Energy Bill
Debate between Lord Oxburgh and Lord Jenkin of Roding
Lord Oxburgh
My Lords, I support the general thinking behind the amendment, which is different from the amendment that we debated a week ago about a higher-level advisory committee. I am not sure that I agree with the noble Viscount, Lord Ridley, in his pessimistic approach to this. I do not see the amendment as taking power away from Parliament or diverting interest in that way. It could provide the kind of information and scrutiny that makes Parliament’s role easier.
The one point that I would make, which has not yet been made on the amendment, is that the most important thing about a panel is not just its expertise but its continuity. At the moment, there is very little corporate memory within DECC, and bodies such as an expert panel can indeed provide continuity. I agree that it has previously been very important to solve things in this way. I therefore hope that the Government will take on board the broad intention of the amendment.
Lord Jenkin of Roding
My Lords, my mind goes back to the group set up last year under the chairmanship of the noble Lord, Lord Oxburgh, to look at the draft Energy Bill. My recollection is that as a result of the evidence we received, which was very good and knowledgeable, our main worry about the contents of the draft Bill was the huge powers being given to Ministers. Some of that has now been modified. For instance, there is now an infinitely better counterparty arrangement than existed previously in the draft Bill, in which there was almost nothing. There have also been other changes.
However, certainly in the initial stages of the operation of this contract for difference, one is going to be almost entirely in the hands of Ministers. They are of course accountable to Parliament, and I entirely accept the point made by my noble friend Lord Ridley that that is the main avenue of accountability. What worries me is the question of whether the panel that has been proposed by the noble Lord, Lord Whitty, would actually make any difference. When you have so much power concentrated in the hands of Ministers—and one has to say that there is not all that much public faith in Parliament at the moment or in whether parliamentary accountability would be effective—one is running the risk of endless cases of judicial review. The growth of judicial review in our system over the past 20 years has been absolutely colossal. Everyone finds it possible in some way or another to take a complaint against authority to judicial review. Some of it has no merit at all but is enormously time consuming, very expensive for those who have to defend it, and a great absorber of the judicial power of the courts. I worry, given all these powers in the Bill, whether accountability to Parliament will be enough.
I listened carefully to the noble Lord, Lord Whitty, and there are obviously some attractions in what he was saying. On the other hand, the point made by my noble friend Lord Ridley about the way that any panel such as this could be got at is not without substance. We are all familiar with situations of that sort. In relation to another amendment, which I may not be here to move because I shall not be here in August and we will not reach it tonight, the power of very large corporations such as the big six generators and distributors, when contrasted with the power of very much smaller bodies that might be affected by their activities, is something of which people are very well aware. What is your remedy? You can go for judicial review, and a panel of the sort suggested may be subject to the same pressures.
All this is inherent in the nature of the new electricity market reform, which is the main purpose of this Bill. I agree with those who say that there is a great deal of hope about it on the part of the Government that it will work. I studied the paper sent to the Delegated Powers Committee of this House, in response to its request for more information, and wondered how anybody could make that system work. That is my great anxiety on this issue—and I am not sure that a panel would have any impact.
For the remainder of the time we have to scrutinise the Bill, we must do as much as we can to try to get the regulations in a form in which the authorities can be made accountable to Parliament as to whether they are in breach of regulations or not. Everybody has to do their best to make it work, but I shall listen with great interest to what my noble friend the Minister says in answer to the suggestion of a panel. I think that we shall hear what we heard before—that there are a great many advisers already in the department and they do not want any more, thank you very much. I understand that argument. But the more I hear about how the system is intended to work, the more we have these huge volumes of paper that are churned out by the department, which is doing its best to keep us informed. It fills me with great foreboding. I hope that I am wrong, but I have a horrid suspicion that things are not going to turn out quite as has been hoped for by everybody who has expressed themselves, as I have, in favour of this Bill.
I shall listen to my noble friend on the question of whether a panel would help or not. At the moment, my mind is not yet clear on this.
Energy Bill
Debate between Lord Oxburgh and Lord Jenkin of Roding
Lord Oxburgh
My Lords, I think we can all agree that our energy system is a vital part of our infrastructure. It is a part that is technically and commercially complex, and it is long-term. It is slow to build but, when we have built it, it tends to last for 40, 50 or even 60 years.
Clearly it is for the Government to set objectives for energy infrastructure, but implementation strategy depends on expertise, experience and continuity at a high level within the department. Unfortunately, that is not something that is readily available at present. It is partly because there has been relatively quick changeover of Ministers in the past decade or so. Also, at a high level, among officials in the Civil Service, we have very capable people who move from department to department but are not specialists. This means that others in the department, who are working hard, lack a coherence of view that could come from an expert and experienced top-level group.
