Product Regulation and Metrology Bill [HL]

Lord Hunt of Kings Heath Excerpts

Wednesday 20th November 2024 Grand Committee

[Lord Sandhurst (Con)]

My Lords, I will speak to Amendment 10, in the name of my noble friend Lord Sharpe of Epsom, which seeks to delete Clause 1(4). It is worth looking at that subsection. It says:

“For the purposes of this Act, a product presents a risk if, when used for the purpose for which it is intended or under conditions which can reasonably be foreseen, it could … endanger the health or safety of persons”


or of domestic animals—I paraphrase—

“property (including the operability of other products), or … cause, or be susceptible to, electromagnetic disturbance”.

That is a bit beyond my knowledge grade.

I looked at this provision and it really is very broad. Where does it end? We say that the provision must be removed because it provides excessively broad powers to the Secretary of State to address things we simply know nothing about. It comes, of course, under the skeleton legislation; I have already made my points about the problems with that.

The definition of risk here has the potential to be so expansive that nearly any product, except an aircraft or certain other things which my noble friend has just identified, could be construed as presenting a risk under certain circumstances. A motor car can be perfectly safe and wonderfully designed but, if driven too fast or just badly in some other way, it will of course endanger life. That happens every other day. The same applies to a whole raft of mechanical tools and instruments—anything one wants to think about. If misused, they will cause danger.

If we have at some time in the future a Government who feel very strongly about something which, at the moment, none of us object to, they will be able to address that by secondary legislation, which will not be ultra vires—outside the scope of the legislation. It can do almost anything. We can all think of almost anything that we use at home, such as a power drill or a stepladder. If you misuse and fall off that, you break your skull. It could be motor cars or anything. This is absolutely absurd and far too broad.

If the Government want to legislate to say that motor cars must have a speed restriction, or must have brakes which do this or that, they should do that with specific regulation under specific legislation directed at that target, because Parliament has said, “We’ve had far too many accidents of this sort. We’ve got to address it”. That is the normal process we have as society develops, but a clause of this sort is just extraordinary. It really is Brave New World stuff.

Our complaint is simply that the broad scope of this definition could, in future, empower regulators to impose unnecessary restrictions on products where the risks are minimal or purely hypothetical—and certainly not within the scope of the imaginations of those of us in this Room—because somebody comes along, or a Government come along, in five years’ time and decides that they want to deal with it. Rather than having an embarrassing and difficult debate in Parliament, the Minister just has his way. That is not how we proceed in this country. We are a parliamentary democracy under, as we have been told, the rule of law. We would suggest that the Government have already attacked businesses, high-street retailers and farmers. Will these relentless, unidentified attacks on businesses ever stop? This provision, like others, risks creating legal uncertainty and regulatory overreach. We really must put a stop to it.

I say again that Clauses 1 and 2, as they stand, must be significantly revised or removed entirely, or the promise remains that we will move for them to be removed on Report.

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

My Lords, it is a pleasure to respond to this particularly interesting debate. I, too, welcome the noble Lord, Lord Sharpe, to his new position. I must say, the noble Lords, Lord Sharpe and Lord Sandhurst, seem to have undergone a conversion, certainly since the former’s time in the Department for Business. I have not been able yet to count the number of regulations in primary legislation that the noble Lord took through but, given that he was a Home Office Minister and given the Home Office’s—how shall I put it?—productive record in producing legislation in Parliament, I hasten to suggest that it was quite a few.

Clearly, behind that is an important consideration about the shape of the Bill and why we need a regulation-making power. On the other hand, the Government would say to noble Lords that the intention is to use those regulations proportionately on the back of the policy consultation that has just taken place. We see here, in a sense, a tension between those noble Lords who wish to make sure that the legislation covers areas of concern—we have heard about the areas of concern for the noble Lords, Lord Foster and Lord Fox—and those noble Lords who feel that the regulation, or the power given here to Ministers through regulation, goes too wide. Clearly, a balance needs to be drawn.

[Lord Fox (LD)]

There is no dichotomy. We do think that the powers are too wide but part of what we want to do is channel those powers by making the sort of suggestions to which the Minister just referred.

[Lord Hunt of Kings Heath (Lab)]

I was hoping to assure the noble Lord that the way the Bill is constructed should give him comfort in relation both to the issues he has raised around safety and to the comments of the noble Lord, Lord Foster. Clearly, we think that consumer safety is very important. It is central to the Bill and a key component of our product regulation.

The Bill as drafted seeks to uphold a high standard of consumer protection and guarantees that the risks associated with products are minimised; Clause 118 provides for this. Although some products have risks that may be reduced through improvements to the design or clear warnings, others may be so dangerous that they should never be allowed to be sold in the first place. Baby self-feeding pillows are an example of this. They were recalled by the Office for Product Safety & Standards in 2022 due to the fact that the risks they presented could not be mitigated.

The noble Lord, Lord Fox, referred to Clause 1(1)(a), which refers to “reducing or mitigating risks”. We believe that that wording puts safety at the heart of the Bill while permitting regulations to acknowledge the wider spectrum of risk. This concept of a wider spectrum of risk covers the point that the noble Lord was trying to make.

That really is the same response as the one to Amendment 10, in the name of the noble Lord, Lord Sharpe, to which the noble Lord, Lord Sandhurst, referred—essentially, how the Bill explains the term “risk”. My noble friend Lord Leong explained how the Bill puts product safety, and reducing the risks associated with it, at its heart. That includes risks to the health and safety of persons, and Clause 10 makes it clear that “health” can refer to the physical or mental health of a person.

I understand what the noble Lord, Lord Sandhurst, was saying. He was concerned about the wide scope of the Bill, particularly Clause 1(4). However, in a sense, we have to capture in the Bill a definition wide enough to allow us to deal with some of the circumstances that noble Lords have raised. The aim is to be comprehensive but also proportionate. The noble Lord said that the Minister could just do this willy-nilly, but the fact is that regulations have to go through Parliament. He knows that in your Lordships’ House, one Member, even on a statutory instrument under the negative procedure, can ensure that a debate takes place. To come back to the words he used, at the very least for Ministers that can be a challenging and extensive process. A regulation will not be produced without full consultation as well. I would therefore argue that this is not an overweening power of the Executive; it is a sensible balance whereby we try to set out a broad enough definition to cover the kind of risks that noble Lords are concerned about. However, because it has to go through a parliamentary process and a consultation process before that, there are sufficient safeguards to ensure that any future Government or Ministers are not overriding in the way that the noble Lord suggested.

Clause 1(4) also ensures that damage to property is also included within the meaning of risk, meaning that regulations made under the Bill can be made for the purposes of mitigating risks to property, including the operability of other products. I can say to the noble Lord, Lord Fox, therefore, that the Bill captures the spectrum of risks that products may present to the health and safety of people and their property.

I also emphasise that not every element of our product safety framework is focused entirely on safety in the traditional sense. Our current regulatory framework covers a wide range of topics. This includes the use of radio spectrum, the ergonomics of protective gear and noise emissions from some outdoor machinery, such as concrete breakers and lawn-mowers. A number of our existing regulations, such as those covering fireworks and pressure equipment, also cover risks to domestic animals. By the way, I point out to the noble Lord, Lord Fox, that that is why domestic animals are mentioned in the clause; it is also for this reason that we cover the interoperability of products and their susceptibility to electromagnetic disturbance, along with the risks to domestic animals, as I said.

Amendment 7, in the name of the noble Lord, Lord Foster, would create in the Bill a category of high-risk products where regulations can apply across the board. He worries that the Bill is too discretionary. I understand where he is coming from.

[Lord Foster of Bath (LD)]

Just for absolute clarity, I did not say that the Bill was too discretionary; I said that the current arrangements were too discretionary and I want a change from that situation.

[Lord Hunt of Kings Heath (Lab)]

I am sorry if I misinterpreted what the noble Lord said, but I get his drift. We believe that the operation of our current product regulation framework already recognises the point that he made.

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[Lord Foster of Bath (LD)]

I apologise but I am not quite sure what the Minister’s concern about my amendment therefore is. It specifically suggests that we put into the Bill a power for the Secretary of State to choose to bring forward regulations that will enable the classification of high-risk products in the way that he has just described. They are all included, including the recently developed framework, as possible ways of doing that within the amendment. I genuinely do not understand the Minister’s argument. I am giving an opportunity for clarity—so that in all circumstances there is an opportunity to use that framework.

[Lord Hunt of Kings Heath (Lab)]

We do not think it is necessary.

[Lord Foster of Bath (LD)]

Why?

[Lord Hunt of Kings Heath (Lab)]

If the noble Lord will let me explain, Clauses 1 and 11 grant powers to make regulations relating to product safety for a range of purposes, general or specific. The Government have set out in their response to the product safety review our intention in the months ahead to begin a process of sector reviews. They will consider whether any changes are needed to our existing regulation of higher-risk products to reflect modern challenges, such as those that the noble Lord has pointed out in two speeches this afternoon. We will also consider whether updates to the GPSR are necessary to ensure that cross-cutting and emerging risks are properly addressed, particularly where products fall outside current sector-specific rules.

Furthermore, in December 2022, the Office for Product Safety & Standards developed a product safety risk assessment methodology for GB regulators to use with non-compliant products. The methodology requires consideration of the tolerability of the risk identified. Where a risk is intolerable, a regulator can act robustly in relation to risks that may have a low possibility of occurring, but where, if they did, the outcome would be disastrous. A noteworthy example is the effort made by the Office for Product Safety & Standards to protect young people from the dangers of ingesting small, powerful magnets.

In Amendment 95 the noble Lord, Lord Fox, makes the sensible point that safe disposal can be a key part of protecting consumers and businesses. Clause 1(5) makes clear that regulations can cover safe disposal of products. We will consider whether particular products need specific regulation in this area on a case-by-case basis.

On the disposal of batteries specifically, the Government are committed to cracking down on waste as we move toward a circular economy. We shall have a discussion on the circular economy—I was going to say “in a few minutes”, but that might be a little hopeful. We are reviewing and propose to consult on reforms to UK batteries regulation before setting out our next steps.

Finally, regarding the question from the noble Lord, Lord Jackson, on the Schedule to the Bill, the things mentioned in the exclusions are covered by separate legislation. It is as simple as that.

[Lord Jackson of Peterborough (Con)]

I am grateful for the Minister’s indulgence; I have a straightforward question regarding Amendment 7 in the name of the noble Lord, Lord Foster. The Minister has answered it thoroughly but I still do not understand. What else would the Government be doing, in looking at the efficacy of product safety, that is not already in the amendment? Surely the noble Lord’s amendment merely formalises actions with regard to product safety that the Government themselves would do in analysing what they need to do to protect consumers. I cannot understand the Minister’s resistance to at least being a bit more emollient towards what seems to me quite a sensible amendment.

