can only dream about. No company is going to locate in Britain to start a business here if it is paying much higher energy prices than in the rest of Europe, as my noble friend Lord Frost has reminded us.

The Government have to be much clearer in their own mind on what they are trying to achieve with Great British Energy. Just saying that it is going to lower energy prices is not quite good enough, really; you have to say how it is going to lower energy prices. That is something we all want to see, but it is very difficult to attain. Perhaps the Minister can explain how all this is going to be done.

[Lord Murray of Blidworth (Con)]

My Lords, I just wish to make one submission on this amendment, in support of my noble friend Lord Frost. Clause 1(1A)(a), proposed by the amendment, contains the phrase

“reducing household energy costs in a sustainable way”.

The great merit of this is that “sustainable” has two meanings in this context: first, that the low prices are sustained over a long period, which is clearly a good thing; and secondly, that they are sustainable in the sense that they are good for the environment. It is a very well-drafted purpose clause and I commend it to the Committee.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, that was an interesting debate, led by the noble Lord, Lord Frost, proposing an addition to Clause 1 which would set Great British Energy’s objectives as

“reducing household energy costs in a sustainable way, and … promoting the United Kingdom’s energy security”.

The noble Lord asked why we are doing this. He then, to be fair, referred to the—I think three—debates we have had on energy policy in the last few weeks, in which we clearly set out our aims and drive towards clean power and net zero. We see Great British Energy, with the provision of financial assistance from the Secretary of State, as being at the heart of our clean power mission. It will speed up the deployment of mature and new technologies, as well as local energy projects. It will support the Government’s aim of decarbonising our electricity system by 2030, while ensuring we can meet future demand as we further decarbonise the economy.

I noted the intervention from the noble Lord, Lord Hamilton, and I thought I detected some scepticism about net zero. I remind him that his party, over 14 years, has made various statements in support of net zero. I note that Mrs Thatcher, at the UN General-Assembly in November 1989, said:

“the environmental challenge which confronts the whole world”—

[Lord Hamilton of Epsom (Con)]

I thank the noble Lord for giving way again. I think he will be the first to acknowledge that two wrongs do not make a right.

[Lord Hunt of Kings Heath (Lab)]

My Lords, it was more than two. I can quote Prime Minister May, and I acknowledge her leadership in this country being the first to enshrine the 2050 net-zero carbon target. Prime Minister Johnson only recently addressed COP 26 in Glasgow; I think we all acknowledge the leadership the noble Lord, Lord Sharma, showed there. The noble Lord, Lord Ahmad, announced to the UN the £11.6 billion in international climate finance for the period 2021-22. Although we are having this friendly discussion about future energy policy, there is still some consensus on the need to decarbonise our energy supply, and Great British Energy is part of the way we are going to do it.

The key thing in the structure of the Bill is the objectives set in Clause 3. They will be informed by the statement of strategic priorities that Great British Energy will operate in, making sure that it will be aligned with the Government’s priorities. We have been clear that the first statement, which will be published in 2025—after due consultation and discussion with the devolved Governments and with Jürgen Maier, the chair of Great British Energy—will ensure that GBE is focused on driving clean energy deployment to boost energy independence, create jobs and ensure that UK taxpayers, bill payers and communities reap the benefits of clean, secure, home-grown energy.

Of course, the issue of energy bills is very important. We are relying strongly on the advice of the Climate Change Committee, of which the noble Lord, Lord Hamilton, is probably not a great fan—but none the less, over 14 years his party listened to it. The committee said that a clean energy future is the best way to make Britain energy independent, protecting bill payers, creating good jobs and tackling the climate crisis.

The independent National Energy System Operator confirmed a few weeks ago that our 2030 clean power goal is achievable and can create a cheaper, more secure energy system. More broadly, the OBR—another body to which the previous Government paid great attention; they ran into trouble when they did not—highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts. The Committee on Climate Change has said that the net costs of the transition, including upfront investment, ongoing running costs and costs of financing, will be less than 1% of GDP over the entirety of 2020 to 2050—lower, it said, than it concluded in its 2019 Net Zero report.

