Energy Bill [HL]

Lord Oates Excerpts

Committee stage
Wednesday 7th September 2022 Lords Chamber

Turning to my amendment, if we are to use this highly questionable route forward for heating, let us ensure that we introduce very stringent standards. I have been speaking to the Green Hydrogen Organisation, which is a new trade association in Europe concerned with representing green hydrogen companies. It says that the best standard is 1 kilogram of CO₂ equivalent for 1 kilogram of hydrogen, and that is what we should be adopting. We should seek to be as ambitious as possible, driving investment into only the cleanest forms and not being distracted by what would be a very expensive and inefficient, very costly and potentially dangerous solution which is just not needed at this time.

[Lord Oates (LD)]

My Lords, I declare my interest as a member of the UK Hydrogen Policy Commission. I do not disagree with any of the amendments, and having a stringent green hydrogen standard is important. However, it is also important to stress that hydrogen is for use not only in home heating—I share some of the noble Baroness’s scepticism about that—and there are very significant uses of hydrogen at present in the chemical industry and as a feedstock in fertilisers. They must clearly be the priority, and we certainly need green hydrogen for that, which is a lot of green hydrogen. Although I absolutely share the ambition on tight standards for green hydrogen, we will definitely need it there, and in some of those hard-to-decarbonise areas such as steel production and the building industry. We should absolutely use it for purposes where electricity is not an easy solution, but let us not talk it down or talk about it as if it is a solution only to home heating, where I agree it probably is not practical.

[Baroness Blake of Leeds (Lab)]

Just to add to that list of uses, I am interested in the development of the hydrogen village, as outlined in the Bill, which is a really interesting example. There are also other uses in transport, for example, which are very well advanced, and we very much look forward to the outcome of those debates.

I do not want to prolong the debate, but the obvious question to me is that a standard has been established and had extensive public consultation and multiple engagement sessions with experts by stakeholder groups, as I understand it. I just wonder why we would want to undermine all that work and complicate the situation by suggesting that the Secretary of State could override the standard. Perhaps the Minister could, in his summing up, give us a very clear explanation of how any changes to the standard and protection might be achieved, to ensure that stakeholders and the public are kept informed, as this is, as we have heard, an area of both enthusiastic response and concern.

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Moved by

[Lord Oates]

50: After Clause 64, insert the following new Clause—
“Designation of a long duration energy storage counterparty(1) The Secretary of State may by notice given to a person designate the person to be a counterparty for long duration energy storage revenue support contracts.(2) A “long duration energy storage revenue support contract” is a contract in relation to which both the following paragraphs apply—(a) the contract is between a long duration energy storage counterparty and the holder of a licence under section 7;(b) the contract was entered into by a long duration energy storage counterparty in pursuance of a direction given to it under section 60(1).(3) A person designated under subsection (1) is referred to in this Chapter as a “long duration energy storage counterparty”.(4) A designation may be made only with the consent of the person designated (except where that person is the Secretary of State).(5) The Secretary of State may exercise the power to designate so that more than one designation has effect under subsection (1), but only if the Secretary of State considers it necessary for the purposes of ensuring that—(a) liabilities under a long duration energy storage revenue support contract are met,(b) arrangements entered into for purposes connected to a long duration energy storage revenue support contract continue to operate, or(c) directions given to a long duration energy storage counterparty continue to have effect.(6) As soon as reasonably practicable after a designation ceases to have effect, the Secretary of State must make one or more transfer schemes under section 79 to ensure the transfer of all rights and liabilities under any transport and storage revenue support contract to which the person who has ceased to be a transport and storage counterparty was a party.”

[Lord Oates (LD)]

My Lords, I will speak to Amendments 50 and 51. These are probing amendments to press the Government on their position on revenue support models for long-duration energy storage and the degree to which they recognise the urgency of determining this.

In Committee on Monday, the noble Lords, Lord Moylan and Lord Howell of Guildford, raised this issue of energy storage. Indeed, the noble Lord, Lord Howell, spoke of the Dinorwig pumped-storage plant in Wales, which I believe he opened—or at least he opened its increased capacity—when he was the relevant Minister. He made the point, quite rightly, that it not only provides support when the system needs it—rapidly bringing power on—but even when it is not operating it is saving money because it reduces the margin that is required to be kept on hand to be on call.

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[Lord Callanan (Con)]

I thank the noble Baroness for her suggestion. The Treasury is not normally shy in coming forward with proposals for extra taxes if it thinks it can get away with it. Of course, we have already imposed the excess profits levy on a number of producers in the UK; indeed, those producers already pay increased rates of corporation tax. We must be careful that we do not disincentivise investment. Putting aside the wider politics of it, which we all understand, I am sure that everybody is aware that we need tens of billions of pounds of investment into existing oil and gas facilities. I welcome the support of the noble Lord, Lord Teverson, for the continued production of UK gas; it is an important transition fuel and I hope he will manage to convince some of his Liberal Democrat colleagues to support us in this. We do need gas in the short term, but many of those same companies are investing many billions of pounds also in offshore wind and other renewable energy infrastructure, so we want to be careful not to disincentive them too much from that. I am sure the Treasury will want to take into account all these helpful considerations as to how it can increase its tax base.

In conclusion, I am grateful to noble Lords for their amendments on these topics. I hope I have been able to provide at least some reassurance to some people on their amendments and that they will therefore feel able not to press them.

[Lord Oates (LD)]

I thank the Minister for his reply. On the tax treatment of batteries for solar power, I heard the Prime Minister at Prime Minister’s Questions today say on a number of occasions, “What I am about is cutting tax”, so perhaps he could suggest to her that this is one of the first tax cuts she could make.

On long-duration storage, the Minister made the point that there is a wide range of technologies, some of which are innovative, and the Government need to consider them. As I said in moving my amendment, that is acknowledged, but there are some that are not innovative: they are proven and effective and we need to get on with them. I hope the Minister can find a way of addressing this, because we will come back to it. The Government need to find a way, whether it is through specific pathfinder pilots or whatever it is, to get on with some of the things that need to happen now. The Minister said that it was premature at this stage to come forward with this stuff. If he talked to the project managers of Coire Glas, I think they would tell him it is not premature at all; in fact, it is desperately needed. They have a project ready to go, but they have no revenue model. We know we need it, the Government acknowledge in their consultation on long-duration storage that we need to massively ramp this up, so we really need to get on with it. I am afraid the Minister did not really address that.

I have one final question for the Minister. He said we will have the solution “by 2024”. Can he confirm that that means we will have the revenue models by 1 January 2024? There is a big difference between “by 2024” and during 2024. The industry is very worried that, when it has pressed the department on this, it has been given no assurance that it actually means “by 2024” and that it could be by the end of 2024. Can the Minister clarify that, in writing perhaps, to me and other Members of the Committee? These are critical things. We just have to get on with doing the things that we know how to do. There are lots of things that we do not know how to do. I beg leave to withdraw my amendment.

Amendment 50 withdrawn.