[Lord Foster of Bath (LD)]

Hear, hear!

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think that is surprising support from the noble Lord, Lord Foster. This is an iterative process in Committee, and we are certainly always prepared to look at suggestions put forward. My response is simply that we think the Bill as it stands, and the reviews that will take place, cover the points he raises. The Attorney-General’s advice also suggests that we should not unnecessarily add to legislation, but we will give it some consideration.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, it has been an interesting mini debate and I am grateful to the noble Baroness, Lady Bennett, and the noble Lord, Lord Fox, for their amendments. I want to remark on the miraculous conversion to regulatory purity of the noble Lord, Lord Sharpe. I can only refer to Luke, chapter 15, which states that

“joy shall be in heaven over one sinner that repenteth, more than over 90 and nine just persons, which need no repentance”.

I am not a crazed zealot but perhaps in my case, with due acknowledgement to St Augustine, “Oh Lord, make me regulatory pure, but not quite yet.”

We have encapsulated a very interesting debate because I think we all accept the really important point raised by the noble Baroness, Lady Bennett, and the noble Lord, Lord Fox. On the other hand, there are issues about the wording of the amendment and the unintended consequences, alongside the fact that we believe that current legislation allows us to do what both the noble Lord and the noble Baroness would require us to do.

Amendments 30, 115 and 125 are intended to reduce waste. They promote recyclability, repair and reuse of products, and seek to mandate that all product regulations made under the Bill would require an environmental impact assessment and provisions related to the right to repair and the circular economy. Amendment 50 of the noble Baroness, Lady Bennett, seeks to achieve similar by making it a requirement that regulations made under the Bill include provisions to promote circular economy principles. The noble Baroness’s amendment then goes a step further, requiring the Secretary of State to issue guidance on such principles within 12 months, and to review and update that guidance at least once every three years.

Under the duty set out in the Environment Act 2021, Ministers and policymakers must already consider the environmental impact of all new government policies. I certainly empathise with the whole concept of the circular economy, on which both the noble Baroness, Lady Bennett, and the noble Lord, Lord Fox, spoke with such eloquence. The Secretary of State for the Environment, Food and Rural Affairs has set the reduction of waste by moving to a circular economy as one of Defra’s top five priorities. In fact, the Secretary of State has convened a small ministerial group on the circular economy and asked his department to work with experts from industry and academia to develop a circular economy strategy. I will feed this debate and noble Lords’ contributions into the ministerial task force.

I understand the importance of the right to repair. The product regulations made under the Bill will cover many types of products, some of which may be inappropriate to repair. That is really part of the point; for instance, cosmetics is one example—the point that the noble Lord, Lord Sharpe, made. The Ecodesign for Energy-Related Products and Energy Information Regulations 2021 introduced measures including requirements for repairability for the first time in Great Britain. Those regulations contribute towards circular economy objectives by increasing the lifespan, maintenance and waste handling of energy-related products. Our aim is to introduce further right to repair measures when regulating individual products under the ecodesign for energy-related products regulations, where appropriate. That is probably the best way in which to approach it, rather than putting a generic requirement in this piece of legislation.

With regard to Amendments 5 and 28, I reassure noble Lords that the provisions in the Bill do not prevent the UK introducing new environmental regulations. Should we wish to set out broader regulations that exceed or differ from EU rules, we already have powers under other legislation to introduce wider environmental protection rules.

I understand the desire of noble Lords to have something in the Bill in relation to these important issues, but there is a problem of imposing requirements where they cannot reasonably be met or duplicate existing policies. I know that is not the intention, but we think that would be the effect of the amendments before us. We clearly want to avoid conflicting or duplicating regulations. In essence, we agree with the principles put forward by the noble Lord and the noble Baroness. We think we are covered by existing legislation and regulations, but I am grateful to them for bringing them forward.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for his response and noble Lords who have taken part in this time-constrained debate. I take some encouragement from the expressions of at least general support. Like the noble Lord, Lord Fox, I look forward to further discussions with the Minister on this issue. That is part of the reason why I tabled a number of amendments taking different approaches and going into different parts of the Bill because of the different ways of approaching it. We are very open to anything that might put in some kind of guard-rail.

If I may say so, the Minister gave a classic Civil Service response: “But it is covered by other legislation”. I point him to the figures I cited about how little progress has been made on waste reduction towards a target that is only three years away. What we are doing now is clearly not enough, and it is not working.

We are talking about the product regulation Bill, and on the point about right to repair and cosmetics, there are obviously different rules to be applied to different products. That is true of any Bill that covers product regulation.

I wish briefly to pick up the points made the noble Lord, Lord Sharpe, who suggested that these amendments might produce a further burden on consumers. If consumers found that their fridge lasted longer, for the kind of period that fridges used to last, that would be not a burden but a considerable advantage. If they were able to fix their mobile phone instead of having to pay a multinational company a large sum of money for a new one, that would certainly not be a burden on consumers. It would perhaps be a rebalancing of the Government acting in the interests of consumers rather than those of giant multinational producers.

We can see clearly that this is a debate that will continue, but in the meantime, I beg leave to withdraw Amendment 5.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I say at once that I pay due regard to the Civil Service and the advice I receive, but these are the words of Ministers. There is a judgment here that you do not want to add legislation where you already have it. The point the noble Baroness makes is that the legislation is not being used effectively. The whole point of the Secretary of State for the Environment, Food and Rural Affairs’s task force is to look at the progress we are making and to refocus in relation to the circular economy. I hope the noble Baroness will not think that this is a damp squib of an answer because we take what she says very seriously. Of course, we will be happy to meet her and the noble Lord, Lord Fox, to discuss this important matter further.

[Lord Sharpe of Epsom (Con)]

My Lords, I reassure the noble Baroness that my fridge is more than 20 years old, and I have a very good mobile-phone repairer.

Great British Energy Bill

Lord Hunt of Kings Heath Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

Moved by

[Lord Hunt of Kings Heath]

That the Bill be now read a second time.

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

My Lords, it is a great pleasure to open the debate on the Great British Energy Bill and to welcome the interest shown by so many noble Lords. I particularly welcome the maiden speech of my noble friend Lady Beckett. It is almost impossible to do justice to her remarkable career and her service to the country and my own party. It is a long time ago, but I particularly valued the discussions I had with her when she was shadow Health Secretary. I wish her a long and happy membership of your Lordships’ House.

I welcome too the maiden speech of the noble Lord, Lord Mackinlay; he comes to this House with considerable experience in the other place. He earned the admiration of so many people in the country and in Parliament for his brave battle following sepsis. He is very welcome to your Lordships’ House and we look forward to what he has to say.

Our country faces huge challenges, more than two years on from Putin’s invasion of Ukraine, as families continue to pay the price for Britain’s energy insecurity. At the same time, we are confronted by the impacts of the climate crisis all around us, not as a future threat but as a present reality.

On climate change, human activity has already resulted in warming of 1.3 degrees Celsius above pre-industrial levels, leading to widespread impacts on people and nature. Professor Penny Endersby, chief executive of the Met Office, has made it clear that if we do not limit temperature rises to 1.5 degrees Celsius, we will see many more weather and climate extremes, including loss of food, water and energy security, leading to increased global conflict, so we have to act fast to reduce emissions to get to net zero. The pace of that reduction is as important as the eventual date when net zero is achieved, because it is cumulative emissions which determine global temperature rises. As the Climate Change Committee has said:

“The faster we get off fossil fuels, the more secure we become”.


That is why the Government’s mission is to make Britain a clean energy superpower, delivering a decarbonised power sector by 2030 as part of an acceleration to net zero. In the first four and a half months of the new Government, we have: lifted the ban on onshore wind; consented some major solar farm developments; agreed major developments in carbon capture, usage and storage; signalled our support for the role of nuclear power as an essential baseload for our electricity generation; conducted a hugely successful allocation round, which delivered a record number of new clean energy projects; announced funding of carbon capture, utilisation and storage; signalled reforms to the planning system and the grid to speed up consent connections; and launched Great British Energy.

We see Great British Energy as a new way of doing things at the heart of our clean power mission. It is a new, publicly owned and operationally independent clean energy company, designed to drive clean energy deployment to create jobs, boost energy independence and ensure that UK taxpayers, bill payers and communities reap the benefit of clean, secure homegrown energy. Headquartered in Aberdeen, with branches in Glasgow and Edinburgh, it will own, manage and operate clean energy projects across the country, generating abundant homegrown electricity and accelerating the energy transition. Backed by a capitalisation of £8.3 billion of new money over this Parliament, Great British Energy will work in partnership with the private sector, local authorities and communities to spread skilled jobs and investment across the country.

We have published Great British Energy’s founding statement and announced its first major partnership, with the Crown Estate, to exploit our offshore wind asset. Progressing the Great British Energy Bill to Royal Assent is the next stage of GBE’s journey, giving it the statutory footing needed to deliver on our ambitions.

The Bill itself draws on best practice from previous legislation, including the Great British Nuclear provisions in the Energy Act 2023, and the UK Infrastructure Bank Act, which have set up successful government companies. The Bill is drafted deliberately to give GBE the flexibility and independence that it needs to carry out its functions and achieve its objectives over time, giving it space to develop and grow. It is focused solely on making the necessary provisions to support the company, provide the finance and set the appropriate guardrails to ensure that it delivers on the Government’s ambitions.

The Bill underpins the wider programme needed to deliver both Great British Energy and our wider mission to establish the UK as a clean energy superpower. The founding statement for GBE confirms that the company will have five key functions to support this:  first, project investment and ownership, by investing in energy projects alongside the private sector, helping to get them off the ground; secondly, project development, by leading projects through development stages to speed up their delivery while capturing more value for the British public; thirdly, local power plans that support local renewable energy generation projects through working with local authorities, combined authorities and communities across the UK; fourthly, building supply chains across the UK, boosting energy independence and creating jobs; and, fifthly, exploring how GBE and Great British Nuclear will work together.

Great British Energy will be accountable to Parliament. It will be overseen by an independent board and benefit from industry-leading expertise and experience. The appointment of Jürgen Maier, the former CEO of Siemens UK, as start-up chair exemplifies this; he brings a wealth of experience to the GBE board. His background, in a variety of roles across sectors, positions him to drive GBE’s mission to innovate and to expand the UK’s clean energy capabilities.

The case for GBE is simple: it will speed up the delivery of the clean energy we urgently need. The only way to protect families from the risk of future price shocks is to accelerate the transition away from volatile fossil fuels and towards clean energy. GBE will mobilise and crowd in investment from the private sector, and it will invest in technologies such as wind, solar, tidal, hydrogen, nuclear, and carbon capture. In the October spending review, the Chancellor announced £25 million to establish the company, with a further £100 million of capital funding to spend in 2025-26 so that GBE can get to work. By backing clean energy projects up and down the country, GBE will help to build a new era of energy independence, firmly establishing us as a clean energy superpower.

