Great British Energy Bill

Debate between Lord Offord of Garvel and Lord Hunt of Kings Heath

Committee stage
Monday 13th January 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not really think I can go any further than the remarks I have made this afternoon. It will ultimately be for GBE’s board to decide how it will arrange its board committees. I have noted what the noble Lord said about an investment committee. I will certainly draw his remarks to the attention of Jürgen Maier, who may not be an investment expert, as the noble Lord suggests, but my goodness me he has a lot of experience in this sector.

[Lord Offord of Garvel (Con)]

My Lords, in bringing the debate on these amendments to a close, I can deal head-on with the Minister’s comments and those of the noble Earl, Lord Russell, about the time given to the Bill. We have so far had one and a half days in Committee and we have one further day allocated, which will be only two and a half days on a Bill that spends £8.3 billion of taxpayers’ money, has no detail on how that money will be spent and gives endless power to the Secretary of State for Energy. It is entirely reasonable that we scrutinise it. The weekend’s press was full of the energy crisis that we face, with the shortage, storage and national grid issues.

[Lord Hunt of Kings Heath (Lab)]

My Lords, with the greatest respect, there is no energy crisis.

[Lord Offord of Garvel (Con)]

As I said, the point of government is to ensure that there is no energy crisis and at the weekend we had reports of there being gas supplies for less than one week, which is concerning to the public. Therefore, it is only fair and reasonable that Parliament debates that in some detail.

[Lord Hunt of Kings Heath (Lab)]

My Lords, what we had was one company looking for government subsidies using the opportunity to make alarmist headlines.

[Lord Offord of Garvel (Con)]

The point is that this is a topical debate that the whole of the public are interested in. They understand energy prices like nothing else now. They understand that, in terms of their household budgets, this is a major part of their cost of living and it is only reasonable that we get to debate this.

The amendments in this group are straightforward and simple. They are nothing to do with micromanagement; they are only to do with the accountability and transparency of this new company, which, as my noble friend Lord Petitgas pointed out, is not an operating company. The public think this is a company that makes cheap energy. It is an investment company sitting on one floor of a building in Aberdeen making investment decisions, and we have no idea how it will do that.

At the last election, the Government made promises to working people on this topic: to reduce energy costs, create jobs and drive forward our energy transition. Therefore, taking my noble friend Lady Noakes’s constructive point, we can argue about how we deliver the substance of these amendments, but we should not ignore the substance. Is it not fair and reasonable that we have in the Bill some consideration of government promises made to the public about the cost of energy—£300 in savings, which, incidentally, is £8 billion, the same amount as is being invested in 28 million households at £300—or the fact that 650,000 jobs are to be created? Is it not reasonable that the Bill somewhere talks about the fact that we want a strategic priority for the UK to develop its own energy supply chain? Is it not unreasonable that we have amendments that deal with how we make sure that the supply chain is fair? We have talked about a fair transition: well, where is the fair transition, to pick up what the noble Lords, Lord Bruce and Lord Alton, said, when we destroy our own highly skilled jobs in the north-east or end up using products made under dubious circumstances in overseas territories?

I would argue that all these amendments need to be considered. There is consensus in this House that we need energy security and that we need to get to 2050. The question is: why is this being speeded up artificially when we and the technology are not ready? Why are we doing this artificially?

My final point has been mentioned by many noble Lords so far: none of this works without the plumbing working. The national grid needs a serious upgrade and comprehensive investment to deliver this. If in these straitened times—we are continually reminded by the Government Benches that there is no money—there is a spare £8 billion, should it not be better used by being put into the national grid once and for all? In the meantime, given that we are where we are in Committee, I beg leave to withdraw the amendment.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, I want to make just two points. The noble Lord, Lord Teverson, made a very interesting and wise contribution. I say to the noble Lord, Lord Hamilton, that of course I have heard the expression that Governments are not very good at picking winners. That is why we have set up GBE. We will have a company with people with expertise to enable investments to take place within the context we set under Clause 3 and Clause 5 as strategic priorities. None the less, it will have operational independence.

The noble Lord, Lord Teverson, is right; noble Lords in their various amendments are seeking to pin down GBE through excessive reporting requirements. The risk is that GBE, far from being allowed to flourish and develop, will be inhibited and micromanaged. That is why these amendments are wholly inappropriate in relation to Clause 6. The power of direction is not to be used in the way that noble Lords are suggesting; it is a backstop power. What is the point of setting up GBE if we are to undermine its independence in the way these amendments suggest?