I have already said that we will publish the statement of priorities in 2025. How will GBE be judged? It will be judged on its performance against the statement of priorities within the context of the objectives set by Clause 3.

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[Lord Wigley (PC)]

My Lords, I will just intervene very briefly indeed in support of the noble Lord, Lord Ravensdale, with regard to Amendment 34 and the question of system reliability. In my previous incarnation I represented a constituency that had the Dinorwig pumped storage scheme. That scheme was brilliant in terms of being able to help guarantee the availability of electricity when it was needed. Half-time in the cup final was a traditional way of interpreting that, when there was a surge of demand. It had the capability of going from zero to full output in eight seconds.

The economic benefit of that is obvious in having a system that does not need to match the total maximum demand. The peaks of that graph are cut off and equalised in a way that makes a lower capacity, and therefore lower total capital investment, a viable proposition. The point I put to the Minister is this: a number of pumped storage schemes are being developed at the moment. There is a significant number in Scotland, including some of the larger ones, but they are also in Wales. They have been waiting for years to get the necessary information on which to base investment decisions. There is one using an old slate quarry hole in Talysarn in my former constituency. It is raring to go but, until it gets the details of the prices that will apply, it obviously cannot make an investment decision. We are talking about tens of millions of pounds, possibly hundreds of millions, and a benefit to the overall system.

In responding, can the Minister give any comfort by way of the timescale by when the framework for such decisions can be made? We really need to get on with it. I am quite sure that those in charge of Great British Energy will also need this information.

[Lord Hamilton of Epsom (Con)]

My Lords, I have always been a great supporter of small nuclear reactors, because it strikes me that they have the enormous advantage of supplying a locality and not getting involved, as the noble Earl, Lord Russell, said, with massive transmission costs. That would be all cut down, which has enormous advantage. Of course, Rolls-Royce is making small nuclear reactors to go into submarines, so we are probably better on the technology than most other people might be.

I have always had a worry that local people would react adversely to a planning application for a small nuclear reactor, because they would see it as devaluing their houses. Despite all-party support in Parliament, this will not stop local concerns raising their heads. I refer back to what the noble Earl, Lord Russell, said on that. I thought the answer was quite simply to offer people in the locality free electricity, and so immediately they would have an advantage. But from what the noble Lord, Lord Vaux, said when speaking to his amendment, that would not actually work. That is why I want to be absolutely clear about this. He seemed to say that wiring up all the local houses to the nuclear reactor—oh, he is shaking his head. Now I am confused. Could the noble Lord intervene and explain what he meant?

[Lord Vaux of Harrowden (CB)]

The nuclear reactor would just pump into the grid, which will be attached to everybody’s houses. The network I was talking about was one with the ability for house A, which has solar panels, to sell its excess electricity to house B, which does not. But a nuclear reactor would pump electricity into the grid and be available to all the houses.

[Lord Hamilton of Epsom (Con)]

That is enormously reassuring. I will support his amendment, even though that was a concern I had.

I think the answer to getting small nuclear reactors planning permission is to offer free electricity to people in the locality. When they come to sell their houses, they will find that any depreciation in the price from being near to a nuclear reactor will be off-set by the fact that they have free electricity written into the sale of the house. That would balance things out. That is very reassuring, and I am glad we cleared it up. I am grateful to the noble Lord and thank him. I very much support his amendment.

Great British Energy Bill

Lord Hamilton of Epsom Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

That is noted. I thank the Minister. I beg leave to withdraw the amendment.

[Lord Hamilton of Epsom (Con)]

Can I ask my noble friend why the new power station in Somerset is costing four times as much as an identical one in South Korea? Surely this will add to energy costs, not detract from them.

[Lord Hunt of Kings Heath (Lab)]

I am not sure which “noble friend” that was aimed at, but I will have a go if the noble Lord likes. I was at the department when we started talking about Hinkley many years ago. Two or three things happened. First, it took an awfully long time to come to a final investment decision. Secondly, EDF thought it could bring a design model from France and place it in Hinkley Point C without having to make design changes. The reality was that it had to make thousands of design changes because of the requirements of the regulatory system in the UK.