GBE will ensure investment in clean energy and create good jobs across the country. We have made progress on the rollout of renewables over the last two decades, but the reality is that we have underdelivered on the jobs that should have come with it. GBE will help to support our plan to create the next generation of good jobs, with strong trade unions and decent wages, by joining forces with our national wealth fund and the British jobs bonus, and working hand in hand with industry to build supply chains up and down the country and driving the reindustrialisation of Britain.

Great British Energy will generate a return for the taxpayer and will own, manage and operate clean energy projects around the country.

I will briefly go through the details of the Bill. Clause 1 allows the Secretary of State to designate a company as Great British Energy, provided that it is “limited by shares” and “wholly owned” by the Crown. A company has already been incorporated for that purpose, so it can be designated as soon as the Bill receives Royal Assent.

Clause 2 ensures that Great British Energy is not regarded as a “servant or agent” of the Crown and will be subject to the law in the same way as any other company.

Clause 3 restricts the objects of Great British Energy, providing the framework for it to carry out the functions I mentioned, which are

“facilitating, encouraging and participating in … the production, distribution, storage and supply of clean energy … the reduction of greenhouse gas emissions from energy produced from fossil fuels … improvements in energy efficiency, and … measures for ensuring the security of the supply of energy”.

Clause 4 enables the Secretary of State to provide financial assistance to GBE, which is key to unlocking the £8.3 billion committed. Financial assistance to GBE will occur in line with its agreed financial framework and His Majesty’s Treasury’s delegations. Financial assistance may be provided in any form, including grants, loans, guarantees and indemnities, as well as through acquisitions and contracts.

Clause 5 requires the Secretary of State to provide Great British Energy with more detail on where it should prioritise and focus its activities, via a “statement of strategic priorities”. The clause also requires GBE to secure that its articles of association provide for the company to

“publish and act in accordance with strategic plans”—

which must reflect the Secretary of State’s strategic statement—and for it to update those plans whenever the Secretary of State’s strategic statement is revised or replaced.

Clause 6 allows the Secretary of State to direct GBE; for example, in the interests of national security. The Secretary of State is not able to do so until they have consulted GBE and such other persons as they consider appropriate. Any directions given must be published and laid before Parliament by the Secretary of State.

Clause 7 ensures that GBE is subject to parliamentary and public transparency by requiring its annual reports and accounts to be laid before Parliament.

Clause 8 sets the territorial extent of the Act and the date on which it will come into force, which is immediately once passed to enable GBE to start delivering benefit for the people of this country.

The Bill will help ensure that every part of the UK has a role to play in delivering energy independence for our country. With GBE, we will harness the UK’s clean energy potential and ensure we are never again at the mercy of volatile global fossil fuel markets. It will speed up delivery and drive investment. It will create good jobs and build supply chains. It will protect family finances and ensure energy security, reaping the benefits for all. I commend the Bill to the House. I beg to move.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, I begin by thanking all noble Lords who have taken part in this—yet again—very interesting debate about energy, climate change and the future. I particularly welcome the maiden speech of my noble friend Lady Beckett; her emphasis on UK climate leadership was particularly welcome, and hospital passes are something I certainly know a bit about. I was also very moved by the maiden speech of the noble Lord, Lord Mackinlay. I echo his tribute to the Sepsis UK, with whom I have worked in the past, and I am glad he was able to meet the Secretary of State. I certainly agree with him about the importance of Parliament being able to scrutinise energy policy and I look forward to his further engagement in these debates.

The noble Lord made a reference to what was happening globally. I would say, though, that the International Energy Agency has shown very recently in its Renewables 2024 report that there will actually be a massive—2.7 times—increase in renewables leading up to 2030. It is clear that countries are not turning away from it. It is also clear that there is a global renaissance in nuclear energy, in which the UK will play a full part. This is the fourth time I have said this, because the noble Viscount, Lord Trenchard, asks the same question each time. What more can I do to say that nuclear is a very important part of what we are developing in the future, in terms of low-carbon and clean energy?

I think my noble friend Lord Grantchester and the noble Lord, Lord Naseby, really said it: in this area, government intervention is essential, and the link to climate change is absolutely critical here. The noble Lord, Lord Bourne, was so right: we are talking about the survival of the human race—nothing less than that.

[A noble Lord]

No we are not.

[Lord Hunt of Kings Heath (Lab)]

We are. There is always going—

[Lord Lilley (Con)]

I tabled a Question some time ago to ask the Government whether they knew of any peer-reviewed science or any science collected by the IPCC which suggested that there would be extinction of the human race if we did nothing worldwide—not as much as we are doing now, but nothing—and they said that there is no such peer-reviewed science. Why does the Minister rely on alarmism?

[Lord Hunt of Kings Heath (Lab)]

I am not alarmist at all. I rely on report after report showing the consequences. Shall we turn to our own independent Climate Change Committee? The noble Lord supported the Conservative Government over a 14-year period. I did not see that Conservative Government disowning the independent advice they had received. He might as an individual, but I do not think his Government did. Noble Lords opposite, when they run down organisations such as the Climate Change Committee—or, indeed, the OBR, as they seem to now—need to remember that they listened to and reflected on the advice of those bodies during that 14-year period.

I agree with the noble Lord, Lord Cameron, that if climate change is critical, energy security comes a close second. That is, of course, what makes the Bill so important, so I hear what noble Lords are saying. The noble Lords, Lord Offord, Lord Duncan and Lord Bourne, the noble Baronesses, Lady Bloomfield and Lady Hayman, my noble friend Lord Hanworth, the noble Earl, Lord Russell, and a number of other noble Lords have commented on the structure of the Bill, with concerns about a lack of detail and questions about the accountability of GBE to Parliament, how it is to be reviewed, and its relationship with the national wealth fund, Great British Nuclear, the Crown Estate, NESO, and, as the noble Lord, Lord Bourne, mentioned, the Climate Change Committee.

I also say to the noble Lord, Lord Bourne, that the fact that GBE is going to be headquartered in Scotland of course does not inhibit its UK-wide responsibilities. I have noted what he had to say about investment in Wales.

However, I accept that there are a number of organisations here and I will take it upon myself to write to noble Lords, setting out how we think the relationships will work together, as I think that will inform our discussions in Committee. On the structure of the Bill, noble Lords will know that this was laid in the Commons very soon after the election as an early priority of the Government. Because of that, we have focused, inevitably, on the provisions that are fundamental to the establishment of Great British Energy. Clearly, we are still working through some of the policy issues on which we need to come to a view, including, of course, discussing them with GBE and the devolved Governments. That is why the Bill, to an extent, does not have the detail which noble Lords wish to see.

However, I have listened very carefully. We will come to Committee, and I hope I can respond constructively to some of the issues that noble Lords have raised. Equally, I want to ensure that GBE is operationally independent and able to make its own decisions within the structure of the Bill and the strategic priorities laid down by the Secretary of State. We are listening very carefully to what noble Lords have to say.

As I said to the noble Lord, Lord Howell, last week in our debate on energy, I fully accept that our drive towards clean power by 2030 is but one aspect of the decarbonisation of society in this country and the move to net zero. In relation to transport, heating and industrial processes, this is a huge challenge and one which we are committed to achieving. The noble Lords, Lord Offord and Lord Ashcombe, and the noble Baroness, Lady Bloomfield, asked about the clean power target. There are a number of different ways of reading the report from NESO, but it is quite clear that the number one message from NESO was that it is possible to build, connect and operate a clean power system for Great Britain by 2030 while maintain security of supply. I accept that it is very challenging—there is no doubt whatever about that—and the NESO report contains a number of those challenges. However, this is independent advice; it says that it can be done and we believe it can be done. It is very challenging, but it is doable.

On cost, as the noble Earl, Lord Russell, said, the biggest cost is doing nothing. As the noble Baroness, Lady Hayman, said, the Climate Change Committee has said that the net cost of transition will be less than 1% of GDP over the entirety of 2020 to 2050. The OBR has highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts and that acting early could

“halve the … cost of getting to net zero by 2050 compared to acting late”.

I noted also the comments of the noble Lord, Lord Ravensdale, on this.

I come to the Bill itself. The noble Baroness, Lady Noakes, and the noble Lord, Lord Vaux, raised that we have partly used the UKIB legislation as a model for some of the clauses in this Bill. The noble Lord and the noble Baroness were particularly focused on the make-up of the board of directors. The fact is that we have brought in clauses from the Great British Nuclear provisions in the Energy Act. The structure very much follows that. We do not think that it was necessary to put into primary legislation provisions in relation to the board, because this will be covered. It is a company, and so will be encompassed within company law, the code of practice and sound corporate governance. GBE will have a chair and a chief executive officer, both of whom will be accountable to Ministers. It will have a board of directors that follows sound corporate governance practice, including the provisions of the UK Corporate Governance Code and those published by the Financial Reporting Council.

We want GBE and the national wealth fund to work closely together. As Great British Energy scales up, we will set out how the two institutions will collaborate and complement each other. On the issue of crowding out investment, surely my noble and learned friend Lord Falconer was right. The whole point about GBE is to speed up the deployment of mature and new technologies but with a focus on where this can complement existing private sector activities.

I must say that the references that the noble Lord, Lord Lilley, made to HS2 and the Post Office were a bit rich, considering the record of the Conservative Government’s stewardship, or not, over 14 years.

I will come on to Clause 3, the objects, which has drawn quite a lot of comment. I say to my noble friends Lady Winterton and Lord Grantchester and to the noble Lords, Lord Cameron and Lord Naseby, among others, that emerging technologies such as CCUS or hydrogen could be very much part of GBE’s portfolio once it is operational. I noted the comments from the noble Baroness, Lady McIntosh, on waste. On Drax, we had a good run on that a couple of weeks ago, although I may not have convinced noble Lords of the Government’s position. I look forward to discussing storage with the noble Lord, Lord Duncan, and my noble friend Lord Stansgate. I also agree with the noble Lord, Lord Ashcombe, on the potential of floating offshore wind.

We, of course, are reluctant to see a list of technologies. Noble Lords sitting on the Front Bench will be readily aware of the list argument, and it is well taken. If you list, you are at risk of excluding other technologies. One must be very careful not to constrain the ability of GBE in its operational independence and its ability to spot the technologies that need supporting. I do accept, with my noble friend Lady Young, that community energy has huge potential in itself and as a way to leverage public support generally for the kinds of changes that we need to see happen. We certainly believe that GBE will deliver a step change in investment in local community energy projects and will work strongly in partnership with local authorities and community groups to deliver this. I know that local authorities would welcome a much stronger partnership to enable this to happen. I take the point from the noble Baroness, Lady Hayman, and my noble friend Lady Young about biodiversity. I look forward to discussing that further with them and in Committee.

