Manufacturing Post Brexit

Lord McNicol of West Kilbride Excerpts

Thursday 26th January 2023 Lords Chamber

Asked by

[Lord McNicol of West Kilbride]

To ask His Majesty’s Government what plans they have to support manufacturing in the United Kingdom following the UK’s departure from the European Union.

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

My Lords, following the UK’s departure from the European Union, the Government are focused on transforming our industrial heartlands by attracting inward investment, future-proofing businesses and securing high-wage, high-skilled jobs. We continue to support manufacturing through programmes in strategically important subsectors such as aerospace, automotive and life sciences, and we have committed nearly £650 million to fund the High Value Manufacturing Catapult centres, and nearly £200 million to the Made Smarter programme.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for his Answer. Trade exports with the EU are down 15% since Brexit; paperwork and delivery times are up, while regulatory divergence, which was heralded as one of the key Brexit benefits, has so far been very limited. As divergence increases, manufacturers see only additional cost, extra paperwork and further disruptions. What further steps is the Minister’s department taking to support UK manufacturers, their employees and their supply chains to overcome the frustrations that they face on a daily basis? What does his department’s detailed cost-benefit analysis of further and future regulatory divergence show?

[Lord Callanan (Con)]

There are tremendous opportunities facing the UK following Brexit. We can have regulatory freedom in a number of areas where we were constrained by the EU. I do not want to cast doubt on the noble Lord’s figures, but manufacturing in the UK is doing well. According to Make UK, which is the largest UK manufacturing trade body, manufacturers are continuing to increase investment in the next 12 months, more than half of manufacturers plan to increase investment in both people and training within the next 12 months, and a further 57% are planning to increase investment in new product development. Manufacturing is doing well. We should not talk it down.

COP 27: Outcome

Lord McNicol of West Kilbride Excerpts

Tuesday 6th December 2022 Lords Chamber

Asked by

[Lord McNicol of West Kilbride]

To ask His Majesty’s Government what assessment they have made of the outcome of COP 27; and what plans they have to address the issues raised at the conference.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I make the House aware of my register of interests.

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

My Lords, COP 27 established a new fund for responding to loss and damage as part of other funding arrangements relevant for loss and damage. This is significant in supporting the most vulnerable. New pledges were also made to the Adaptation Fund totalling more than $230 million. However, we had to fight at COP 27 to keep 1.5 degrees alive. While we were disappointed not to make progress on fossil fuels, the deal does preserve the Glasgow climate pact.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for his Answer. I had the privilege of attending COP 27 with rewired.earth, a not-for-profit organisation. Like many, we were very concerned at the low level of agreement and ambition for the future. With the war in Ukraine, the energy crisis and the cost of living crisis, it is understandable but very worrying that there was not more emphasis on the net-zero approach. Global emissions remain at a record level and the world is on track for warming well in excess of 2 degrees. I believe Britain can be at the forefront of solving the problem. What mechanisms have the Government put in place to ensure joined-up, consistent policy-making between departments so that policies are aligned with and do not put in jeopardy our pull towards delivering on climate?

[Lord Callanan (Con)]

I agree with the noble Lord’s initial comments about COP. I think it is worth being a little optimistic, in that over 90% of world GDP is now covered by net-zero commitments and 169 countries have put forward new or updated 2030 NDCs. However, I entirely agree with him that there is a lot more progress still to be made. This Government are very proud of our record. We have the world-leading net-zero commitment in law and all government departments are working together to deliver that.

Employers: Fire and Rehire

Lord McNicol of West Kilbride Excerpts

Thursday 3rd November 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord has answered his own question. The position remains that we will bring forward an employment rights Bill when parliamentary time allows. I point out that the Government are supporting numerous Private Member’s Bills which have been introduced, particularly in the other place, such as the Neonatal Care (Leave and Pay) Bill, Employment (Allocation of Tips) Bill, Protection from Redundancy (Pregnancy and Family Leave) Bill and the Carer’s Leave Bill. Many of these provisions are being taken forward.

[Lord McNicol of West Kilbride (Lab)]

My Lords, everyone deserves to be treated with dignity and respect at work, even government Ministers. Being rehired on worse terms and conditions is just plain wrong. It has been over seven months since the Government announced the new statutory code on fire and rehire, which I think the TUC called baby steps that would not deal with rogue employers. Can I push the Minster a little more? He said, “in due course”, but can he give any more detail on the timescale for the start of the consultation? Regarding the last question from the noble Lord, Lord Fox, I do not think P&O carried out fire and rehire, but just fired staff.

