Great British Energy Bill

Debate between Lord Ravensdale and Lord Wigley

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Ravensdale (CB)]

My Lords, I declare my energy interests in the register. I will speak to my Amendment 19 and I thank the noble Baroness, Lady Noakes, for her support of that amendment. This amendment is very straightforward and we have had some discussion already in the second group around cost and the importance of cost and reflecting that, but I will put a bit of a different slant on that.

Noble Lords will be very familiar with the energy trilemma and balancing the competing demands of cost, sustainability and security. Any public organisation that has energy system responsibilities should be focusing on and balancing these objects. We look at NESO, for example. This was set up in the Energy Act 2023 with a cost, sustainability and security duty. Likewise, Ofgem has cost and security considered in its consumer duty and a sustainability duty was added as part of that 2023 Act as well.

However, when I reviewed the objects—I was very grateful for the education provided by the noble Lord, Lord Vaux, on the difference between objects and objectives and that is certainly something we need to come back to—cost was conspicuous by its absence. My first point is that we really should be considering system alignments and consistency across all those UK energy system organisations in terms of their objects and duties. Cost, sustainability and security should be running as a golden thread through all of them so that all those organisations are aiming at the same thing. Great British Energy is a central player in the energy system. It will be making significant investments of public money and aiming to crowd in private investment. Through these investments it will presumably be aiming to lower the cost of energy, which is a key government objective, as well as decarbonisation and security objectives.

My second point is on the importance of cost. We have already heard about the UK having the highest industrial electricity prices in the developed world. They are now four times those in the US. This not only has the obvious impact on bills but is a real brake on growth. I have spoken to a number of industrial companies recently which want to set up in the UK but cannot make the numbers stack up in their business cases because of our high electricity prices so are taking their business elsewhere. For the Government to achieve their number one mission of economic growth, they need to have a laser focus on reducing electricity prices and I know the Minister and the Government are very focused on this area. I hope the Minister can consider this small change and come back with a government amendment on Report which would really help align GBE with the critical priorities of the Government.

My Amendment 34 seeks to clarify the definition of security of supply. I look at Clause 3 and can see clear definitions for “clean energy”, “distribution”, “fossil fuel” and “greenhouse gas” but cannot see a definition for “security of supply”. Noble Lords have made the point in earlier debates about the importance of energy security. It is important to clarify this term: first, because the definition can be very broad; and, secondly, because it can mean different things to different people.

I have some personal experience here in that I recently chaired an energy security task force for the Midlands region and we spent a fair bit of time debating what we really meant by energy security. It is not as straightforward as it first appears. Many when considering this term would jump straight to fuel security and having sovereign energy so that we are not dependent on foreign states and can avoid the energy price spikes that we saw following the invasion of Ukraine. Of course, there is also price predictability: we could have fuel security but volatile prices remain. System reliability is also key so that people can access energy when they need it. Cybersecurity and physical security are other important aspects.

It is very important that in the primary legislation we are clear on what is meant by terms and help guide stakeholders, including business and industry, on how GBE will undertake its duties. I would welcome some further engagement with the Minister on how the Government would define this term and I again hope that he can consider this and come back with a government amendment on Report.

Finally, my Amendment 20 relates to local area energy planning. Great British Energy could play a really important role in energy system governance and I have been encouraged to hear from the Government the renewed focus on local planning, with a potential role for GBE in local power plans and local area energy plans which could bring in the focus on community energy, spoken to earlier by the noble Earl, Lord Russell, and the noble Lord, Lord Vaux.

Given the role of GBE, the Government have an opportunity with the Bill to set out in more detail how energy system governance will work at a local level. The story of net zero so far has been a top-down one—in essence, central planning from the Government, which needs to be done—but that transition will not succeed unless this is matched by a bottom-up governance approach from local areas to regions to the national level. So much of the knowledge rests in those local areas; for example, the condition of housing stock relating to energy efficiency measures, and local energy infrastructure.

Local area energy plans could be the foundation of how energy system governance is planned and undertaken at a local level. The issue we have seen over recent years with local area energy plans is their patchwork nature. We have many in place but with varying levels of quality and robustness in how they are set out within local authorities. I note that only 31% of local authorities are covered by local area energy plans. These plans need to be delivered to a consistent standard, with robust data and analysis, and consideration should also be given to how this can be aligned to meet the input requirements necessary for regional energy strategic planning to undertake that flow-up of governance.

Three things are needed: guidance from government on what a local area energy plan is, as has already been set out in Wales; funding for stretched local authorities to develop these plans; and an oversight function to co-ordinate and ensure that those local plans are joined up. There is a really good opportunity here. If GBE is the organisation that is going to take on all or some of those roles, setting that out in the Bill would be an excellent step forward in firming up that crucial local governance function to stakeholders, and unlock local planning of energy. I would be grateful if the Minister could perhaps give us more detail on the role of Great British Energy in this area.

[Lord Wigley (PC)]

My Lords, I will just intervene very briefly indeed in support of the noble Lord, Lord Ravensdale, with regard to Amendment 34 and the question of system reliability. In my previous incarnation I represented a constituency that had the Dinorwig pumped storage scheme. That scheme was brilliant in terms of being able to help guarantee the availability of electricity when it was needed. Half-time in the cup final was a traditional way of interpreting that, when there was a surge of demand. It had the capability of going from zero to full output in eight seconds.

