Great British Energy Bill

Viscount Trenchard Excerpts

Committee stage
Wednesday 15th January 2025 Grand Committee

[The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)]

My Lords, any noble Lords who were not able to speak on Monday and who wish to speak before the opposition spokesman may now do so.

[Viscount Trenchard (Con)]

At the point when the Committee decided to adjourn its deliberations on Monday, I was about to make a brief intervention in support of my noble friend Lady Noakes and the noble Lord, Lord Vaux. As my noble friend Lady Noakes explained, GBE will be a private company, which would normally allow it nine months in which to file its accounts. As my noble friend explained on Monday, Amendment 88 changes that to six months, in line with the requirement for public companies. GBE may not be a public company technically, but it certainly is a company of huge interest to the public. It is therefore obviously right that the company should be required to prepare its accounts in accord with the rules applicable to public companies, rather than taking advantage of the more lenient requirement applicable to private companies.

In his remarks in the House yesterday, the Minister said that he recognised that it was the role of the Opposition to scrutinise legislation. But I ask the noble Lord: is it not actually the role of the whole House to scrutinise legislation, including the Government’s own Back-Benchers? He probably did not mean it when he said that it was the role of the Opposition.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

The point was that I was responding to a comment made by the Opposition Chief Whip about scrutiny. But of course I very much take the point that this is a matter for the whole House. The very fact that my noble friend Lady Young spoke to this group shows how effective that scrutiny can be.

[Viscount Trenchard (Con)]

I thank the Minister for his kind explanation, which certainly clarifies that. As far as my interventions on Monday are concerned— I spoke at length and several times—I take issue with and very much resent being accused of having filibustered. If the noble Lord looks at my contributions, he will find that they were all different.

I suggest that one reason why there have been so many amendments to the Bill is that so little was included in it. It is very thin Bill, but it has £8 billion of public money. Many of us are puzzled that GBE is being established effectively with £8 billion of public money, whereas Great British Nuclear, which has no public money to speak of, continues to operate in a kind of silo. I recognise that the noble Lord attempted to reassure the Committee about how GBN and GBE will work together, but I do not think that they can be described as comparable organisations.

I had intended to support my noble friend Lady Noakes and the noble Lord, Lord Vaux, on Amendment 88, and I added my name to it. I think that it is necessary because although GBE is intended to be structured as a public company, it will have only one shareholder, the Secretary of State. As my noble friend explained on Monday—she is well known as an expert in these matters—we must be sure that GBE will be managed according to the standards that would be expected by shareholders in public companies. That is why changing the nine-month provision for filing accounts to six months is so necessary.

I have also added my name to Amendment 89, in the names of the noble Lords, Lord Vaux and Lord Cameron, and my noble friend Lady Noakes. It is particularly important that the accounts must comply with the stipulation in proposed subsection (d), to provide

“an assessment of the extent to which”

any investments made or partnerships entered into

“have encouraged additional investment by the private sector”.

It is clear that the very long incubation period for nuclear projects places them outside the criteria for many private sector investors, but some public investment can be effective in unlocking private investment through match funding, as the Rolls-Royce SMR programme has already shown.

I also support Amendment 92, in the name of my noble friend Lady Noakes and that of the noble Lord, Lord Vaux, which would ensure that the Comptroller and Auditor-General must audit GBE’s accounts.

[Lord Roborough (Con)]

My Lords, Amendment 88, in the name of my noble friend Lady Noakes, would require more timely publication of GB Energy’s accounts, in line with public rather than private company reporting. I also support Amendment 89, in the name of the noble Lord, Lord Vaux of Harrowden. On earlier groups I have addressed the limitations of private and public company reporting versus that of listed companies. I made that argument, given that taxpayers’ money, raised at great cost through tax increases impacting pensioners, farmers and all businesses in this country, is being invested. All this appears to have fallen on somewhat deaf ears with the Minister, who seems determined to avoid anything but the lowest level of scrutiny, transparency or accountability as to how GB Energy invests this, at least, £8.3 billion.

I also alluded to my comments in the debate on the King’s Gracious Speech and I remind the Committee of exactly what I said:

“it is private capital that has driven the rollout of renewables and infrastructure in our country, and it appears that Great British Energy will be targeting investments that private capital alone will not finance. That does not fill our Benches with confidence that these investments will necessarily be judicious. Please can the Minister assure the House that GB Energy will report on the performance of its investments regularly and in detail and that the Government will be held accountable in this House for the performance of those investments?”.—[Official Report, 18/7/24; col. 36.]

In response to this question, I received the following reply from the Minister, the noble Baroness, Lady Hayman of Ullock:

“The cost to the taxpayer of its set-up and investments will be carefully managed and monitored through Parliament, and investments will be subject to safeguards and risk assessments, similar to established public finance institutions”.—[Official Report, 18/7/24; col. 126.]


That answer may not have been the answer that I was looking for, nor the answer that I may be seeking today, which many amendments tabled to the Bill have also sought, but it does seem to offer at least some scrutiny through Parliament. It does not appear to me that the Minister here today is offering even that level of scrutiny in the Bill. His response in previous groups to amendments seeking this transparency and accountability has been:

“the existing reporting requirements are set out in the Bill, which makes provision for GBE to produce and publish an annual report and accounts”.—[Official Report, 13/1/25; col. 942.]

It is hard to disagree that the reporting requirements as determined by the Government are set out in the Bill. However, the point that these amendments, and many others already debated, make is that this is simply not adequate. One set of accounts published annually up to nine months after the year end, with the potential for minimal levels of detailed reporting, is effectively writing GB Energy a blank cheque, with next to no external oversight.

As other noble Lords have suggested to the Minister, if the Government were willing to table amendments to allow for greater scrutiny in a timely manner of the financial performance of investments, and the progress in achieving the overall objectives of increasing employment, reducing household electricity bills and reducing carbon emissions, I am sure that the Committee could be satisfied, without taking so much time making similar points. On previous groups the Minister has called this filibustering. That is an unfair characterisation, at least of the groups that I have taken part in. The Government have proven deaf to the Committee’s reasonable requests, but that will not make them go away.

I am particularly taken by Amendment 89 in the name of the noble Lord, Lord Vaux, and not in the least surprised to see that it has so many supporters. It avoids amendments to Clause 6, which the Minister has pointed out is the wrong place in the Bill for such amendments, and to which my noble friend Lady Noakes has given authoritative support, but it addresses key reporting requirements around the receipt of subsidies, reporting on individual investments, achievement of objectives and strategic priorities, and impacts on the wider financial ecosystem. For these reasons, I believe it is an excellent amendment. However, it may still be lacking by relying on the relatively lax Companies House requirements for limited companies, so I also support Amendment 88 in the name of my noble friend Lady Noakes to make reporting in line with that for public companies.

As I have argued in previous groups, in support of my noble friend Lord Petitgas, who is in his place, there is a strong argument that quarterly reporting should also be required, in line with the listing requirements for publicly traded companies. As I have pointed out, if companies worth less than £100 million can comply with this, I do not believe it is a challenge for the £8.3 billion-plus GB Energy. This would also impose more disciplined reporting on GB Energy’s investees.

Why is it that the Government are so resistant to GB Energy showing proper transparency and accountability, even less than the modest commitments that I read in my response to the King’s Speech? What do the Government fear, if they are so convinced that it is worth while taking so much taxpayers’ money and investing it in energy, which in theory will be a good financial deal for the taxpayer? Last year’s business-unfriendly Budget, despite the protestations that it was pro-business and pro-growth, fills us all with concern that this Government do not understand business.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

My Lords, with the leave of the Committee I shall move Amendment 93 at the request of the noble Baroness, Lady Noakes, who, as I say, is unable to attend today. I will speak also to Amendment 121A, also in her name.

Amendment 93 says:

“The Secretary of State must prepare a framework document”


to cover

“the relationship between the Secretary of State, Great British Energy and any other relevant public sector bodies … The framework document must cover the operating and financial principles”,

at least, to be adopted by Great British Energy. Once finalised, the framework document must be laid before Parliament.

Amendment 121A goes a little further and would defer commencement of the Act until the framework document has been laid before Parliament. The noble Baroness, Lady Noakes, and I have several times contrasted the parliamentary passage of the UK Infrastructure Bank Bill with that of this Bill. In particular, she has raised the absence of a draft framework document for Great British Energy. All we know in relation to GBE is that the founding statement published for it last July said that a framework document would be established in due course. The Minister has not yet given any indication of the timing for that framework document.

I would not normally expect a Bill establishing a public sector body to contain a requirement for a framework document. That is because it is a document routinely put in place between the Government and public bodies, and there should be no question of a body commencing operation until all the details are in place. Hence, when we scrutinised the UK Infrastructure Bank Bill, an advanced draft was made available to those of us taking part in the Bill, which was extremely helpful in our debates. We knew the detail of what the Government were planning, and how they were intending to deliver it, which is missing from this Bill.

Although framework documents have no legal force, they set out in some detail what the Government expect of the new body. Sometimes they cover detail that could have been included in primary legislation, but usually the detail is of a nature likely to change over time and, hence, is inappropriate for statute. The important point, however, is that considerable thought and work are put into the contents of that document.

As we have discussed, it is clear that with GBE, the Government have not yet put in all the hard work on how it is to operate in practice, and what rules and restrictions will be necessary. The Minister has confirmed that this is under way and explained the thinness of the Bill on the basis that the Government had to get on with legislating, and that details would follow. That is not a sound basis for legislating, and failure to provide fuller details on things such as the framework document or strategic priorities treats the process of legislative scrutiny in a somewhat disrespectful manner. We have already discussed the concerns raised in that respect by the Constitution Committee.

I will quickly run through the key contents of the framework document for what is now the National Wealth Fund—what was the UK Infrastructure Bank—which will illustrate the things that we should have expected to see advanced drafts of by now. It sets out the strategic objectives for the National Wealth Fund. These might, or might not, be the same as required by Clause 5 of this Bill. We have seen no draft or even an outline of the strategic priorities that the Secretary of State will set under Clause 5, so we do not know whether to expect strategic objectives in the framework document. Objectives and priorities ought to be different things, but we are completely in the dark at the moment.

There are a number of operating principles, which are extremely important. They include the requirement to make a positive financial return over time, and a double bottom line—a phrase used frequently during passage of the UK Infrastructure Bank Bill, another complicated Bill—of achieving both the strategic objectives and financial return. We ought to know the financial objectives of GBE by now, especially in view of the open-ended financial assistance power in Clause 4, which might mean that GBE will not be required to make a financial return.

Another operating principle is that of additionality, by prioritising investments where there is an undersupply of private sector finance. The noble Baroness, Lady Noakes, asked whether additionality applied to GBE at Second Reading but did not receive a suitable answer, and I have raised this principle a number of times, including in the previous group. It would be helpful if the Minister spoke a little about the expectations for additionality for GBE. It is another fundamental question that Parliament ought to be informed about before allowing this Bill to become law.

