Energy Bill [HL]

Lord Wallace of Tankerness Excerpts

Wednesday 21st October 2015 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, I think that the noble Baroness, Lady Worthington, will say something about Scotland when she comes to speak to her amendments. As I said in Committee, the onshore wind industry in Scotland directly employs 5,400 people and contributes £9 million per annum in community benefit. I think that the work which I would like to claim my noble friend Lord Stephen and I started when we were in the coalition Government in Edinburgh and which has been carried on by the present Scottish Administration, and the work done by previous Secretaries of State at DECC, has resulted in onshore wind power being an increasingly cheaper source of power. However, the position as I set out in Committee on the Scottish dimension was that if the Scottish Government choose to extend the period, as was first envisaged when it was agreed with them that the renewables obligation would end, that is something that they should be able to do.

On the grace periods, which were the substance of the Minister’s amendments, I first and foremost acknowledge his engagement both before last week’s recommittal and subsequently, in terms both of meetings and phone calls. It might also be fair to acknowledge his private office, because I received an email from it timed at 00:54 on Saturday morning, which is quite remarkable. I know from experience just how hard private offices work.

While I welcome some of the changes which the Minister has referred to, with regard to the investment freezing condition and to making it clear that it was grid or radar and not cumulative, that is as far as the Government have gone, and the rest of the government response has been more than a little disappointing.

[Lord Foulkes of Cumnock (Lab)]

Is the fact that the Minister, who is well respected in this House, has had to work so hard—his private office has to work past midnight—not illustrative of the chaotic way in which the Government as a whole have dealt with this Bill?

[Lord Wallace of Tankerness]

My Lords, I think that everyone who has dealt with this Bill would agree that it has not been a satisfactory process. We have had late tabling of amendments; even the amendments before us were tabled only on Monday, meaning that if we wished to table amendments to amendments we were under considerable pressure to do so.

Perhaps I may put in context what we are discussing by drawing to the House’s attention what was said yesterday in the Select Committee on Energy and Climate Change in the other place. My right honourable friend the Member of Parliament for Orkney and Shetland asked the noble Lord’s ministerial colleague, Andrea Leadsom, “So what is the purpose of the grace period, then?” To which she replied, “As I say, to ensure fairness—to ensure that those who have spent money in a significant investment and achieved everything technically to meet the cut-off date, but through reasons beyond their control have not actually made it, are not penalised for reasons beyond their control”. It is with these words in mind that we must examine the Government’s position and the amendments that have been put forward. As the noble Baroness, Lady Worthington, said, an estimated £350 million has been put in to take forward projects which may not now proceed.

Our amendments relate in one respect to all applications which were in train at the time of the somewhat arbitrary date of 18 June—that was the date that the Secretary of State made a Statement; it has no more magic than that—and which had received planning committee approval. The reason for emphasising committee approval was that, in an earlier clause in the Bill, the Government set great store by the fact of local determination. A local determination means that, after considerable discussion, debate and consultation, the local planning committee has approved a particular proposal. It may just be that it is due to the cycle of planning meetings that the application has not yet gone to the full council for endorsement. I refer back to what the Minister, Ms Leadsom, said about applicants achieving everything technically to meet the cut-off date, but through reasons beyond their control, not actually making it. A lot of developers do not have control over the cycle of meetings of a local authority and it seems very unfair that, if they have passed muster after scrutiny by a planning committee, they fall foul because the full council has not ratified that decision.

Our Amendment 78RA contains a provision that it should refer to planning applications that were in place and had been accepted 16 or more weeks before 18 June. The reason for that is that after 16 weeks it is possible, if the local authority has not made a determination, for the developer to say that there has been a non-determination, so it is a deemed refusal and to appeal to Ministers on that basis. But the noble Lord and others who were at the Committee debate last week will remember that I gave an example from, I think, Tayside where extensive work had been done in terms of discussions between the developers, local communities and the planning authority to try to ensure that concerns had been meet and the opportunities to work with other environmental projects going on in the area were maximised. I believe, along with I am sure most Members of your Lordships’ House, that it is good practice for developers to work alongside the planning authority and try to get an agreement and outcome that is satisfactory to all. And yet, if the developer did that and missed the 18 June cut-off date, it will be penalised for it, whereas those about whom it might be said that they are not using best practice—I would not necessarily say that it was bad practice—might take a slightly legalistic view and say, “Well, it has been 16 weeks, so that is it. We are going to appeal because there has been a deemed refusal”. If that is subsequently granted on appeal, their applications will be satisfied. That does not appear to be a fair way of proceeding. If we are looking for an element of fairness in this, where is the fairness in penalising those who have demonstrated good practice?