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I thank my noble friend Lord Ashcombe for moving the amendment, which gives vital consideration to the role the North Sea oil and gas industry might play if our national energy is compromised. I support my noble friend’s efforts and thank him for his contribution. The establishment of GBE is an effort to fulfil the Government’s rushed, unprecedented and unilateral target for clean power by 2030, which will come at a great cost to the North Sea oil and gas industry and the UK’s energy security. I am therefore thankful to my noble friend for bringing this issue to the forefront of the debate on the Bill.

[Lord Hamilton of Epsom (Con)]

I hope the Committee will forgive me. I was slow on the uptake and should have preceded my noble friend instead of following him. I think doing so is legitimate within the rules of Committee.

I very much support my noble friend Lord Ashcombe’s amendment. The Minister has already made the point that I have the greatest possible reservations about net zero. This is not because I have some tremendous hang-up and that I want to pollute the atmosphere and make the place less liveable than it might otherwise be, but because we are now reaching the point on net zero where the costs are starting to come in and getting very severe indeed. That is why we have to think very closely and carefully about where we go from here.

We have done an awful lot to lower our net emissions into the atmosphere, largely by closing down vast areas of our generation industry, in which coal-fired power stations have now been phased out almost completely. What has happened? We think we are setting a wonderful example to the rest of the world but our net emissions come down and world emissions go up. That is hardly surprising, because the Chinese and the Indians are still building coal-fired power stations. They account for massive amounts of coal-fired energy, which keeps their energy prices low and makes them very competitive with the rest of the world. Are we really going to see a change of heart from China and India? Will they suddenly say, “No, no, we’ve been polluting the atmosphere too much and we must now start cleaning everything up and working to net zero”? I do not think they will. They want to keep their competitive position.

That is why it is so essential, to refer back to my noble friend’s amendment, that we continue to accept that we will need oil and gas for much longer than we might originally have thought. The cost of saying we will not explore for any more oil and gas in the North Sea is absolutely massive in terms of jobs for people living in Scotland. The pigeons are starting to come home on all this. That is one of the reasons why I have the greatest possible reservations about driving on towards this net-zero target: the costs are becoming prohibitive. Our energy prices are already higher than almost everybody in Europe. This will cost us jobs and competitiveness in the world generally for years to come.

[Lord Hunt of Kings Heath (Lab)]

My Lords, one of the joys of debating energy is that, on every occasion, we come back to the substance of the whole argument about energy and where we are going. I am grateful to the noble Lord, Lord Ashcombe, for stimulating such an interesting discussion. The noble Lord, Lord Hamilton, in a sense, has brought this into the open. Clearly, it was his Government who signed up to the legislation on net zero by 2050. The last Government, as much as we do, saw the huge risks involved in climate change and the need to take action.

The international position is that, despite what the noble Lord says, the fastest growth in use of renewable energy is occurring in China. The International Energy Agency indicated in its recent renewable energy report that we will see a 2.7 times increase in the use of renewables globally between now and 2030. So, there is a global movement towards clean power and net zero. Yes, it is going at different paces, but we believe the UK can gain great advantage by taking a leadership role. The National Energy System Operator—NESO—has shown that there is a pathway to clean power by 2030. We are now committed to taking that and turning it into an action plan, which I hope we will be able to publish very shortly.

I would not deny that North Sea oil and gas still have important roles to play, and I am of course listening to what noble Lords say about the tax situation and proposals, and the investment issue. Clearly, the Government are in very close discussions with the industry. Our aim is an orderly transition, and that is what we mean to achieve. So we clearly see the value of what happens in the North Sea, and we need it to continue to provide supplies to the UK in the years ahead. Equally, however, we need to manage the transition to clean power and net zero.

On the issue of jobs, obviously, the number of people employed by GBE will not balance out the people who may be lost to the oil and gas industry in the future. This is important. It does not really matter where the chair comes from; the point is that the headquarters of GBE will be firmly based in Aberdeen. I have already referred to the extra 40,000 people we need in nuclear by 2030. If you look at the other sectors we are talking about investing in—CCUS, hydrogen—all of them will need more people. So, the energy sector as a whole will provide a huge number of opportunities, but I accept that, if there is a reduction in the number of people employed in the North Sea, it is our responsibility, with industry, to help manage that transition effectively.