Employment Rights

Lord Oates Excerpts

Tuesday 19th July 2022 Lords Chamber

[Lord Callanan (Con)]

I do not think that those answers are contradictory at all. It is always nice to go further in these matters. We keep all of these employment rights issues under review. As I have said, we have an excellent record, and we will go further when it is possible to do so.

[Lord Oates (LD)]

My Lords, is the Minister aware of the comments of the noble Earl, Lord Howe, in response to a question in February 2020 on thresholds for constitutional ballots. He said:

“If one had a threshold related to voter turnout, the inflexibility of such an arrangement could easily prove counterproductive and have the paradoxical effect of equating non-participation with no vote, because low levels of participation can void a given result.”—[Official Report, 12/2/20; col. 2265.]


In the light of those comments, what plans does the Minister have to review the trade union legislation which imposes just such ballot requirements on trade unions?

[Lord Callanan (Con)]

We keep all these matters under review but I do not think there are any specific plans to change those thresholds at the moment. It is very important that, before any strike action, there is proper consultation with employees and a proper secret ballot takes place, so that we can make sure that strike action has support from the workforce.

Energy Security Strategy

Lord Oates Excerpts

Wednesday 27th April 2022 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, I thank the Minister for coming here to answer our questions. However, I am disappointed that we only have this opportunity 20 days after the publication of the strategy, due to the Government’s decision to publish it while the other place was not sitting and thereby avoid immediate scrutiny.

On the Statement itself, I will begin with the aspects that we welcome. The last Labour Government gave the go-ahead for new nuclear sites in 2009, which have seen little-to-no progress. It now time for the pace to pick up on Sizewell C and the development of small modular reactors. The establishment of Great British Nuclear, if it achieves its goals, should be welcome, but, frankly, what is needed is action rather than additional bureaucracy and figures plucked out of the air without regard to cost, speed or deliverability. Can the Minister set out a timetable for the establishment of this body and, more importantly, the delivery of the eight reactors the Statement suggests could be set up at a rate of one per year?

We also welcome the Government’s target for offshore wind of up to 50 gigawatts by 2030. We need to ensure that developments of this kind lead to creating British jobs, which is not always the case under schemes from this Government. Can the Minister offer assurances that this will be addressed as the strategy is implemented and that other necessary steps to achieve it, such as grid investment in the North Sea network, will be taken?

However, the main issue with the strategy is what is missing. In short, these steps, while welcome, will not provide for households struggling with the cost of living crisis. They do not constitute the green-energy sprint that is needed to cut household bills, reduce reliance on Russian imports and cut emissions this decade. Measures that could have made an immediate difference to households and businesses have been ignored. On the cheapest, quickest, cleanest renewables such as onshore wind and solar, the Government have caved to Back-Bench pressure.

Onshore wind is four times cheaper than gas and overwhelmingly popular, but hundreds of projects that communities want, and are ready and waiting for, have been blocked. Earlier versions of the strategy showed that the Government were well aware of this, yet this strategy contains little beyond vague platitudes, and nothing to reverse the results of their ban on onshore wind projects in 2015, which destroyed the market, with only 20 new turbines granted planning permission between 2016 and 2021. Doubling onshore wind capacity to 30 gigawatts by 2030 could power an extra 10 million homes, add £45 billion to the UK economy and create 27,000 high-quality jobs. Does the Minister accept that bills will be significantly higher as a result of this failure?

The story with solar is not much different. Slashing solar subsidies in 2015 crashed the market, and many projects that could have been enabled are waiting in abeyance. Why have the Government watered down their ambition, rather than properly committing to tripling solar power by 2030?

The main hole in the Statement, for all those millions of people paying at least an extra £170 per year on energy bills, concerns energy efficiency. Energy efficiency is the best, quickest, most effective way to reduce energy bills, but there is no new money for it. Vulnerable people in this country need a national emergency plan to insulate homes, which could cut bills for the millions of pensioners and low-income households who need it most. At the same time, it would create new, skilled jobs. Instead, vulnerable people are being condemned to live in cold, draughty homes and paying more than they need to. The Minister previously admitted that the Government were keen to go further. So, who stopped them, the Secretary of State or the Chancellor?

The Government have missed another opportunity to close the door to fracking and continue to float the idea of a new coal mine in Cumbria. They have also failed to adopt Labour’s proposal of a windfall tax on oil and gas firms that are making record profits while bills skyrocket. Overall, it is fair to say that the energy strategy is disappointing and underwhelming. We can only ask how the Minister expects to reassure your Lordships’ House of the Government’s commitment to net zero if they continue to act to the contrary.

[Lord Oates (LD)]

My Lords, there are things to welcome in this Statement but unfortunately, there are also many missed opportunities. Energy security is obviously critical at this time, but we must understand that it is about not just security of supply to the United Kingdom but the fact that millions of households right now feel a complete lack of security regarding their ability to pay their energy bills going forward, and particularly as we go into the next cold period.

The Government had an opportunity to take up my right honourable friend Edward Davey’s proposal: a windfall tax on the super-profits of the oil and gas industry, which the Labour Party has also argued for. That could have unlocked finances to give further support to people who will be desperately vulnerable this winter.

As the Liberal Democrats and many others in this House have repeatedly stated, curtailing the wasted energy that leaks out of our buildings should be the No. 1 priority in the hierarchy of measures we take to improve our energy security, reduce carbon emissions and cut costs for households. But there was nothing new in the Statement on this front. I asked the Minister at Questions yesterday why the number of insulation measures installed annually in the UK had fallen from a high of 2.3 million during the coalition to an average of less than 10% of that peak since then. He did not really give me an answer, to be honest, but I do not blame him for that. If he was unconstrained by collective responsibility, he would be able to be clear that it was down to the myopic foolishness of the Treasury, which has kyboshed many of the schemes that have been brought forward in the past. Not least of these is the green homes grant, which was destroyed by its lack of understanding that this has to be a long-term project, not a short-term stimulus measure. I hope the Minister will not be deterred, however, by that myopia, and will continue to urge his government colleagues to take a more creative approach to this issue, including fiscal measures such stamp duty discounts and council tax rebates for homes that improve their energy performance certificate ratings.

Can the Minister also tell us when the new ECO4 regime, which he mentioned yesterday, comes into effect? Am I correct in thinking that there is gap between ECO3 and ECO4 coming into effect? If so, why is that being allowed to happen?

Like the noble Baroness speaking for the Labour Benches, I welcome the extra commitments on offshore wind, but I also share her view that this is a massive missed opportunity for onshore wind. Onshore wind, as has been said, is one of the cheapest ways of powering green energy, and it is absolutely reckless that we are putting it aside.

On oil and gas, I hope the Government are really thinking about the danger of stranded assets on any new exploration. That is a dangerous thing.

I should declare my interest as a member of the UK Hydrogen Policy Commission in saying that I very much welcome the Government’s commitment to doubling their ambition to 10 gigawatts by 2030, and that for the first time, at least half of that will be green or electrolytic hydrogen.