Also with regard to Section 75 and Section 106, the Minister said in his letter to me that, where the planning committee could have been minded to approve on or before 18 June subject to Section 75 or Section 106 agreements but no formal consent was granted on or before 18 June, unfortunately, there is no legal consent given that they are minded to approve and we understand that the negotiations can be lengthy and not always successful. People from the industry who have been talking to me find that an unduly legalistic approach. The industry has been working with planning authorities for some 10 years on the Section 75 or Section 106 agreements that emerge in these situations. By and large they are already negotiated, but it may take time to put in place some of the detailed provisions. For example, if it is part of the development that there has to be a new habitat on neighbouring land—not the land on which the development is to take place—it has to be shown that the developer has the right to undertake the building of the habitat on that land. That is part and parcel of what happens and it is both practical and common sense that it should be recognised. Again, reminding us of what the Minister’s colleague said, it is to ensure fairness so that people are not penalised for reasons that are beyond their control.

Perhaps I may also take up what the Minister said on the question of variations. He helpfully stated in his letter to me and then repeated it in the House just a moment ago that, where consent is granted for a development on or before 18 June and is subsequently varied in this way, it will continue to fall within the approved building condition in proposed new Section 32LJ. I raise this because it is helpful that the Minister has now put this on the record, but I have also had representations from those who have taken legal advice that they do not necessarily believe that it does what the Minister says. I would ask him to look at it again. The fact that we have something that could be referred to in a Pepper v Hart way is helpful, but some would find greater reassurance, and it would be clearer to me, if there is something on the face of the Bill.

I refer to Amendments 78RA and 78RB with regard to Section 36 of the Electricity Act 1989. The purpose and effect of these amendments is to address what we believe is an anomaly by applying the principle of proposed new Section 32LJ(4)(b) to an analogous position under the Section 36 regime. Under Section 36 of the 1989 Act, the relevant planning authority is not the decision taker, but it can object to the proposal, after which there must be a public inquiry and then a decision by the Secretary of State. That is closely analogous to refusal under local planning followed by an appeal, and indeed for around half of the affected projects DECC’s renewable energy planning database describes the projects as being at appeal. Indeed, the last time that the people briefing me looked at the DECC website they were described as being at appeal. However, the proposed provisions cover the local planning version of this process but not the Section 36 version. This means that small extensions of larger sites, which have to follow the Section 36 route, are going to be treated less favourably under these grace period provisions than some sub-50 megawatt, stand-alone developments which go ahead under the local planning process. Reverting back to the question of fairness, there should be consistency in the Government’s approach. This amendment seeks to ensure that, and I hope the Minister will think again on it.

I also draw the Minister’s attention to the fact that, because of the Planning Act 2008, which has superseded Section 36 in England and Wales, that section mainly affects plants in Scotland. The functions of the Secretary of State under Section 36 and Schedule 8 are transferred to Scottish Ministers under Article 2 of the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 1999, so far as they are exercisable in or as regards Scotland. Accordingly, the amendment does not explicitly refer to devolved Ministers. Would the Minister look and see if it is the case that they are not covered? I am sure he would not wish to put Scottish developers in any less favourable position than those in England and Wales.

We have proposed a relatively simple amendment regarding grid works, with a different cut-off date for grid works agreements. In Committee and subsequently, I raised with the Minister a case involving a joint venture between an energy company and a private individual. The energy company carried on the transmission entry capacity for a substation but the joint venture finished and the private individual carried on himself. Transmission entry capacity has therefore been lost and has to be reapplied for. It has had that connection for five years in the past but, crucially, did not have it on 18 June. It seems very unfair that they should lose out in a very bureaucratic process. We tried to find a way to capture that in an amendment and we thought we would do this by putting in a different end date, because you cannot just conjure up a grid connection agreement. It would not have taken any more capacity than was already the case, but this might give some clarity.