[Lord Offord of Garvel (Con)]

My Lords, as in the previous group, these amendments are not designed in any way to micromanage. There is very little in the Bill that gives us any indication of how this company will operate. As indicated by my noble friend Lord Petitgas, it is an investment company without an investment committee or any investment directors. All that is being sought by these amendments is some level of accountability and scrutiny.

Once again, I say that when promises are made to the public that the Bill will address their concerns, it is not unreasonable that we ask for amendments to be made accordingly. For example, looking at employment in Amendment 68, we are simply asking for a report—as the noble Lord, Lord Bruce, said—on the impact these investments make on employment and bills. Why is that an unreasonable thing to say? We have 200,000 people in highly skilled jobs in the North Sea. They are worried that they are about to be phased out unilaterally and prematurely. Why is it unreasonable to have somewhere in the Bill a requirement that GBE comes to Parliament and explains what it is doing in relation to employment in this key sector?

As we have said before, the Bill has failed to substantiate the promises made. The job of the Opposition is to highlight that and to make it clear that this needs to be debated and scrutinised. That is what we will continue to do. In light of that, for now I will withdraw the amendment.

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[Lord Offord of Garvel (Con)]

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

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

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

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

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

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

Amendment 85D requires Great British Energy to

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

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

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

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to the noble Lord, Lord Murray, for Amendments 85D and 85E, which are focused on the issue of renewable energy curtailment. I must repeat, as I said earlier, that this debate is, in essence, about technologies, rather than the appropriate use of the directions in Clause 6. However, I assure the noble Lord that we are determined to increase significantly the deployment of short-term and long-term duration electricity storage to reduce curtailment.

I, too, was present in the debate on energy storage last Thursday, which was very interesting. My noble friend Lady Gustafsson recognised then that a variety of energy storage technologies would be needed to achieve net zero. That includes technologies such as lithium batteries and pumped hydropower storage—which can deploy at different scales and provide output over different lengths of time—and it can include emerging technologies, such as liquid air energy storage and flow batteries. Low-carbon hydrogen, too, can act as a low-carbon flexible generating technology and provide very long duration energy storage.

Today, around 7 gigawatts’ worth of grid-scale electricity storage is operational in Great Britain. This is made up of 2.8 gigawatts of pumped hydrogen and 4.3 gigawatts of grid-scale lithium battery storage. I add that we have announced a long-duration energy support scheme. We will publish a technical document in February. Applications will open in the second quarter, and we hope that the first agreements under the cap and floor system will take place in early 2026. It will be technology neutral, and it will be for projects that could not be built without the cap and floor system.

There are some developments in train: SSE, for instance, is doing exploratory tunnelling in the north of Scotland for pumped-storage hydro. Highview Power has reached FID in terms of liquid air energy storage near Carrington. Points on curtailment costs are well made; we see it as a key priority to accelerate network infrastructure to increase capacity on network and reduce constraints.

I do not think there is a lacuna; the Bill is constructed in the way it is. We have Clause 3 and the strategic statement of priorities in Clause 5. I hope I have reassured the noble Lord that the substantive point he raises is important and accepted by the Government.

Great British Energy Bill

Debate between Lord Offord of Garvel and Lord Hunt of Kings Heath

Committee stage
Tuesday 17th December 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

My Lords, I thank noble Lords who have contributed: the noble Lord, Lord Vaux, for opening this group, the noble Earl, Lord Russell, and my noble friends Lord Hamilton, Lord Effingham, Lord Howell, Lord Trenchard and Lady McIntosh. I particularly thank my noble friend Lady Noakes for her detailed scrutiny of the Bill and her expertise.

The debate has raised crucial issues regarding how our energy future is shaped, particularly community energy, transparency and the governance of strategic priorities. It is evident that we in this House today share many of the same concerns about the absence of a statement of strategic priorities and plans. I reiterate that this is in the context of the Bill being responsible for £8.3 billion of taxpayers’ money, with no detail as to GBE’s plans, priorities, objectives and purpose. As the noble Lord, Lord Vaux, said, the Bill is merely a skeleton, providing unabridged powers to the Secretary of State without clarity on how they can be used.