Another section of the framework document sets out investment principles. It describes the kinds of investment that are to be undertaken and those which are not allowed. Not only must individual investments support its core objectives, they must also be intended to deliver a positive financial return, and to crowd in significant private capital. We have no idea what the guiding principles for investments made by GBE are. There is also a lot in the framework document on governance and other matters.

The key questions are whether we will see a framework document and when. I would not go as far as the noble Baroness, Lady Noakes, in Amendment 121A, which would delay commencement, but it is essential that we see a framework document as early as possible. Given the lack of detail in the Bill, it is important that the company should have to do that. I beg to move.

[Viscount Trenchard (Con)]

My Lords, I rise to follow the noble Lord, Lord Vaux, in speaking to Amendment 93, which he moved on behalf on my noble friend Lady Noakes. I have also added my name to this amendment.

As has been said several times in our debates, this is in essence a framework or enabling Bill but one that gives a large number of Henry VIII powers to the Secretary of State. A requirement to produce a framework document setting out the operating and financial principles that GBE will use would be a significant improvement to the Bill, as the noble Lord, Lord Vaux, explained so eloquently. It is essential that the principles underpinning the relationship between the Secretary of State and GBE should be publicly understood and supported. The arguments that I have previously used in relation to my Amendment 86A also apply here; other relevant public bodies, as mentioned in that amendment, clearly include GBN, NWF, NESO, Ofgem and Mission Control.

I also support my noble friend Lady Noakes in her Amendment 121A, which I think is justified in the circumstances, but I would certainly like to hear the Minister’s view on it. Amendment 121A would ensure that the framework document is laid before Parliament before the Act comes into force.

[Earl Russell (LD)]

My Lords, I shall speak briefly on this group of amendments.

I generally give my support to Amendment 93. I understand that these things are being done quickly and urgently to get GBE established and that the Government need to get that done, but there is a general lack of detail in the Bill and we do not have the framework agreement. If the Minister could update the Committee on where that framework document is and what stage it is at, that would be useful. In the interests of trying to find a compromise and a way forward on these issues, I do not know whether it might be possible for the Minister to provide the equivalent of heads of terms or to say something from the Dispatch Box about what he would expect the framework document to cover or to send us an outline of what is likely to be in that document. We are keen to support the principles of this Bill, but the Bill is extremely short and lacks detail.

On the other side of the fence, there is a slight feeling that we are being asked to approve things without knowing what it is we are approving. If it were possible to find a way forward on these issues before Report, that would be appreciated, but I am interested to hear from the Minister what stage these documents are at and what impediments there may be beyond the Minister’s control in these matters.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

My Lords, I rise to speak to Amendment 103, and thank the noble Baroness, Lady Noakes, the noble Lord, Lord Cameron of Dillington and the noble Viscount, Lord Trenchard, for their support. As we have heard, once again we are returning to transparency and accountability.

Amendment 103 is similar to Amendment 94, which has just been introduced by the noble Lord, Lord Offord, but with some important differences. As we have discussed before, and as the noble Lord, Lord Offord, has just mentioned, most of this Bill has been copied across from the UK Infrastructure Bank Act, but with most of the transparency and accountability provisions removed. In particular, Section 9 of that Act, which provides for independent reviews of the effectiveness and impact of the bank—now the National Wealth Fund—has been omitted.

The Minister has previously explained that the reason for this omission was that no such reviews were included in the Energy Act in respect of Great British Nuclear, and he feels that this is the precedent which should apply here. That argument holds no water at all. Great British Nuclear is a completely different entity, with completely different activities. It has a clearly defined and specific role initially to administer the process to select which small modular reactor technology the UK will choose. It has a relatively small budget—I think it was £157 million initially—and it is not intended to invest directly in those technologies. Great British Nuclear has an important role, but it is very different to what is apparently planned for GBE.

GBE will, in effect, take over a substantial and important area of the National Wealth Fund’s activity, investing directly in projects and businesses. It has an initial budget of £8.3 billion, which is nearly a third of the National Wealth Fund’s budget. It is worth reminding noble Lords that there is no limit in the Bill on how much public money GBE can spend. Indeed, the activities of GBE and the National Wealth Fund are so close that, initially, the National Wealth Fund will carry out the activities of GBE on its behalf, so let us drop this pretence that GBE is like Great British Nuclear; it is not. GBE is taking over a part of the National Wealth Fund’s activities and has a substantial budget. A body with the ability to spend billions of pounds of public money should be subject to rigorous transparency and accountability, and not just to the Treasury and the Secretary of State. It must, therefore, be appropriate for GBE to have to follow at least equivalent accountability disciplines to the National Wealth Fund. It is doing very similar things.

Amendment 103 is an almost direct copy of the independent review process that the National Wealth Fund is subject to. That arose from lengthy debate during the passage of the UK Infrastructure Bank Act and was supported by the Minister’s party at the time. It is not clear why, in government, they have decided to omit it from the Bill. Accountability seems to be a good thing, so long as it does not apply to them.

For GBE, I have changed the provision slightly from how it is in the UK Infrastructure Bank Act, in two ways. I have limited the scope to reporting only on how GBE has met its objectives and how well it has encouraged private sector investment alongside its activities. This latter point—additionality—is critical, as I have mentioned before. I do not have time to get into the details of crowding-in and crowding-out theory, but if all that GBE does is invest in projects which could easily have been financed by the private sector, that would be a complete waste of taxpayers’ money. Indeed, it would be actively damaging, as it would undermine the emergence and growth of a thriving industry providing the finance for our move to net zero.

We had lengthy discussions around the additionality principle during the passage of the UK Infrastructure Bank Act. I asked the Minister to comment on it in a previous group. He has still not commented in any detail, but it is critical. I would like to hear from the Minister what the expectations of GBE are in that respect. The Government have stressed the importance of it, and I have referred previously to the £1 of public money capitalising £3 of private investment that has been claimed. Crowding in is fundamental to its success, so it should be part of the measurement and review of GBE’s performance.

The second tweak I have made to the section from the UK Infrastructure Bank Act is on timing. The 2023 Act requires that the first independent report should be after seven years and then every five years. Infrastructure is by nature long-term, so those timeframes made sense in that context. However, GBE is intending to have decarbonised the power sector by 2030, in just five years’ time, so we should logically be reviewing progress before then. I have suggested reporting every three years; that is probably the major difference between my Amendment 103 and Amendment 94 of the noble Lord Offord, which proposes an independent report every year. I think an annual independent review is probably unduly onerous, but we need an independent progress review before the end of the target period of 2030, so I hope that three years is an acceptable compromise. However we do it, as currently drafted, the Bill falls woefully short on transparency and accountability.

I hope that the Government look seriously at having an independent review of effectiveness. It was hard-wired into the UK Infrastructure Bank Act for good reason: routine annual reports and accounts are simply not a good vehicle for a deep dive into the effectiveness of what are often quite complex investments and other financial activities. A separate, independent review was a good idea for what is now the National Wealth Fund, and I cannot see how a valid distinction can be made between the two organisations. The Government should want to ensure that they both operate equally effectively. Again, I would be very happy to discuss this further with the Minister and I hope that he is receptive to strengthening these aspects of the Bill, just as he and his party, when sitting on the other side of the Chamber, were on other Bills including the UK Infrastructure Bank Bill.

I say in passing that I support Amendment 102 of the noble Earl, Lord Russell, which requires a biennial report on GBE’s relationship with other public sector bodies. We have talked about this previously and it is another example of the opacity that currently surrounds GBE. In particular, I have no idea what its relationship with the Crown Estate means in practice, as well as that with Great British Nuclear and the UK Infrastructure Bank. It would be very desirable to have reports on how those relationships would work.

[Viscount Trenchard (Con)]

My Lords, I support my noble friend Lord Offord’s Amendment 94, to which I have added my name. I have also added my name to Amendment 103 in the names of the noble Lords, Lord Vaux and Lord Cameron, and my noble friend Lady Noakes.

The noble Lord, Lord Vaux, made the same point that I tried to make on Monday much more eloquently than I did: GBE and GBN are not comparable institutions. Unfortunately, it seems that the Minister’s department does not recognise that. I refer to the Explanatory Notes at page 6, paragraph 22. The power to give directions in the hands of the Secretary of State

“is consistent with the power that the Government has to direct comparable institutions, for example: the Department for Energy Security and Net Zero has a statutory power to direct Great British Nuclear, although, to date, this has never been used”.

I repeat the point made by the noble Lord, Lord Vaux, that, despite what this says, I cannot think that they are comparable institutions.

Both Amendments 94 and 103 require an independent person to carry out a review of GBE’s effectiveness. Of the two, I prefer Amendment 103, which requires the independent person to review the extent to which investments by GBE have encouraged private sector investment in those projects. Amendment 94 requires an annual independent review, whereas Amendment 103 requires such a review only once every three years. Perhaps we could compromise at two years.

I have also added my name to Amendment 102, in the name of the noble Earl, Lord Russell. This requires GBE to report on its relationships with other connected bodies and is, to some extent, similar to some of the other amendments we have debated. It is obviously a requirement of working together on strategic objectives and directions that GBE should maintain excellent relationships with its stakeholders. One of the ways to achieve that would be by adopting the noble Earl’s amendment, and I look forward to hearing him speak to it and to hearing the Minister’s response.

[Earl Russell (LD)]

My Lords, I rise to speak to my Amendment 102 in this group, which concerns independent review and governance. It would insert a new clause after Clause 7 on Great British Energy stakeholder relationships. To be honest, it is a bit of a probing amendment and one that is looking for a bit of reassurance from the Minister.

The amendment argues:

“Within one year of the day on which this Act is passed, and every two years thereafter, Great British Energy must publish a report regarding its relationship with … Great British Nuclear … the Office of Gas and Electricity Markets (Ofgem) … National Energy System Operator (NESO) … the UK Infrastructure Bank … the Crown Estate”.


Obviously, it is essential that Great British Energy publishes reports and that these are available. It is important that we have a good understanding of how Great British Energy is working in practice. That involves understanding how it is establishing its working relationships alongside other partners and fulfilling its missions and goals, as we work towards net zero. It extends to objectives and joint projects and asks, “What problems are happening?” These are all key issues in the energy transition, which is itself a complicated business that involves lots of partner organisations and joint and crossover responsibilities. This is already a crowded space—or a tangled web, if you like—in which Great British Energy is being created. Indeed, the delivery of GB Energy’s goals will happen only if the new organisation builds strong and lasting relationships that develop well and help create both joint working and good outcomes.