Our ambitions are now similar to those of many of our international competitors, which is welcome, but the funding allocation behind them is completely different. We are not putting in anything like the money that our competitors are. Could the Minister look at that issue in particular?

Finally, will the Minister also look at the support that will be needed by local authority planning departments and councillors, which will have to deal with an increasing number of hydrogen-related planning applications? Currently, most do not have the necessary skills or resources to deal with them or to address the inevitable concerns. Will he also look at the regulatory environment that will be required? The hydrogen strategy suggests that regulations will be made on a piecemeal basis as hydrogen is scaled up, but this misses the point that regulatory certainty is absolutely required if the scale-up is to happen at all. I hope he can address a few of those questions.

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

I thank the noble Baroness, Lady Blake, and the noble Lord, Lord Oates, for their relatively constructive comments. I know they do not necessarily agree with everything we are doing and would like us to go further in some respects, but I know that in general, their hearts are in the right place. The strategy is of course a long-term plan to accelerate the transition away from expensive fossil fuel prices that, obviously, are set by global markets we cannot control. I know that both the noble Baroness and the noble Lord will support us on that.

Starting with the vital issue of concerns about energy prices, correctly raised by the noble Lord, the strategy reconfirms that the Government are committed to helping with the cost of living. That includes over £9 billion of help for families struggling with their bills. We are aware, of course, that Ofgem will set the next price cap in August, and we will want to review the current support arrangements at that point, well in advance of them taking effect in October.

The noble Lord also raised issues concerning energy efficiency. I know that he and I agree on the critical role that energy efficiency plays in both our energy security and in helping consumers to manage their energy bills. I disagree with him, however, in that this Government have gone further than any other in setting out an ambitious energy efficiency strategy, including through our landmark heat and buildings strategy. I know he will want to push us to go further but, in essence, we are heading towards the same destination—although apparently, we have different rates of getting there.

In response to the noble Lord’s question about ECO, there is no gap between ECO3 and ECO4. There is a delay due to legal considerations in tabling the SIs to implement ECO4, but we are certainly in touch with the industry bodies to explain that, and there is no gap in the implementation. The increased budget associated with it, at £1 billion a year, takes effect.

The noble Baroness, Lady Blake, raised the subject of onshore wind—I am sure there will be further questions on this as we proceed through the Statement—and also solar. Noble Lords are correct: onshore wind and photovoltaic solar are the cheapest forms of renewable energy. We are fortunate to have more onshore wind that pretty much any other country in northern Europe, and we continue to promote it passionately.

That said, both onshore wind and large solar projects —which can be controversial in some circumstances—should be pursued on the basis of local community support. Clearly, where that local backing exists, the strategy includes support for new projects and the enabling national network infrastructure.

Offshore wind is an area in which we have been hugely successful, and it has had a transformative effect compared to other renewables. Offshore wind is especially suited to the UK’s geography, and we truly are leading the world in its technology and capacity. It rightly forms one of the centrepieces of the strategy. As the noble Lord, Lord Oates, referred to, we are increasing our ambition to deliver up to 50 gigawatts by 2030, including up to five gigawatts of innovative floating wind capacity. By 2030 we will have more than enough wind capacity to power every home in the United Kingdom.

In response to the question by the noble Baroness, Lady Blake, I say that this is all bringing vital investment into the UK, particularly to our coastal communities. It will support 90,000 direct and indirect jobs by 2030. I met the Mayor of Tees Valley last night, who was telling me about some of the enormous projects being built on his patch, entirely to benefit from this expansion of offshore wind capacity.

I also welcome the support of Labour—if not the Liberal Democrats—from the noble Baroness, Lady Blake, for nuclear. It is very welcome. Energy security means being able to meet demand even on the coldest days of winter when there is neither sun nor wind. We need a baseload of decarbonised power to complement the renewables we are installing and while most of the current nuclear fleet is reaching the end of its lifespan and will be decommissioned this decade. We will be reversing decades of underinvestment and we will build back British nuclear.

In response to the question from the noble Baroness, Lady Blake, about the new body, I say that this will be set up immediately to bring forward new projects backed by substantial funding. We will launch the £120 million future nuclear enabling fund this month. We intend to take one project to a final investment decision in this Parliament and two in the next—subject to value for money and the appropriate approvals, as always.

On the subject of fracking, which the noble Baroness, Lady Blake, also asked about, it is right and sensible that, with wholesale gas prices around 10 times their level at the end of 2019, we review the science and evidence picture around fracking. The strategy commits to assess whether the previous conclusion against licensing has shifted or if scientific developments have changed, and we will do that.

I welcome the support of the noble Lord, Lord Oates, for hydrogen. I am happy to look at the comments he made about support for local authorities in terms of progressing hydrogen applications. I am sure we want to provide as much technical support as necessary and I agree with his comments about the importance of regulatory certainty in this area.

International Energy Agency Report

Lord Oates Excerpts

Tuesday 26th April 2022 Lords Chamber

[Lord Callanan (Con)]

My noble friend makes an important point. As well as encouraging OPEC to increase production, we are trying to increase production from our own domestic sources and ensure that there is increased investment in our own resources in the North Sea.

[Lord Oates (LD)]

My Lords, has the Minister had a chance to read the excellent blog on this subject by the former clerk to the Lords Science and Technology Committee, Dr Simon Cran-McGreehin, which reminds us that, in 2012, 2.3 million insulation measures were installed in the UK before policy changes reduced that to an average now of 10% of the peak? Does he therefore agree that the quickest way to restore these levels would be immediately to appoint Liberal Ministers back to government, given that this was during the coalition? Failing that, will he consider which of the policies in place at that time could be adopted now to speed up building insulation, which I know he is as keen to do as the rest of us?

[Lord Callanan (Con)]

The noble Lord will forgive me if I do not accept at least one of his policy recommendations. For that to happen, the Liberal Democrats would need to win an election, which is vanishingly unlikely in the current circumstances.

Energy Security Strategy

Lord Oates Excerpts

Thursday 7th April 2022 Lords Chamber

[Lord Callanan (Con)]

We are ramping up all forms of renewables, but we have a requirement for oil and gas in the short term. I remind the noble Baroness that the UK’s emissions are falling fast. We have the fastest rate of declining emissions of advanced western economies. We were the first to set a long-term target. The UK is responsible for a tiny proportion of emissions in worldwide terms, and this is a worldwide problem. We are reducing our emissions; we are making progress; we are rolling out renewables, and we are rolling out energy-efficiency measures.

[Lord Oates (LD)]

My Lords, the immediate crisis of energy security relates to the energy security of millions of British people who are facing ruinous bills. In that context, why have the Government chosen a strategy that passes over the cheapest form of energy production —onshore wind—and have instead adopted the most expensive—nuclear—which will be piled on people’s bills through the RAB charge? What is the reason behind that?