With that in mind, I welcome Amendment 119, tabled by my noble friend Lady Noakes, which would delay the commencement of other provisions in the Bill until a statement of strategic priorities has been laid before Parliament. This is a sensible and necessary step to ensure that Parliament and the public have sight of the plans that will guide the operation of this great new company, GBE. Furthermore, Amendment 58 would ensure that Parliament is made aware of Great British Energy’s strategic priorities, and Amendment 52 would give Parliament the power to reject a statement of strategic priorities once received. We cannot, in good conscience, simply allow this Bill to proceed without the opportunity to scrutinise these priorities, which will guide £8.3 billion of taxpayers’ investment.

Amendment 51 would introduce a clear time limit for the Secretary of State to publish the statement, while Amendment 54 would ensure that a motion for resolution is tabled in both Houses of Parliament. These amendments provide the necessary transparency and accountability to ensure that Parliament can scrutinise and approve those priorities before any further steps are taken. The Bill cannot and should not proceed until we have seen the strategic priorities.

This brings me to the question of whether Clause 5 should stand part of the Bill. In its report, the Constitution Committee expressed concern that Clauses 5 and 6 amount to disguised legislation and that Clause 5 does not offer an adequate degree of parliamentary oversight. This is a serious constitutional issue, and I hope that the Minister takes the committee’s concerns seriously as we continue our debate.

Amendment 53, tabled by my noble friend Lady McIntosh of Pickering, seeks to insert a provision into Clause 5 requiring the Secretary of State to produce a statement to the chairs of the relevant Select Committees in both Houses of Parliament. This amendment is fundamentally about transparency, and its purpose is simple: to ensure that Parliament can properly scrutinise the actions of the Secretary of State and guarantee that public money is being used efficiently and in the public interest. This is why we propose that a copy of a strategic statement be sent to the relevant Select Committees for their review and input.

As discussed earlier on Amendment 57, tabled by my noble friend Lord Effingham, transparency is not a luxury; it is a necessity. Transparency ensures that decisions are made openly and subject to public and parliamentary scrutiny. He brought to our attention consideration of the requirement that GBE deal with the devolved Administrations throughout the UK.

Finally, Amendment 90 seeks to insert at the end of Clause 7 the provision that the Secretary of State must

“arrange for a statement to be made in each House”.

The intent behind this amendment is to ensure that the actions of the Government in relation to Great British Energy are made public and accountable. For such a significant and impactful initiative, there must be a mechanism for direct communication with Parliament. This would allow both Houses to question, debate and hold the Government to account on any developments or changes in the direction of the company.

A comparison has already been drawn by the noble Lord, Lord Vaux, with the National Wealth Fund, previously the UK Infrastructure Bank. That organisation experienced thorough scrutiny and testing before its establishment. Why should we treat GBE any differently? If we expect such rigorous assessment for the UK Infrastructure Bank, it stands to reason that a similar level of transparency and parliamentary scrutiny should apply to Great British Energy. I urge noble Lords to support this amendment, as it reinforces the principles of accountability that should be at the heart of this Bill.

In conclusion, I welcome the amendments and the ongoing discussions regarding the strategic priorities and transparency of Great British Energy. The strategic priorities are critical to the success of the Bill, and I am grateful to all noble Lords who have expressed similar concerns. I reiterate my support for my noble friend Lady Noakes and all other noble Lords who have raised similar issues.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am most grateful again to noble Lords who have raised a number of very interesting points in relation to Clause 5 and the statement of strategic priorities. I remind the Committee that the founding statement set out GBE’s purpose, priorities and objectives, including its mission statements and its five functions. The first statement of strategic priorities is intended to ensure that Great British Energy will be focused on driving clean energy deployment, boosting energy independence, creating jobs and ensuring that UK taxpayers, bill payers and communities reap the benefits of clean, secure, home-grown energy.

Clearly, Clause 5 is important in that respect. The noble Lord, Lord Offord, will not be surprised that I will resist his opposition to it standing part of the Bill. He made another point in relation to the investment bank legislation. I understand the point; he knows that we have looked at this legislation and taken parts from it, but we have also looked at Great British Nuclear, which his Government put through in the last Energy Act. In some cases, we think that that is appropriate to look at in relation to the way this legislation has been framed.

