Great British Energy Bill

Debate between Viscount Trenchard and Lord Offord of Garvel

Committee stage
Wednesday 15th January 2025 Grand Committee

[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.

Great British Energy Bill

Debate between Viscount Trenchard and Lord Offord of Garvel

Committee stage
Monday 13th January 2025 Lords Chamber

[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.