[Lord Callanan (Con)]

As we debated many times in this House, we need both. We need nuclear and are pleased to have the support of the Opposition in accepting that we need it for long-term baseload power supplies. We also need renewables, which is why we already have the second greatest amount of offshore wind power in the world. We are seeking to ramp up those facilities as well. We are also deploying additional solar and hydrogen production. As I said, on onshore wind, we will look to go forward in partnership with supportive local communities. It is not a question of picking one technology over another: we need a diverse mix of energy supplies. The noble Lord was wrong to say that there was a problem with the UK’s energy security. There is no difficulty with energy security; there is clearly a short-term difficulty with the price of energy—particularly relating to gas—and we totally understand the difficulties that consumers are going through. That is why the Chancellor announced the £9.1 billion-worth relief package.

Energy Storage Capacity

Lord Oates Excerpts

Tuesday 5th April 2022 Lords Chamber

Asked by

[Lord Oates]

To ask Her Majesty’s Government what plans they have, if any, to increase energy storage capacity in the United Kingdom.

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

My Lords, energy storage is an essential source of flexibility for net zero and for energy security. The Government are analysing whether further intervention is needed to support deployment of long-duration energy storage, including hydrogen storage, to help ensure a least-cost transition to net zero. The diversity of the UK’s gas supply is a strength of our approach to energy security, and GB gas storage tops up supply during periods of high demand.

[Lord Oates (LD)]

I thank the Minister for his response. He will be aware that due to the UK’s lack of long-term energy storage, we waste enough wind energy every year to power over 1 million homes. Does he recognise that long-term energy storage, alongside renewables, could end this waste and provide the most cost-effective solutions to decarbonising the grid? Can he tell the House why the revised energy policy statement was so unambitious on long-term storage, and when we will get some decisive action in this area?

[Lord Callanan (Con)]

The noble Lord is right to point out the importance of long-term storage. We are aware that long-duration electricity storage—for example, pumped hydro—can struggle to deploy because of the high capital costs and the lack of forecastable revenues. We are analysing responses to a consultation from last year on a call for evidence on facilitating further deployment of this type of storage. We already have a considerable amount, but he is right that we must do more.

Boiler Upgrade Scheme (England and Wales) Regulations 2022

Lord Oates Excerpts

Monday 4th April 2022 Grand Committee

I have a small second point. I was rather surprised to discover that installing a heat pump can actually have a negative impact on energy performance certificates. That means that, for a landlord looking to achieve the required EPC, there is a disincentive to install a heat pump. I have this problem as a landlord, albeit in Scotland—so it is devolved—but I think the same is true in England. That cannot make sense, so if the Minister could look at that I would be most grateful.

[Lord Oates (LD)]

My Lords, I too thank the Minister for his comprehensive explanation and for having spared the time last week, with his officials, to explain some of this stuff to me. It is welcome that we have a simpler scheme and that the Government are trying to understand that big schemes that cannot be met with the skills required, et cetera, do not bring any benefit. These are the key things that arise from the scheme.

The noble Lord, Lord Jones, raised the issue of skills, which are fundamental to everything in this area, not just in terms of heat pumps. As we green our economy, we have to ensure that we build our skills base. I know that the Minister talked about a lot of money having been spent on training under the previous green homes grant scheme and the money being spent by manufacturers. But we need to ensure that the Government, working with local authorities, skills providers and industry, are really looking across the piece about greening the economy and how we ensure that the skills are there to do it.

As I understand it, the grant scheme is to be installer led. That is obviously beneficial because the installers will, I hope, get used to that process, which will make it a bit less daunting for consumers. It is also encouraging that proper quality assurance is being required although, again, that clearly also constrains the ability to meet demand.

It is very important that all those installers will be required clearly to advise home owners on the appropriateness or otherwise of installing a heat pump in their property. As we have heard from the noble Lords, Lord Carrington, Lord Jones, and Lord Vaux of Harrowden, properties vary immensely. The performance of these pumps also varies and public confidence in the scheme should not be lost—as the noble Lord, Lord Vaux, said, it could really disappear overnight. If people feel that it has been oversold and they have been provided with replacements for their heating systems which do not achieve the heat and hot water that they are used to, or have been promised, we will have a real problem. I hope that the Minister will be able to reply to those important points that the noble Lord raised.

I do not have a heat pump in my own property. I sought to get one installed under the green homes grant scheme; unfortunately, that scheme came to an end, but my property was also said not to be suitable. It is clear that not every property is suitable and that we will really have to think about those which are not. Although a lot of rural properties may well have the space for a ground source heat pump, many of them may be old and poorly insulated and it may also be difficult for heat pumps to operate effectively there. I notice that, for off-grid properties, biomass boilers are to be allowed. In response to the question of the noble Lord, Lord Carrington, I would be interested to know whether liquefied natural gas made from the organic materials that he talked about would be counted as biomass.

We have also heard about two gaps in particular, one of which is the seven-week gap in this scheme, which is obviously an important concern for manufacturers. But we also heard about the gap raised by the Secondary Legislation Scrutiny Committee between the Government’s ambition of 600,000 heat pumps being installed per year by 2028 and the 30,000 each year over the next three years under the grant scheme and the 200,000-plus heat pumps it is estimated will be installed in new builds when the new future homes standard come in. There is still a big gap there, and I am not entirely convinced that the Government have thought through how they can match their ambition with delivery.

If we are to decarbonise domestic home heating in this country, we cannot rely simply on grant schemes. I know that lots of different schemes are running, which sometimes overcomplicates things for consumers, but we really need to have fiscal incentives in place as well to encourage home owners to take various measures that can help not only to decarbonise the heating system but reduce demand, because reducing the amount of energy that we waste must be one of the central things we do. We cannot have systems in place that disincentivise the installation of heat pumps via the impact that the noble Lord, Lord Vaux of Harrowden, explained on the energy performance certificates. It would be interesting to hear the Minister’s response on that as well.

Finally, we on the Liberal Democrat Benches commend the Government on their ambition in this area and on having learned some of the lessons of the green homes grant scheme. There is obviously an issue about how we meet this 600,000 target. I am not sure that all the detail is there, but we hope to hear more about it in the coming months.

[Baroness Blake of Leeds (Lab)]

My Lords, in debates such as this, from listening to the excellent contributions from my noble friend Lord Jones, and the noble Lords, Lord Carrington, Lord Vaux of Harrowden and Lord Oates, more questions come up as we go along. I look forward to the Minister’s response on some of the technical details.

I go along with the general response in welcoming the purpose behind the scheme. The ambition is clear. Obviously, the context is the imperative to decarbonise for our net-zero targets and energy security is absolutely at the forefront of everything we are discussing at the moment, but perhaps we have not dwelt enough on the link with the cost of living crisis and the real concerns we have about people being able to afford to heat their homes, as well as all the other challenges for people bringing up families, in particular, and older people, who are also making terrible decisions about heating or eating. There is a very complex background to this, as we have heard.

The main question we have running through this is whether the amount of funding available—I thank the Minister for the detail on the background to the upgrade scheme—realistically has a chance of delivering the number of conversions laid out in the proposals.