I come now to my favourite topic: nuclear energy. First, we want to make sure that GBN can carry on with its work—the technology appraisal of the shortlisted technologies for the SMR programme is particularly important—and that it will work in complementary ways to GBE without there being duplication of effort. I picked up the important contribution from the noble Lord, Lord Ravensdale. I say to the noble Viscount, Lord Trenchard, that nuclear power is not being underprioritised in my department. I need no persuading of the importance of nuclear energy. It acts as the essential baseload, and when it is aligned with gas that, in future, will be abated by CCUS, we will have the right balance to complement the intermittency of renewable energies.

On nuclear and resources, we have just announced a huge resource allocation to Sizewell C to get it over the next two years. We are working very fast towards final investment decisions over the next few months; we have the SMR programme and we are very excited by the potential of AMRs. I very much take what my noble friend Lady Winterton said about the potential of SMR manufacturing in the UK.

A number of noble Lords mentioned the grid and planning and what they described as the roadblocks to developers. I very much take that point. We have already signalled, in parallel with GBE, our intention to reform the planning system to enhance our grid connections. I take the point about the delays to the connection which developers are suffering at the moment. Clearly, we have to do something about that, but GBE’s main priority will be to help developers get through some of the roadblocks and focus on the energies that need support.

I noted with interest the comments the noble Baroness, Lady McIntosh, made about the impact on farmers and on fishing fleets. I accept that consultation and environmental assessments must continue to be made in any more streamlined planning process and expansion of the grid.

My noble and learned friend Lord Falconer and the noble Baroness, Lady Noakes, raised the question of state subsidies and competition law. As an operationally independent company, GBE will be subject to the same legal and regulatory framework as other entities in relation to subsidy control and competition law, such as the Subsidy Control Act 2022. The Bill does not alter that framework.

I hear what noble Lords say on Clause 5 in relation to strategic priorities and the statement. It is unlikely that we will have published the statement of strategic priorities before Royal Assent, but I have listened to what noble Lords have said. I will reflect on that and I am sure we will discuss it further in Committee. Noble Lords seem to be indicating that they would like to discuss it in Committee.

On power of direction, the noble Lord, Lord Lilley, was particularly assertive that the Secretary of State would wish to take almost micromanagement control. I assure him that that is not the intention. It is a backstop, reserve power.

On the annual accounts and reports, there will, of course, be accountability. The chief executive officer will be the accounting officer. The National Audit Office will oversee. Ministers will answer to Parliament. Select Committees can invite GBE in to give evidence. Noble Lords will debate. We will have Questions and more general debates.

I listened to noble Lords and I understand that they have looked at the UKIB legislation. We will reflect on that, but my noble friend Lady Young is right: there is a balance here between due accountability and not putting a load of bureaucratic micromanagement on this organisation, which is not what we want to happen.

I absolutely agree with noble Lords that we must make the most of the supply chain. I picked up the point about skills and managing the transition in the North Sea.

The noble Lord, Lord Alton—my noble friend, if I may call him that—and I have worked together on these issues. I congratulate him on his work and the huge effort that he has made in Parliament, the influence that he has had on legislation, and the help that he gave me around enforced organ harvesting, particularly in Xinjiang province but in China more generally. At this stage, we expect UK businesses, including GBE, to do everything in their power to remove any instances of forced labour from their supply chains. They should not approve the use of products from companies that may be linked to forced labour. I am very happy to talk to the noble Lord about the energy potential of Merseyside, as he suggested, and to discuss the issues that he raised so eloquently.

I have reached the time limit. This has been a very good debate and I am most grateful to noble Lords. I would like to think that contributions were constructive, and I look forward to debating this in Committee.

Bill read a second time and committed to a Committee of the Whole House.

Drax Power Limited: Ofgem Investigation

Lord Hunt of Kings Heath Excerpts

Monday 11th November 2024 Lords Chamber

[Baroness Boycott]

To ask His Majesty’s Government what assessment they have made of Ofgem’s investigation into Drax Power Limited, which found “Drax misreporting data” and “being unable to provide Ofgem with sufficient evidence … to support the reliability of its profiling data reporting of forestry type”, and what plans they have to ensure that companies receiving public subsidies are not able to claim them without concrete evidence.

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

My Lords, Ofgem’s investigation found that Drax had failed to report data accurately. Data misreporting is a serious matter and the Government expect full compliance with all regulatory obligations. Drax’s £25 million redress payment underscores the robustness of the regulatory system.

[Baroness Boycott (CB)]

My Lords, I thank the Minister for that Answer. KPMG was commissioned by Drax to look into the results; this was done in secret at its behest, and it was reported in this week’s issue of Private Eye. It corroborated that Drax had provide inaccurate data to Ofgem and that there was evidence of

“material financial misstatement … fraud or misconduct”.

Therefore, we cannot trust Drax to be honest or to behave honourably. Will the Minister use his good offices to put an end to the enormous subsidy that we pay to Drax on an annual basis, which, according to one of the latest adverts put out by an environment group, is costing every individual in this country £100 a day?

[Lord Hunt of Kings Heath (Lab)]

My Lords, on the issue of data, I have checked with Ofgem. At the moment, it has no reason to think that Drax is not compliant, but it will not hesitate to act if required. On the question of subsidy to Drax, the noble Baroness is referring to the ROC system of subsidies, which the last Government oversaw for many years. The ROC comes to an end in 2027. The last Government issued a consultation on whether there should be transitional subsidy arrangements. We are considering the results of that work at the moment.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Noble Lords will remember the “Panorama” exposé of the illegal sourcing of wood pellets from Canadian forests, a charge vigorously denied at the time by Drax. Our Conservative Government introduced the strict criteria that allowed Ofgem to conclude that there was not “sufficient evidence”. What plans do this Government have to ensure that Ofgem can continue to investigate any company receiving a subsidy?

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is clearly very important that companies in receipt of the ROC payments—and, indeed, where their biomass electricity generation is classified as low-carbon—are acting according to sustainability criteria. The last Government issued a call for evidence in 2021 and then took two years to publish a strategy, in 2023. On the revision of sustainability criteria, they rather ducked it, saying that they would produce a cross-sector consultation this year, which never happened. We are now working on that. It is clear that sustainability criteria need to be kept up to date. We will ensure that that happens.

[Lord Birt (CB)]

My Lords, I have seen the deeply troubling allegations presented by a staff whistleblower to at least one member of the Drax board. It is troubling reading. They allege outright dishonesty, cover-up, offers of under-the-table bribes and naked threats by some senior Drax executives. Has the Minister seen this evidence, or, as already mentioned, KPMG’s internal investigations following the BBC “Panorama” report on Drax? If not, given the substantial public funding that Drax receives, will he ask to see them?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to the noble Lord. I have seen the media reports, but I have to say to the House that it is the responsibility of Ofgem to make judgments as to whether a company is applying the sustainability criteria. The issue before us today is data information. Clearly, Ofgem found that Drax was not complying with the requirements—hence the redress payment. However, it did not find that Drax was not complying with sustainability criteria.

[Lord Teverson (LD)]

My Lords, given the amount of private money that has been spent in this area, is it not important for Ofgem to be rather more ahead of the curve on these issues? I notice in the report that Drax is now going to have external audit. Why did it not have this before? More importantly, why does not Ofgem get off its backside and go to the United States and Canada to check these items out for itself? Is it about to do that?

[Lord Hunt of Kings Heath (Lab)]

My Lords, first, it is not for Ministers to tell Ofgem how to regulate; we have to rely on its rigorous approach. Secondly, in the US and Canada, we depend on the rigorousness of the regulators locally. Ofgem’s job is to ensure that, as a whole, sustainability criteria are correct. I do not believe that it would be fair to say that Ofgem is not doing a thorough job. That is not my experience.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, it is clear that this Government know that what is coming from Drax is not renewable energy. At the moment, every single energy bill payer in Britain pays Drax for renewable energy. It is not renewable; the company emits 12 million tonnes of carbon a year. The Government know that and choose to allow international regulations to cover it up.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not recognise what the noble Baroness says. It is true that Drax is an emitter of carbon but that is offset—netted off—by the new forestry growth that takes place and absorbs the carbon. This is not a fanciful notion by the Government; the International Energy Agency, the IPCC and the Committee on Climate Change all accept that biomass, as long as sustainability criteria are applied and accepted, is in that way a low-carbon renewable energy.

[Lord Forsyth of Drumlean (Con)]

My Lords, is not the problem, as the noble Baroness has said, that the idea that cutting down trees in North America and California, turning them into pellets, dragging them across the Atlantic Ocean using diesel-powered ships, shipping them across the country and then burning them at Drax is somehow saving the planet is mad?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I realise that it sometimes sounds counterintuitive. None the less, the carbon emitted during the supply-chain process, and in the process at Drax and places like it, is netted off by the growth in forestry, which absorbs the carbon. That is a well-accepted international approach. It produces 2.6 gigawatts at Drax, 4% of our electricity generation in this country, with over 2,500 people employed in the local region, and it is classified as renewable.

[The Earl of Effingham (Con)]

My Lords, the Government have introduced further environmental levies, which the OBR predicts will add an additional £2.8 billion to electricity bills between 2025 and 2030. Can the Minister please explain what support the Government will offer to consumers so they are not adversely affected by this move?

[Lord Hunt of Kings Heath (Lab)]

I remind the noble Lord that policy costs on bills have increased from £115 on average in 2010 to an estimated £309 in 2024, so a lot of this increase occurred under his Government and the previous Conservative and Lib Dem Administrations. If we are serious about going towards clean power and net zero then we have to accept that we must finance the development of new energy-generating structures, and that is the case for biomass. Equally, that has to be done under sustainability criteria regulations that will ensure it happens. As for the OBR, its analysis has highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts.

[Lord Watts (Lab)]

My Lords, is this not a case of the regulators letting down the public again? Do we not need to have more accountability for our regulators? I suggest that each regulator has to produce an annual report that goes to a committee of the House of Commons, so that we can review what they are doing. At the moment, they are badly letting us down.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think that, by implication, my noble friend is being critical of Ofgem, but I must say that that is not my experience. Ofgem is actually a rigorous regulator. It produces an annual report, and of course it would appear before a Select Committee if required.

Contracts for Difference (Electricity Supplier Obligations) (Amendment) Regulations 2024

Lord Hunt of Kings Heath Excerpts

Wednesday 30th October 2024 Lords Chamber

Moved by

[Lord Hunt of Kings Heath]

That the draft Regulations laid before the House on 30 July be approved.

Relevant document: 2nd Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 28 October.

Motions agreed.