[Lord Callanan (Con)]

I answered the question from the noble Lord, Lord Fox. I cannot be absolutely precise on a timescale with the noble Lord; he will understand that. But we want to bring it forward in the near future.

Energy Prices Bill

Lord McNicol of West Kilbride Excerpts

Committee stage
Monday 24th October 2022 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, many of the amendments in this group are sensible and could easily be accepted by the Government. We on these Benches will support Amendment 8 if the noble Lord, Lord Teverson, tests the opinion of the House. The Member’s explanatory statement is exactly as the noble Lord said, and it is a modest amendment:

“This new clause would require the Secretary of State to report”—


just to report—

“on the impact of energy efficiency programmes in reducing energy costs.”

It is modest indeed, and I am at a loss as to why His Majesty’s Government are not willing to accept it.

To quote from the government website:

“Improving the energy efficiency of UK buildings is the quickest way we can support families and businesses, to respond to rising energy prices.”


I am sure we all agree. It goes on:

“Improving the efficiency of our homes could reduce our heating bills by around 20% and reduce our dependency on foreign gas.”

Again, that is something I am sure we all agree with, so these amendments are in line with BEIS’s priorities and language.

As the noble Lord, Lord Foster of Bath, said, the UK has some of the least energy-efficient housing in Europe. According to my figures, 19 million homes are estimated to be below EPC band C. His figure was 15 million; I am sure he will forgive the 4 million. In excess of 10 million homes are worse than EPC band C. Under the Conservatives, home insulation rates have plummeted. In 2013, the then Government cut energy efficiency programmes, after which insulation rates fell by 92% in 2013. Further to that, new statistics show that home insulation dropped again by 62% in the second quarter of 2022 compared with the first quarter, with only 35,000 installations being recorded. The Resolution Foundation estimates that 9 million households are paying an extra £170 per year on their energy bills as a result of these failures. Since then, the Government have botched the green homes grant, which has yet to be adequately replaced.

These amendments would help with the bills people have to pay, and they would help the Government, the country and consumers. On top of this, Labour would give the devolved Administrations the power and resources to bring every home in their area up to EPC band C or higher within a decade.

The chief executive of E.ON, Michael Lewis, has pointed out that a sustained programme of energy efficiency could have reduced the amount of energy used in UK homes by 25%. That is the equivalent of six Hinkley Point C power stations. As we have heard throughout the debate on these amendments, the cheapest energy is the energy we do not use. A simple uprating of a home from EPC band D to band C would save the bill payer some £500 a year on the basis of April prices, so if it is put to the test we will support Amendment 8.

Energy Prices Bill

Lord McNicol of West Kilbride Excerpts

2nd reading
Wednesday 19th October 2022 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank all noble Lords who have participated in this Second Reading; there have been thoughtful and detailed interventions across the House. These Benches welcome the Bill and will support its passage. However, as raised by my noble friend Lord Lennie in his opening remarks, there are a number of issues we would like to see revised, revisited and resolved. I think the deadline for amendments is tomorrow evening, and we will be working with colleagues across the House to bring forward some detailed amendments which will improve the Bill, as your Lordships’ House always does. I will not repeat my noble friend Lord Lennie’s concerns about the Government’s wider conduct around bringing it here, but I repeat the concerns he and others have with the Bill itself. While it is welcome, it is certainly not perfect, and we truly believe it can be improved in a number of ways.

Families and businesses alike are feeling the hardest pressure as we enter the winter, and the Bill and the measures within it are therefore welcome. Reflecting on the measures themselves, there are a number of deficiencies when compared with the package that the Labour Front Bench in the other House initially proposed—a package, I note, that the Government get closer to day by day. Why not save us all a little bit of time and move to that now?

First, capping the unit price means that prices will still rise by £129, even when taking into account the £400 of support, and many households will pay a lot more than the typical £2,500 figure that the Government keep repeating. Ultimately, 10 million families will spend more than 10% of their income on energy.

Secondly, as we have heard from across the House, the one in six households that use off-grid energy sources for their heating will get little or no support, in stark contrast to the average £1,000 of support they would have got from Labour’s plan. The 4 million households with prepayment meters get no additional support, even though they use 60% of their energy over this period. These families will be spending these long, cold months unsure whether they will be able to keep their homes warm on a day-to-day basis.

Then there is how it will be paid for. Once again, I will not repeat too much of the contributions from my noble friend Lord Lennie and others, but it is clearly bizarre to avoid calling it a “windfall tax” for political reasons. I am not sure it matters what you call it—targeted interventions, periodic payments, an excess profits levy—because it sounds like a windfall tax and it acts like one.