In another circumstance which has been drawn to my attention, changes were made. Grid capacity that was for one developer was then to be shared and this required a new agreement to be made. There was a clerical error and the developer sent the agreement back to get this sorted. Unfortunately, it was sent just before 18 June and did not come back until after that date. It would be reassuring to know whether that counts as a variation or whether it could be addressed by extending the period for grid connection.

In the recommittal, I made a point about radar and the problem developers are finding with the length of time it is taking the Ministry of Defence to process applications. The grace period that has been given may, therefore, not be effective because of the time it takes to get agreements reached. One developer who has made representations has said, about a particular mitigation which the MoD is looking for: “There are no guarantees that the work programme will deliver mitigation at this stage. In any event, the current MoD position is that the first part of the variation condition allowing development to commence cannot be discharged before 2018. There are some ongoing discussions between onshore developers and the MoD, seeking to find ways of earlier condition discharge but this is proving problematic. Overall, the costs and timescales of this ATC radar mitigation programme do not fit with any of the onshore projects”. It would be perverse if delay on the part of the Ministry of Defence meant that the grace period which the Government have sought to give does not actually cover these circumstances. This is why we have put in a particular date, though it may be that March 2018 is too early. I hope the Minister will take that serious point about trying to get agreements out of the Ministry of Defence if he wishes to give substance to what he sought to do with the radar works part of his amendment.

I am sorry to take up time but I had a lot of important points. I hope that the Government will move. I do not believe that they have met the letter or the spirit of what Andrea Leadsom said yesterday to the Select Committee in the other place.

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[Lord Bourne of Aberystwyth]

My Lords, I do not know the proportion, but I know that the upper end of the limit is £270 million over the period. That might seem like a small amount, but it is not a small amount to me and I am not sure it would be to anyone else. We have this basic difference, and with that I oppose these amendments.

[Lord Wallace of Tankerness]

First, I did not raise the issue of the definition of the recognised lenders because the noble Lord did not deal with it when he moved his own amendment. Did he give a commitment to go away and come back with a better definition that included, for example, organisations such as the Green Investment Bank? My second point, although there are many others that I could make, is this: does he accept that with regard to radar issues, what the Government give the Government might also take away? Will he undertake to talk to the Ministry of Defence to see if it can ensure that whatever provision is made by this grace period for radar is not actually defeated by the tardiness of the MoD?

[Lord Bourne of Aberystwyth]

My Lords, on his last point first, I am very happy to speak to the MoD in the way that the noble and learned Lord suggests. On the former of the two points that he raised relating to the recognised lenders, I have indicated that we will look at this issue. I have not made any commitment about what the result of looking at it will be but I recognise, based on information given by the noble and learned Lord and others, that there is a case to look at it. I hope that is helpful.

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[Lord O’Neill of Clackmannan]

I am sorry. I realise that we are moving towards a vote and I do not wish to take much more of the House’s time. All I want to say is this. It is very dangerous for people, first, to reinterpret manifestos once they have been the substance of electoral victory; and, secondly, to use that as an excuse to undermine elected representatives and local government who have a sensible and fair means of determining the priorities of the planning requirements for all of the communities they represent.

[Lord Wallace of Tankerness]

My Lords, I do not wish to detain the House for long. When we engaged after the debate on recommital late last week, we hoped that the Government might have moved a lot further than they did. I acknowledge the amendments that have been made, but they do not go to the heart of many of the concerns of the industry. In fact, there is still a blatant unfairness for those who have observed good practice and have tried to work with local planning authorities.

On the point made by the noble Lord, Lord Cormack, that local democracy matters, developers have worked alongside communities and planning authorities, but because they did not take the route of having a deemed refusal, they are falling foul of this.

[Lord Cormack]

One of the things we have to bear in mind is that a number of wind farms were granted permission not by local authorities, but by being overruled from the top. Indeed, Lincolnshire County Council was against a number of wind farms that have been thrust upon the county.