Amendments 51, 52, 53, 54, 57, 58, 90, 119 and 128 all refer to the statement of strategic priorities, with some amendments seeking to defer commencement of the Bill in relation to the statement. The noble Lord, Lord Howell, always speaks with great experience on energy, and he is threatening us with many more amendments the next time we meet. We believe that the best way to get stability on prices and security of energy, and to deal with climate change, is to move in the way that we have set out. Numerous organisations have looked at it and say that, in the context of value for money, investment decisions and cost to government, this will be the cheapest way forward in the end, and that staying reliant on fossil fuels, with the unreliability of the international market, would not be a productive use of our resources and would do nothing for climate change. That is why we are going down this path.

I come to the amendment of the noble Lord, Lord Vaux, and his opening remarks on this group. We do not wish to escape parliamentary scrutiny. I say to the noble Baroness, Lady Noakes, that we do not want to weaken accountability processes. I assure her that there is no way we will use the power of direction in the way that she suggested might happen. She referred to the power of direction and from what she said I took it that she thought it could be used in a way which would simply direct GBE, instead of the statement of priorities, but perhaps I have confused that.

Great British Energy Bill

Debate between Lord Offord of Garvel and Lord Hunt of Kings Heath

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

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

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

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

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

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

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

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

“wholly owned by the Crown”

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

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

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

[Lord Offord of Garvel (Con)]

I thank noble Lords for their insightful contributions on the designation of a company as Great British Energy and the ownership of such a company. I welcome the amendments from the noble Lords, Lord Vaux and Lord Cameron—Amendments 4, 6 and 7. They were designed to probe the benefits of having flexibility to allow minority external equity ownership of Great British Energy. However, I cannot disagree with anything that the noble Baroness, Lady Noakes, said about introducing private equity into what is, in effect, government-underwritten risk, which means that it really should be debt.

The fact we are debating this indicates that there is no clarity about the substance and purpose of the Bill or about the exact ownership of Great British Energy. Given that we are debating £8.3 billion of taxpayers’ money, and that there is no limitation on how that financial assistance can be given or structured, we have a concern that will continue through Committee.

The experience of the House was brought into the debate by the noble Lords, Lord Howell and Lord Hamilton, who looked back over previous generations to instances of how overarching powers given to Secretaries of State can be used if not abused, sometimes with the best of intentions. Again, it speaks to how there could be more clarity in the Bill about how those powers will be allocated. We believe that accounting and reporting measures are absent from the Bill and that we need further detail and clarity on the priorities and plans of Great British Energy. I expect that we will return to those matters on Report but, in the meantime, I beg leave to withdraw the amendment.

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[Lord Offord of Garvel (Con)]

My Lords, I rise to speak in favour of my noble friend Lady Noakes’s stand part notice. This clause deals with the Crown status—or more accurately, the lack of Crown status—of Great British Energy, and it is imperative that we probe the Government’s reasoning and consider the implications of this approach.

Clause 2 states clearly:

“Great British Energy is not to be regarded as a servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown”.


Additionally, it specifies that the property of Great British Energy

“is not to be regarded as property of, or property held on behalf of, the Crown”.

Let us pause and consider what this means. Great British Energy is envisaged as a significant player in the energy sector, with the Government making it central to our net-zero ambitions and national energy security. It may well handle substantial public funds, represent the UK’s interests domestically and internationally, and carry out critical projects on behalf of the Government. Yet the Government have deliberately chosen to sever this body from the legal, financial and symbolic framework provided by Crown status.

I pose the question: why? Why has this decision been taken, and what are the potential consequences? There are three areas of concern I wish to highlight; the first is accountability and oversight. Without Crown status, Great British Energy sits outside the constitutional framework that traditionally governs Crown bodies. Will this weaken Parliament’s ability to scrutinise its actions? Will the Comptroller and Auditor-General have clear access to audit its books? In an age of heightened public interest in corporate governance and transparency, these questions should be considered.

Secondly, on legal implications, by denying Crown status, Great British Energy forfeits the legal immunities and privileges that might ordinarily protect a public body in its dealings. Does this leave it more vulnerable to litigation? Could it become ensnared in disputes that detract from its primary mission?