In the end, we may disagree about this, but the Government are confident that we are right to go towards clean power as quickly as possible. We have had endorsement, both from the Committee on Climate Change and the Office for Budget Responsibility, that investing in clean energy now will pay dividends in the long term.

--- Later in debate ---

My noble friend Lord Offord has not spoken to his other amendments in detail. I had a number of comments on them, but I imagine that we are trying to speed through to the conclusion of this day’s Committee and I will refrain from commenting further.

[Lord Hamilton of Epsom (Con)]

My Lords, I support this amendment, but for all sorts of different reasons from those given my noble friend Lady Noakes. I am very worried that this money will be wasted. At the end of the day, there is a whole mass of commercial companies out there that are more than happy to invest in energy projects of one sort or another as long as they show a return. Why we need taxpayers’ money is slightly beyond me. I do not quite understand why that will make a big difference, unless the taxpayers’ money goes into projects that are completely uncommercial and therefore lose money for the taxpayer.

This comes back to the remarks I made earlier about the Government trying to pick winners. They have no record of success on this whatever. Indeed, if Ministers were so good at picking winners, no doubt they would be doing it commercially somewhere else and not bother to be in this place. It worries me that, at the end of the day, they will be left with nothing but the non-commercial aspects of development of energy projects rather than those that work and make money, because if they work and make money, the private sector will invest in them anyway.

I would like to know the Minister’s view on this, because it strikes me that there is a contradiction in terms. There are not going to be a mass of profitable projects that Great British Energy can invest in; there will merely be those that people say are not profitable and do not work. Therefore, the only way of getting them going is to shove taxpayers’ money into them and probably lose it. That is why I support my noble friend’s amendment.

[Lord Cryer (Lab)]

My Lords, before I move on to the substance of the quite extensive amendments, let me say that this has struck me as being a very constructive and interesting debate, with some genuinely deeply interesting contributions. For those of us who served in the House of Commons—I was there for 22 years, and I am fairly new here—what is striking is that the way of working here seems to be that we have confrontation only when it is necessary. For those who do not know, at the other end of the Corridor, it tends to be the other way round; you have confrontation whether you need it or not.

Amendments 35, 36, 37 and 38 in the names of the noble Lord, Lord Offord, and the noble Baroness, Lady Noakes, seek to understand how the specific mechanism envisaged in this clause might be used and why it represents financial assistance. The Government have committed to capitalise Great British Energy with £8.3 billion, as we are all acutely aware, over this Parliament.

Clause 4 gives the Secretary of State the power to provide financial assistance to Great British Energy—simply put, to allow the Secretary of State to fund the company. Subsection (2)(a) allows the Secretary of State to provide financial assistance in the form of a grant to Great British Energy. That provision might be used while Great British Energy is in its initial set-up phase, and before it can undertake revenue-generating activities. It could also be used in circumstances where the Secretary of State required Great British Energy to undertake non-revenue-generating activities.

At Second Reading, and in conversations inside and outside the Chamber, noble Lords have asked how Great British Energy will be able to raise equity. Subsection (2)(b) allows the Secretary of State to acquire shares in Great British Energy. This will be an important mechanism by which the Secretary of State will fund Great British Energy through this kind of equity injection. This method has been used to fund other public bodies, such as the formerly publicly owned but no longer publicly owned Green Investment Bank.

Great British Energy must be wholly owned by the Crown, so it will not be possible for other parties to acquire shares. Subsection (2)(c) allows the Secretary of State to acquire assets on behalf of Great British Energy. This provision might be used while Great British Energy is in its initial set-up phase, before it can undertake its own acquisitions. It could also be used in circumstances where it might be more appropriate for an asset to sit on the balance sheet of the Department for Energy Security and Net Zero—or DESNZ, to use one of the worst acronyms I have ever heard—rather than on that of Great British Energy.