The complexity of an energy system is perhaps hard to explain to those who may not be fully familiar with it. However, in my judgment, it is probably more complicated than, for example, designing an aircraft engine. Who would like to fly in an aircraft whose engines had been designed by intelligent people working on the basis of consultants’ reports and public consultations but who had never done it before? This is, in essence, what we are doing with energy policy in general and, I might comment, with this Bill in particular.
I have suggested a solution to this problem. I will not elaborate on the problem, which I did at Second Reading. The solution I put forward may or may not be the right one, but I propose that we have an energy investment advisory board which, above all, brings continuity at a high level to departmental strategy. It would comprise people of commercial and technical experience and, most importantly, it would report to Parliament. This could be a very valuable resource for Ministers. It is the kind of body that could see problems coming ahead of time in a way that typically does not happen today. It could see implications across the system for a decision here and a consequence there. It could look at generation, transmission, interconnectors and energy storage right across the spectrum, not to mention the markets and market interactions. Reporting to Parliament would be extremely important because it would give Parliament confidence that this piece of infrastructure was being properly looked after.
Those who feel unable to support this proposal have three choices. One is to say that there is no problem. In that case, I refer them to Power Politics, the slim volume published in 2011 by the noble Lord, Lord Tombs. In it, he describes decades of struggling with bureaucracy over industrial strategies and the energy industry, and he is trenchant, indeed mordant, in his criticism of the present system. If people do not like that, they might look at the London School of Economics Growth Commission’s report on infrastructure, which comes to very similar conclusions. Alternatively, they might look no further than the pre-legislative scrutiny group of this House, which I had the honour to chair informally and which was extremely critical of the current situation. It is, therefore, hard to make a case for saying there is no problem.
A second option is to say, “Yes, there is a problem but we’re going to deal with it differently”. That would be great, as long as it is actually dealt with. However, it cannot be dealt with in the way that the Minister suggested in her reply to my Second Reading speech, in which she said that in the department there are lots of consultative groups helping the Government with EMR. That is not really what this is about; it is about something much more long-term and strategic.
Finally, it would be possible for the Government to say that they think that this, although perhaps not precisely right, is a possible way forward and that they are prepared to sit down and discuss ways of tackling the problem. Perhaps over the summer or before Report stage, an amendment could be introduced. It would need a degree of cross-party support and, indeed, there is significant expertise in this area—way beyond mine—on the Cross Benches.
This is an important area, and there is now an opportunity to deal with it. I am sure the Government would rather not deal with something such as this at the moment, but in one sense this is both the worst and the best of times, given that we face the problems arising from the lack of a body like this. I beg to move.
Lord Jenkin of Roding
My Lords, the noble Lord, Lord Oxburgh, who moved his amendment with great clarity and force, has discussed this with me, and I was a member of the informal group that he chaired on the draft Energy Bill.
I, too, at Second Reading reflected the increasing anxiety in this country over the security of supply over the next four to five years. Since then, the latest Ofgem capacity assessment report has confirmed the fears that we face several years of very low margins. This has been widely interpreted as posing a distinct risk of interruption to supplies. You need only two major power stations to go out of commission for even a few hours—as happened a few years ago with Sizewell B and Longannet—to create considerable alarm as to whether we have enough. If that happened again in a year or two years’ time, we would be in very serious difficulties.
This is what lies at the heart of the noble Lord’s amendment, to which I was very pleased to add my name: how on earth have we managed to get into such a perilous position? Is it something in the current structure of the electricity industry or in the current attitudes of the departments in charge? As the noble Lord, Lord Oxburgh, suggested, is it to do with the experience and expertise of those whose job it is to advise Ministers? Which of these has led to this difficult situation—or is it all of them?
I will draw a parallel. The noble Lord, Lord Oxburgh, and I were both co-opted on to the Science and Technology Committee to look at the capacity of the nuclear industry in this country for research and development. It is not an overstatement to say that we were dismayed by the very poor level of understanding among DECC Ministers and most of the officials who gave evidence to us. Happily, they appear to have read our report but some of the solutions remain to be worked out. This is not the occasion to go into the details of that but the experience convinced me that something has to change if we are not to face similar failures in the future.
Last month, my attention was caught by an article in the Financial Times by Professor Anthony King, who is, I have to say, a good friend of mine, and for whom I have a great deal of admiration. His sub-headline was:
“British government is no Rolls-Royce. It is barely motorised”.
He went on:
“British government used to be regarded as one of the wonders of the world: intelligent, decisive and sensible, with democratically elected leaders supported by a Rolls-Royce civil service”.
A lot of people think it is still like that, but he said that the only possible response to that attitude is,
“that of John McEnroe addressing a harassed Wimbledon umpire: ‘You cannot be serious’.”.