Thirdly, this is a public body intended to work for the public good. Denying it Crown status might send a message—rightly or wrongly—that it is not fully embedded within the public sector, raising questions about its mission and accountability to the public interest. I do not suggest that Crown status is a necessity in all circumstances. Indeed, there may be good reasons for taking this route, such as granting Great British Energy greater operational flexibility or shielding the Government from certain liabilities—but these reasons have not been clearly articulated by the Government, and they deserve to be.

As we face unprecedented challenges in energy policy, the creation of Great British Energy is a momentous step. Its structure and status must instil public confidence, ensure robust accountability, and align seamlessly with the broader aims of our national strategy. Clause 2, as it stands, leaves too many unanswered questions.

[Lord Hunt of Kings Heath (Lab)]

My Lords, we think Clause 2 is very important. It ensures that Great British Energy will serve the public as an independent company and operate in the same way as other UK companies. Before I come on to the main body of the argument, I say to the noble Lord, Lord Howell, that he had some interesting points to make about the role of advanced nuclear reactors tied into industrial processes and data centres. We are watching very carefully what is happening in the US and we are in discussion with some of the companies themselves. I very much take his point about that.

The clause ensures that Great British Energy will not have any special status, immunity or privilege normally associated with the Crown, nor will its property be seen as the property of the Crown. It will also be subject to the same legal requirements as other companies. This is in line with the vision we have had for Great British Energy from the beginning: that it should be an operationally independent and agile market player, and we want to ensure it remains that way. If we were to leave out the clause, either Great British Energy would be regarded as a servant or agent of the Crown and have the immunity or privilege associated with that status; or, at least, there would be ambiguity as to whether it has that status.

I understand that the courts in recent years have been faced with questions about whether certain persons or bodies had Crown immunity, and the issue was not clear in the legislation—for example, the Commissioners of Customs and Excise, and the Commissioners of Prisons. The clause avoids that ambiguity and the possibility of any litigation arising regarding Great British Energy’s status. Examples of how this might arise in the context of Great British Energy, are, first, that Crown bodies are generally not covered by the requirements of the Employers’ Liability (Compulsory Insurance) Act 1969; and, secondly, that parts of the Health and Safety at Work etc. Act 1974 do not bind the Crown. We would not want Great British Energy to be exempt from that legislation or for it to be unclear whether it is bound by such legislation.

As I mentioned earlier in response to the noble Baroness, Lady Noakes, we expect Great British Energy and the National Wealth Fund to work well together. It is while Great British Energy is being established that it will utilise the National Wealth Fund’s existing expertise, which I think has been widely acknowledged. This is work in progress, and I cannot say very much more than that at the moment. We are not making it up as we are going along. There are earnest discussions between ourselves, His Majesty’s Treasury and Jürgen Maier, the chair of Great British Energy, and we will work closely with His Majesty’s Treasury to provide clarity to the market on how the two institutions will complement each other and how their relationship will evolve over time.

I also acknowledge that the partnership with the Crown Estate will be hugely valuable. On the question of the Crown Estate’s own position, I will have to seek further advice and write to the noble Baroness, Lady Noakes, because I do not have the answer at the moment.

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[Lord Offord of Garvel (Con)]

My Lords, I thank my noble friend Lord Naseby for introducing his thoughtful and technical amendments, which no doubt would improve the quality of the Bill should they pass. I also thank all noble Lords who have spoken on this group. Each amendment contributes meaningfully to the Bill’s ultimate aim by ensuring that governance reflects accountability, fairness and long-term sustainability.

I will limit my remarks to Amendments 8, 9, 12 and 13. Amendment 8 proposes the addition of “investing in” alongside “encouraging”. This is quite important, because it seeks a balance between fostering enterprise and ensuring strategic government investment to safeguard our national energy. We want a partnership between government and the private sector. By explicitly including “investing in”, the amendment aligns with our commitment to a dynamic and sustainable energy sector.

Amendment 9, by adding “one or more of”, would bring clarity and flexibility to the Government’s strategic objectives in advancing energy policies. It would ensure that the Government could prioritise specific energy initiatives based on strategic needs without being overburdened by one limiting obligation. It reflects the core principles of pragmatism and efficiency, ensuring that resources can be allocated where they can deliver the greatest impact.