Subsection (2)(d) allows the Secretary of State to enter into contractual arrangements with Great British Energy. This might be used where Great British Energy acts as an agent of the department under a contractual arrangement; for example, to deliver a support scheme. Subsection (2)(e) allows the Secretary of State to incur expenditure on behalf of Great British Energy, similarly to how I have already set out with regard acquiring assets. This provision might be used while Great British Energy is, again, in its initial set-up phase, before it can undertake its own acquisitions and operations, and/or where it might be more appropriate for expenditure to sit on the balance sheet of DESNZ rather than on that of GBE.

Similar provisions can be found in other legislation; for example, in Sections 320 and Section 129 of the Energy Act 2023, the latter regarding financial assistance in respect of carbon capture and low-carbon hydrogen production. There is therefore nothing unusual about the inclusion of these forms of assistance.

Amendment 39 in the name of the noble Baroness, Lady McIntosh, who I am glad to see is now in her place, seeks to make the provisions of Clause 4 regarding the ways in which the Secretary of State can provide financial assistance to GBE subject to a condition that a plan be developed for the transition to clean energy. We must resist this amendment because it is not needed and would produce what could be perceived as an unhelpful result, although I appreciate that the noble Baroness may simply be probing the Government’s priorities in providing financial assistance to GBE. Her amendment would mean that the Secretary of State would have no means of providing funding to GBE until the condition had been met and would, in effect, prevent the company being set up, recruiting any resources or undertaking any of the general activities required to create a new business. This would be a highly unusual provision and would curtail GBE’s ability to operationalise its activities through lack of financial assistance.

We have already set out GBE’s mission and five functions in its founding statement. Its mission is to drive clean energy deployment to boost energy independence, create jobs and ensure that UK taxpayers, bill payers and communities reap the benefits of clean, secure, homegrown energy. I am happy to reassure the noble Baroness that in due course GBE will clearly set out plans as to how it will contribute towards the transition to clean energy and the nature of interventions in specific sectors.

Amendments 40, 41, 42, 44, 45 and 108 are in the name of the noble Lord, Lord Offord. Amendment 40 requires any financial assistance to GBE to be included in the national debt. I am happy to assure the noble Lord that this is the case. Therefore, the amendment is superfluous to the situation. As a company wholly owned by the Secretary of State, GBE will sit fully within the consolidated accounting boundary of DESNZ. It will be on the department’s balance sheet and funds provided to it will be shown transparently through not just GBE but the department. Similarly, investments in projects or businesses made by GBE will also be shown in its annual report and on its balance sheet.

Amendment 41 seeks to require that GBE cannot sell shares without the approval of Parliament. Clause 1 already requires that GBE must be wholly owned by the Crown. It is entirely appropriate for that to be the case and for the Secretary of State to be the sole shareholder—we debated that earlier this evening. GBE will not be able to sell its shares to a third party, so the amendment is not needed.

If the amendment also includes the Secretary of State as a party who may acquire further shares in GBE—which, as set out in Clause 4, is one of the means by which the Secretary of State may provide financial assistance to the company—it is not necessary to require additional parliamentary approval for these individual issuances of share capital, not least because Parliament’s approval is already being sought through the Bill to allow the Secretary of State to provide financial assistance to GBE.

Amendment 42 seeks to limit financial assistance to GBE, above the announced commitment of £8.3 billion, without laying regulations approved by a resolution of each House. I again resist this amendment, as there are existing parliamentary controls and processes if any additional financial assistance were considered for GBE in the future. Any spending of public money requested by the Government must be voted for in the other place. There is an annual process that we are probably all aware of: the estimates cycle. Although I acknowledge that your Lordships’ House has no role in the estimates process directly and passes supply and appropriation Bills without debate, the other place provides the required degree of scrutiny, including the use of Divisions.

Amendment 44 would require the Secretary of State to produce an annual report on all financial assistance provided by GBE and to lay it before Parliament. I resist this amendment because, again, it is unnecessary. The reporting requirements upon GBE are already sufficient to achieve the objective of the noble Lord’s amendment. Detail on any financial assistance received from the Secretary of State will be included in the accounts of GBE, submitted as part of its annual report and accounts, as per its obligations under the Companies Act 2006.