Contracts for Difference (Electricity Supplier Obligations) (Amendment) Regulations 2024

Lord Hunt of Kings Heath Excerpts

Monday 28th October 2024 Grand Committee

Moved by

[Lord Hunt of Kings Heath]

That the Grand Committee do consider the Contracts for Difference (Electricity Supplier Obligations) (Amendment) Regulations 2024.

Relevant document: 2nd Report from the Secondary Legislation Scrutiny Committee

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

My Lords, these draft regulations were laid before the House on 30 July 2024. This instrument forms an important part of the Government’s commitment to accelerate the deployment of carbon capture, usage and storage—CCUS. We believe this to be critical to deliver clean energy and accelerate our net-zero journey. As the Government recently announced, CCUS is vital as we enter a new era of clean energy, investment and jobs. By boosting this tried and tested technology, the UK has the potential to become a global leader in CCUS, delivering good jobs and economic growth for decades to come.

A critical element of the CCUS mix is the successful deployment of power CCUS—gas-powered electricity generators fitted with carbon capture technology. Power CCUS will complement the rollout of renewable energy, providing secure, flexible, non-weather-dependent low-carbon electricity, critical for a reliable energy system and achieving our mission of clean power by 2030.

The Government are committed to incentivising the deployment of power CCUS and this instrument will enable future payments to power CCUS plants under the business model known as the dispatchable power agreement. This agreement—the DPA—is the contractual framework to support power CCUS. It has been designed specifically to incentivise the investment and deployment of power CCUS in the UK. The DPA is a type of contract for difference and, like a contract for difference, uses the electricity supplier obligation to fund support payments. This levy is calculated and managed by the CfD counterparty—the Low Carbon Contracts Company—and collected from electricity suppliers, who are able to pass the costs on to their customers if they choose to do so.

In addition to the existing renewable contract for difference contract design, the DPA business model will provide an alternative payment based on a power CCUS generator’s availability. This availability payment is based on a generator’s availability of electricity generation and carbon capture, and associated carbon dioxide transport and storage network costs. Under the DPA terms, payments will reduce proportionally to reflect any reduction in a generator’s capture rate or generation.

The payment is made whether a generator dispatches power or not. This ensures that a CCUS power plant will run in response to market signals, ahead of unabated gas plants, but will not surpass cheaper renewables. This arrangement will strengthen security of supply, ensuring that a source of reliable low-carbon energy is available when the wind does not blow and the sun does not shine.

Let me be clear: this proposed instrument enables only certain types of payments under the renewable CfD and DPA contracts to be funded by the supplier levy. Any future support offer to a project will be subject to rigorous negotiation with partners. Any decision to award support will be subject to value-for-money and subsidy control tests to ensure best value for money for consumers.

In effect, this statutory instrument amends the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014. The amendments will allow the payments made under the DPA to be funded by the supplier levy, by changing how the supplier levy rate calculation works in the regulations.

First, Regulation 4 relates to the way an electricity supplier’s daily contributions paid to the CfD counterparty is calculated. This instrument amends Regulation 4 to enable the definition of generation payments such that the supplier obligation can be charged for payments related to the activities of a dispatchable power plant fitted with CCUS technology. This includes amendments to take into account: the electricity generation capacity made available by a generating station on a given day; a generating station’s achieved carbon dioxide capture rate or capture capacity on a given day; the incurred CO₂ transport and storage capital costs incurred for transporting such captured carbon dioxide and if required, associated carbon dioxide; transport and storage network revenue shortfalls proportionate to a DPA-supported generating station which arose on that day.

Secondly, Regulation 7 of the 2014 regulations sets out how the CfD counterparty estimates the quarterly obligation payment that electricity suppliers will be required to provide to the counterparty. This instrument amends Regulation 7 to ensure a consideration of matters related to a dispatchable power agreement-supported generating station are taken into account, including the carbon dioxide transport and storage network capital costs and, if required, revenue shortfalls, and the amount of carbon captured.

Together, these amendments allow a CfD counterparty to estimate, raise funds and ultimately pay a DPA-supported CCUS-enabled power plant. The existing payment calculation, based on the amount of electricity generated by renewable CfD-supported generating stations is retained and unaffected.

These proposals have been long considered as the power CCUS business model has been updated. This has included update publications in December 2020, May 2021, October 2021 and April 2022. The instrument was formally consulted on from December 2023 and received a range of responses from electricity suppliers, power operators, a trade body and a consumer-focused charity. Respondents were broadly in agreement with the principles laid out. My department continues to engage closely with industry in the development of the CCUS sector.

In summary, this instrument represents a positive step forward in the delivery of the Government’s ambitious CCUS programme and 2030 clean power mission. It will lay the regulatory groundwork to encourage the deployment of power CCUS and begin to unlock the great economic and jobs opportunities that we see coming from this important development. I beg to move.

[The Earl of Effingham (Con)]

My Lords, His Majesty’s Official Opposition welcome the Government’s Contracts for Difference (Electricity Supplier Obligations) (Amendment) Regulations 2024. These regulations will enable licensed electricity suppliers to make payments to natural gas power plants fitted with carbon capture, usage and storage—also known as CCUS—technology. In 2023, we introduced funding for CCUS with the plan to make up to £20 billion available to support the early development of CCUS, so we welcome this step as an essential part of reaching the net-zero target, and we are pleased to see that the current Government are continuing our work in this area.

On these Benches, we both aspire to and understand the need to reach net zero, and there is indeed consensus from all on the 2050 target. The use of carbon capture technology will play an important role in achieving that goal, and this amendment introduces incentives for suppliers to produce low-carbon electricity—an objective with which we agree.

However, we seek clarification from the Minister. When in government, we committed to deploying CCUS technology in four industrial clusters by 2030. Can he please inform the Committee as to whether his Government will also commit to working towards and reaching that same target?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I welcome the noble Earl’s welcome for the statutory instrument. He is right that a lot of the original work was undertaken by the previous Government. I think I said in my opening speech that most of the consultations took place under the auspices of the previous Government, so there is clearly consensus about the key role of CCUS.

I had expected greater attendance and that we might have debated the principles of CCUS. For me, it is an essential part of the transition. We will need gas-powered electricity generators for years to come. They give the flexibility we need in relation to renewables and having nuclear as a baseload. If we can have it abated then that would clearly decarbonise our energy structure, but it can also play a key role in the industrial use of energy.

On the noble Earl’s question, I say gently to him that, in a sense, the previous Government’s £20 billion seemed rather a theoretical figure. We have had to work hard with our colleagues across government to get to the almost £22 billion that we have announced. Clearly, that money is to be spent on building the foundations for the industry. Basically, the funding we have announced is being invested in our first projects. These include the underpinning CO₂ transport and storage networks and three CO₂ capture projects. Other projects will join later, but these are subject to agreement across government. Of course, the noble Earl will know that we will have the Budget and spending review decisions very shortly. I will have to wait till those decisions are made before I respond on where we will go next.

I thank the noble Earl for his general support for this instrument. I believe we need as much political consensus as possible in relation to net zero, and the general support for CCUS is very welcome.

Motion agreed.

Carbon Dioxide Transport and Storage (Determination of Turnover for Penalties) Regulations 2024

Lord Hunt of Kings Heath Excerpts

Monday 28th October 2024 Grand Committee

Moved by

[Lord Hunt of Kings Heath]

That the Grand Committee do consider the Carbon Dioxide Transport and Storage (Determination of Turnover for Penalties) Regulations 2024.

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

My Lords, these regulations, which were laid before the House on 30 July, are technical but, we believe, necessary. They are part of the implementation of the economic regulation framework for carbon dioxide transport and storage established in the Energy Act 2023.

I do not need to repeat what I said earlier about the potential of CCUS, but one of the key points here is the potentially monopolistic characteristics of carbon dioxide pipeline transportation and storage infrastructure. A framework of economic licensing and regulation is necessary to prevent anti-competitive behaviours by infrastructure operators and ensure protections for users and consumers.

Under this framework, an operator of a carbon dioxide transport and storage network requires a licence that permits charging users of the network a fee for delivering and operating the network. The licence will determine the “allowed revenue” for a transport and storage operator, reflecting its efficient costs and a reasonable return on its capital investment. The economic regulator, Ofgem, will oversee charges and determine whether costs can be passed on to users in accordance with the agreed economic framework.

To ensure that the economic regulation framework operates as intended, Ofgem has enforcement powers to ensure compliance with licence conditions and provide appropriate redress for any regulatory breaches. Such redress includes the ability for Ofgem to impose financial penalties on licence holders for contraventions of the licence, up to a maximum amount of 10% of company turnover. That the maximum amount of penalty cannot exceed 10% of company turnover is established in the primary legislation; the regulations that we are discussing today specify how a company’s turnover is to be determined for the purpose of calculating the maximum amount of penalty that could be imposed.

The amount of financial penalty imposed will not automatically be set at the maximum; the maximum penalty of 10% of turnover is a cap, not a target. Any penalty imposed should be reasonable and appropriate, considering all the circumstances of the case. The regulations before us today set out that turnover is to be calculated based on the revenue from the company’s ordinary activities, excluding trade discounts, VAT and other taxes. This includes revenue from goods and services provided by the company, whether authorised by the licence or not.

The turnover is usually based on the company’s revenue for the business year preceding the date of notice of the penalty. However, if the business year is not 12 months long, the turnover is adjusted proportionally. This is consistent with general accounting practices. Any financial assistance from public bodies or publicly owned companies that is directly linked to the company’s ordinary activities, or is provided under a carbon dioxide transport and storage revenue support contract, is included in the turnover calculation.

Ofgem is required by the primary legislation to prepare and publish a statement of policy outlining its policy and approach to enforcement and penalties in the carbon dioxide transport and storage sector. This statement of policy should include the factors and circumstances considered in decisions on whether to impose a financial penalty and in determining the amount of any financial penalty. Ofgem has consulted on documents explaining how it will conduct its enforcement activities and issue penalties in its role as the economic regulator of the CCUS sector. The consultation closed in early July; Ofgem has now considered and published its response.

To conclude, these regulations are technical but necessary, providing clarity on what is meant by “turnover” when determining the maximum amount of a financial penalty that can be imposed by Ofgem. We see these regulations as an essential part of the economic regulation framework for carbon dioxide transport and storage, designed to overcome market barriers to deploying CCUS infrastructure in the UK and achieving net zero while protecting the interests of users and consumers of this infrastructure. I beg to move.

[The Earl of Effingham (Con)]

My Lords, these regulations are made using the powers created in the Energy Act 2023. They form part of the implementation of the economic regulation framework for CO₂ transport and storage involved with carbon capture, usage and storage—CCUS—which we have just debated.