We know that energy security and innovation in this area—referred to by my noble friend Lord Howell as bigger perhaps than the Industrial Revolution—require adaptability. Whether we are investing in offshore wind, nuclear power or emerging technologies, the amendment would allow for a tailored approach that maximised value for taxpayers’ money and strengthened our energy independence. I urge colleagues to support it to make sure that we have smart, effective and flexible governance in the Bill.

My noble friend Lord Naseby’s Amendment 12 is again quite technical. It seeks to insert the phrase “directly or indirectly” into Clause 3, which would again enhance the Bill by acknowledging the interconnected nature of emissions reductions and energy initiatives. This addition would ensure a pragmatic approach to addressing climate goals. Emissions reductions often involve complex supply chains and secondary impacts. Recognising these indirect contributions reflects our understanding of the broader economic and technological dynamics that drive innovation and decarbonisation. For example, investments in nuclear power or advanced grid infrastructure may not lower emissions immediately but they create the conditions for sustainable reductions in the long term, towards 2050 net zero. The amendment therefore provides the flexibility needed to pursue bold initiatives while holding true to the principle of cost-effectiveness for taxpayers. By adopting it, we would make the Bill more robust, practical and reflective of real-world energy systems. I urge my colleagues to support it.

Finally, my noble friend Lord Naseby’s Amendment 13 proposes the substitution of the word “produced” with “derived” in Clause 3. Again, this is a technical and seemingly small change, but it holds significant importance for our energy policy. “Derived” more accurately captures the diverse and evolving sources of energy in our transition to a low-carbon future. Energy comes increasingly from various integrated systems, including renewable sources, nuclear, tidal—as we have heard in great detail—and hydrogen. The term “produced” can be limiting, whereas “derived” acknowledges the broader, more dynamic approach needed to secure our energy future. The amendment provides the flexibility to encompass a wide range of energy sources and technologies, ensuring that our energy policies remain adaptable and forward thinking. It should reflect our commitment not only to reduce emissions but to foster innovation and maintain energy security in the face of global challenges.

[Lord Hunt of Kings Heath (Lab)]

My Lords, this was a very interesting group. It clearly refers to a range of technologies in which Great British Energy could invest. I should start by saying that we intend GBE to be operationally independent and it is not for us to rigidly define what it should do or in which technologies it should invest.

The noble Baroness, Lady Hayman, of course anticipated my list argument because she has used it herself a number of times, but I take her point about ensuring long-term certainty and a stable environment for some of these crucial sectors. I recognise that GBE has great potential so to do, particularly in sectors where investment from the private sector may initially be difficult. I also take her point about how this has to be aligned with planning reform, enhanced grid connections and infrastructure.

Amendments 8, 9, 12, 13, 14, 23, 31 and 32, in essence, relate to technologies specific to GBE’s objects in Clause 3. Amendment 23 from the noble Earl, Lord Russell, would prevent Great British Energy being involved in CCUS projects, whereas the amendments from the noble Lord, Lord Naseby, would ensure that both carbon capture and storage and hydrogen fell within the scope of the Bill. The Government view both hydrogen and CCUS as vital to our drive towards net zero and to ensuring a just transition for industries based in the North Sea.

Great British Energy Bill

Debate between Lord Offord of Garvel and Lord Hunt of Kings Heath

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I really cannot disagree with anything noble Lords have said in this debate, although I do not believe we need an amendment. I utterly agree that nuclear power is essential to the future; it provides the essential baseload; it is safe, secure and reliable. We have great opportunities in the UK to develop nuclear energy and the supply chain, even more than we have now. Obviously, Rolls-Royce, from a UK company point of view, has great potential.

We are keeping a very close eye on Hinkley Point C; the operational date that has been given for the first unit between 2029 and 2031 is very crucial. We are working very hard to get Sizewell C to final investment decision in the next few months. We have the SMR programme, and I agree with the noble Baroness, Lady Bloomfield, about the importance and value of the work of Great British Nuclear. We are regularly engaged with GBN, and I pay tribute to the great work that its chair and chief executive are doing.

I have met a number of companies who are very interested in developing AMRs. We have all seen the experience of companies such as Amazon, in the US, linking small modular reactors and advanced modular reactors with data centres; clearly, we wish the UK to be very much part of that. In terms of the UK’s growth agenda, if we combine military and civil nuclear defence requirements, we know that the nuclear skills task force has now estimated that we need about 40,000 extra people in the industry by 2030, and moving on with even more people by the 2040s. This is at once a challenge and a huge opportunity, because the careers that are offered in the nuclear industry are secure and well paid, and it is a very exciting industry to go into.