Amendment 45 requires the Secretary of State to make regulations, to be approved by both Houses, to define the conditions that the Secretary of State may impose on financial assistance provided to GBE. I again resist this amendment. It is right that the Secretary of State can set out appropriate conditions for financial assistance provided to the company, but it would create a great deal of inflexibility if the Secretary of State were required to itemise any potential conditions in regulations. Where conditions for financial assistance are occasionally outlined in legislation, these are typically not limiting, as is the case in sections of the Energy Act 2023 relating to Great British Nuclear—GBN. In that case, Section 320 details financial assistance to GBN, and subsections(3)(a) and (3)(b) stipulate some potential conditions. However, that list of conditions is explicitly exhaustive and their application is left to the discretion of the Secretary of State. The Energy Act provides some good examples of the types of conditions that the Secretary of State may decide to put in place for GBE, but it is important that the legislation grants flexibility to the Secretary of State not only to provide financial assistance in any manner but to set any conditions deemed appropriate.

I assure the noble Lord that, while there is a broad power, it will of course be subject to the normal spending and budgeting controls. It will be subject to parliamentary scrutiny through the estimates process and to HM Treasury financial delegation controls, which are applicable to all government departments and tailored to mitigate specific risks, and it will be overseen by the accounting officer of the department, who can be called before various Select Committees, particularly the Public Accounts Committee.

Amendment 108 in the name of the noble Lord, Lord Offord, seeks to add a new clause allowing the Secretary of State to limit the ability of GBE to finance itself through borrowing. Noble Lords will be aware that, as a publicly owned company, GBE will not be permitted to borrow money from commercial bodies without explicit permission from His Majesty’s Treasury. Generally, the Exchequer can always borrow money more cheaply than financing from the private sector. If circumstances were to change and GBE received such permission, then, because it is a public sector body, any borrowing by Great British Energy would appear as a liability on the Government’s balance sheet and therefore would be transparent and visible to any interested party, including us.

[Lord Hamilton of Epsom (Con)]

I would be most grateful if the Minister could answer my question. Is there not a danger that, if there is a profitable energy project, the private sector will pick it up and make money on it but, if it is much dodgier and more speculative, and it might lose money and the risk is much higher, GBE will be left with it and probably lose money for the taxpayer?

[Lord Cryer (Lab)]

I see the point the noble Lord is making, but that is a matter for the board. I have a certain degree of faith in the Secretary of State and we have an extremely competent chair with a well-proven track record. In due course, we will hopefully have a board with a similar track record. I do not think we will be dealing with the sort of people who fritter money away because they happen to fancy it. But that is a matter for the board of GBE.

COP 29

Lord Hamilton of Epsom Excerpts

Thursday 28th November 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have to say to the noble Baroness that at the moment we do not have any plans to review it.

[Lord Hamilton of Epsom (Con)]

My Lords, China is a major contributor to global emissions. Much of its energy is still generated through coal and it is still building coal-fired power stations. China is not alone. India is also building coal-fired power stations and depends on coal for much of its energy as well. The result is that both countries are keeping their prices low, compared with the rest of the world, and the undertakings that we have from them seem rather hazy. What guarantees are there that they will reduce their consumption of coal and are they likely to keep to them?

[Lord Hunt of Kings Heath (Lab)]

Obviously, there are no guarantees, but that is why it is very important to move to Brazil and deal with mitigation, in a way that we were unable to do in the last COP negotiations. In relation to China, I understand entirely what the noble Lord is saying. I understand entirely his concerns. However, China was a player at the COP discussions. It did indicate the voluntary payments that it has made to developing countries and I believe we have to work very hard to keep China in the tent.

I repeat again that, although clearly China has overtaken the EU and is now the world’s largest emitter, it is also developing extensively in renewable energy. What alternative do we have? In the end, we must come back to climate change and the awful consequences, for us and globally, of not taking action. It would be a huge mistake to put the brakes on, say, “No, we’re going to rely on oil and gas”, and hope that nothing happens. We just cannot do that. We have to work with China and India. We have to try as hard as we can to bring them with us and that is what we are seeking to do.