I want to say a word about the Crown Estate Bill, if I may. It is the cornerstone of GB Energy’s relationship with the Crown Estate; their partnership was announced on the same day that GB Energy was created. Clearly—certainly for the initial part of GB Energy’s life—that partnership will be about developing floating offshore wind with the Crown Estate. As part of the Crown Estate Bill, an amendment was agreed in order that the Crown Estate produces an annual report on its relationship with GB Energy. So that is already happening on the Crown Estate side. I ask the Minister to give an assurance that, from the Government’s point of view, there is no reason why that requirement would not be mirrored on GB Energy’s side. I cannot see one; it seems like common sense to me. As others have said, reporting is a general issue running across this Bill.

I note what the Minister has said today in relation to group 10. I also note what he has said about the possibility for ongoing parliamentary scrutiny. Ministers are responsible, of course, for example at Question time. As the Minister has confirmed today at the Dispatch Box, GB Energy will be subject to scrutiny by all the Select Committees across both Houses of Parliament, but it is important that these relationships are reported on via an annual report. I would like to hear some reassurance from the Minister on that.

I turn briefly to the other amendments in this group. As we have heard, Amendment 94 in the names of the noble Lord, Lord Offord of Garvel, and the noble Viscount, Lord Trenchard, would require the Secretary of State to appoint an independent person to review annually the effectiveness of Great British Energy in delivering its objectives, meeting its strategic priorities and complying with its directions. The independent review would be required to cover Clauses 3, 5 and 6 of the Bill.

I would be interested in the Minister’s response to this amendment. My worry is that this would be overly burdensome for the organisation. I am not certain that I was able to find another comparable organisation where these conditions applied, so my concern is whether we are asking for something that is not on a level playing field with other, similar types of organisations. I note as well that strategic directions can be given and, as I said, there are also other methods of scrutiny, so it would be the Minister’s right, at any point, to give the strategic direction for that to happen.

Amendment 103 in the name of the noble Lord, Lord Vaux of Harrowden, would require an independent review of the effectiveness of Great British Energy in achieving its objectives and the extent to which it had encouraged private investment. But this would be every three years. I was interested to hear what the noble Lord said in relation to the UK Infrastructure Bank. Again, my worry is whether this is a level playing field, but I was interested that the noble Lord said that that is part of that organisation and how it works. That makes me more inclined to lend support to his amendment.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, I will speak to the two amendments in this group regarding the appointments of the chairman and board of Great British Energy. These amendments, in the names of my noble friends Lord Frost, Lady Noakes and Lord Trenchard, attempt to fix a glaring omission from the Bill as it stands. As drafted, there is no mechanism to govern the appointments process of the chairman and the board, and this is a concern as we have heard on many occasions that GB Energy will be responsible for £8.3 billion of taxpayers’ money. Those at the top of the company will have enormous responsibility and therefore it is paramount that adequate scrutiny is given to these appointments.

My noble friend Lord Frost has attempted to address these concerns with his amendments in this group. Amendment 98 requires the chairman of GBE to undergo pre-appointment scrutiny in front of the Treasury Committee. This amendment has not come out of the blue: it is exactly the same process as the appointment of the chairman of the Office of Gas and Electricity Markets, otherwise known as Ofgem, which is the regulatory authority for the energy sector. Once the Secretary of State appoints the chair, they must appear before the House of Commons Energy Security and Net Zero Committee. This is also the case for the chairs of the Climate Change Committee and the Nuclear Decommissioning Authority. The Commissioner for Public Appointments keeps a list of significant appointments, which details the public bodies of which the chairs must undergo pre-appointment scrutiny by Parliament. There are no fewer than 40 current chairmanships of public bodies for which this appointments procedure applies.

There is clearly precedent for the chairmen of significant public bodies with responsibility for large sums of public money to be subject to pre-appointment parliamentary scrutiny. If this is the case for these three other public bodies with responsibilities in the energy sector, why should the chair of GBE not also be subject to the same pre-appointment parliamentary scrutiny process?

The Bill also fails to detail the procedure for the appointments and tenure of the directors of Great British Energy. As drafted, there are no requirements for the composition of the board, no limits on the number of directors that may be appointed and for how long a director may serve on the board, and no statutory duties to be conveyed on the board. The amendment from my noble friend Lord Frost plugs this gap.

Once again, there is precedent for having this level of detail regarding appointments to the board of a major public body. The Utilities Act 2000, which created Ofgem and which—we must not forget—was passed by the last Labour Government, did exactly that. Schedule 1 to that Act lays out, for example, that:

“An appointment of a person to hold office as chairman or other member must be for a term of not less than 5 years and not more than 7 years”.


So that Act includes details of the tenure and the appointments of the chairman and the board, yet the Bill does not. I ask the Minister why Labour thought it pertinent to specify the executive composition of Ofgem but does not believe it necessary to do the same for Great British Energy.

[Viscount Trenchard (Con)]

My Lords, I congratulate my noble friend Lord Frost on his two amendments in this group, which deal with the governance of GBE. There is, as has been said in previous debates, almost nothing in the Bill about the corporate structure of GBE or how it will be managed. I welcome my noble friend’s proposals to require that the chair should be full time and be required to attend the office in Aberdeen, from which it follows that he must be based there. That would also ensure that the person will be fully committed and be a real check on the powers of the chief executive, who may need oversight in interpreting the priorities and actions needed in response to directions received from the Secretary of State. My noble friend’s proposal that the board must comprise at least five and no more than eight directors makes perfect sense and provides for the assembly of a group of people with the appropriate skills and experience.

I have also considered and support Amendment 101 in the name of the noble Earl, Lord Russell, which requires scrutiny of any proposed appointments by the Energy Security and Net Zero Committee of another place. That committee should ensure that an appropriate balance of skills and experience among the directors is maintained at all times.

[Lord Vaux of Harrowden (CB)]

My Lords, I was not going to speak on this, but I just point out very quickly that the other Act that has a clause that is not quite the same but similar to Amendment 99 is the UK Infrastructure Bank Act. As I have already pointed out, that is the really analogous organisation to Great British Energy, so it must be appropriate, I think.

Great British Energy Bill

Viscount Trenchard Excerpts

Committee stage
Monday 13th January 2025 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I declare my nuclear power-related interests, as stated in the register. I support my noble friend Lord Offord of Garvel, who has moved Amendment 59 which, together with other amendments in this group, seeks to align the objectives of GBE with claims made by the Government before the general election as to what GBE would achieve for consumers.

I think it is fair to say that the pledge to cut consumers’ bills by £300 per household was a specific promise, and it was repeated often. I understand that the £300 pledge was made on the back of a report by the energy think tank Ember, but that it was based on the energy price cap that applied in 2023. Is it not also based on the less ambitious plan for transition to net zero, to which the previous Government had committed? However, the previous Government had not planned on setting up GBE. Will the Minister please explain where the savings figure of £300 came from, and whether the Government still support it? In that case, is it not right that it should be made a specific objective of GBE?

Will the Minister also tell the Committee whether my noble friend Lord Frost was correct in his warning, in his debate on 14 November, that NESO’s figures predicting the cost of electricity generated from offshore wind were rather optimistic at £44 per megawatt hour? My noble friend told your Lordships that recent payments to offshore wind farms under contracts for difference suggest that the real cost may be three times as much, at some £150 per megawatt hour. If that is so, NESO’s report on the Government’s plan to decarbonise the grid by 2030 may need some adjustment.

I still do not understand why the Government choose to subsidise only wind and solar schemes rather than nuclear. If consumers are required to subsidise only intermittent sources of energy, it follows that the total energy mix will be disproportionately dependent on intermittent sources. We need much more nuclear, which should not be seen as an add-on, to ensure that we can keep the lights on when the wind does not blow and the sun does not shine. It should be seen as a core and important part of our firm baseload energy system.

Indeed, we were once global leaders in nuclear power, but we now have a severe shortage of skilled workers with experience in the sector. Those we have are relatively old, and we need to train many more younger workers in nuclear technologies, and rebuild the supply chain. I am talking not just of gigawatt scale large plants like Hinkley Point C and Sizewell C, but small SMRs and AMRs which are flexible and very cost effective. That is why I have added my name to Amendment 61, also in the name of my noble friend Lord Offord. We must ensure that we benefit from the so-called clean energy transition, which is particularly relevant in the case of nuclear technologies. It is right that GBE, as a publicly owned company, should report annually to the Secretary of State on progress in re-establishing supply chains as a strategic priority.

There is not much about nuclear in the Government’s new publication Clean Power 2030 Action Plan, published on 13 December. It refers to GBE’s founding statement published in July. That document explains GBE’s five functions, of which building supply chains in “every corner of the UK” is listed fourth out of five, in two short paragraphs. “Working with GBN” is listed last, in a short single paragraph.

I have also added my name in support of Amendment 63. It is essential that GBE must understand what fulfilling its strategic priorities will cost—otherwise, how can the Secretary of State exercise his powers of direction in a responsible manner? Similarly, Amendment 65 would ensure that GBE must not waste money by investing in schemes that are too far from a grid connection or have no cost-effective access to the grid and no realistic prospect of acquiring one in a timely manner.

I have also added my name to Amendments 69 and 70 in the name of my noble friend, who has eloquently explained to your Lordships the purposes of these amendments: namely, to require GBE to consider carbon emissions from each investment and to do the same in respect of its whole investment portfolio, reporting to Parliament annually. We may not agree on the absolute prioritisation, regardless of cost and damage to our industrial base, of the elimination of all fossil fuels from our energy generation system, but we can all agree that it is a good thing that public money should be spent in such a way that increases clean power at the expense of less clean power—that is, as long as the benefits gained justify the cost. The Committee will have a chance to debate this matter in the next group.

Among the investments that GBE will make, I very much hope there will be some investments in nuclear power schemes, particularly in SMR and AMR technologies. As the Minister told your Lordships in his briefing before Second Reading, he does not expect GBE to make investments in nuclear, at least initially. I think this is because the Government think that it is not possible to deploy any of these new technologies before the 2030 target for clean power. The 13-page press release accompanying the release of the Clean Power 2030 Action Plan contains “nuclear” only once, explaining that the Government’s clean power mission is the solution to this crisis,

“by sprinting to clean, homegrown energy, including renewables and nuclear”.

But the action plan’s sparse references to nuclear comprise only a single reference to the GBN-led SMR programme, and a reference to the extension to the life of the four existing AGR reactors as a stopgap measure. I cannot find any evidence that the authors of the action plan see nuclear as playing much of a role in sprinting to clean energy.

I have also put my name to Amendment 72, which requires an annual report by GBE of its impact on the amount of imported energy. In preparing for this debate on Saturday morning, I took a look at the National Grid’s energy dashboard, which revealed at 10.15 am that we were drawing 14.7% of our electricity from imports, which is too high. Indeed, the name of the Minister’s own department emphasises the importance of energy security. The winter sun was shining brightly, but solar contributed only 4.3% and wind a mere 8.8%, less than the 11.4% generated by our existing, ageing nuclear power stations. Noble Lords will appreciate that the electricity grid accounts for around 20% of total energy consumption, which means that wind power on Saturday morning was supplying around 1.76% of the country’s total energy requirement, and solar less than 1%, even on a sunny day. Overreliance on intermittent energy sources does not help energy security—quite the reverse.