The noble Lord, Lord Offord, quoted figures from the IEA. Although we have seen a global downturn in nuclear energy, it is right to now talk about a renaissance. At international gatherings, it is pretty clear that there are countries coming back to nuclear, as we are, and other countries that wish to develop nuclear energy for the first time. This is very encouraging; we know that, in terms of popular opinion, there is a much more positive attitude among the public towards nuclear energy.

In saying I do not believe that the amendment is necessary, I do very much embrace the comments of the noble Lords and I can assure them that, in the department, we see nuclear energy as having an essential role for the future.

[Lord Offord of Garvel (Con)]

I thank the Minister for his clarity and unequivocal support of nuclear, and, indeed, for his reply to my noble friend Lord Howell of Guildford, who asked a specific question in relation to the GB Energy Bill. GB Energy can, if required, participate in nuclear, but the clear understanding is that discussions are ongoing with GB Nuclear. So I would encourage the Government to continue to clarify what that will look like and how it will be funded going forward.

[Lord Hunt of Kings Heath (Lab)]

If I may come back on that, the noble Lord may have seen that the energy Select Committee had a hearing at which the chair of Great British Energy and then the chair of Great British Nuclear gave evidence. It is clear from what they said that we will have no difficulty at all in establishing a co-operative relationship.

[Lord Offord of Garvel (Con)]

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

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, I thank the noble Lord, Lord Alton of Liverpool, and the noble Earl, Lord Russell, for their amendments. We all agree that modern slavery is one of the great scourges of our time. It is estimated that tens of millions of people are trapped in forced labour worldwide, many of them in sectors tied to energy production and manufacturing. Indeed, as the noble Lord and the noble Earl pointed out very eloquently, renewable energy technologies such as solar panels rely on materials such as polysilicon, much of which is sourced from regions where reports of forced labour and human rights abuses are widespread.

These amendments seek to ensure that GBE operates with integrity and accountability in its supply chain practices. Each amendment addresses a crucial aspect of ethical responsibility, and together they would bind the Government to ensure clean energy does not come at the expense of human rights, ethical labour practices or transparency. I encourage the Government to look at this matter carefully. Can the Minister explain what measures will be put in place to ensure that there is oversight of Great British Energy’s supply chains? If Great British Energy is to represent the values of this nation, there is a strong case for tougher measures to prevent public funds being spent in a way that supports or sustains supply chains that exploit human beings.

On Amendment 109, while I recognise the sensitivity and complexity of this issue, it is crucial that we approach it with transparency and courage. Consumers and stakeholders have a right to know the origins of the products they use and the conditions under which they are made. I hope the Minister will listen carefully to the arguments made on this matter; we on these Benches will be very interested to hear his reply.

As a publicly backed entity, Great British Energy has an opportunity to set an example and be a model to other countries. I am sure the Government agree there are opportunities here and we look forward to hearing their response.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I thank the noble Lord, Lord Alton, for his expert introduction to the amendment. I also thank the noble Earl, Lord Russell, for his wise comments. I say to the noble Lord, Lord Offord, that we are, of course listening very carefully to this important debate, and I have no doubt whatever about the gravity of the issue. The amendments seek to highlight the importance of ensuring that our supply chains are protected from forced labour, and I wholeheartedly support this.

Great British Nuclear: Modular Reactors

Debate between Lord Offord of Garvel and Lord Hunt of Kings Heath

Monday 2nd December 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a very important agreement. We have a very good relationship with the US on all things civil nuclear, and this will enable us to enhance that. I should also say that at COP, six new countries joined existing countries in declaration of an aim to triple nuclear power globally by 2050. There are now 31 signatures, which is very important. It is an indication that globally we are seeing a renaissance in nuclear, in which this Government wish our own nuclear industry to be a part.

[Lord Offord of Garvel (Con)]

Last week, in answer to a question on COP 29 from the noble and learned Baroness, Lady Butler-Sloss, referencing GB Energy, the noble Baroness, Lady Smith of Basildon, suggested that the Government would look at nuclear energy, specifically small nuclear reactors. Can the Minister clarify whether that is indeed the case?