The economic benefit of that is obvious in having a system that does not need to match the total maximum demand. The peaks of that graph are cut off and equalised in a way that makes a lower capacity, and therefore lower total capital investment, a viable proposition. The point I put to the Minister is this: a number of pumped storage schemes are being developed at the moment. There is a significant number in Scotland, including some of the larger ones, but they are also in Wales. They have been waiting for years to get the necessary information on which to base investment decisions. There is one using an old slate quarry hole in Talysarn in my former constituency. It is raring to go but, until it gets the details of the prices that will apply, it obviously cannot make an investment decision. We are talking about tens of millions of pounds, possibly hundreds of millions, and a benefit to the overall system.

In responding, can the Minister give any comfort by way of the timescale by when the framework for such decisions can be made? We really need to get on with it. I am quite sure that those in charge of Great British Energy will also need this information.

Subsidy Control Bill

Debate between Lord Ravensdale and Lord Wigley

Lords Hansard - Part 1 & Report stage
Tuesday 22nd March 2022 Lords Chamber

[Lord Wigley (PC)]

My Lords, I am delighted to follow the noble and learned Lord, Lord Thomas, to whose amendment I have added my name. We discussed these matters in Committee at some length. I am also delighted to see the Government’s Amendment 2, which is a step in the right direction. However, we need to address the purpose of having subsidies and how the achievement of that purpose or failure to achieve such objectives is measured, and we need some quantified basis on which to monitor and fine-tune policy.

We in Wales, unfortunately, have had far too long an experience of so many parts of our country having to depend on assistance to try and overcome economic difficulties. From the rundown of coal and steel in the 1950s and 1960s through to now, that has happened. There has been investment from the public purse to areas such as the north-west of Wales, including Anglesey, and the Gwent valleys, where the income per head is a 10th of the level of Kensington in west London; clearly, policy has failed. Objective criteria were laid down by the European Union with regard to the Objective 1 funding and the subsequent programmes we have had since 1999. They were based on areas below 75% of GVA per head being eligible for assistance. Millions of pounds have gone into programmes of that sort, but they have not necessarily solved the problem. We are looking for a mechanism that enables the economies of these areas to become self-regenerative, not to depend on handouts for ever and a day. That must be the objective. Therefore, there need to be clear criteria.

It is a good step that the Government recognise the need for there to be a regional and social dimension to this, but there needs to be a means of monitoring and fine-tuning and ensuring the growth of the economy from within. Rather than just compensation for not having that economic growth, the ability must be created among people and businesses to generate growth and economic well-being for the future. If we get it right in this Bill, it could be a very important step forward. If we fail, it will be a missed opportunity.

[Lord Ravensdale (CB)]

My Lords, starting with the government amendment to Clause 18, I must thank the Minister for listening to my concerns in Committee and for responding by putting forward this amendment, which addresses my concerns with the impact of Clause 18 on the levelling-up agenda and meets the intent of my original stand part amendment. I must also thank the officials for the work they put into drafting and finding an acceptable way forward and for engaging with me throughout the process. I thank the noble Baroness, Lady Blake, the noble Lord, Lord McNicol, and the noble and learned Lord, Lord Thomas, for all their support throughout.

The Government have proposed a comprehensive amendment in Amendment 14, which will ensure that subsidies that target regional disadvantage are exempted from the prohibition on relocation of economic activities. It will address concerns from stakeholders I worked with in the Midlands Engine, home to many of the most deprived regions in the UK, that this would be a constraint on supporting disadvantaged areas; and it will address concerns from local authorities and other disadvantaged regions. I believe it will prove an important part of the Government’s toolkit in levelling up, through allowing productive relocation activities that reduce economic disadvantages within the UK as a whole.

I also welcome the clarification, provided through Amendment 2, to the equity rationale in Schedule 1 to the Bill, that it covers subsidies aimed at regional economic disadvantage. This whole package of amendments goes a long way to address concerns expressed by noble Lords in Committee. However, there is always more that can be done.

I very much support Amendment 9 in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd, to which I have added my name. It addresses an issue in that the way the common principles are drafted can be viewed through a local context; there is nothing in the Bill to define what a disadvantaged area is, as opposed to an advantaged area. If national direction is absent, there is no means via subsidy control to steer intervention to those areas that need it most. The amendment seeks to set objective criteria to define a deprived area, which would resolve this difficulty. It would also give legal certainty for business on which areas would count as deprived, and hence work to drive investment into those areas.

The other way this could be approached is through streamlined routes. A streamlined route or routes could be created, through the mechanism in the Bill, to provide national direction on funding into deprived areas. This could be on the basis of the same economic indicators as in the amendment of the noble and learned Lord, Lord Thomas, where any one of several markers of deprivation is present. Again, the legal certainty that comes from this route would then help direct business investment into the deprived areas. There would be a clear definition of what a deprived area is, and therefore the areas of the country for which support would be available through the streamlined routes. Obviously the streamlined route would not prevent subsidy in a non-deprived area. It would just mean that the giving of a subsidy in a non-deprived area would be more complex, require more scrutiny and therefore help direct investment into deprived areas.

I would be most grateful if the Minister could give some clarity on a couple of things. First, to echo the request from the noble and learned Lord, Lord Thomas, can the Minister provide some reassurance that the Government will provide some specification or objective criteria of what a deprived area is within guidance? Secondly, can he provide some detail on the government programme for streamlined routes and how these will feed into the levelling-up agenda?

In concluding, I was delighted to see the appointment of Professor Sir Paul Collier to the Government’s levelling-up advisory council. Several years ago he wrote that what was needed was a shock to expectations, which in itself would provide the momentum required to level up the country. Noble Lords will recall Mario Draghi saying that he would do “whatever it takes” to save the euro. In a similar way, the Government need to take on the challenge of levelling up by stating that they would do whatever it takes to level up the regions. The Bill will be a key part of the Government’s toolkit for achieving just that.