I have added my name to Amendment 80, tabled by my noble friend Lord Petitgas. Of course, it must be right that GBE should be required to produce quarterly accounts and audited accounts annually. As far as the requirements for reports on carbon emissions are concerned, the amendment duplicates Amendments 69 and 70. If the Minister can assure the Committee that the Government will bring their own amendments to satisfy these requirements, I am sure that such duplication can be avoided.

Lastly, I support Amendment 85A in the name of my noble friend Lord Hamilton, which seeks to achieve substantially the same result. Amendment 80 is also necessary to ensure proper scrutiny of GBE’s decision-making process with regard to its investments. Will the Minister explain his view on GBE’s role as a potential investor in joint public and private partnerships?

[Lord Berkeley (Lab)]

My Lords, Amendment 74 in this group is in my name. It seeks to ensure, in the creation of GB Energy and the delivery of its objectives, a specific consideration of decarbonisation challenges faced by the 1.7 million households in the UK that are not connected to the gas grid—I declare an interest in that I am one. An awful lot of other people—including many noble Lords opposite, I am sure—are not connected to gas and will have to use electric. The amendment provides for direction to be given to GB Energy to review the decarbonisation challenges that these households face but also, importantly, to consider the solutions that exist to help them do so practically and affordably. They include the value of adopting renewable liquid fuels.

Taking into account the recommendations of GB Energy, the amendment would also require the Secretary of State to implement existing measures within the Energy Act 2023 that would help off-grid households—namely, to hold a consultation on the benefits of introducing a renewable liquid heating fuel obligation or RLHFO. This measure secured all-party support in the last Parliament but has not yet been implemented. I hope that my noble friend will look at this again.

To go into a bit more detail, the challenges facing off-grid households, which are mostly in the countryside, are their existing energy efficiency, location, age and construction. As many noble Lords will understand, this means that these households will face substantial challenges to decarbonise using technology based on electrification. The research undertaken by the department and the Scottish Government shows that installing a heat pump in such a house, including full retrospective costs and the cost of servicing, will cost off-grid homes on average over £21,000, which is unaffordable for many.

I am concerned that there will also be an impact on the local grid. We tend to forget about the local grid. If everything is to be heated by electricity, placing unmanageable pressures on the grid, we need to have a good grid. In the National Grid’s Future Energy Scenarios report, the scenario “Leading the Way” has estimated that to achieve clean power by 2030, 1 million properties in the UK will require a solution other than electric heating, due to the high cost of local networks.

There are probably several solutions, but the one I want to describe briefly is that renewable liquid fuel can make decarbonisation affordable and practical for off-grid consumers, significantly reducing emissions and delivering on the carbon budget. It will help deliver clean power by 2030 and the commitment that no one who does not want to will be forced to remove a boiler.

In Cornwall, where I live, a fuel distributor has successfully created the country’s first renewable liquid fuel village, in the coastal village of Kehelland, converting homes, businesses and the local church and schools to a fuel called HVO. It has been a fantastic success in helping residents to reduce their carbon emissions and allowing them to play their part.

I appreciate that my noble friend’s ministerial colleague in the other place gave evidence on this issue the other week, but she referred to issues of supply and cost to consumers. I was concerned to hear that the department may be delaying the Energy Act consultation. I hope that is not the case, because this consultation needs to go ahead. I know that the industries that support off-grid households found that she said something rather surprising, given that there is clear evidence that should reassure my noble friend and his colleagues.

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[Lord Offord of Garvel (Con)]

My Lords, I rise to move Amendment 62 and to speak to my Amendments 64, 68, 71 and 75. Aside from the promises to cut consumer energy bills and create 650,000 new jobs made by the Government throughout the election campaign, the British public were assured that GBE would turn a profit for the taxpayer. Yet there is nothing in the Bill that elucidates an investment profile or targeted rate of return. Why not? The British taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of public money.

With that said, Amendment 64 requires GBE to provide an annual report to Parliament on its annual rate of return on investment and a projection of the following year’s expected rate of return on investment. That point was picked by my noble friend Lord Petitgas in the previous group. The company intends to invest in and de-risk projects in new clean energy technologies and it would be useful to see the return on investment of these projects. The point was well made in the last group and this amendment continues to hammer that point home.

During the last election, the Government made countless promises on bills and energy costs—again, a point we heard in the last group—that were rehearsed, debated and put out by the Prime Minister, Chancellor and various Cabinet Ministers, who gave the figure of £300. Once again, it is only fair that we have amendments that hold the Government to account on these promises made to the British people. It is widely understood that the cost of electricity is a matter of serious concern and, again, as has been indicated, it is now the major part of any household’s weekly costs. Therefore, it is deeply worrying that the Government are voting against enshrining these promises in law when they made them so directly to the British public.

The Government have said that GBE is part of their plans to ramp up renewables, which they say will result in cheaper energy. But, again, we do not have the background and analysis. The only analysis we have had so far, from Cornwall Insight, found that in the last contracts for difference, the Secretary of State, on these assumptions, will potentially increase people’s energy bills by £5. So, again, we have conflicting reports from different experts in this space. The Office for Budget Responsibility has forecast that removal taxes will increase by 23% by 2030, again highlighting the cost of this transition to the ordinary consumer. It is with that in mind that I bring forward Amendment 71, which requires GBE to produce and report

“a cost benefit analysis of the price of electricity produced from renewable energy technologies compared to that produced from gas”,

which plays a critical role in energy generation.

I return again to the Government’s promises of 650,000 jobs with no detail as to how that will be deployed, other than the fact that we know there may be 100 or so in the Aberdeen headquarters. I believe that the Government’s punitive attack on the North Sea oil and gas industry will actually cost jobs, as the noble Lord, Lord Bruce, already mentioned in the last group—some 200,000 highly paid, highly technical jobs in the North Sea, which are critical to the transition to the new green energy world for which we all wish.

Finally, Amendment 75 would require GBE to carry out an environmental impact assessment on each investment it makes. The Secretary of State and GBE should give due regard to their role in maintaining the protection of our environment while ensuring that they deliver healthy returns on investment.

I am pleased to speak to this group. I look forward to the corresponding debate. The function of GBE as a type of investment body is central to its operation as a company. It is therefore essential that the Bill makes provision to report on the success and impact of each investment it makes, backed by £8.3 billion of taxpayers’ money. I beg to move.

[Viscount Trenchard (Con)]

My Lords, I congratulate my noble friend on his clear and well-argued introduction of his amendments in this group, to most of which I have added my name. As he said, the taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of his money. State-owned companies do not have a great track record in realising a strong, positive return on their invested assets.

Unless GBE does that, it is likely to have a negative, rather than a positive, effect on wholesale electricity prices. Amendment 62 will ensure transparency on that. GBE intends to invest in and de-risk projects involving new clean energy technologies. It is clearly necessary to have full transparency as to the rate of return on each of the investments that GBE achieves. The amendment would require GBE to consider every single investment it makes in terms of the impact that it will have on electricity prices in the future. Does the Minister not agree that this would be a good discipline for GBE? Amendment 64 would ensure that we have such transparency on the whole portfolio of GBE’s investments across the board.

Amendment 71 contains a requirement for a cost-benefit analysis of the price of electricity generated by each of its investments compared with that of electricity generated by gas. We certainly need to know that. Many of us think that we are already saddling the consumer and industry with unnecessarily expensive electricity. The grid is always bound to draw electricity from renewable sources when they are available, in priority to gas. This means that gas power stations are constantly being fired up and down, and are seldom operated at full capacity. This distorts the price of gas, which in turn distorts the price of electricity because gas power stations produce much cheaper electricity when operated consistently at or near full capacity than they do under the current modus operandi. The price of gas used in the cost-benefit analysis required by this amendment ought to be the price achievable from constant operation rather than the distorted price resulting from prioritisation of renewable sources.

I also refer briefly to Amendment 75. It is clear that the main purpose of GBE’s collaboration with the Crown Estate is to build a large number of offshore wind farms in coastal waters. This amendment will require GBE to consider carefully the environmental impact of its activities on marine life and inshore fisheries, among others.

The Government have made much of their determination to cut energy bills. Their refusal to accept Amendment 71 and other amendments would show that they are less than certain that their plans will result in lower energy prices. I look forward to hearing the Minister’s response.

[Lord Hamilton of Epsom (Con)]

My Lords, I was speaking to the noble Lord, Lord Mandelson, the other day. This was when he was chasing around after the chancellorship of Oxford University. I said to him that I thought he would serve his country much better in Washington than in Oxford. I congratulate him on becoming our ambassador in Washington. I think he will do a very good job.

I mention the noble Lord, Lord Mandelson, because a quote attributed to him is that, “When politicians try to pick winners, the losers invariably find the politicians”. People should recognise that the track record of politicians in trying to pick winners is absolutely abysmal. Invariably, political considerations and jobs come into it; profitability is the last thing that is ever considered.

Therefore, it is essential that we support these amendments. They are asking for some degree of accountability for Great British Energy, which will have billions of taxpayers’ money. If we are not very careful, it will go to all the projects that have been rejected by the private sector as not being viable and will invariably lose money. That should be of great concern to us all because it discredits government and wastes taxpayers’ money.

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[Viscount Trenchard (Con)]

My Lords, I rise first to propose my Amendment 86A as an amendment to Amendment 86, to which the noble Lord, Lord Cameron of Dillington, has just spoken. The purpose of my amendment is similar to that of Amendment 56A, which was debated in an earlier group. I agree with the noble Lord that the Secretary of State’s considerable powers to give directions to GBE should be subject to oversight. The Bill already requires any directions to be published and laid before Parliament, and it requires him to consult GBE and any other person he considers appropriate before giving any direction. The noble Lord, Lord Cameron, rightly proposes that NESO, the Climate Change Committee and the Gas and Electricity Markets Authority should also be consulted. He rightly did not add Natural England and the Environment Agency to the list—I guess because they are not qualified to have authority over the Secretary of State’s directions on energy projects to GBE.

However, both Great British Nuclear—GBN—and the National Wealth Fund should be consulted, because their objectives are associated specifically with the delivery of new energy schemes. In particular, it would have made more sense to have created GBE as a body incorporating GBN from the beginning, which would have provided for more joined-up thinking. It is seriously distortive to the market that GBE is well capitalised, with £8.3 billion of taxpayers’ money, and GBN has no such funding. That is why we do not have anywhere near enough UK-based nuclear companies and consortia going through the GDA process at present. At the very least, GBE should be required to work closely with GBN. The Minister should surely accept that GBN should be able to propose nuclear schemes, which may compete well with renewable schemes. A requirement to consult would make it more likely that that would happen.