I go to personal experience. I have talked to people over the past few days who have been considering upgrading their boiler and heard clearly the reasons why, at this moment, they have decided not to go down that route. Of course, the fundamental one is cost, but efficiency is also a major concern. Noble Lords know my background in local government; I know that the Minister visited Leeds to look at a scheme for retrofitting housing. The biggest challenge we have is retrofitting and suitability for purpose.

Exports: Support for Businesses

Lord Oates Excerpts

Thursday 31st March 2022 Lords Chamber

[Lord Callanan (Con)]

We can trade statistics and I can give the noble Lord alternative statistics, but we are optimistic for our export service. We are providing good support to businesses. Businesses across the UK are continuing to export to EU member states and to non-EU member states. We continue to be optimistic for the service. We will provide support to businesses and I am confident that British business will bounce back.

[Lord Oates (LD)]

My Lords, has the Minister had a chance to read paragraph 1.16 of the OBR’s Economic and Fiscal Outlook? It states:

“With little evidence to suggest that we revise our assumption about the negative effect of Brexit on UK trade flows, we continue to forecast little growth in export and import volumes and a fall in the trade intensity of the economy over the medium term.”


Does he recognise how devastating a statement that is for a trading economy such as ours? Can he tell the House what the Government intend to do to address these highly damaging impacts of Brexit?

[Lord Callanan (Con)]

I have not had a chance to read the paragraph that the noble Lord refers to, but I know that there are a number of contrary statistics out at the moment and it is quite hard to disentangle the various impacts. Of course, the pandemic had a serious effect on all countries’ export performances, and many supply chains are still suffering. I will certainly take the opportunity to read the paragraph the noble Lord refers to.

Nuclear Energy (Financing) Bill

Lord Oates Excerpts

Report stage
Thursday 24th March 2022 Lords Chamber

Moved by

[Lord Oates]

1: Clause 2, page 2, line 14, leave out from “project” to end and insert “will result in value for money, as evidenced by the publication of the Value for Money assessments conducted to date.”
Member’s explanatory statement
This amendment would require the Secretary of State to provide stronger evidence that the project will result in value for money through publication of such assessments carried out to date.

[Lord Oates (LD)]

My Lords, I shall speak to all the amendments in this group. They deal with value for money for the taxpayer and for bill payers, the impact on consumer bills of the regulated asset base charge, and the final amendment relates to excluding those on universal credit and other legacy benefits from such impacts.

Amendment 1 requires that the Secretary of State is of the opinion that designating a nuclear company will result in value for money, as evidenced by the publication of the value-for-money assessment. In this sense, it is about both value for money and transparency, which we will also touch on in later groups. We want to know not just that such a designation will result in value for money but on what basis that decision has been arrived at. We know from the history of the nuclear industry that promises about costs have rarely been kept and that finances have been opaque, to say the least. If there was one advantage of energy sector privatisation, it was that the costs which had previously been fairly buried in the accounts of the Central Electricity Generating Board became much clearer. That is a significant part of the reason why nuclear power ceased to be attractive, because it was clear that it did not offer value for money either for the taxpayer or for the consumer.

As my noble friend Lord Foster said when he spoke to this amendment in Committee, the Government have said already that they are going to conduct a value-for-money assessment. All we are asking is that that assessment is published as part of the process of the Minister being clear that it is his position that the designation would represent value for money. In Committee, the Minister notably failed to give any such commitment that the value-for-money assessment would be published, so I ask him to tell the House directly in his response whether the Government will publish that assessment. If he does, he will satisfy many of our concerns on this matter. If he does not, he will simply confirm our belief that the result of the Bill will be that the public are going to be landed with eye-wateringly expensive power generation which does not offer value for money and for which they will be forced to pay on their bills in advance.

Amendments 3 and 10 deal with the impact on consumer bills. Amendment 3 requires the Secretary of State to be of the opinion that designating a nuclear power company will not have a significant and material impact on consumer bills and to lay a report before Parliament setting out the reasons and evidence for that opinion. Again, this is about both the protection of the consumer and transparency over decision-making.

Amendment 10 seeks to exclude recipients of universal credit and legacy benefits from the regulated asset base charge, and I am grateful for the support of the noble Lord, Lord McNicol of West Kilbride, and the noble Baroness, Lady Bennett of Manor Castle, on this amendment. It would guarantee in law that the most financially vulnerable in our country do not see an additional increase in their energy bills to finance the exorbitant costs of nuclear power generation. The most indefensible part of the Bill is that the cost of nuclear generation and the way the RAB charges work would have a disproportionate impact on those who are already struggling to pay their bills. With the energy price cap already set to increase by 54% and with further increases very possible, indeed likely, in the autumn, this is no time to place further burdens on those least able to meet them, as the Bill does. On the Liberal Democrat Benches, we believe that we have an absolute duty to protect those least able to meet these costs at such a difficult time.

As finance expert Martin Lewis has said, the financial strain on families is already the worst he has known. He describes the increase in energy bills as a

“fiscal punch in the face”,

and adds:

“I am out of tools to help people now … It’s not something money management can fix … we need political intervention.”


But what we have in this Bill is political intervention to make the situation worse. Reports from the Joseph Rowntree Foundation have added that the case for support

“to help people on the lowest incomes could not be clearer”—

so why are we doing the opposite? As we all know, the number of people in fuel poverty is increasing at alarming rates; it is estimated that it will have tripled in the space of two years.

Citizens Advice finds that 55% of universal credit claimants are already going without basic essentials. The Government are proposing to increase benefits by just 3.1% at a time when inflation is forecast to peak at 8% to 9%. Many, including the CBI, believe that peak may be sustained over a significant period. This Bill would exacerbate the problem even further. Amendment 10 would at the very least make sure that the most financially vulnerable people in our country are not forced to bear further costs on their energy bills as a result of this unfair policy.

[Viscount Hanworth (Lab)]

My Lords, I wish to speak to Amendment 1. The noble Lord, Lord Howell, disposed of the previous version of this amendment most effectively in an eloquent speech in Committee, yet the Liberal Democrats persist in asking for an unequivocal value-for-money assessment of any project to build a new nuclear power station. It is not clear on what basis such an assessment should be made.

They may be inspired by the expectation that an assessment conducted according to commercial accountancy would cast doubt on the economic benefits of building new nuclear power stations. It has been pointed out to them that such a valuation would entail the commercial cost of capital funds, which are available from the financial sector only at an exorbitant rate of interest. It is precisely for the purpose of overcoming this impediment that the financial device of a regulated asset base, which is what this Bill advocates, has been devised.

Commercial accountancy—if that is what the Liberal Democrats have in mind—would be a most inappropriate means of assessing the value of investment in social and economic infrastructure that would provide us with a carbon-free source of electricity for the long term. Not only will this electricity be making a vital contribution to our climate change agenda but it will serve to sustain our industries in the absence of fossil fuels. Surely the Liberal Democrats should support such objectives.