More importantly, not prioritising cheap, homegrown, low-carbon power in favour of expensive, insecure fossil fuels is just not sensible, as we have heard. Onshore wind and solar are being treated as the whipping boy of the industry, shouldering an unfair proportion of the costs while other renewables are protected.

The Government have set out no detail on how the level of the cap will be decided, massively denting investor confidence. There needs to be clarity that the UK will not set a cap which puts us at a disadvantage against the EU equivalent and certainly not higher than the equivalent measures in the oil and gas sector. The windfall tax must be set at a level to contribute significantly to the price support for businesses and consumers—an eye-watering amount, as we heard from the noble Lord, Lord Teverson. The Government must end the absurd multibillion-pound loophole for oil and gas companies on reinvesting. Above all, it needs to be fair to consumers.

There is a vast range of powers contained in the Bill. The Delegated Powers and Regulatory Reform Committee, or DPRRC, has understandably not had enough time to look at all the powers in the Bill in detail, but it is disappointed by the decision to provide in Clauses 9, 11 and 22 powers that it finds inappropriate. Inappropriate: it does not come much clearer than that.

It said that the power in Clause 22 allowing the Secretary of State to give a direction to any energy licence holder or the Northern Ireland regulator needs to be fully explained, as the noble Lord, Lord Rogan, asked. Ministerial decisions need to be subject to parliamentary scrutiny and should be sunsetted commensurate with the other time limits in the Bill—five years is just too long.

The Minister said in his opening speech that the concerns expressed in the DPRRC report needed to be balanced with the needs of consumers benefiting from this Bill. He is right, but we on these Benches believe that there is a way through this that does not have a contradiction. We will bring forward amendments tomorrow which we will discuss on Monday in Committee and on Report.

The Minister will have received representations from industry. Many of its issues have been raised this afternoon. The noble Baroness, Lady Worthington, and others touched on them, but I will quote one:

“Our concerns are not linked to the substance of the policies outlined within the Bill but to the unprecedented and open-ended powers the Bill would confer upon the current and future BEIS Secretary of State without sufficient recourse to Parliament.”


With the changing political winds, you may ask why we on these Benches do not just keep quiet and let this go through. The reason is simple: we believe in parliamentary scrutiny and the benefits it brings to legislation and departmental and ministerial decisions. As the noble Baroness, Lady Worthington, the right reverend Prelate the Bishop of Manchester, my noble friends Lady Young of Old Scone and Lord Liddle, and others have asked, will the Government look again at these clauses?

Similar to the emergency legislation passed during Covid, this legislation gives the Secretary of State powers to extend provision on a rolling basis every six months at a time when investment in our own homegrown energy generation has never been more crucial to UK energy security. The unintended consequences of this Bill for investment could be far and wide-ranging.

We will of course look at all of these issues in more detail in the remaining stages on Monday, so I will finish off by briefly saying that the most important thing to come out of the Bill is not what is contained within it or the issues with those measures but the lack of a long-term plan that it signifies. The Bill’s solution to the problem of some renewable and nuclear electricity generators making windfall profits because of the way they price their electricity, where it was contracted under the renewable obligation arrangement and pegged towards expensive gas, is a short-term fix. There is no long-term solution in the Bill; or, as the noble Lord, Lord Teverson, said, there is no exit strategy. We would include powers to solve this problem in the long term by delinking the price of low-carbon power from that of gas for good. Unless the Government dramatically change course on their fundamental approach, we could face similar crises in the years ahead.

What we need is a sprint towards green energy—towards solar, wind, hydrogen and nuclear—and, as the noble Lord, Lord Foster, said, energy efficiency. I know that the Minister often talks about an energy mix, and again, he is right, but it is about prioritising those sources over oil and gas. Not pushing forward with these over the last 12 years has significantly raised bills and imports, and undermined our own energy security, contributing to the crisis we are facing today. We cannot let this be repeated. It is time for change.

Workforce: Trades Union Congress

Lord McNicol of West Kilbride Excerpts

Wednesday 19th October 2022 Lords Chamber

[Lord Callanan (Con)]

I am sure that the Prime Minister does not need my advice as to whether she wishes to meet the Trades Union Congress. The direct answer to my noble friend’s Question is that I have no information that a meeting is scheduled or not.

[Lord McNicol of West Kilbride (Lab)]

My Lords, Frances O’Grady, the TUC general secretary, will be a welcome addition to your Lordships’ House. Last year, when talking about supply chains and employment, she said:

“Ministers may scratch their heads about how to protect supply chains and fill vacancies. Well, here’s a novel idea. Invite unions in with employers. Get us around the table. And let’s make that industry deliver decent conditions, direct employment and a proper pay rise.”