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[The Earl of Effingham (Con)]

My Lords, I rise to speak in support of the amendments I have tabled to Clause 6 of this Bill, along with the contributions from the noble Viscount, Lord Trenchard. These amendments reflect three core principles of fiscal restraint, operational transparency and the safeguarding of national interests.

Amendment 83 seeks to limit the number of Great British Energy representatives attending conferences of the parties to the United Nations Convention on Biological Diversity to no more than five. I greatly understand the importance of international collaboration on biodiversity, but we absolutely must be realistic about the need for cost control and proportional representation. These international summits are indeed vital, but we have to recognise also that very significant amounts of taxpayers’ money are spent on travel and accommodation. It is simply not appropriate for Great British Energy, funded by the public purse, to send unnecessarily large delegations. By limiting attendance, this amendment ensures that taxpayers’ money is spent wisely, without detracting from the company’s core mission, which can be accomplished with a lean and laser-focused task force.

Amendment 84 would require Great British Energy to publish its principles, policies and criteria for evaluating prospective investments. One of the most persistent criticisms of government-led initiatives is the opacity with which decisions are often made. Entrepreneurs, innovators, universities and companies across the country deserve clarity when applying for backing from Great British Energy. For example, what metrics will Great British Energy use and what constitutes a worthwhile investment? By requiring the publication of this information, we will not only promote transparency, which should be encouraged, but foster a more competitive and accessible process for any prospective partners. This is good governance in action.

Finally, Amendment 85, tabled jointly with the noble Viscount, Lord Trenchard, addresses the critical issue of national security and economic prudence. It would require that Great British Energy does not co-invest with Chinese state-owned companies without prior notice to the International Trade Committee of the other place. The risks associated with Chinese state-owned companies are well documented. Co-investment with such entities could compromise the integrity of Great British Energy and pose long-term risks to our national security. Furthermore, it would expose the UK to significant economic and political vulnerabilities. To be clear, this amendment does not propose an outright prohibition, but it does mandate a right and proper process of scrutiny. Requiring advanced notice to the International Trade Committee will introduce a layer of accountability which will ensure that such decisions are not made in haste or without proper oversight.

Together, these amendments reflect a responsible approach to managing Great British Energy. They ensure that the company operates in a manner that is transparent, cost-effective and aligned with the UK’s strategic interests. I urge all noble Lords to support these amendments and help guide Great British Energy to be an entity that truly serves the British people both efficiently and prudently.

[Viscount Trenchard (Con)]

My Lords, I rise to support my noble friend Lord Effingham in his Amendment 85, to which I have added my name. Certainly, there are good reasons to be very cautious in selecting international partners with whom we will co-invest in the energy sector. Chinese state-owned companies are managed under rather different governance systems from those which the London Stock Exchange would consider appropriate for its listed companies. I agree with my noble friend that the Secretary of State should consult the International Trade Committee of another place before considering such co-investment.

Among other amendments in this group, I also support my noble friend Lady Bloomfield of Hinton Waldrist in her Amendment 78, which would ensure that GBE will reinvest all profits into the company. I agree with what she said in her speech, especially as GBE, as a publicly owned company, will not be subject to the disciplines of the marketplace, and its shareholder will be more concerned with achieving policy objectives through GBE than with maximising its return on investments and contributing to long-term growth.

[Lord Teverson (LD)]

My Lords, I will make a few comments on this. I am rather attracted to the amendment from the noble Baroness, Lady Bloomfield—one worries that, if this were a successful organisation, all profits would disappear back into the Treasury, which would be very unfortunate. I think that is an excellent bonus, but I suspect I probably would not put it in as an amendment to the Bill.

In terms of investment committees, I cannot believe that this organisation will not have a proper professional investment committee, which, I hope will probably have some external members as well. But this misses one of the key points—which I also would not put in the Bill, so I have not put down an amendment—which is the discipline with which the great Green Purposes Company, of which I am a trustee, keeps the feet of the Green Investment Group part of Macquarie to the fire. It is around checking and making sure through proper systems that the investments that are made are truly green and add to low carbon, rather than otherwise. There needs to be a check on that side so that the organisation itself also avoids greenwashing, which is one of the big issues that would undermine the reputation of Great British Energy if it should ever happen. Obviously, we hope that it would not, and I am sure the Secretary of State would not want it to, but there needs to be something within the organisation—an external audit would be good—that includes the impact on greenhouse gas emissions and biodiversity as part of its performance.

In terms of foreign companies, again, I would not honestly see this as being part of the legislation, but I would absolutely say that Great British Energy should be involved in joint venture companies with foreign businesses. That is one of the key areas where we should be able to bring intellectual property back into this country and work together with other nations, as well as strong UK companies. Those joint ventures would be extremely important in terms of the performance of this company.

Lastly, why are we discriminating against the UN convention on biodiversity? It is an organisation that is struggling. I am not disagreeing on how many people we should or should not send to it, but why that and not the United Nations climate change committee or the COPs? I do not get that. It would be very negative for that organisation, for which we are struggling to get international consensus to tackle the real and huge biodiversity problems that we have on this planet, if it was mentioned in a Bill of the UK Parliament. That would be absolutely negative for our international reputation.

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Moved by

[Viscount Trenchard]

85B: Clause 6, page 3, line 38, at end insert—
“(1A) The Secretary of State must give a specific direction to Great British Energy that it must consult with Great British Nuclear prior to investing in the production, storage and supply of nuclear energy.”Member’s explanatory statement
This would require GB Energy to consult with Great British Nuclear before it invests in nuclear energy.

[Viscount Trenchard (Con)]

My Lords, although I have already spoken extensively about the need for GBE to pay much more attention to nuclear power, I am glad that we now have a separate nuclear group of amendments. My Amendment 85B requires GBE to consult with GBN prior to investing in nuclear energy projects. A reader of the Bill and of the Explanatory Notes would probably take the view that it is not the Government’s intention that GBE should have any involvement with nuclear power. The word “nuclear” does not occur in the Bill and occurs only once in the Explanatory Notes, which inform the reader that the Secretary of State’s powers to give directions to GBE are consistent with the powers the Government have to direct comparable institutions such as GBN. Does the Minister agree that it is a bit of a stretch to argue that GBE and GBN are comparable institutions?

We have been told that GBE will be capitalised with £8.2 billion for the purposes of making investments in green energy. As I pointed out at Second Reading, a look at GBN’s accounts shows that it had only £342 million on its balance sheet at 31 March 2023. How can these two bodies be regarded as comparable?

On 17 December, the Minister told the Committee that

“we also need nuclear as an essential baseload for our energy generation, and gas as the flexible energy generation which you can turn on and off”.—[Official Report, 17/12/24; col. 177.]

I will make two observations on the Minister’s statement. First, to use gas power stations only as a balancing item for renewable energy is a very expensive way of using them, because they are constantly being fired up or down. Gas’s role in electricity pricing also distorts the price upwards, in a manner most damaging to the consumer’s interests.

I will not comment on CCUS, except to say that if only the Government would consider a funding commitment for nuclear of even one-tenth of that which they have made for CCUS—£21.7 billion—it would make an enormous difference to the prospects of British nuclear energy projects becoming viable and attracting funding from the private sector.

I was happy to hear the Minister confirm that we need nuclear as an essential baseload for our energy generation, but he has not convinced me that he recognises the urgent need to prioritise new nuclear projects now. He also said:

“Great British Energy and Great British Nuclear are already talking very closely together, and he can be assured that this will continue”.—[Official Report, 17/12/24; col. 209.]


This may be true, but the Government’s intention seems to be for GBE to concentrate initially on its clean energy superpower mission. The statement after the first energy mission board did not even mention nuclear at all. The Minister said at the Peers’ drop-in session before Second Reading that he did not expect GBE to invest in nuclear projects in its early years, and, as I mentioned in an earlier debate, he did not answer the noble Baroness, Lady Winterton, clearly when she asked him whether GBE might invest in an SMR project in South Yorkshire.

It is hard to escape the impression that, besides the two gigawatt projects at Hinkley Point C and Sizewell C, the Government see other nuclear as something that comes later—first SMRs and then later, AMRs—ignoring the important fact that some AMR technologies are more advanced than some SMR technologies. Can the Minister tell the Committee why GBN is prioritising SMRs over AMRs, which is surely an illogical approach, as some AMR technologies are more advanced than SMR technologies? Those that are ready now for commercialisation are being artificially held back.

I blame the Government for continuing the approach of the last Government in failing to recognise the potential of supporting a much quicker move to market for some AMR technologies, which are being sidelined by the limited scope and budget, and the slow pace, of the Government’s AMR research, development and demonstration programme, whose aims are merely to demonstrate high-temperature gas reactor technology by the early 2030s, in time for potential commercial AMRs to support net zero by 2050.

My Amendment 85B would ensure that GBE recognises that nuclear projects must form a part of its early investments. Amendment 85C would require GBE to monitor the impact of its nuclear investments on its ability to attract investment from the private sector in nuclear energy projects. I believe the latter could be substantial. Why does the Minister think that two important gigawatt projects initiated by Japanese companies—Toshiba’s NuGen project and Hitachi’s Horizon project—failed? Does the Minister not recognise how much better our energy security would be if either or both those projects had proceeded to successful deployment?

I have also tabled Amendment 118C, which adds a reporting requirement for GBE to undertake a review of the impact of this Act on the competitiveness of the UK nuclear industry compared to other countries. If GBE working with GBN acts as a catalyst in the adoption of new nuclear energy projects, their competitiveness will progressively increase compared with other countries. In September 2024, the International Atomic Energy Agency revised upwards its annual projections for the expansion of nuclear power for a fourth successive year. World nuclear capacity is now projected to increase by 2.5 times the current capacity by 2050, in the IAEA’s high-case scenario, including a significant contribution from small modular reactors.

The website Global Petrol Prices shows some interesting statistics. The price of electricity for businesses in the fourth quarter of 2024 in the UK was 51.7 cents per kilowatt hour, double that in Germany, where it was 23.5 cents per kilowatt hour, and three times that in France, where it was 17.4 cents per kilowatt hour. RTE, the electricity transmission network of France, showed that last Saturday nuclear accounted for 73% of French electricity generation, hydroelectric power for 12%, solar power for 7%, and wind power a mere 3%. It is very clear that the enormous cost of electricity for British businesses is now massively reducing their competitiveness compared with their French competitors. The more nuclear power we have, the more competitive it will become, and as the cost of electricity falls, the more competitive our businesses will become.

Does the Minister not agree that the economic growth that we all need so urgently can only be achieved by a radical adjustment to our energy policy? We need rapidly to commission more nuclear capacity—large, medium and small. I am not sure that all these amendments are perfect, but if he does not like my amendments as drafted, can he come back with some better ones to ensure that GBE, working with GBN, will ensure that much greater support will be given to nuclear projects so that nuclear can play its proper part—a much larger part—in our energy sector in the decades ahead? I beg to move.