[Lord Wallace of Tankerness]

I think that the noble Lord almost makes my point because, as far as I understand what is being proposed by the Government, local authorities which have refused an application before 18 June, but which was subsequently appealed successfully on a decision taken by Ministers, will actually qualify. But an agreement reached by locally elected people and a locally elected planning committee after debate, consideration and engagement with the local community, but where the subsequent consent as part of that route due to the cycle of meetings was not given until after 18 June will not qualify. Perhaps he has done so inadvertently, but the noble Lord, Lord Cormack, profoundly makes the point that we are making. There is an inconsistency and an unfairness in what the Government are proposing. There is inconsistency between Section 36 applications for smaller developments added on to existing developments and those which do not need Section 36 applications. I do not believe that the Government have made out the case for fairness of treatment, given the test which their own Minister articulated yesterday.

I am sure that we will debate the Salisbury convention at some stage, and I hope that we will take note of the report of the House of Lords and House of Commons Joint Committee on Conventions, which sat around 10 years ago. My noble friend Lord Wallace of Saltaire, who was then the deputy leader of my party in your Lordships’ House, emphasised the Liberal Democrats’ view that,

“‘the Salisbury-Addison Convention was an historical negotiation between the Labour Party in the Commons and the Conservative Party in the Lords’ and therefore not relevant to current circumstances”.

We articulated that position almost 10 years ago, and I think that the report itself accepted that things had moved on.

The noble Baroness, Lady Worthington, said that it was an opportunity for the Government to think again. We certainly want to engage with them in thinking again, because I do not believe that what we have at the moment is fair to developers who had a reasonable expectation that a system which was due to close in March 2017 has been brought forward by a year. In the end, as the Government’s own impact assessment states, the central estimate is around 30p on the electricity bill of the average household. Given the potential damage to the industry and the damage that this is doing to investor confidence in other areas of the renewable industry, it is important that the Government should think again. They have not been able to come up with satisfactory ways of addressing some of the many legitimate complaints that the industry has expressed.

[Lord Hardie]

My Lords, I also want to draw attention to the fact that this legislation is unfair. Contrary to the statement of the Minister in the other place referred to by the noble and learned Lord, Lord Wallace of Tankerness, I would point out that the noble Lord, Lord Foulkes, mentioned an example on the Isle of Skye. Perhaps I may give the House some more detail about it. There is a development on Skye called the Glen Ullinish wind farm which was granted planning consent in March 2015. That was before the general election and may even have been before the manifesto, and it was certainly well within the current deadline. The local community, with one exception, supported this proposal. The developers, Kilmac Construction, have had a grid connection contract in place since 2011 and have been making annual contributions to the grid to secure their position. They would otherwise have constructed the site and made connection to the grid before the deadline of December 2018, but they are not able to do so through no fault of their own. The connection date has been given as 2021 and the reason for the delay is that, to secure the supply in the west of Scotland, it is necessary to reinforce and upgrade 124 kilometres of line in the Highlands, which this project will facilitate. If the infrastructure had existed, the wind farm would have been constructed and connected in time.

These developers have invested over £1 million and a considerable amount of time and effort in securing the necessary planning permission, grid connection contract and land ownership permissions to ensure that they can comply with government deadlines. They have only been prevented from doing so by the grid infrastructure problem. The Secretary of State for Energy and Climate Change has been aware of this case since 1 September 2015, when the developers wrote to her explaining the circumstances in full. Will the Minister tell the House that the Government will extend the period of grace in this very exceptional case, where the developer is unable to comply with the timescale through no fault of its own? If he is unable to give assurance on this, the appropriate course would be, in the interests of fairness, to remove Clause 66 at this stage, to allow the Government time to reflect on this anomaly and introduce an amendment in the House of Commons, if they wish. This would not, as has been suggested, wreck the Bill. It passes it on to the Commons, where proper consideration can be given to this matter which is so important for the people of Skye.

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, we have already debated this. I think that Amendment 78RA would improve Amendment 78R, so I would wish to test the opinion of the House, but perhaps the Minister would clarify. Is he still insisting on his Amendment 78R, or is our amendment otiose?

[Lord Bourne of Aberystwyth]

Perhaps the noble and learned Lord can tell me what it is about.

[Lord Wallace of Tankerness]

My understanding is that Amendment 78R contains the new clause to embrace the grace periods. As Clause 66 has fallen, I am not sure whether he wants to insist on it. If he does, I will want to press our Amendment 78RA, but I want clarification, because there is no point dividing the House if he does not insist on his new clause, which incorporates the grace periods.

[Lord Bourne of Aberystwyth]

I am certainly not pushing this amendment.