This measure will introduce a framework of economic licensing and regulation to prevent anti-competitive behaviour and to avoid the potential monopolistic characteristics of CO₂ pipelines. Operators of carbon dioxide transport and storage networks will operate with licences that allow them to charge gas plants for using their CCUS services. This licence will determine the revenue that the CO₂ transport and storage operators can receive. Ofgem will oversee the charges and determine whether the costs can be passed on to users.

As we have heard, Ofgem will have the power to address any regulatory breaches with a financial penalty of up to 10% of company turnover. However, it will not automatically be set that high; the 10% is a cap, not a target, and Ofgem will have to publish a statement of policy to explain any penalties.

His Majesty’s Official Opposition support this regulation. I will use the words of my colleague in the other place, as he put it so well:

“The regulations address a technical point arising from the Energy Act 2023 and follow on from the ambitions of the previous Government. This is a necessary measure to clarify the technical detail of how big the maximum fine can be, and we are 100% behind it”.—[Official Report, Commons, Fourth Delegated Legislation Committee, 9/10/24; col. 4.]

[Lord Hunt of Kings Heath (Lab)]

I am very grateful to the noble Earl. I emphasise two points. First, the 10% is a cap, not a target, as he rightly said. Secondly, Ofgem has now published its statement of policy, so we have the clarity that industry needs. Having said that, I am most grateful to him for his support. I beg to move.

Motion agreed.

EV Strategy: (ECC Committee Report)

Lord Hunt of Kings Heath Excerpts

Wednesday 16th October 2024 Lords Chamber

[Lord Fuller (Con)]

My Lords, this is an important debate at a pivotal moment for the personal mobility that underpins our economy and growth. The report explains in great detail that the choice of an electric vehicle affords much greater driving pleasure, greater acceleration, lower maintenance costs for home chargers, competitive daily charges and, thanks to direct-drive motors, the consignment of the grinding of gears to the history books—but if only this mode shift were that simple.

The market for EVs was already stuttering when the report was published in February. Since then, there have been further dramatic changes, as the growth as a proportion of the whole market has stagnated. We are literally at a fork in the road for electric vehicles. The report highlights a number of things that must be done for us to get back on track.

Before I talk about the rollout of chargers, I thank my noble friend Lord Leicester for his comprehensive list of electric vehicles that are made in this country. He missed out one that is close to home for us both, in Norfolk, because Lotus Cars is shortly to be manufacturing its Type 135 in our great county.

To return to the provision of charging infrastructure, the report makes it clear that it is much easier for the market to provide charging points along the motorways and main roads, while there are few incentives on the B roads and in out-of-the-way places. As a council leader back in 2018, I recognised that it was really important for the council to take a lead in the provision of this public infrastructure. Our approach was grounded in the understanding that not every motorist has a long gravel drive; many live in flats or terraced homes, and simply do not have anywhere to park outside their home—a point that other noble Lords have made. Our council understood that we would never get the wide uptake of EVs unless we democratised the opportunity for anybody to charge a vehicle close by, so we invested in the fat cables in our car parks to serve the first generation of fast chargers, with better app support. We have now extended the number of installations in our leisure centres and other public buildings with a second generation, taking advantage of government funding and adding our own resources to decarbonise.

However, we still needed to drive forward, having done our bit to begin with. Two years ago, we made a big offer to each of the 120 town and parish councils in our district. We would procure, install, maintain and manage an electric charging point in the grounds of their village hall or bowls club car park; all they needed to do was find that space. We would hook it up to the mains, and the app would ensure that any electricity consumed by chargers would be refunded, with a margin for themselves.

A third of our population lives in rural villages, and we wanted all residents and their visitors to be able to charge, especially as we had lost so many rural petrol stations. We would provide a real choice of mobility technologies for everybody in the countryside—and, of course, by putting the capital costs of these chargers on to the local council tax payer, those amortisation costs would then not fall in a surcharge on the pence per kilowatt hour on the public charges, which the noble Baroness, Lady Parminter, and the report have enumerated. We did not want to discriminate against those who could not charge at home.

These parish councils are valued partners and make an enormously positive contribution to our national life, but, two years on, I regret to say that only a single installation has been made under our offer to the villages. Although there are a few in the pipeline, our offer ran flat. Yes, the market will provide on the highway and, yes, urban authorities can upgrade their lamp-posts, but we can and must do more in the countryside.

I want to relay some of the reasons why our parish councils did not take up our offer. Some parishes simply assumed that there was not enough electricity, notwithstanding that we were going to have a survey as part of the offer. The offer was rejected on the basis of hearsay, rather than evidence. Some market towns felt that taking a lead locally and installing charging points was a service—a service that, on principle, they did not seek to provide. Others felt that they were not going to get used, so why bother? A few cited the lack of mobile coverage in the countryside as an issue; unless you have a mobile connection, you cannot connect to the app and download the code, and so the electric charger would not work—but that is of course notwithstanding that most village halls in most parish councils now have wifi.

There were cases where the parish council wanted to learn more but could not persuade the village hall committee to get on board. Some were just simply unrealistic. Sometimes in rural areas there is just not the oomph in the network to provide the sort of rapid charging found at a service station. They were rejected on that basis, and therein lies a real case of the excellent being an enemy of the simply satisfactory. Finally, and notably, most local councillors just did not want people hanging around the village hall. I was disappointed. There was a pocketful of excuses.

I tell these disappointing stories because they are part of my real-life experience, and if there is to be a plan for more electric cars, we will need a national strategy that takes some of these concerns into account. As the SMMT has observed to me, just making the plan is worthless unless the market participants can look beyond defeatism or prejudice. Having a plan is one thing but delivering it is another. Only when we have leadership across the whole of the public sector—that includes some of our 9,000 parish councils, as well as principal authorities—will we get universal, not just urban-based, coverage.

It is important to make progress quickly because, unless we start to address some of these headwinds, we will never get progress. I was pleased that the report makes it clear that home-based charging is nearly always cheaper, but home-based charging is just one of the costs. It has become clear to me, especially since February, when the report was written, that, leaving the simple energy cost per mile to one side, the total cost of EVs is now rising fast, and is making the internal combustion engine even more competitive once again.

Although electric cars are now subsidised by manufacturers, as the noble Lord, Lord Woodley, said, the upfront purchase costs are still more expensive—especially when taking into account the interest payments, which are not the same as when interest rates were 0.5%. There are also insurance costs: a function of providing a like-for-like replacement, plus some astonishingly risk-averse repair quotations for minor prangs in the car park that see write-offs, are now driving premiums to eye-watering levels. Depreciation is ruinous. It has destabilised the motor traders, who have been trying to catch a falling knife on the impaired value of their stock. The private motorist, as we have heard, is at a serious disadvantage to the corporate purchaser, with no tax incentives or opportunities for salary sacrifice and other things. Of course, battery range is not what it was thought to be—my noble friend made that point so clearly.

I will not dwell further on the 20% versus 5% VAT level, but it is discriminating against people who live in flats and do not have the long gravel drive or large diesel 4x4 to fall back on. We know from the SMMT that the fiscal drag is bringing electric cars into the luxury super-charged tax rate, at another £500 per year. Who would buy such a car with their own money? The costs, over and above the mileage costs, are running away.

We hear now that road charges have been mooted. I can understand why the noble Lord, Lord Whitty, mentioned this, because it is a truth that we will have to grip. Not only is the total cost of ownership of electric versus combustion becoming much more significant but, if we then end up with road pricing, it will be the nail in the coffin. It would dramatically increase the cost of running an electric car.

I am not going to dwell further on the increasing proportion of electric vehicles against internal combustion engines in sales, but the policy is destabilising UK motor dealers, and undermining European and domestic manufacturers, by encouraging a flood of Chinese imports of uncertain quality and with concerns over embedded IT. This well-intentioned regulation is undermining our economic stability and electronic security, delegating production and wealth creation to parts of the world with lower environmental standards. Given the importance of cars to the global economy, we cannot ignore this global context. We must approach EVs and our policies as part of economic security, which in turn is part of our national security.

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

My Lords, there has been a bit of chuntering so I should explain that the Clock was wrong; the noble Lord has not taken more than 15 minutes.

[Lord Fuller (Con)]

I thank the noble Lord, Lord Hunt. I noticed that it was showing eight minutes when I started, so I think I have some more time.

I was talking about the role of electric vehicles and our treatment, in trade and tariffs, of our economic and national security. A dilemma is around the corner. After the US elections, will we follow the Canadians with a 100% tariff on Chinese EVs, or will we pursue a more EU-aligned strategy that combines a less aggressive tariff approach with tighter regulation—but at the risk of hobbling UK production? Informed commentators know that the upcoming UK policy choices on such matters as tariffs and trade are being watched closely in Beijing and Washington, as well as by our new friends in Brussels, who are the subject of a renewed charm offensive from London.

Whether it is America, China or Europe, the trade treatment of EVs here in the UK will set the tone for global trade negotiations in a much more complicated trading environment in an unstable world. One thing is for sure, though: if we side with our allies on protectionist tariffs, this will drive up the costs of UK electric vehicles still further, which will increasingly aggravate the move to electric. But if we side with China, this could kill off our industry anyway and leave us reliant on imports for ever. These are big dilemmas.

There is nothing more democratic than the freedom to get about. This report has made an important contribution to this important market at a single point in time, but it is a fast-moving target. I wish the noble Lord, Lord Hunt, well in navigating this complex macroeconomic, security and environmental situation. My view is that the fiscal approach, our environmental regulations and government policy targets need to be urgently tweaked—not done away with—to ensure that customer preference for electric vehicles is maintained, not further undermined with our economy damaged. This is not a market that can afford to go into reverse but, unless there is a change in tone, gears will continue to grind. Let us hope the engine does not seize up completely.

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a great pleasure to respond to what has been an excellent debate. I thank the noble Baroness, Lady Parminter, for her opening speech and the many members of the Select Committee, and other noble Lords, who have spoken today. I very much agree with the tributes paid by the noble Baroness, Lady Randerson, and the noble Earl, Lord Effingham, to the noble Baroness, Lady Parminter. Her opening speech without notes was a remarkable effort that set the tone of the debate.

She outlined the main themes in the Select Committee report, which were clearly built on in the debate. She spoke of this being a critical challenge for the Government and the need for the Government to take a lead. Her committee said that the transition to electric vehicles was “essential” if the UK is to meet its net-zero emissions target by 2050. Her report said that EVs could provide “dramatic reductions” in emissions, in addition to improved air quality, but that “concerted Government action” is required.

In the debate, we heard about a number of the key measures. I think that there is a pretty broad consensus among noble Lords about what needs to happen, including the issues around upfront costs, charging infrastructure and affordability, and the grid and planning regulations. VAT and the vehicle excise duty were also raised, which I am afraid I will completely duck and say are a Treasury matter, although I have noted noble Lords’ comments on them.