[Lord Hamilton of Epsom (Con)]

My Lords, it seems quite extraordinary that no reference is made in this Bill to nuclear because, let us face it, if you want to have clean energy generation, nuclear is the only thing that is available at the moment. My noble friend Lord Trenchard must be right when he says that we should be much more seriously considering both small modular reactors and large ones for our energy supply in future, because that is going to be the only way we really get clean energy. I find it quite extraordinary that this has all been parked somewhere separately when it all should be integrated. We should certainly be looking at the potential for nuclear, because that is where the future lies.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, it is always good to have a discussion about nuclear energy. The noble Viscount, Lord Trenchard, is ever consistent in putting forward his views. I assure him and the Committee that the Government see nuclear power as having a vital and important part in our energy mix.

I say to the noble Lord, Lord Hamilton, that the fact is that no technology is mentioned in the Bill, and that is quite deliberate—so the absence of nuclear in the Bill should not be taken as an indication that we do not think that it has an important role to play. I say to the noble Lord, Lord Offord, on Labour’s record on nuclear, it was in fact a Labour Government, in 2008, who took the decision that we would go back to new nuclear. Shortly afterwards, I was appointed a Minister of State at the Department for Energy and Climate Change, and I took part in many discussions at that point about how we got the sites, developed the supply chain and attracted investment. The fact is that we were succeeded by a coalition Government, followed by a Conservative Government, and it was not until, I think, 2017 that a final investment decision was made in relation to Hinkley Point C.

I am very proud of the nuclear sector. For all the challenges that Hinkley Point C has had, the fact is that a UK supply chain has been developed. The point about replication at Sizewell C is that that supply chain can then continue to service Sizewell C. We then want to see small modular reactors and AMRs developed, because we see them as having great potential. I say to the noble Viscount, Lord Trenchard, that he has not responded to the points raised by his colleague, the noble Lord, Lord Howell, in relation to Sizewell C. I am sure he will agree with me that, if we were to pull the plug on Sizewell C at this point, it would have a devastating impact on the confidence of the nuclear sector, in this country and globally. Actually—although he is not here—the point about replication is about the derisking of Sizewell C, building on what happened at Hinkley Point C, including the design changes and all the other issues, such as the time it took to develop the supply chain and the productivity issues. The case for Sizewell C is very strong indeed, and we look forward to moving towards a final investment decision over the next few months.

On the relationship between GBN and GBE, we have decided that GBN will remain a separate legal entity. That is important, because it makes sure that we have a body that can focus completely on nuclear energy, but working very strongly together with Great British Energy. The two chairs have met and have, I believe, built a very strong relationship already. I expect them to be able to work in strong partnership in future. I do not think it is necessary to put onerous requirements in the Bill. Certainly, Clause 6 is not the way in which to do it.

The noble Viscount, Lord Trenchard, is concerned about the approach that GBN is taking to the SMR technology selection process. It was instituted by his own party in government, and I think he was critical of his own Government. Well, I am not. I think the SMR technology assessment was absolutely the right thing to do. In September 2024 it concluded the initial tender phase of the process and downselected four companies. We hope for further progress over the next few months.

I recognise the huge potential that AMRs bring, and we will respond to the alternative routes to market consultation. We are obviously very keen to do what we can to attract nuclear company developers in this country.

On the impact of competitiveness, I really do not think the Bill is an appropriate vehicle for those considerations, and nor do I see that being part of Great British Energy’s role. But of course I want there to be a thriving nuclear industry in this country. I want to see us build on the supply chain that has been built around Hinkley Point C and then on to Sizewell C, as I have said.

In conclusion, I hope the noble Viscount will recognise that while he may disagree with elements of the Government’s policy on nuclear, he should be under no misapprehension: we believe that nuclear provides an essential baseload. We will continue to support the industry in the future.

[Viscount Trenchard (Con)]

My Lords, I thank the Minister very much for his reply, and I thank my noble friend for his intervention. To some extent I am heartened by the Minister’s words, although I remain a little unconvinced by his assertion that he sees nuclear as being so important. There is a fundamental difference between GBE and GBN, in that GBE has £8.2 billion of capital and GBN has only a few hundred million. The two vehicles are completely different, so I would be rather more relieved if the Minister had explained that the capital made available to GBE would equally be available to nuclear projects that GBN might recommend for investment.

[Lord Hunt of Kings Heath (Lab)]

Can I just respond? Nothing precludes GBE from investing in a nuclear development.

[Viscount Trenchard (Con)]

I thank the Minister again for his reply. Nevertheless, GBN does not have any money for investment, so GBN is by definition a very different kind of vehicle compared with GBE. In light of the Minister’s reply, I would like to withdraw my amendment for now.

Amendment 85B withdrawn.

--- Later in debate ---

[Lord Fuller (Con)]

My Lords, I will speak to Amendments 85G and 85H in my name.

In this week of all weeks, when temperatures have dropped to minus 20 in parts of our nation and we are down to less than a week’s-worth of gas, it is time for the rhetoric on renewables to collide with the reality of what it takes to power our economy and protect the comfort and well-being of our citizens. There could not be a better moment to have this debate, with Mother Nature dialling a wake-up call to us all.

We need to be more realistic about the practicality of heating and lighting our homes, grounded in the world as it is rather than how we want it to be. The purpose of these amendments is to ensure that GB Energy takes a structured and quantitative approach to investing in energy production from renewable and wind energy assets. These investment plans would be evidence on an annualised basis, but broken down into monthly segments to reflect the seasonality that we all experience, with mandatory monitoring on a monthly basis. At its heart, my amendment seeks to force GB Energy to use a data-driven approach to address the structural energy gap we get every winter and, inter alia, to use that data to prioritise investments in energy assets that give energy security above the desirability of decarbonisation.

Energy security and decarbonisation are not necessarily mutually exclusive, but when the UK’s energy balance is published monthly, as these amendments would require, it will act as an obvious spur on investments to keep the lights on every month as a first and primary duty. These amendments do not dilute the ambition of GB Energy or abandon the obvious desirability of reducing our reliance on fossil fuels. However, requiring GBE to publish its plans for renewables and to address the predictable gaps that come each year will bring some reality to the rhetoric.

This country is bumping on empty this week—it is a serious matter. We are too reliant on the kindness of strangers to heat our homes. As the noble Baroness, Lady Brown of Cambridge, head of your Lordships’ Science and Technology Committee says, the crux of the matter is the robustness of our plans for

“the doldrums of winter when the sun doesn’t shine and the wind doesn’t blow”.

I am not rubbishing renewables but we need to be less starry-eyed about their ability to make the contribution some have thought they can, especially in winter. The amendments would therefore require GB Energy to be specific about how its investments in renewable and wind energy assets, and the planned additional investments over its existing ones, will contribute to the aggregate energy demand in monthly slices. There is a purpose to this, which is to ensure that when we flick the switch, the light comes on; when we press the button, the motor whirrs into action; and when you open the bill, you should not have to fall over in shock.

I am not interested in adding bureaucracy; NESO has a responsibility to produce these aggregate demands and I do not intend to interfere with those. But we know that there are seasonal variations in sunshine, and as with solar, also with wind; we all know the wind tends to blow harder in the winter as storms barrel across the Atlantic. My amendment will require GBE to take this predictable seasonality into account in its investment plans, to ensure that those investments in renewables can realistically contribute to meeting the energy requirement on a monthly basis, especially in winter. It is also about holding GBE accountable for the hard-nosed business of addressing these predictable structural energy gaps in the way that the noble Baroness, Lady Brown, highlighted, working hand in glove with NESO to address the market failure.

It sounds obvious that this should be the case, but my sense is that the Government are primarily focused on decarbonisation, even if it just ramps up surpluses in the summer that require these constraint payments to pay wind turbines to be switched off. If we are chasing carbon alone, we are missing the point. We need to balance renewables and wind investments in a way that also balances energy markets every month so that we do not run out of juice when it is cold.

This is important, because the total amount of standby generation capacity that we need is scaled by the months with the greatest deficit. It is on not an annual basis but a monthly basis. Because we have these predictable gaps, we pay standby gas power stations millions to keep ticking over, ready to jump into action when needed. Control rooms up and down the country are staffed by people playing patience and waiting for that call. That is expensive. It also underpins the entire speculative subculture in energy markets, in a process that the Daily Telegraph last week called the “gasino”, whereby speculators make a fortune while householders pick up the tab.

My colleagues have noted that the Guardian reported this week that two gas-fired power stations were paid £12 million for just three hours of electricity. We should not be surprised. Running a power station is expensive—there are staff, there is capital and maintenance, with people sitting around waiting for that call—and it is expensive to provide this insurance. The truth is that we are having to pay twice for much of our electricity, once for the renewable capacity, which we hope will boil that kettle, then again to have non-renewables on standby, ready to leap into action so that we can ensure that we can boil that kettle when the mercury falls. The consequence is that we are paying for some of the most expensive electricity in the world. Our costs rose 124% in five years, according to government figures. The UK’s energy price per kilowatt hour was 25.85p per kilowatt hour in 2023—significantly higher than in Germany, France and the US. We are becoming structurally uncompetitive as a result.

If enacted, my proposals would mean that the company’s objectives and functions would be forced by the market and public opinion to rank energy security above the decarbonisation function. That way, our £8 billion investment in GBE will keep the lights on. That is how we get best value from those investments, and we have energy markets that work more efficiently and at lower costs, which is a good thing. I expect the Minister to say, “Well, this is all rather burdensome”, and give ifs and buts and ask why would we need to publish this stuff. However, nobody questions when the OBR on a monthly basis publishes the forecast for the Bank of England. I do not see why, if it is good enough for the Bank of England, the GBE should not be forced to publish its investments as well.

I mentioned in the earlier debate how GB Energy is a private company, but it is established for public benefit. Publicising its plans and monitoring them is for the benefit of the public. It should not be entitled to cloak its activities in secrecy, as a private company established under the Companies Act 2006 would normally be expected to do. Mandating a monthly look at the markets, with a view to reducing the amount of back-up generation that we need, would avoid the perverse incentive to invest in renewables that make the surplus even greater. We do not want to overprovide standby back-up, so we end up paying excessive compensation payments, and we pay people more than is necessary to play solitaire in those control rooms. We do not want to underprovide, so that speculators hold us over a barrel in the short squeeze.

It follows that the requirement to publish the plan, to invest with the purpose of reducing the monthly or the predictable energy gaps, ensures that it brings a dose of reality to the complicated job of not only calculating the gap but doing something about it. That is where GB Energy can have a good, effective and ambitious role. Success looks like GBE publishing the plans and data so that we can see how effective it has been in needing fewer people in the control rooms by minding that gap, seeing fewer people falling over when they open their bill and a realistic, data-driven, balanced energy market that is not held hostage by ideology so much, so that we can move our economy forward—to keep the lights on and keep those motors whirring.