He then analysed what has happened. The noble Lord, Lord Oxburgh, mentioned some of that. I particularly want to draw attention to what Professor King called,
“the resulting loss of institutional memory”,
which he described as “immense”. It used to be said that the Civil Service is the memory of the Government, in many cases going back not just decades but centuries. I have a horrid feeling that that is no longer so. Perhaps that is why we are where we are.
Turning to the issues before us, tributes have been paid, quite rightly, to my noble friend the Minister and the Bill team for their strenuous efforts to help us to get to grips with this very complex piece of legislation. Without them, we would have been in some difficulty. Thanks to the work of the Delegated Powers and Regulatory Reform Committee, to which my noble friend Lord Roper drew our attention at a previous sitting, we have now been given a glimpse of just how much of a policy that is supposed to be enshrined in the Bill is left to regulations, which are still being drafted or in many cases are still being worked out.
I spent part of the weekend reading the DPRRC memorandum on Part 2 of the Bill. It sets out the position in lurid detail: 60 pages of descriptive material, complex tables of content and timetables, and nine detailed annexes. It filled me with a dreadful sense of foreboding. How can anyone possibly be sure that that will all work or even that it will be ready in time?
My noble friend will no doubt, as she did at Second Reading, give a description—but I hope a fuller one on this occasion—of the plethora of consultants’ reports, advisory groups and expert panels on which the department relies for advice on developing the very complex electricity market reform that is embodied in the Bill. I will certainly listen very carefully to what she has to say but I must warn her that she faces an uphill task in persuading us that Ministers have all the advice that they need and ought to have. I ask again: how is it, after years of taking all this advice from consultants, panels and experts, that over the next two or three years we face the possibility of cuts? To put it crudely, this country is not replacing the generating capacity that is being closed down. I gave a list of the stations that have been closed since only last December when I spoke at Second Reading.
Energy Bill
Debate between Lord Oxburgh and Lord Jenkin of Roding
Lord Oxburgh
Perhaps I might ask the noble Lord whether the provisions of the Climate Change Act and in the present Bill that allow Ministers to change targets and adjust things in the light of changed circumstances are not sufficient to meet the real questions that he has raised.
Lord Jenkin of Roding
I can only reply that if the noble Lord thinks that that is all that is necessary, I cannot think why he has moved the amendment. He is quite right. The committee of my noble friend Lord Deben recommends but does not decide. It is the Government who decide. As I said a moment ago, I want to leave the Government with the flexibility to make decisions in the light of the latest circumstances. However, at the moment the customer is bearing all the risk, and this is unsustainable.
Energy Bill [HL]
Debate between Lord Oxburgh and Lord Jenkin of Roding
Lord Oxburgh
My Lords, I, too, have substantial sympathy with the amendment. Before one starts talking too much about juggernauts, it is worth placing on record that we had to have our domestic electricity meter changed a month ago. From the time the man who was doing the work came through the door to the time he left was about 12 minutes. It is a quick and easy operation, certainly so far as electricity meters are concerned.
However, an important point has been missed. By and large, the electricity companies have a poor understanding of their customers simply because they have no way of disaggregating their demand. With a better understanding of why, how and when loads peak in particular areas, which they do not have at the moment, a significant indirect benefit should be possible for consumers, which would be reflected in reduced electricity charges, because we may well be able to run the electricity system with a lower generating capacity than at present because of our limited understanding.
Lord Jenkin of Roding
My Lords, one matter which is not dealt with in the amendment—I do not know what my noble friend’s reaction to this will be—is the question of the training of the technicians whose job it will be to install the new smart meters. Some noble Lords may recollect that I pursued this issue over the past year or two with the previous Government. I was informed that the sector skills council which dealt with this—the Energy and Utility Sector Skills Council—had applied for the necessary financial support to enable it to lay out a training programme for smart meter installers, only to be told that that could not be done under the then system, which I hope is in the process of being changed. I raised the matter with the previous Government and the noble Lord, Lord Hunt of Kings Heath, who undertook to look seriously at it, and I have pursued it with other Ministers in the present Government.
Attention needs to be given to this matter because, as a number of speakers have said, if people are going to go into consumers’ houses it is important that they are properly trained to do the work. If eventually, as I have heard said, we are going to have combined gas and electricity meters—but perhaps not at the first stage—that will require a considerable new approach to training.
I have supported the smart meter programme from the beginning and have had some representations—not pressure; that would be the wrong word—made to me that it is a con trick in favour of electricity suppliers and distributors. I do not for one moment accept that argument. As speakers on all sides of the House have said, if it is properly handled and people are given all the information that they should have, which is very important, this could be of real value to consumers. The noble Lord, Lord Whitty, was wise to say that he did not really expect the Government at this stage to accept the amendment but, at some stage, something of this kind will be needed and I hope that it will cover the training of technicians as well as the other matters set out in the amendment.
