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.

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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.