[Viscount Trenchard (Con)]

My Lords, I support Amendment 85F, tabled by my noble friend Lord Murray and Amendments 85G and 85H tabled by my noble friend Lord Fuller. As I explained in an earlier group, it is very clear that the price of electricity is presently adversely affected by the pricing mechanism applied by NESO, which is the price being determined by the last price of gas as used. If you are using gas only as a balancing item—that is, when the wind is not blowing and the sun is not shining, you fire up a gas power station to make sure the lights do not go out—it is much more expensive. The electricity generated by that last switch on of a gas power station determines the price of electricity, and that has a huge negative effect on the consumer, obviously. That is why these amendments are so necessary.

I would like to ask the Minister if he thinks that it is right that the electricity price is determined by the last firing up of a gas power station, which is being used simply as a balancing item when the wind does not blow and the sun does not shine. As we have seen over the last few days, there have been many days when the proportion of our electricity generated from wind is under 10% and that generated by gas goes above 50%, which means that power stations that are used only occasionally are being fired up, and that is very expensive.

[Lord Ashcombe (Con)]

My Lords, it is worth stating what is going on out there on the national grid right now. Gas and wind are supplying between 42% and 43% each; therefore, it is the gas price that is driving the price for everything. We are in the unusual position right now where we are exporting electricity to the continent because they need it more than we do. To have 42% driven by gas, with the price at over £100 a megawatt hour at the moment, seems worrying, and what we can do to curtail that must be important; but gas is not going away any time soon, and we have to be careful about how we moderate the reduction in it.

Great British Energy Bill

Viscount Trenchard Excerpts

Committee stage
Tuesday 17th December 2024 Lords Chamber

for that purpose. These are obviously probing amendments but what this group of amendments, from all noble Lords, shows is that the Committee is not content with the level of parliamentary scrutiny in either House at this time. We are taking a lot on trust and passing over a lot of power and decision-making to the Government. I believe that if it is worthy of scrutiny, the noble Lord and the Government should not be frightened of parliamentary scrutiny: that is the main thrust of the amendments in this group.

[Viscount Trenchard (Con)]

My Lords, I agree with my noble friend Lady McIntosh that the Bill is defective so far in terms of parliamentary scrutiny and involvement. I have added my name to Amendment 51, so ably proposed by the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Noakes. It requires the Secretary of State to prepare the statement of strategic priorities for GBE within six months. That is quite an easy target. Perhaps when the Minister thinks about this—of course, I am very optimistic that he will come back with his own proposal to deal with the lack of accountability—he could suggest a shorter timescale within which the Secretary of State might lay out the statement of strategic priorities. As has been said, at Second Reading many noble Lords expressed the view that it is a pity that that is not in the Bill.

I apologise to the Committee that I was not able to be present on the first day, when we discussed the objects which refer to clean energy but with little detail. It is very unclear, as other noble Lords have said, what Great British Energy is going to do and particularly how it will relate to other companies and entities in the same space.

I also support Amendment 52 in the name of my noble friend Lady Noakes. It is right not only to prepare the statement of strategic priorities but to give both Houses 40 days to approve it or not. On reflection, I also agree with the noble Lord, Lord Vaux, that it perhaps should be subject to the affirmative rather than the negative procedure.

I look forward to hearing my noble friend Lord Effingham speak to Amendment 57. He rightly proposes that the consultations with devolved Administrations should take place before the publication of the statement of strategic priorities. However, this only goes to show how essential it is, as many of us believe, that we have a co-ordinated national strategy, given that devolution has taken place over many areas of our national life, as it would be cheaper and make more sense. But we are not in that place, and we have to take account of the settlement of the devolved Administrations that exists. So, it is obviously absolutely essential, and I hope the Minister will confirm that he will make sure that the policies put forward and GBE’s strategic priorities will not be squabbled over by the devolved Administrations.

My noble friend Lady Noakes, with her usual forensic expertise, has also identified that the articles of association of GBE need to make sure that it is able to prepare the strategic plans, and that the articles must empower the company to do that. It must reflect the Secretary of State’s statement of strategic priorities.

Lastly, I also support Amendment 119, proposed by my noble friend Lady Noakes, which deals with the accountability and other provisions which must not take effect until after the statement of strategic priorities is laid before Parliament.

[Lord Hamilton of Epsom (Con)]

My Lords, I too support the amendment of the noble Lord, Lord Vaux. It strikes me that the real problem with the Bill is that if nothing happens with GB Energy, the Secretary of State intervenes. On the whole, politicians intervening in investment decisions does not have a very good history, and an awful lot of taxpayers’ money has been wasted. Therefore, it would be a very good idea if there was a system of reporting back to Parliament.

The real problem with the whole energy scene in this country is that the private sector is well in there already. I am not sure how committed these people are to energy, but they are certainly very good at crunching the numbers. Of course, with any project, they establish that the supply of, say, wind, is reasonably constant in a certain area. Then, the key thing is the feed-in tariff that they negotiate. That gives them a guaranteed cashflow. Among other things, with wind turbines they even managed to negotiate that they get paid when the wind is blowing and nobody wants the energy. So, if you can do that, it seems to be relatively easy to make money on these things.

If you want to put up wind turbines, there is no problem getting private finance. It is the more vexed areas of energy where you will find people with DeLoreans appearing, saying, “I’ve got a wonderful scheme all organised for carbon capture”, or something that is incredibly difficult in technological terms—or indeed nuclear fusion, come to that, which is another very hard nut to crack. It would be wonderful if we could have nuclear fusion power stations pumping out energy, but we are still a very long way from getting there. What guarantees do we have that taxpayers’ money will not be ploughed into these things and an awful lot of money completely wasted?

I would like to pick up some remarks from my noble friend Lady McIntosh of Pickering. She was concerned that GB Energy would have great problems raising finance. That is not quite the way it works. You actually get tiered finance when it comes to some of these projects, and I can tell noble Lords what the tiers will be: a whole lot of outside investors will get their money back almost whatever happens, and all the high-risk capital will be produced by GB Energy. GB Energy will be the one that will lose absolutely everything if it goes wrong and make a minimal amount of money if it goes right.

We need to be very wary about all this, which is why I support these amendments. It is important that Parliament has some check on all this and is able to say whether it thinks it is a good idea or a bad one. That discipline on the Secretary of State will be very important. Otherwise, I see politicians wheeling off, backing all sorts of incredibly speculative ventures and losing taxpayers’ money as a result. I am not sure that anybody in this House wants to see that happen.

--- Later in debate ---

Moved by

[Viscount Trenchard]

56A: After paragraph (d), insert—
“(da) Great British Nuclear,(db) the National Wealth Fund, and”

[Viscount Trenchard (Con)]

My Lords, I was interested to read the amendment by the noble Baroness, Lady Hayman, and I tend to agree with it. It makes absolute sense that before the statement of priorities is published, these bodies should be consulted.

As many noble Lords said at Second Reading and on our previous day in Committee, there are many different bodies all trying to do much the same thing in this space. What was the UK Infrastructure Bank is now called the National Wealth Fund, and it is quite rich. It has, I think, £28 billion to deploy, and will no doubt be able to make many investments that will help not only the decarbonisation of the energy system but energy security. But as the Minister knows, I continue to believe that the Government’s energy policy so far does not take enough account of nuclear and its potential. For example, the consumers, whether households or companies—industrial consumers—do not have any say over where their subsidies go. A part of electricity bills goes in subsidies to renewable energy projects, for example, but not to nuclear. This means that the market to date has been distorted to the disadvantage of nuclear projects.

That is one reason why there are not enough viable and financially well-funded United Kingdom nuclear projects. There are quite a lot coming to the UK from the United States, whose Government have been extremely generous in providing grants and financial help to American nuclear consortia. There is a danger that Great British Energy will operate too much in a silo and that Great British Nuclear, which does not have very much money, will not be required to co-ordinate its strategy and policy sufficiently with GBE, or indeed with what is now called the National Wealth Fund.

It is right—as the noble Baroness, Lady Hayman, has proposed, and the noble Lord, Lord Ravensdale, told us—that the Secretary of State should be required to consult those bodies, but we should also include Great British Nuclear and the National Wealth Fund, so that each of these three bodies knows what the others are doing, so that they have a greater chance of working out a co-ordinated policy, and so that we have some joined-up thinking.

That is why I tabled Amendment 56A as an amendment to Amendment 56. I beg to move.

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

We will reflect very keenly on that between Committee and Report.

There is no doubt about the argument. We are facing a twin climate and nature crisis. They are inextricably linked. Not only are the Government committed to reaching net zero by 2050 and clean power by 2030, we are also committed to restoring nature—for example, with the Environment Act targets in England to halt the decline in species abundance by 2030—and to effectively protect our marine protected areas as part of our global 30-by-30 commitment.

We know that the UK is one of the most nature-depleted countries in the world, so it is not enough for us to protect or conserve. This is why the Government are committed to restoring nature through such targets, and our related international commitments. The real opportunity available to the UK is to deliver clean power by 2030 in a way that does not simply avoid or compensate for damage to nature, but is constantly innovating to deliver the target in a nature-positive way, such as rewetting lowland peat soils at the same time as constructing new solar farms or creating new wildlife corridors alongside or underneath linear energy infrastructure. The noble Lord, Lord Teverson, referred to that potential earlier in our previous debate.

It is not so much about balancing energy and infrastructure needs but about trying to integrate them, rebuilding our natural infrastructure at the same time as building the new energy infrastructure we need in the 21st century. It is significant that in the Clean Power 2030 Action Plan, the Government have said that we

“will launch an engagement exercise in early 2025 to invite communities, civil society and wider stakeholders to submit their ideas on how government can best encourage nature-positive best practice into energy infrastructure planning and development. Feedback from this exercise will allow government to better understand how we can integrate nature restoration through Clean Power 2030”.

We want Great British Energy to focus on its mission of driving clean energy deployment, but I have listened very carefully to what noble Lords have said today and I understand the point that noble Lords are making about the Crown Estate Bill. I assure noble Lords that we are going to reflect on this between Committee and Report.

[Viscount Trenchard (Con)]

My Lords, I thank my noble friend Lord Howell for his support for my amendment and all other noble Lords who referred to my amendment in the debate. I appreciated the whole debate, and I am grateful to the Minister for his thoughtful reply. There will be another opportunity to discuss the same kind of thing in a future group, of which he is aware, so I will have an opportunity to return to that. I beg leave to withdraw my amendment.

Amendment 56A (to Amentment 56) withdrawn.

Great British Energy Bill

Viscount Trenchard Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I thank the Minister for introducing this Bill today. I declare my interests as a member of the advisory board of Penultimate Power UK Ltd and as a consultant to Japan Bank for International Co-operation. I, too, congratulate the noble Baroness, Lady Beckett, and my noble friend Lord Mackinlay of Richborough on their excellent maiden speeches.