The Liberal Democrats have been enjoined to tell us how they envisage that we might satisfy these objectives in the absence of the secure and reliable supply of electricity that would be provided by nuclear power stations. They have failed to do so. They have failed to tell us how the problems of the insecurity and intermittence of the supply of electricity could be addressed if it were dependent on the wind, the sun and imports from abroad. We must assume, in the absence of any declaration from them, that this is what they envisage. The truth is that they have failed to address the logistics of the energy supply in a meaningful way.

The value of renewable sources of power must be assessed not only on the costs of what they are able to produce but on the costs of what they fail to produce. At times when this power is not available, other sources must be found. In the absence of a baseload of electricity, they are liable to become exorbitantly expensive when there is a dearth in power. Wind and solar power will not satisfy the demand for a greatly increased supply of electricity, which must arise if our industries and our transport are to relinquish fossil fuels. The renewable sources of power would serve to satisfy the demands only of a wholly deindustrialised and socially immiserated version of the United Kingdom.

--- Later in debate ---

I thank noble Lords for their consideration of these matters, and I want them to know that their concerns have been heard. I therefore hope that, with the reassurance I have been able to provide that the Government are taking the necessary steps to deal with the concerns behind their amendments, noble Lords will feel able not to press Amendments 1, 3 and 10.

[Lord Oates (LD)]

My Lords, I am grateful to all noble Lords who took part in the debate. I thank the Minister for his response. The issue of value for money, as my noble friend Lord Stunell pointed out, is a central part of the Bill. All we are asking is that the value-for-money assessments the Government rely on are published. I am pleased that the Minister said that they will be published, albeit not at the stage we would wish them to be. That is some progress at least, but it puts the slightly bizarre argument that this is not an issue for amendment in that context.

Regarding universal credit, the Minister said that it would be administratively difficult because the electricity suppliers are charged the RAB charge and would have to pass it on to consumers. It would, of course, potentially be possible for the Government to exclude the relevant amount for universal credit and other legacy benefit users. It would also be possible and open for the Government, if they wanted to, to assess whatever the RAB charge is and give that as an additional benefit to those people. But the essential issue is that we cannot put further burdens on people who are already suffering enormously with the cost of energy and cost-of-living increases. This has to be solved. I am sure it is not beyond the Minister and his colleagues, if he says that there are technical problems with putting universal credit or other legacy benefits into the Bill, to correct that when it goes back to the Commons and bring forward an amendment that they think would work.

Overall, we have to take some action to protect these very vulnerable consumers. I think we can all agree on that and I hope the House will support the amendment when we come to it. As I said to the Minister, I am grateful on the issue of value-for-money assessments. I am sorry he could not go further on the impact on consumers’ bills as a whole. We really need more transparency on that.

Finally, I say to the noble Viscount, Lord Hanworth, that I am absolutely delighted by his interest in Liberal Democrat policy. Knowing his deep and clear affection for the Liberal Democrats, as shown in these debates, I am surprised that he has not already read our excellent policy paper Tackling the Climate Emergency, which sets out in comprehensive detail, as only a Liberal Democrat policy paper can, how to decarbonise the grid without the need for new nuclear. However, if by any chance he has not had the chance, I would be very happy to send it to him. With that, I beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

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[Viscount Trenchard (Con)]

My Lords, the noble Lord, Lord McNicol, tabled an amendment similar to Amendment 2 in Committee. The Minister could not accept it because it appeared to rule out EDF as an investor in Hinkley Point C or Sizewell. It also attempted to restrict sourcing of nuclear fuel to domestic producers, which the noble Lord has dropped from his revised amendment. My noble friend explained that the Government do not support investment in our critical infrastructure at the expense of national security, which was good to hear. I ask the Minister to tell your Lordships what progress the Government have made on replacing proposed Chinese investment in Hinkley Point C and Sizewell C.

Amendment 2 is an improvement on the version debated in Committee, but the link to Amendment 6 requires the Secretary of State to establish a list of foreign powers or entities that are barred from involvement in the UK’s civil nuclear sector. Amendment 2 covers nuclear companies owned wholly or in part by a power or entity included on this list, but ownership in part could mean just one share. Surely this amendment should restrict only significant shareholdings; perhaps 5% would be an appropriate trigger.

Furthermore, the requirement on the Secretary of State imposed by Amendment 6 would clearly be massively burdensome, if not impossible. It is quite adequate that the Secretary of State should deal with each application separately and assess the shareholders at the time of application.

I said in Committee that I was inclined to support the amendments in the name of the noble Lord, Lord Vaux of Harrowden, who has experience in these matters and always takes a well-considered view. He has persisted in seeking more safeguards in the Bill by bringing back his amendments, but now aligned with the generally accepted definition of “persons of significant control” of UK companies. Those are usually persons holding more than 25% of the shares in a company or having the right to appoint a majority of the board of directors.

The noble Lord, Lord Vaux, is also surely right in his purpose in tabling Amendments 7 and 8 that designated nuclear companies should promptly notify the Secretary of State of any change in persons of significant control. However, I am not sure that it is necessary to state this explicitly in the Bill, and there could well be cases where the Government welcome changes in the shareholding structure of nuclear companies. As my noble friend explained to your Lordships in Committee, the Secretary of State may attach any conditions he deems appropriate to the designation of a nuclear company, and I believe that this will give him the flexibility to make whatever stipulations he needs to with regard to the balance of shareholdings in such a company.

The noble Lord, Lord Vaux, made some further good points today, although I must say that I consider his suggestion that a Chinese company might take a 51% stake in a Japanese company to be very unlikely, based on my experience of working in the Japanese stock exchange. Nevertheless, I look forward to the Minister’s reply to those points.

[Lord Oates (LD)]

My Lords, this group addresses the foreign ownership and transparency issues which we have just heard about, and it includes the amendment in my name and that my noble friend Lord Stunell, on transparency issues.

I very much support the compelling arguments made by the noble Lord, Lord Vaux, and I hope that the Minister will be able to address them. I was also pleased in Committee to support the amendment in the name of the noble Lord, Lord McNicol. He has brought back one that addresses the concerns that were raised in Committee, and he will certainly have the support of the Liberal Democrats. I think it fair to say that Peers on all sides of the House are concerned about the foreign ownership issue, so I hope the Minister can give us some comfort on this. However, if he cannot accept the amendment and if the noble Lord, Lord McNicol, chooses to divide the House, he will have our support.

Amendment 9, in my name and that of my noble friend Lord Stunell, deals with transparency. As drafted, Clause 13(2)(a) allows the Secretary of State to withhold any material which they believe would

“prejudice the commercial interests of any person”.

As I said in Committee, this is an enormously wide loophole which does not take any account of the degree of prejudice to the public interest of withholding that disclosure. Surely it is only proper in order to ensure effective public scrutiny that Ministers are not able to hide information behind claims of prejudice to commercial interests through wide loopholes such as this. These projects are being funded by the public and they have the right to know all relevant material, except in exceptional circumstances.

