Energy Bill [Lords]

Alan Whitehead Excerpts

Ping Pong: House of Commons
Monday 9th May 2016 Commons Chamber

The Government and industry share the same ambitions, even if the actions of Opposition Lords have frustrated the timeliness of the OGA’s implementation. The Government want to protect bill payers and ensure technologies stand on their own two feet, while meeting our renewable energy commitments.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Let us be clear before we go any further: this discussion does not concern manifesto commitments in any way, shape or form. The Energy Bill provides within its terms of reference a number of grace periods to mitigate the effects of the early closure of the renewables obligation on categories of schemes affected by that closure. That is a consequence of the original plan to close the renewables obligation early.

[Andrea Leadsom]

The hon. Gentleman says it does not concern a manifesto commitment to get costs down for bill payers. Is he willing to put forward the £7 million the amendment would cost the bill payers to whom we made that manifesto pledge?

[Dr Whitehead]

I believe we referred to the manifesto commitments the Minister mentioned during the passage of the Bill as something of a flexible friend. The Minister is quoting a manifesto commitment that was not actually in the Conservative party 2015 general election manifesto. The manifesto commitment was for no new subsidies for onshore wind. The Bill puts that in place, but provides for a number of grace periods for the consequence of that process. What we are therefore talking about in this debate is not that commitment but the grace periods that follow it. That, essentially, is what the Lords amendment is about. It therefore does not breach manifesto commitments in any way. To do that, the Minister would have to say that the grace periods themselves breach the manifesto commitment. Plainly, the Minister put those grace periods into the Bill. She must therefore accept that the grace periods are a part of the process and not the process itself.

Under the grace periods, if there is a delay in grid connection or a delay in clearance for Radar, then the schemes come into the fold. That is set out in the grace periods in the Bill. If you have been turned down by a planning committee, have appealed and the appeal comes through after the cut-off date, then you come into the fold. If investment facilities have been frozen because of uncertainty about what was going to happen to the Energy Bill and investment documentation could not be shown in time, that comes into the fold of the grace periods.

As matters stand, however, one cannot come into the fold if one has gone down the route of seeking local approval for the scheme, gaining that approval, getting the consent of the local planning committee and negotiating section 106 or section 75 agreements, as would happen once agreement is reached. If the final certificate, which is obtained after agreement has been reached, happens to fall after 18 June 2015, then one does not come into the fold. That is especially galling for the people going down this route, which they did not have to go down. A central part of the Energy Bill is that onshore generating schemes should proceed in future only if they have the support of the local communities in which they are to be sited, which might be determined by the grant of locally based planning permission. Clause 78 expressly removes the requirement for consent by the Secretary of State. If one has gone down that route and done everything by the rules that the Energy Bill wants to put in place, one is outside the fold if everything is not in place, even after permission has been granted, by 18 June 2015.

Let us imagine the scene when the managers of the Bill sat down to draft what was always clearly supposed to be a sequence of exceptions to the clear bright line as described by the Minister: the cut-off date and circumstances of the cut-off for new onshore windfarms. The instruction to the team drafting the Bill—I commend the Bill team on a superb job in pulling together the multiple facets of the Bill into a coherent whole—would have been to work towards an overall instruction that the renewables obligation would be closed to all new applicants a year before its original closure date, a date to which developers, local authorities and those seeking to invest in wind farms had all been working. The Bill team was required to place that into a satisfactory legislative context. In doing so, there would have to be cut-off dates before the final date of closure of the scheme overall. It was always recognised, however, that there would have to be exceptions, which is why extensive passages of grace periods have been drafted into the Bill, allowing for exceptions where not to do so for various reasons would have looked particularly unjust, would have led to legal complications or even legal challenge from those affected.

I would have thought that projects about to be completely swept away by the imposition of the cut-off date—when they had done exactly what the Bill provides for, having previously thought the original cut-off date was March 2017—would have been first on the list for possible grace periods. Who knows, perhaps something might have been drafted early on to accommodate such a position? What we know, regardless of any speculation, is that someone decided—it looks to me that they may have done so on grounds of dogma, rather than on a fair analysis of what should go into an already agreed grace period—that those schemes would have the door firmly closed in their faces. That is a manifestly perverse outcome for projects whose approach to planning and investment was exactly by the book. On the other hand, others going through an appeal process—having perhaps been turned down by those very local concerns the Bill emphasises—will find they are on the guest list after all and can come in through the door.

The amendment from their lordships’ House does not seek to alter the premise of grace periods. It does not seek to overturn the early closing date for onshore renewables, sad though that is. It does not seek to alter in any way the vast bulk of this well-crafted Bill, with all its important provisions concerning the North Sea oil industry. It simply seeks to put right one of the great anomalies in the grace period sections of the Bill, and, in that way, strengthen the proper application of those periods. As the Minister may have noted, it now does so in a way that it did not do in a previous amended incarnation. It places a specific time limit after the cut-off date of three months, reflecting the view that grace periods should be just that. This is now a very brief grace period window in which to put right the most difficult cases frozen out for doing the right thing.

We all want the Bill to pass now and it can do so today. We want the Bill on the statute book because of what we agree on. Overall, we want it to be on the statute book as a just Bill, even when Opposition Members consider the principle behind it—effectively retrospectively pulling an early plug on the renewables obligation specifically for onshore wind—is profoundly mistaken. It is mistaken because it will potentially replace onshore supply with more expensive offshore wind. As I am sure the Minister is aware, a study by the Royal Academy of Engineers estimated a while ago that if just one onshore turbine was replaced by more expensive offshore turbines, it could eventually cost taxpayers £300,000 per annum.

The amendment saves money, therefore, as well as placing equity back into the grace periods. It is of course down to the Government to get their legislation on to the statute books. We have supported most of the Bill, which can be passed today, throughout its passage. I trust that they will have the sense not to stand dogmatically in the way of its passage and allow us to sign it off and get going with the vast bulk of the provisions on which we all agree.

[James Cartlidge (South Suffolk) (Con)]

I will speak briefly given that we have been here before in this ping- pong process.

This was my first Bill Committee and Reasons Committee—I believe I am already coming up for my second, which is interesting—and we are now down to one key point: there is wide acceptance of the broader need for the Bill, but we are told that if it is so important, we need only accept one more wafer-thin amendment and then it can go through. Conservative Members take the view that a Government could not govern if they did that every time. There are, unfortunately, cut-off points in lots of Bills, and many are unpopular, and although I can understand why people who will lose out are aggrieved, we take the view that the wider principles are incredibly important.

Others have spoken about the Oil and Gas Authority. Every time I have spoken, I have referred to the oil price, which I think is now up to about $49. There is still no sign of stability returning to the sector. Who knows where it will be in weeks if not days, given all that is happening in the world? The measures in relation to the OGA are not a magic wand for the oil sector but will bring an extra level of stability and demonstrate Government support at an incredibly sensitive and important time for what remains one of the UK’s largest industries and one of Scotland’s key industries. We should dispense with this process, move forward and pass the Bill, for the simple reason that it is about the fundamental strength of the UK economy.