In the debate on the King’s Speech, the noble Lord, Lord Hunt of King’s Heath, explained the Government’s aim to make this country a clean energy superpower. He told your Lordships that the Government were focused on achieving clean electricity by 2030, with a system based on renewables and nuclear power, and then building on that momentum to achieve the ultimate goal of net zero by 2050.

It is not widely understood that the electricity grid provides only around one-fifth of our total energy consumed. The Minister said:

“The Great British Energy Bill, put forward in the gracious Speech, will establish a publicly owned company to spearhead our mission to become a clean energy superpower”.—[Official Report, 18/7/24; col. 33.]


Although he mentioned nuclear power as well as renewables, it appears that His Majesty’s Government have little interest in nuclear. In his briefing on the Bill, the Minister said that GBE, for now, would invest solely in renewables. That will disappoint the noble Baroness, Lady Winterton, who asked whether GBE could fund an SMR factory in South Yorkshire. Can the Minister confirm that he agrees that nuclear power provides energy that is just as clean as that from renewables? Could he also confirm that there is a compelling need for firm baseload power that does not suffer from intermittency? Large-scale, affordable energy storage is still decades away.

It is surprising that the Government have introduced this Bill to set up GBE without clarifying how GBE is going to relate to Great British Nuclear—GBN. GBN’s remit is not sufficiently clear, but, if the Government properly recognised our need for new nuclear and the huge contribution it could make to achieving clean energy, surely the two bodies should be combined, or at least work together. I was pleased to hear the Minister say that the Government will explore how GBE will work with GBN, but there is nothing at all, yet, in the Bill about this. The noble Viscount, Lord Hanworth, expressed similar concerns in his well-informed speech, with all of which I was in full agreement.

There is of course, as my noble friend Lady Bloomfield well explained, a third government body in this space—the former United Kingdom Infrastructure Bank, now known as the national wealth fund. Its website explains that it will continue to make private sector investments against a clear set of priorities, with a focus on “crowding in” private finance to sectors and technologies that are critical to the UK’s clean energy and growth ambitions.

Clause 3 of the Bill before us today states the objects of GBE, of which the first is the provision of clean energy. Another object is improving energy efficiency. But pursuing a dual system of renewables and gas which you only use when there is not enough wind is inherently inefficient and leads to excessively volatile and unnecessarily high prices. These objects are substantially the same as several of the objectives of the national wealth fund, contained in Clause 2 of the UKIB Act. The NWF is set to be capitalised with £27.8 billion, compared with £8.2 billion for GBE, and that only within the course of this Parliament. GBN is clearly the poor cousin as it does not have any money to make investments. It has only the £342 million of net assets showing on its balance sheet on 31 March 2023. This again shows the low priority that the Government give to nuclear power. How is GBN going to make a contribution to funding the procurement of at least two SMRs, as declared?

In January this year, the former Secretary of State designated the former British Nuclear Fuels Ltd as GBN under the Energy Act 2023. According to Companies House, the Secretary of State referred to in the Act as the “person of significant control” is the Secretary of State for Energy Security and Net Zero, Ed Miliband. Can the Minister tell the House what ambitions the Secretary of State has for nuclear in the next five years? Could he tell the House whether the last Government’s 24-gigawatt target for nuclear, which many think too low, is still in place, and, specifically, what are the targets for large-gigawatt stations, SMRs and AMRs?

It is widely accepted that we need firm baseload power to provide electricity when the wind does not blow and the sun does not shine. My noble friend Lord Frost, in his excellent speech on 14 November, drew attention to the fact that in the week of 3 to 10 November, wind accounted for a mere 10% of electricity generated. I have checked this fact on the National Grid’s energy dashboard website. What that means, as was so well explained by my noble friend Lord Howell, is that wind power provided only around 2% of the country’s energy consumption during that week. As noble Lords are well aware, we have not seen much sunshine lately.

In the same week, solar power accounted for 0.7% of electricity generated: that is, 0.14% of total energy consumed. During that same week, gas-fired power stations accounted for 52.2%, nuclear for 14.3% and electricity imports for 11.3%—even that was more than the contribution from wind. And what do imports do for energy security? Do these facts not suggest that we absolutely cannot rely on renewables to continue to decarbonise the grid, or even begin to replace our much larger industrial energy consumption, which is still dependent largely on oil and gas?

Even those of us who are not convinced that the slight increase in the proportion of carbon dioxide in the atmosphere in recent years—from 0.037% in 2000 to 0.042% in 2024—controls nearly all aspects of climate strongly support the development of clean energy. But if we need firm baseload energy, as shown in the week of 3 November, why do we not prioritise nuclear power now? The Government have said that they will work with the private sector to double onshore wind, triple solar power and quadruple offshore wind by 2030. They will invest in carbon capture and storage, and hydrogen and marine energy, and ensure that we have the long-term energy storage our country needs. That would all be prohibitively expensive, and we are already losing our remaining manufacturing competitiveness because our electricity is among the most expensive in the world: twice as much as in Japan and more than twice as much as in the United States.

The OBR’s economic outlook forecasts that subsidies to gas providers to maintain a fleet of power stations “just in case” will have to quadruple. Is it not true that the Government continue to push the 2030 net-zero agenda harder and faster than ever, but without any proper cost-benefit analysis? My noble friend Lord Frost has queried why we need subsidies at all if the real cost of offshore wind is £44 per megawatt hour, as suggested by NESO—well below current market prices and the prices agreed in auction rounds. Onshore wind projects have been subsidised since the first wind farm at Delabole in Cornwall in 1991. Why are we still subsidising them? Why are electricity consumers forced to pay much higher prices for their electricity because a significant part of those charges are subsidies for renewables? That has distorted, and continues to distort, the market.

The proposal to transfer renewables electricity subsidies to gas bills does not solve the problem; it merely delays it for another day. But if subsidies are justifiable, why is the consumer not subsidising nuclear technologies too? Can the Minister justify continuing to force the consumer to pay for wind but not nuclear? The Government have provided a tiny amount of financial support to developers of nuclear technologies, compared with other countries such as the United States and France. France generates around two-thirds of its electricity from nuclear power. By 2018 the United States was generating half its emissions-free electricity from nuclear sources.

GBN is concentrating on selecting winners in the SMR competition. There are four companies still in the race, of which three are American-owned. Only Rolls-Royce represents British industry and technology. There are other technologies, some of which were invented here, such as the high temperature gas-cooled reactor technology invented at Winfrith, Dorset in 1965 by the UKAEA. The IP is owned by the Japan Atomic Energy Agency. The Japanese Government, who are still constrained in their domestic development of nuclear power because of the 2011 Fukushima disaster, have wanted to collaborate with overseas Governments, especially the UK, in supporting the commercial development of this technology. The demonstrator has been running in Japan for more than 10 years and is inherently safe. The heat energy produced by an HTGR at 950 degrees Celsius enables the decarbonisation of many industrial processes, including the production of green hydrogen at scale.

Unless the Government change course very soon, we will miss the chance to become the manufacturing and distribution hub for EMEA—this invaluable technology, which is now languishing in phase B of the Government’s AMR competition. They have committed a mere £55 million from the future nuclear enabling fund, to be shared between two successful bidders, but there is no commitment that this competition will continue; its only purpose is to construct a demonstrator by the early 2030s, in time for potential AMRs to support net zero by 2050. We will have missed the boat by a country mile.

We have the chance to put together a public-private UK-Japan consortium to commercialise this technology now. We should press ahead with that, and with Rolls-Royce’s SMR technology, using home-grown knowledge and experience developed over 60 years of supporting the Royal Navy’s nuclear fleet. New nuclear builds would support thousands of highly-skilled jobs, directly and in the supply chain, during construction and then for decades during operation, often in remote areas of the country. They would reuse locations where existing grid connections are in place.

The Bill is very short and says little about the governance of the company. Some of it is similar to the UKIB Act but it gives little indication of what the company will do and how it will operate. The Government claim that

“GBE will take a stake for the British people in projects and supply chains that accelerate technologies for the future”.—[Official Report, 18/7/24; col. 33.]

Yes, the Government should do this but GBE, as envisaged by the Bill, does not provide the answer. As my noble friend Lord Lilley said in his powerful speech, we need to know much more about the strategies and priorities of GBE.

We may or may not be close to a climate emergency or climate crisis, but we are most certainly facing an energy apocalypse now. The Government should urgently reconsider the role of nuclear energy and bring GBE together with GBN now, properly capitalised to act as a catalyst in averting the energy emergency we face; or, at the very least, they should devise a structure whereby possible nuclear energy projects are evaluated in a manner similar to renewables projects. Furthermore, the Bill gives the Secretary of State very great powers. He is required to inform Parliament of general or specific directions, but he is not accountable to Parliament at all in respect of his position of control within GBE. Parliamentary oversight needs to be strengthened.

I apologise for going on for so long, but this is very important. I look forward to working with noble Lords on all Benches to carry out our duty to scrutinise and improve this Bill.

Advanced Modular Reactors: Criticality Tests

Viscount Trenchard Excerpts

Tuesday 19th March 2024 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, the noble Viscount makes a very good point. Can my noble friend the Minister explain why Japan’s high-temperature gas-cooled reactor technology, endorsed by my right honourable friend Greg Hands in 2021—which is inherently safe, internationally licensed and has been operating for more than 10 years—has been consigned to the back burner as part of the AMR research, development and demonstration programme? This technology needs to be brought forward into the GDA process now, or it will be too late to make its much-needed contribution to the decarbonisation of industry.

[Lord Callanan (Con)]

I refer my noble friend to the answer I gave to my noble friend Lady Bloomfield. We have selected high-temperature gas reactors for research and development purposes in the AMR R&D and demonstration programme.

Cleaner Energy Technologies

Viscount Trenchard Excerpts

Tuesday 14th March 2023 Lords Chamber

[Lord Callanan (Con)]

We give a value to carbon and use that to inform our policies, not least through the ETS. We have supported a number of early-stage technologies. Offshore wind was extremely expensive when we first started supporting it; now it is very cost-competitive and we are confident that we will end up in the same position on hydrogen.

[Viscount Trenchard (Con)]

My Lords, does my noble friend the Minister agree that the only way even to get close to the net-zero targets is to make major changes to the current energy policies to enable a substantial increase in both the number and speed of deployment of nuclear reactors?

[Lord Callanan (Con)]

I certainly agree with my noble friend that we need to expand both the potential and the deployment of nuclear reactors, and we are doing just that. We recently passed the Nuclear Energy (Financing) Bill, for which I am grateful for the House’s support. We have invested several hundred million pounds in the new Sizewell plant and are supporting Rolls-Royce to develop the next generation of small modular reactors.