We already know how reluctant the Government and their agencies are to provide information on costs which is overwhelmingly in the public interest, but it goes wider than that. I note that in a reply to a Written Question from the noble Lord, Lord Alton, about meetings between Ministers and the China General Nuclear Power Group, the response was that no minutes were kept of that meeting. I am not clear whether that is within the Ministerial Code, but it goes to show that there is a reluctance to share information here.

The record of transparency in nuclear affairs is poor. This amendment would require the Secretary of State, if he withholds information, to make it clear that it was seriously prejudicial to commercial interest and to set out to Parliament his reasons for withholding it. I hope that the Minister can address those issues in his response.

[Lord Callanan (Con)]

My Lords, I thank all noble Lords for their contributions to the debates. As all the amendments in this group, tabled by the noble Lords, Lord McNicol, Lord Vaux, Lord Oates and Lord Stunell, are linked, I will address them together.

I start with those tabled by the noble Lord, Lord McNicol. As the noble Lord has described, the amendments seek to create an obligation for the Secretary of State to bring forward a list of foreign powers and entities that should not be allowed to invest in nuclear projects, and to use this as the basis for a new designation criteria under the Bill. I appreciate the sentiment behind the amendment but, as the noble Lord will understand, I cannot agree to it for a number of reasons. The amendment is too broad; it does not specify the range of companies that it could cover or the reasons that a foreign power or entity could be included on a list, and the excluded activities are extremely wide—all participation in all projects. This is an extremely broad-brush approach which could severely affect our ability to bring in finance and to deliver new nuclear projects. We would expect the amendment to have a chilling effect on investment, ultimately leading to a higher cost for consumers.

In addition, I am concerned about the further impacts of the amendment. In the noble Lord’s explanation of the amendment, he mentions that the list should act

“in a similar way to the Financial Action Task Force’s list of high-risk countries.”

However, the main focus of that list is to encourage enhanced due diligence in respect of these countries, rather than to provide an outright ban as this amendment seeks to do.

There is also an inconsistency between the amendment to Clause 2 and the proposed new insertion after Clause 3. While Clause 2 is targeted at preventing listed entities from having full or partial ownership of a nuclear company under the RAB model, the proposed new clause discusses barring entities’ involvement in the whole civil nuclear sector. If this wider approach were taken, it could limit our options for international co-operation on this sensitive issue, including obtaining technical advice.

By highlighting these problems, I do not suggest that I disagree with the sentiments behind the amendments. Indeed, as the noble Lord will know from the numerous discussions that I have had with him, the Government know that the protection of our national security must be the top priority. The Government already have strong oversight of foreign ownership in nuclear projects as a result of the NSI Act 2021, as the noble Lord, Lord Vaux, reminded us, which includes the ability to call in for assessment any qualifying acquisition if the Secretary of State reasonably suspects that it may give rise to national security concerns.

Importantly, certain acquisitions of entities operating in the civil nuclear sector require mandatory notification and clearance before the acquisition can be completed. This is set out in Schedule 4 to the notifiable acquisition regulations made under the Act, which specifically include entities which hold, or are in the process of applying for, a nuclear site licence or development consent under the Planning Act 2008 in relation to a nuclear reactor.

To provide an illustrative example, this means that if a new entity wanted to acquire over 25% of the shares in a nuclear project company, this would have to be notified to the Secretary of State and could not be completed until, or if, the Secretary of State agreed it. Indeed, the Secretary of State could require that the transaction was not progressed, assuming the relevant tests in the Act were satisfied. If the acquisition was completed without first being approved by the Secretary of State, or in breach of an order from the Secretary of State, it would be void and not legally effective.

--- Later in debate ---

Moved by

[Lord Oates]

10: Clause 19, page 16, line 12, at end insert—
“(4A) Revenue regulations must make provision to prevent electricity suppliers from recovering the costs of paying a revenue collection counterparty from customers claiming Universal Credit, or any legacy benefits specified in the regulations.”Member’s explanatory statement
This amendment would mean that electricity bill payers who qualify for Universal Credit, or certain legacy benefits, would not be liable for levies on their bills that pay into the RAB revenue collection fund.

[Lord Oates (LD)]

My Lords, I wish to test the opinion of the House.

--- Later in debate ---

[Viscount Trenchard (Con)]

My Lords, I wish to speak in support of Amendment 12, ably proposed by the noble Lord, Lord Ravensdale, and my noble friend Lady Neville-Rolfe. I tried to put my name to it on Tuesday but, because the Marshalled List was printed on Tuesday, it does not appear.

I do not think I need to repeat the arguments that have already been explained, but I want to ask the Minister how quickly the Government can take action to correct the situation in which nuclear projects are excluded from green financing. It was surprising and deeply disappointing that when the Treasury published the UK Government Green Financing Framework in June last year, nuclear projects were specifically excluded. Page 18 of the document states:

“Recognising that many sustainable investors have exclusionary criteria in place around nuclear energy, the UK Government will not finance any nuclear energy-related expenditures under the Framework.”


Does my noble friend not agree that this exclusion sent entirely the wrong signal to the market? The whole point is that “sustainable investors”, as the paper describes them, take their lead from the Government, which influences their ESG policies. Is it not now a matter of some urgency to withdraw this framework and replace it with one that rightly includes nuclear so that this damaging market distortion is removed?

Even the EU, despite continuing opposition from Germany, introduced a Complementary Climate Delegated Act on 2 February. The objective of the EU taxonomy is to step up the transition away from fossil fuels by drawing on all possible solutions to help the union reach its climate goals. The Commission has acknowledged that there is a role for private investment in gas and nuclear activities in the transition. It still does not acknowledge a continuing significant role for nuclear in a climate-neutral future, which it still maintains will be mostly based on renewable energy sources. The technical screening criteria contained in the EU delegated Act and the equivalent regulation referred to in the amendment are still concerned with transition to net zero rather than what is at least as important: to secure the continued supply of energy and electricity that rely on reliable sources of firm baseload power, such as nuclear, which are not dependent on whether the sun shines or the wind blows.

As for Amendments 13 and 14, the noble Baroness, Lady Bennett, exaggerates the nuclear waste issue. My noble friend Lady Bloomfield explained in Committee that the Energy Act 2008 already requires nuclear projects to have in place a funded decommissioning programme. Besides this, as your Lordships are aware, progress is being made in identifying suitable sites for geological disposal facilities.

I remind the noble Baroness that all the used nuclear fuel ever produced in the world since the 1950s would fit into one football pitch to the height of approximately 10 yards, so I do not think the trains she talked about will have very many wagons. Has she ever expressed any concern about the massive costs and energy requirement that will be incurred in disposing of millions of wind turbines and solar panels when they reach the end of their operational lives? Furthermore, France and some other countries reprocess and recycle nuclear fuel, which can make it even more productive. Some advanced reactor technologies are designed to run on used fuel. Happily, the noble Baroness has said she will not move her Amendments 13 and 14, which is good news, but if she had I would have voted against them.