Energy Bill [HL]
Debate between Lord Oxburgh and Lord Jenkin of Roding
Lord Jenkin of Roding
My noble friend’s meagre intelligence has led him to ask a series of very important questions. I put “meagre” in quotes; it would be quite wrong for him to stand by his own words.
I have a slight anxiety about this matter. As my noble friend rightly said, a number of parties are involved in producing the Green Deal for the customer. I had assumed that it was the role of the assessor to determine whether a proposal being put forward by a provider would achieve the objectives of the Green Deal. It seems to me—certainly a lot of people in the industry think that this will be the case—that a very wide range of bodies will wish to become providers under the Bill, not just banks, building societies or financial institutions. It has been suggested that major retailers might wish to become involved as well as local authorities, housing associations and a range of other bodies. I am not entirely clear how far the responsibility for ensuring that the plan is in the best interests of the consumer can necessarily rest with the provider.
My noble friend’s amendment emphasises the provider in this regard. The provider is entitled to rely on the advice of the assessor as the assessor will advise all parties on the validity of the proposals being put forward. Therefore, it would be very helpful if my noble friend could make this clear when he replies to the debate. I quite understand that these matters are being discussed with all the interests involved, but we must have some idea where the responsibility primarily lies. It is difficult to suggest that it lies with the provider, as my noble friend’s amendment does. The provider is entitled to rely on the advice of the assessor. As my noble friend rightly says, I hope that these matters can be decided in a competitive environment so that the consumer has a choice.
Lord Oxburgh
My Lords, I wish to pursue the point made by the two previous speakers. This is an extremely important area in which the fine detail will determine whether the scheme works. I draw attention to the implicit assumption in the Bill that there is such a thing as a unique assessment. Regardless of who makes the assessment—whether it is done by the person who ultimately provides or an independent assessor—these are matters on which there can be different views and with which a householder may be dissatisfied and may legitimately and reasonably want a second assessment.
Energy Bill [HL]
Debate between Lord Oxburgh and Lord Jenkin of Roding(13 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Oxburgh
To answer a couple of points raised by the right reverend Prelate, I should say that 25 years is a perfectly reasonable time, but it might well be 35 years for the life of a field of this kind.
Lord Oxburgh
In the interests of reducing internecine strife, I think the prospects of serious incompatibility here are quite small. There is not really as much scope for moving wind farm locations as it might appear—wind is pretty variable—but, given the kind of technology of which I spoke in relation to the previous amendment, one can now exploit gas fields or oil fields at an angle from some distance without too much difficulty. It is important to give some confidence, as far as it is needed for investors in this area, but I do not think this is going to be a big problem.
Lord Jenkin of Roding
My Lords, the noble Lord, Lord Oxburgh, is absolutely right. The more I have looked into this, the more I see that it is a very complex problem. It has been under discussion with the two industries and my noble friend’s department for some years. From time to time, pressure has been brought on one or the other to try to find a solution. I am sure that the noble Lord, Lord Oxburgh, is right but the prospects of a serious overlap are pretty small.
It seems to me that often the problem is bringing the product ashore. The problems with offshore oil and gas are well known but I know that some wind farms have found difficulty in finding ways of getting their supplies ashore. It has been suggested to me—I think this has been discussed with my noble friend’s department—that there might be some form of compulsory purchase onshore to ensure that the product of a wind farm can be brought ashore at the most appropriate place, even if at present the landowners are reluctant to give permission. However, it does not seem to me that this complex matter has been dealt with by a single amendment in a Bill of this sort.
I entirely take the point made by the noble Lord, Lord O'Neill of Clackmannan, that oil and gas will be very important—particularly gas—for many years ahead. It is not so long ago that there was a major discovery off the coast of Scotland—the Buzzard gas field—and that could still happen. These things are far from certain and gas has to be exploited where it is. Yes, as the noble Lord, Lord Oxburgh, implies, there is a limited capacity for drilling horizontally, if necessary, or at an angle to develop a field but my impression is that the two industries have tried over a long period to reach an accommodation about how this might be handled. I think we would be a little unwise to start legislating in the way the noble Lord, Lord Whitty, suggests and simply say that there can be a retrospective revocation or variation of a lease that has been given in respect of which a great deal of capital investment may have taken place.
On the whole, I do not support the amendment in the name of the noble Lord, Lord Whitty, but I think that the discussions should continue. If it appears to my noble friend’s department that some legislative provision needs to be made, perhaps the Government could look at that for the next energy Bill, whenever it appears. My impression is that we may not see it this Session.