[Lord Hunt of Kings Heath (Lab)]

I am not sure I understand the question, but if it is whether we recognise the importance of SMRs in this country and generally, the answer is yes. On the benefits of the use of small modular reactors, having a modular approach in which much can be assembled off-site brings huge advantages. Going forward, we see that SMRs have great potential, and of course UK companies themselves have great potential.

Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024

Debate between Lord Offord of Garvel and Lord Hunt of Kings Heath

Monday 2nd December 2024 Grand Committee

[Lord Offord of Garvel (Con)]

My Lords, I support this instrument. This order will expand the scope of the UK Emissions Trading Scheme to include carbon dioxide venting in the upstream oil and gas sector. It will introduce deficit notices to allow regulators to penalise operators for failing to surrender allowances by a set date and makes technical changes to penalties. There is no doubt that climate change is an issue that any Government need to take steps to tackle. That is why the Conservative Government introduced the UK ETS, to ensure that businesses monitored, reported on and surrendered allowances in respect of their greenhouse gas emissions. We are glad that the Government recognise the benefits of the scheme and are taking steps to continue to use it.

However, this Government have prioritised their climate policy above financial and economic concerns. While we understand that there must be trade-offs to reach our net-zero targets, I caution them on raising taxes consistently on the North Sea oil industry—they are now running at 78%. This could put significant costs on companies already navigating a complicated regulatory environment. We must remember that net zero by 2050 does not mean zero hydrocarbons. We will still have about 25%. However, as this ETS will provide support by removing venting and flaring, we can have clean hydrocarbons. We must also consider the impact of the hydrocarbon companies in investing in renewables and the people required in the transition to net zero.

With that being said, I will ask the Minister one question that was left largely unanswered in the other place, to do with the impact of the carbon price rise to £147, as highlighted by NESO. What will the impact be on employment, industry and households, and will there be an impact assessment on those key areas?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I thank noble Lords for their general support for the order, which is much appreciated. I will seek to respond to the points raised but will follow up if I am unable to answer everything.

Clearly, the emissions trading scheme is a key pillar of our climate and net-zero policy regime. It sets a cap on emissions in the sectors covered—currently around a quarter of the UK’s emissions. In doing so, it guarantees that the sectors will reduce their emissions in line with our net-zero target. We see maintaining a strong UK ETS playing a key role in making Britain a clean energy superpower, delivering our mission of secure and clean electricity by 2030, and having a positive impact on bills.

I very much take the point about the impact on industry. In relation to the North Sea, in particular, I understand that noble Lords are concerned to make sure that the transition is as effective as possible—something that we are very much committed to doing.

On the point of the noble Earl, Lord Russell, regarding ETS expansion, we see the scheme continuing to remain a key driver of decarbonisation. Our intention is to expand it further. We have recently consulted on proposals to expand the scheme to energy from waste incineration. We are also currently consulting on expansion to maritime operators and on a regulatory framework for integrating non-pipeline transport for carbon capture, usage and storage. We are exploring options to build the UK ETS into the world’s first integrated market for carbon emissions and carbon removal; subject to consultation, our intention is to include engineered greenhouse gas removals. We see that as supporting the new technologies we will need to meet net zero while providing a sustainable path for industry to decarbonise and to encourage that process.

To refer to the impact assessment and the question from the noble Baroness, Lady McIntosh, I think I can reassure her on fracking. We have no intention to permit fracking. As for the impact assessment, it was published alongside the decisions in the response to the report on developing the UK ETS authority. We stand by that assessment as the best assessment of the implications of our policy changes, and therefore we do not think it necessary to do any further work in that area.

The noble Earl, Lord Russell, was right that, in the absence of the Northern Ireland Assembly, it was not possible to make changes to the UK ETS order that extended to Northern Ireland using an affirmative procedure. It is a very good thing that we have made progress in Northern Ireland and are now able to make that provision.

I should say too that the UK ETS authority agreed that the UK Government should amend the UK ETS auctioning regulations to give partial effect to the agreed policy of reducing the cap, and that the authority would pursue a legislative programme in line with the decisions and intentions made in the main UK ETS authority response, including for the cap, set out in the response for 2026 and beyond. As stated there, the authority is now taking the necessary steps to finalise that legislation, and the IA is being relayed alongside that legislation to support parliamentary scrutiny.