[Lord Oates (LD)]

My Lords, I am happy to give Amendment 11, in the name of the noble Lord, Lord McNicol, the support of these Benches. It is particularly important given the failures of the early cost recovery model in the United States. Whatever one’s view of nuclear energy, we really do not want to end up spending more than $20 billion, like they did, and getting no new nuclear plants at all. South Carolina in particular spent $9 billion before Westinghouse went bankrupt. If we are to go ahead with this, we certainly need to ensure that it delivers something at the end of it.

On Amendment 12, I will not go into the detailed debate about the taxonomy issue. The one thing I will say, in the context of the amendments from the noble Baroness, Lady Bennett of Manor Castle, is that whether or not nuclear is regarded as a sustainable means of producing energy, it is certainly not clean. It produces significant amounts of waste that have to be dealt with. Nearly 70 years after our first nuclear plant came online, there has been a scandalous failure to provide a permanent solution. We heard from the noble Viscount, Lord Trenchard, that discussions are ongoing about the geological disposal facility. I am sure we will hear more from the Minister on that. This has been going on for years and years and there is no permanent solution.

I note that the noble Baroness, Lady Bennett, is not going to move her amendments. We certainly discussed this in some detail in Committee so I will not dwell on it further, but the nuclear industry’s failure to take its responsibilities seriously in this way is notable. Indeed, until the Nuclear Decommissioning Authority was set up there was no national plan to deal with waste at all. It has done a great job trying to quantify the level of the situation—of course, we have seen bills and disposal costs go up and up year on year—but it is a really important point and I am grateful to the noble Baroness for bringing her amendments to the attention of the House.

[Lord Callanan (Con)]

I thank noble Lords for their contributions to what will hopefully be the final grouping on this Bill. I thank all the hardy souls who have lasted throughout the Committee and Report stages to get to this final stage.

Let me start with Amendment Neville—you can tell it is the final stage; the amendment of the noble Lord, Lord McNicol, is what I should have said. Why did I say that? In my mind, they sounded the same: Lord McNicol and Amendment 11.

Let me state to the noble Lord that I share his ambition to maximise the chances that a nuclear RAB project will commence or continue generation in the unlikely event of an insolvency, therefore preventing sunk consumer costs. It is for this very reason that we have introduced a special administration regime for nuclear RAB projects, with the aim of ensuring that consumers reap the benefits of the low-carbon electricity generated from a nuclear power station which they helped to build. In light of Amendment 11, I consider that it would be helpful to provide the noble Lord with a clear explanation as to the exit routes available to a special administrator under this legislation, and how these would not impinge on the ability to bring a nuclear power station under public control, if that is in the best interests of consumers and taxpayers.

Let me first reaffirm that special administration is a court-administered process and a nuclear administrator would be an officer of the court. It is the nuclear administrator, under the supervision of the court, who would be tasked with exploring all viable options for ensuring that the objectives of the administration are met. This is supported by the Secretary of State, who is able to provide funding and does have options for bringing the administration to an end in certain circumstances, as I will now explain.

The first route available to the administrator is that the company is rescued as a going concern. This is the preferred option for achieving the objective, save in certain circumstances, and would ensure that normal service was resumed and the plant would continue construction or generation. If this is the case and the objective can be achieved, then the Secretary of State, Ofgem or the administrator may then apply to the courts to end the special administration order.

Should this not be feasible, the administrator’s second option would be to seek to transfer the company’s assets and liabilities to a privately or publicly owned company or companies. This is called an energy transfer scheme and is provided for by Schedule 21 to the Energy Act 2004, as applied by Clause 33 of the Bill. While the Secretary of State must approve an energy transfer scheme, the court retains overall responsibility for the process as it appoints the time from which a scheme would take effect.

It is considered that, as the nuclear administrator will need to achieve the objective of the administration order as quickly and efficiently as possible, in practice this may mean that an energy transfer scheme is explored immediately if this is the most viable means to achieve the objective of the administration. This may be supported by the Secretary of State where, amongst other matters, it is in the public interest.

Should neither of the options I mentioned be possible or in the best interests of taxpayers or consumers, Section 40 of the Energy Act 2004 would establish the option of a nuclear transfer scheme. This is subject to approval from Her Majesty’s Treasury and is intended to deal with circumstances where, for example, during the plant’s operational phase, for reasons of public safety or to minimise the costs to the taxpayer, the Nuclear Decommissioning Authority is given responsibility for decommissioning the plant.

Gazprom Energy

Lord Oates Excerpts

Thursday 24th March 2022 Lords Chamber

Asked by

[Lord Oates]

To ask Her Majesty’s Government what plans they have (1) to withdraw Gazprom Energy’s licence to operate in the United Kingdom, or (2) to place Gazprom Energy into special administration.

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

My Lords, Gazprom Energy’s parent company has been sanctioned by the UK Government in relation to transferable securities. Our sanctions continue to put pressure on Russia to cease its war on Ukraine. As regards the retail arm in GB, Ofgem and BEIS will continue to work closely with all energy suppliers to ensure that customer supply remains uninterrupted, and we have tried and tested practices in place for situations where suppliers exit the market.

[Lord Oates (LD)]

I thank the Minister for his Answer, but can he explain to the House why it is that a subsidiary of Russian state-controlled Gazprom is continuing to operate in the United Kingdom one month after Russia’s brutal invasion of Ukraine, and when his own colleague in government, the Health Secretary, has been calling on NHS bodies to cancel contracts with the company, and local authorities and businesses are doing the same? Is it not time for the Government to stop dithering and take Gazprom Energy into administration now?

[Lord Callanan (Con)]

We keep these matters under constant review and the sanctions regime is constantly evolving. The noble Lord will be aware that the Foreign Secretary today sanctioned another 65 new bodies, and we have now sanctioned over 1,000 individuals and businesses since the invasion started.

--- Later in debate ---

[Lord Callanan (Con)]

As I said, it is difficult for me at this stage to comment on individual cases. However, we keep the whole sanctioning regime under constant review and new rounds of sanctions are constantly announced. It is difficult in this case because of the large numbers of essential businesses, schools, hospitals, et cetera that have contracts with Gazprom UK, but we will keep these matters under review.

[Lord Oates (LD)]

Can the Minister tell the House how he squares his earlier answer that it is up to individuals, businesses and organisations to make decisions about whether they cancel their contracts with Gazprom with the instruction that his colleague the Health Secretary has given to NHS England that it must withdraw from contracts? With various organisations withdrawing from these contracts—local authorities, health authorities and businesses—is it not almost inevitable that Gazprom will collapse? Would it not make much more sense for the Government to get ahead of this and take Gazprom into special administration now?

[Lord Callanan (Con)]

Ofgem has a number of processes in place to deal with supplier collapses and we stand ready to put those into effect if they are required. However, these are individual commercial decisions. Local authorities, for instance, are individual legal entities and they have to take their own commercial contractual decisions, but we will support them as much as we possibly can in that process.