Does the Minister share my view that this is an eminently sensible suggestion, and will he action it?

[Lord Callanan (Con)]

We are always looking for helpful suggestions to improve supply chains. In fact, Frances O’Grady was in a BEIS meeting with one of my ministerial colleagues in August. We remain open to constructive meetings with trade unions where it is required.

Energy Supplies

Lord McNicol of West Kilbride Excerpts

Wednesday 12th October 2022 Lords Chamber

[Lord Callanan (Con)]

I am happy to hear from the noble Baroness the great news that the Prime Minister agrees with me and has said the same thing, which is always good for a Minister to hear. However, the reality is that the issuing of hydraulic fracturing consents is a matter for BEIS and the Secretary of State for BEIS.

[Lord McNicol of West Kilbride (Lab)]

My Lords, as many speakers have alluded to, there is little evidence to suggest that fracking is the answer to the current energy crisis. However, reducing our collective energy demand would improve energy security and lower prices. Why was the Government-led campaign to encourage household energy savings scrapped?

[Lord Callanan (Con)]

If I can just correct the noble Lord: fracking is not the only answer; it is one of the potential answers to energy security. As I said earlier, we need a diverse range of supply. I remind the House that while we have our own domestic supplies of gas, we still import a considerable amount of very carbon-intensive LNG. If fracking gas—shale gas—can replace some of that, then that is a net carbon saving.

With regard to information, the Government will continue to promote all our energy efficiency schemes. We will continue to provide information to consumers on ways that energy can be saved and, more importantly, on how they can reduce their bills. There is one pre-eminent technology that everybody should do, which is to turn down the flow temperature of your condensing boiler: you will end up with the same temperature, the boiler will run much more efficiently, and you will save 8% to 10% on your gas bills.

North Sea Gas

Lord McNicol of West Kilbride Excerpts

Wednesday 7th September 2022 Lords Chamber

[Lord Callanan (Con)]

We have received proposals from Centrica, which we are closely examining at the moment. I point out that the market in 2017 was in a very different position. A number of independent reports were produced by experts at the time, supporting that decision from Centrica. However, the situation is very different now, which is why it is now looking at reopening it.

[Lord McNicol of West Kilbride (Lab)]

My Lords, following on from that answer, I welcome the Government’s approach to reopening the gas storage facility in the North Sea. However, as the Minister just touched on, questions persist with regard to the safety of Rough wells, and these concerns, as he mentioned, are shared by many, including energy consultants and safety experts. This raises real concerns over the safety of reopening without extensive remedial work. Can the Minister say what measures the Government are putting in place to ensure the safety of both the facility and the workers, to make sure that they are protected?

[Lord Callanan (Con)]

As I said, the facility was closed in 2017 for commercial reasons, and that was not a decision for BEIS or Ministers at the time. The Government understand that Centrica is seeking all the necessary regulatory approvals to reopen the facility. The decisions to grant any and all approvals are of course taken by independent safety regulators; health and safety is their top priority.

Net Zero Strategy: High Court Ruling

Lord McNicol of West Kilbride Excerpts

Thursday 21st July 2022 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, paragraph 252 of the High Court judgment ruled that the Government’s net zero strategy was unlawful. The court found that the net zero strategy did not go below national and sector levels to look at contributions to emissions reductions, and that it needs to be rewritten with quantified accounts and a realistic assessment. The Energy Bill is currently passing through your Lordships’ House; it establishes an independent system operator and planner, which is a welcome step. However, the legislation does not establish a system operator and planner at a regional level to promote the 2008 Act. If Her Majesty’s Opposition were to lay an amendment to deliver a regional system operator and planner which would solve some of the problems of the judgment, would Her Majesty’s Government support that?

[Lord Callanan (Con)]

I would need to look at the details of the noble Lord’s amendment before giving him an answer. As the Climate Change Committee recognises, the net zero strategy is a comprehensive plan for meeting our climate targets, which outlines measures to transition to a green and sustainable future, helping businesses and consumers move to clean power. We think we are on strategy; as I said, we will look closely at the judgment and decide whether or not to appeal.

Electricity and Gas (Energy Company Obligation) Order 2022

Lord McNicol of West Kilbride Excerpts

Tuesday 12th July 2022 Grand Committee

[Lord Teverson (LD)]

My Lords, there have been a few changes in the Government over the past week and it is excellent to see the Minister still here. I took the opportunity to look up his responsibilities, because there has been a bit of a shuffle in BEIS and I was even more delighted to see that he has responsibility specifically for energy efficiency—I think he had it before; the climate change side has moved slightly. I am delighted that energy efficiency remains with the ministerial purview of this House.