The committee and the noble Lord, Lord Birt, said that, to ensure the transition to EVs, it was necessary to decarbonise the electricity used for charging. The report—as well as the noble Lords, Lord Lucas and Lord Grantchester, and the noble Earl, Lord Leicester—also said that we need to review urgently progress on EV and battery recycling facilities.

An important matter that a number of noble Lords raised, including the noble Baroness, Lady Randerson, as well as the committee, is that consumer confidence is critical to secure a successful transition and that the Government need to do more to convey a positive vision of EVs and to counter misinformation about the technology. Of course, there are many other things in the Select Committee report as well.

I was very interested in the noble Earl’s comments about what he thought the Government should be doing. He went through a list of actions taken by the last Government, which I readily acknowledge. However, he rather glossed over what the Select Committee had to say when it was particularly critical of the September 2023 speech by the former Prime Minister, Rishi Sunak, in which he pushed back the petrol and diesel phase-out date from 2030 to 2035. The noble Earl had a go at defending that, presenting it as a positive asset in terms of consumer choice. However, I think—and the evidence is here in this debate today— that it had a dampening effect on industry and consumer confidence. That is a reflection of the fact that Mr Sunak told the public that achieving

“net zero is going to be hard”.

He had emphasised the costs of EVs while failing to stress the benefits. So, coming back to the issue of growing confidence, this is clearly a role I believe government has to take, and it is one that we readily accept.

There was a very interesting discussion about costs and subsidy. The noble Lord, Lord Lilley, was articulate as ever in relation to that matter. He has a debate in a week’s time looking at the whole relationship between what we seek to do in terms of energy net zero and the cost of it, and of course his speech during the King’s Speech debate reflected his views on that.

The noble Lord, Lord Lucas, also raised the issue of costs. Of course, costs and subsidies are involved, and the Department for Transport is engaged in discussions with our friends in the Treasury on Budget and spending review decisions. I recognise that noble Lords have asked me to give precise dates about when announcements will be made and how policies will be taken forward. The fact is that I cannot say, because many of these are bound up in the current spending discussions. However, I can say that I have noted the issues that have been raised today, as will the Department for Transport, and they will of course be considered by the department in taking these matters forward.

Costs and subsidies are involved; equally, my noble friend Lady Young made the very important point that the cost of not taking action also has to be taken into account in terms of the impact of climate change. As the noble Baroness, Lady Jones, said, that is not some distant threat but is with us now, and we are seeing the consequences.

I also agreed with the noble Baroness, Lady Jones, on the question of decarbonising our energy network. That is why it is one of the five key missions of the Government. I know that noble Lords have asked me to set out how we will get there, first to clean power 2030 and then to net zero. We have asked NESO, the new body, to provide us with advice on the precise path to 2030.

I accept that the noble Baroness, Lady Jones, also mentioned the need for a coherent approach across government. In a sense, I hope that the fact that I am here at the Dispatch Box responding to this issue is a reflection of that. However, I acknowledge, as my noble friend Lord Whitty said, that the policy lead for electric vehicles rests with the Department for Transport.

I was disappointed that the noble Baroness, Lady Parminter, said that the Government had not made sufficient progress since the election. That has not been for want of lack of energy, emphasis and importance. Of course it is very important but, as I said, so much of this is tied into spending review and budgetary issues, and it is difficult for me to give the kind of responses she seeks. However, I can say that the Government see this as being a very important policy area, and we look forward to making a series of announcements in the next few months when we are clearer about the financial situation and the other issues that we need to take forward.

I turn to the manifesto commitment, which is clear. We said that we would support the transition to electric vehicles by accelerating the rollout of charge points and giving certainty to manufacturers by restoring the phase-out date of 2030 for new cars with internal combustion engines. I say to the noble Earl, Lord Effingham, that we are of course actively engaging with the industry on these matters. We are also supporting buyers of second-hand electric cars by standardising the information supplied on the condition of batteries.

I say to my noble friend Lord Grantchester that it is our firm intention to phase out the sale of new cars powered solely by internal combustion engine by 2030. All new cars and vans will need to be zero-emission by 2035. I say to my noble friends Lady Young and Lord Birt that we do believe that this is doable. We are not being spooked by the adverse comments we occasionally see in the media.

As noble Lords know, the zero-emission vehicle mandate will increase from 22% this year to 80% in 2030, while that for vans will rise from 10% this year to 70% in 2030. As the noble Earl, Lord Effingham, said, following extensive consultation with vehicle manufacturers, a number of flexibilities were built into the ZEV mandate which vehicle manufacturers can use to be compliant with the legislation. These include reducing the CO₂ of non-ZEVs to earn additional ZEV credits, borrowing from future years and trading with other manufacturers. We think the targets are within reach.

We then come to the matter of cost, which a number of noble Lords, including the noble Baroness and the noble Earl, Lord Effingham, raised. I know from looking at the media reporting on electric vehicles in the last few months that there is a sense that production and the whole policy have stalled, but it is worth pointing out that the number of electric vehicles sold in the UK continues to rise. So far, 270,000 battery electric cars have been sold this year, 13% higher than last year. The September figure is particularly encouraging; one hopes—I certainly do— that it is a sign that consumers and the industry now have greater confidence in our making progress on the targets we have set, and that this will be the start of an acceleration in interest in and the purchase of electric vehicles.

On the used car market, there is some evidence that electric cars are now priced similarly to their petrol and diesel equivalents. Obviously, this provides a more affordable route for drivers to purchase an EV; none the less, I accept that cost is a key barrier to EV uptake. We know that, in the end, everyone should benefit from the transition to EVs and the cheaper running costs that can occur, but the Government are going to continue to review demand incentives to make sure that we strike the right balance between value for money for the taxpayer and support for the transition to electric vehicles. So, this is very much a work in progress.

It is the same answer, really, in relation to charging infrastructure and costs. We know that to give the public confidence in making the switch to electric vehicles, they must be confident in their ability to charge those vehicles. The noble Earl illustrated the point very well indeed.

I take on board the comments made by the noble Lord, Lord Fuller, about the democratisation of charging —as he described it—the potential contribution of parish councils, the lack of uptake and the issue of rurality, which I will make sure the department gives full consideration to, as I recognise that this is very important. He talked about parish councils, but we know that the performance of local authorities generally is patchy. In souping-up the policy going forward, we must look at how we can encourage local authorities, including parish councils, to take up the charge rather more enthusiastically.

Obviously, charging at home works for many people. One of the benefits of the election was campaigning, during which we knocked on doors and talked to people who had home chargers. My perception was that people who have them are very happy with them, but clearly it cannot be for everyone. Noble Lords have raised a number of problems for those people who do not have access, as well as the issue of renters. Clearly, we need to reflect on what we can do to improve the situation. Public charging provision has increased by 42% since last year, and the noble Earl referred to that as well. We need to look at what we can do to encourage ever-more increase in the charge point provision.

I take note of the well-made point from the noble Lord, Lord Birt, on service stations and rapid charging points. My understanding is that we now have 960 open access rapid and ultra-rapid charge points at motorway service areas, with many more on or close to our key A roads. The rapid charging fund is piloting and funding a portion of the cost of upgrading the electricity grid at motorway service areas where it is currently not commercially viable. We are looking at applications for the fund pilot at the moment and will be coming forward with further information in due course—to use the phrase beloved of government departments.

The noble Lord, Lord Birt, referred generally to the need for a reliable charging network. The Public Charge Point Regulations were introduced in November last year, meaning, in effect, that charge point operators will be required to offer 24/7 access to a free helpline, share open data, increase the provision of contactless payment options and be 99% reliable across each rapid charging network. We are definitely not complacent on this; we know that more needs to be done. We also recognise the importance of what the right reverend Prelate the Bishop of Oxford said very well in relation to fairness.

The noble Lords, Lord Whitty and Lord Lilley, mentioned road pricing. I must say from the Dispatch Box that there are no current plans to introduce a system of national road pricing. However, we recognise that motoring tax revenues in general need to keep pace with the changes that are being brought about by the switch to EVs, while keeping the transition affordable for consumers.

A number of noble Lords made important points about manufacturing, recycling and the battery supply chain. I have listened to those very carefully indeed. To the noble Lord, Lord Lucas, and the noble Earl, Lord Effingham, I can say that we are going to work closely with investors, via the automotive transformation fund, to build a globally competitive EV and battery supply chain in the UK.

I ought to turn to the issue of communication, because this is such an important area. A number of noble Lords—the noble Lords, Lord Lucas and Lord Whitty, the right reverend Prelate and my noble friend Lady Young—particularly raised the problem of misinformation about electric vehicles. This is something we need to be concerned about and not be complacent. I recognise that we as the Government have a clear duty and responsibility in terms of giving clear information to consumers on the benefits and use of electric vehicles. We need to work closely with industry in terms of correcting this misleading coverage and delivering factual communications to consumers on the many benefits that electric vehicles provide. We are already taking proactive action to counter inaccurate information presented by the media on the subject of EVs when this arises. Today’s debate has reinforced my view of the importance of doing this and I know that my colleagues in the Department for Transport will be listening very carefully to what has been said in relation to the role of government here.

To summarise the Government’s view, we welcome this report. I know that it was published in February and here we are in October, but none the less I can reassure members of the Select Committee that the report has informed, and is informing, the Government’s policy now about the way we need to go forward. I have said already that there are a lot of areas where I cannot give precise answers in terms of what we will do and what the dates are, because it is very much dependent on the spending review and budgetary discussions. Let us be frank: the public finances are particularly challenging and I will not hesitate to remind the party opposite of the public expenditure hole that they left us in. Clearly, that is a factor as well. But this is an important policy area; electric vehicles play a major role in the journey towards net zero and we know that it is important that we come back with some of the answers to the questions noble Lords have raised today.

In conclusion, I again thank the Select Committee and its chair for the extraordinary, valuable piece of work that they have done.

King’s Speech

Lord Hunt of Kings Heath Excerpts

Thursday 18th July 2024 Lords Chamber

[Lord Reid of Cardowan]

That an humble Address be presented to His Majesty as follows:

“Most Gracious Sovereign—We, Your Majesty’s most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament”.

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

My Lords, it is a great honour for me to open our six-day debate on the gracious Speech. I start by thanking my predecessor at the Department for Energy Security and Net Zero, the noble Lord, Lord Callanan, for his contribution to the department and his considerable efforts to keep noble Lords informed and debate vigorously with them. I also very much welcome the noble Lord, Lord Fuller, who is making his maiden speech during our debate. I am sure that it will be the first of many important contributions.