I also welcome the fact that the Government tabled an amendment on Report to the UK Infrastructure Bank Bill to include energy efficiency specifically as part of the bank’s remit in terms of its investment. I think the whole House very much welcomed that change. They could have done one or two other things, but at least we had that.

On ECO and the prior schemes, I read a report by the Energy & Climate Intelligence Unit—ECIU. I am on its advisory board and it is one of the better of these think tanks. It was interesting that the report reckoned that between 2009 and 2019 some 6 million homes had been improved to band C in energy performance. It estimated that that amounted to a 20% cut in their gas demand, which meant that on an annual basis now those households were saving £1.2 billion. Clearly, that is significant.

Those figures are from 2009 to 2019 and the ECO scheme came in in 2013, but the number of applications dived hugely over the past eight years and only now has started to tick upwards again. It was interesting to read in the Explanatory Memorandum that some 2.4 million homes had made applications to the ECO scheme, but in 2020 we still had 3.5 million homes in energy poverty. Think about that. There were applications for 2.4 million homes but at the end of that process there were still 3.5 million homes in fuel poverty—and that was before the huge price rises in energy that we are now seeing.

The Minister mentioned 450,000 applications and taking them out of fuel poverty. There is no chance of taking homes out of fuel poverty at the moment. We are going to add to that because of the energy prices that there are.

I know this from my own experience. At the beginning of this year I paid a monthly standing order to Octopus Energy of £212. This month I paid £355. That is not my only energy cost, but I admit that, for me, it is not a crisis. But, my goodness, for people outside that is an horrific increase in their energy bills.

I suppose I just want to make the same old argument again that there is so much to be gained from these programmes, as that statistic from the ECIU suggested, but at the moment they are only a pinprick—a drop in the ocean—in terms of what we actually need. Of course, it is easy to say that if we were not starting from where we are now but from before George Osborne as Chancellor of the Exchequer massacred the various energy efficiency schemes’ futures in terms of new homes and those sorts of applications, my goodness we would be in a better position than we are now. We are in a position where the Government are spending £37 billion, I think it is, on putting right the cost of living crisis, much of which is driven by energy costs, yet all of that is just to stand still, and I am not the first person to say that. If only we were managing to put that money into these sorts of schemes, my goodness those fuel poverty numbers would start to come down rather than inevitably skyrocketing, as they will. That is my comment on this. As the noble Lord, Lord Whitty, said, how can one argue that this is an improvement? As I said, it is a drop in the ocean, given what we need to do.

My question follows on from what the noble Lord, Lord Grantchester, said. One of the lessons from the disaster of the green homes grant was that the bit that involved local authorities actually worked. I am interested to understand how our local authorities, which are so much better at understanding their local communities and the issue of fuel poverty, will be tied in to the way the ECO4 scheme is delivered.

[Lord McNicol of West Kilbride (Lab)]

My Lords, like many others, I thank the Minister for his explanation of what this order achieves: introducing the latest energy company obligation, ECO4, replacing ECO3, which came to an end in March. I start by echoing what the noble Baroness, Lady McIntosh of Pickering, said, about the effects of the delay. Has any assessment or estimate been made of the effects of the delay between 1 April and the new regulations coming in?

As we heard, the order will place a cost-reduction obligation on gas and electricity suppliers that exceed domestic supply thresholds, requiring them to promote the installation of energy efficiency and heating measures to reduce the cost to low-income and vulnerable households. Unlike ECO1 and ECO2, which were centrally funded, I understand that this obligation to fund and finance again falls on the energy companies using their own resources, as was the case with ECO3.

If this understanding is correct, can the Minister confirm what assessment was made of the difference in impact between these two approaches, given that we now have examples of both? Given that energy suppliers will incur these costs, which will need to be recouped, we can expect them to be passed on directly to customers through energy bills. As others have asked, is this really the best approach at this time, given the energy crisis? Will any steps be taken to encourage or even obligate energy companies not to pass costs on to customers who can ill afford them at this time? In reality, if they are passed on, it will be the consumers and customers who will be paying for the upgrades of their own homes.

As the Minister outlined, the objectives of this order are to help alleviate fuel poverty, accelerate progress to meet fuel poverty targets, contribute to carbon reduction, reduce the costs of meeting the renewable energy target and encourage innovation. All of these are welcome, as is the targeting of vulnerable and low-income households. If the target we have heard about of annual bill savings of £224 million is reached, this will make a real difference.