Since I was last a Minister in what was the Department of Energy and Climate Change, 14 years have passed. While the office still looks familiar—and the Secretary of State is certainly familiar—the challenges we face are undoubtedly more profound. The vulnerabilities in our energy system have been laid bare by Putin’s invasion of Ukraine and his weaponisation of international fossil fuel markets. Families are still in a cost of living crisis, exacerbated by energy bills that remain high. There is also a deep and urgent demand for good jobs, good houses and good economic opportunities across the UK, particularly in former industrial heartlands, which feel like they have been left behind in recent years. All the while, the climate crisis is no longer a future threat: it is happening right now, all around us. We are seeing the effect of warming in droughts, wildfires and floods across the world, and feeling it in extreme temperatures, with June this year the 13th consecutive month to set a record global high.

As was set out in the gracious Speech, the Government are on a mission to address these challenges. At the heart of that mission is the plan to make Britain a clean energy superpower. If we want to wean ourselves off our dependence on fossil fuels and become more energy secure, we need clean energy. If we want to tackle the cost of living crisis and make sure that British people feel better off, we need to harness our domestic potential for cheap clean energy. If we want skilled jobs with good wages, bringing a new wave of prosperity to every corner of the country, we need an industrial strategy focused on clean energy. If we want to halt climate change and protect our planet, we need clean energy.

Instead of having to choose between security, sustainability and affordability—what is known as the energy trilemma—we have an extraordinary opportunity to boost all three by investing in clean energy at speed and scale. That is why the Government are focused on achieving clean electricity by 2030, with a system based on renewables and nuclear power, and then building on that momentum to achieve the ultimate goal of net zero by 2050, which means we will then be no longer adding to the total amount of greenhouse gases in the atmosphere, and therefore no longer contributing to climate change.

The Great British Energy Bill, put forward in the gracious Speech, will establish a publicly owned company to spearhead our mission to become a clean energy superpower. Headquartered in Scotland, Great British Energy will encourage, own and develop clean energy projects of all sizes across the country. It is highly unlikely that the scale and pace of investment required to decarbonise the electricity system could be achieved by the private sector alone within the current institutional and policy framework. This new public energy company, alongside additional electricity market reforms, can provide the spark we need, supporting and encouraging private investment. Working in conjunction with industry, Great British Energy will help substantially expand our renewable capacity by the end of this decade.

The Bill will establish GBE, which will develop, own and operate assets, investing in partnership with the private sector, and will have a capitalisation of £8.3 billion of new money over the lifetime of this Parliament. Through these investments, GBE will take a stake for the British people in projects and supply chains that accelerate technologies for the future, reaping benefits at home in cheap clean power and securing Britain at the front of the global race for technology, which has such major global export potential.

GBE will also facilitate, encourage and participate in the production, distribution, storage and supply of clean energy, and the reduction of greenhouse gas emissions from energy produced by fossil fuels, as well as measures for furthering the transition to clean energy and improving energy efficiency. The Bill gives the Secretary of State the ability to provide GBE with the financial backing needed to meet its aims and ambitions. The Secretary of State will be required under the Bill to prepare a strategic priority statement for GBE, to ensure it focuses its effort on government priorities. GBE will also, of course, accelerate ground-breaking new developments, with public investment helping to crowd in investment from the private sector and supporting the development of municipal and community energy.

Renewables are not only greener but the fastest to deploy, cheapest to build and operate, and more secure. A renewables-led system is the cheapest foundation for a decarbonised grid. It also gives us energy security, because renewables are not sold on markets controlled by foreign powers. By accelerating the clean energy transition, GBE will not just put us firmly on track for net zero but will boost our energy security and create those skilled jobs we need. Further, it will ensure that electricity bills are no longer exposed to the kinds of gas price shocks that helped to drive increases in the electricity price cap of over £1,300 for a typical household during winter 2022-23.

GBE will work alongside our new mission control centre, which is exactly what it sounds like—a strategic hub in government that will set out the path, and monitor and drive our progress, to reaching clean power by 2030. It will draw upon the unique expertise of industry leaders, in a format unprecedented in government, bringing together the best possible people to shape how we achieve decarbonised electricity. I share the Secretary of State’s delight in having such a credible expert at the helm in Chris Stark, the former chief executive of the Climate Change Committee.

If anyone needed proof of the pace at which this Government are willing to move, they need look only at the lifting of the onshore wind ban, after just 72 hours. Onshore wind accounts for roughly a quarter of all electricity generated from renewables. We already have a strong pipeline of projects in the planning system, but planning and grid constraints in England and Wales mean we have seen little investment in onshore wind outside Scotland in recent years. We have removed the de facto ban in England by deleting onshore wind- specific planning tests that have been in the National Planning Policy Framework for almost a decade. What this essentially does is place onshore wind on the same footing as other energy developments.

We are very eager for communities to benefit from hosting local renewable energy infrastructure, which is why we will soon publish an update to the community benefits protocol for onshore wind in England.

We are building on the strategic spatial energy plan, which is being developed by the National Energy System Operator. This is about speeding up the rollout of clean power, giving more certainty to the planning and consenting process, and seeking to expand the use of spatial planning to other infrastructure sectors.

Work is under way on a host of other vital reforms, including energy system reform to ensure that our regulator can hold companies to account for wrongdoing, and the warm homes plan, which will offer grants and low-interest loans to support insulation, as well as the installation of solar panels, batteries and low-carbon heating. We will seek to extend the lifetime of existing nuclear power plants while supporting the completion of new sites, such as Sizewell C.

The Chancellor has already committed to a national wealth fund to drive investment in the industries of the future and create thousands of jobs in clean energy. This new national wealth fund task force will be led by the people who know best, including the former Bank of England Governor Mark Carney, the CEO of Barclays Bank, and Aviva CEO, Dame Amanda Blanc.

I turn to the environment. At the heart of our net zero plans is, of course, a determination to protect our natural environment for generations to come. For too long our natural world has been destroyed, and our farmers and rural communities neglected. Action is needed to urgently reverse this damage and bring about lasting and positive results.

It is surely a national shame that there are record levels of sewage in our rivers, lakes and seas. Cleaning this up is a priority that can no longer be ignored. That is why we are bringing forward legislation this Session that will take the first important step towards substantial reform in the waste sector. We want to hold water companies to account, putting them under special measures through strengthened regulation, but there is much more that has to happen if we are to support economic growth and minimise environmental harm.

We are committed to creating a circular economy that uses our resources in a more environmentally, economically and socially sustainable way, creating a road map that will finally move Britain to a zero-waste economy. We recognise that food security is critical to our national security, so will be working hard to support our farmers and rural communities, and will do more to protect communities from the devastating damage that flooding causes.

We should surely be proud of our country’s remarkable natural beauty, but the fact is that we are currently one of the most nature-depleted countries in the world. So we will take action to meet the targets set out in the Environment Act and work in partnership with communities to restore and protect nature.

Another central pillar of the Government’s agenda for change is housing. A safe, secure, affordable home is the foundation of a good life, but we know that for too many people it is increasingly out of reach. In hostels throughout the country, there are children in temporary accommodation. Couples are stuck living with parents, unable to move out and start a family, and millions of lives are put on hold because of the failure to address our housing emergency. This is holding us all back because new homes do not just provide families with security to make plans and get on but help create well-paid jobs, attract investment into local infrastructure and spark the economic growth that Britain desperately needs.

As some of the biggest contributors to our carbon emissions, homes also hold the key to a greener, cleaner future that brings down people’s bills while doing our best for the planet. That is why we have made it a mission to get Britain building again with 1.5 million new homes across the country, including the biggest wave of affordable, social and council homes for a generation. These new homes will be energy efficient, with proper insulation to bring down bills. To achieve this, the Government are reintroducing local housing targets, reforming the National Planning Policy Framework, kick-starting the next generation of new towns and creating a new task force to accelerate stalled housing projects, including hiring 300 more planning officers. In doing this, we will focus on nature-friendly planning, starting with the development of poor-quality grey-belt land—disused wasteland—and prioritising building on brownfield sites. We also need to address the real reasons that many people oppose homes being built in their neighbourhood, so we will make sure that more homes also means more doctors, more schools and better transport.

Government is often about making difficult decisions, and it can sometimes feel like a Catch-22 situation where every positive choice seems to involve some sort of push-back. The energy crisis is not a Catch-22. Nor is the need to protect our natural environment, nor the demand for good-quality housing. In all those areas we have an extraordinary opportunity at this time. By investing in clean energy, protecting our environment and building hundreds of thousands of good-quality homes, we can make ordinary working people better off and build a more secure and prosperous future for all. I beg to move.

--- Later in debate ---

[Earl Attlee (Con)]

My Lords, I intend to be brief. I congratulate my noble friend Lord Fuller on his maiden speech.

I am grateful to the noble Lord, Lord Hunt of Kings Heath, for introducing the debate. We have sparred for many years, and I know how much he enjoys my supplementary question technique. His speech was slightly disappointing: he expressed no sentiments that I disagreed with.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I will try to do better in the future.

[Earl Attlee (Con)]

I am full of optimism for this Parliament and strongly support the proposed planning reforms, including for offshore wind, and I agree with everything that was said by the noble Lord, Lord Rooker. I just worry that the Government’s proposals will not go far enough, though I think they will unlock development. I assure the Government that I will do nothing to impede these reforms. I have already checked my diary; I have business meetings on every conceivable day that we will be voting against these proposals. We have allowed the population of the United Kingdom to grow significantly. If we increase the population, it is inevitable that we must bring more land into development, not just for housing but for employment. The noble Lord, Lord Rooker, explained why this is not a problem.

I see far too many businesses operating in units that are too small, badly organised and inefficiently laid out, and with no space for new and more modern machinery. This results in them having to send goods to another factory, using transport and emissions, in order to carry out a further process. We need to improve the supply of industrial premises. I hope that some of the Government’s planning reforms will make that easier. A few years ago, I wanted to buy a small industrial unit near home, near Portsmouth. I gave up. I could not buy a small industrial unit—there were none.

The noble Lord, Lord Hunt, talked about GB Energy. I know that private funding will be leveraged in, but I wonder whether the amount of money he is talking about is going to be enough to make a difference.

My noble friends Lady Moyo and Lord Lilley talked about the increase in electricity demand. There is demand from data centres but also for charging heavy goods vehicles, which uses a huge amount of electricity. Problems are arising with the movement of new heavy electrical equipment. Some of these high-voltage DC transformers that enable electricity to be transmitted long distances weigh 200 to 300 tonnes. There are serious and complex technical and regulatory problems, and several government departments are involved. I am doing what I can to help, and will be engaging with Ministers and officials. I am the subject matter expert and I am not convinced that a layman working from a brief will be able to perform the same function that I do, but no one else in Parliament has the knowledge. Once I am ejected from your Lordships’ House, who will look after this industrial problem?

Finally, I support onshore wind turbines. Of course there are adverse effects, but carbon reduction surely is a priority. I am afraid that I am not convinced by the arguments laid out by my noble friend Lady McIntosh.