Alan Whitehead
Main Page: Alan Whitehead (Labour - Southampton, Test)Energy BILL [ Lords ] (Fourth sitting)
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The Chair
Dr Alan Whitehead (Southampton, Test) (Lab)
It is a pleasure to serve under your chairmanship again this morning, Mr Bailey.
This provision reminds us that the theme of fees runs throughout the Bill. I am also reminded of a sketch in the well known Marx Brothers film “A Day At The Races” where Chico Marx is allegedly selling ice cream but is actually selling form guides to the races and Groucho Marx has to keep buying form guides in order to understand which horse is running in the race, with the result that he ends up purchasing about 20 form guides from the ice cream truck. I commend the film to hon. Members who wish to understand this section. [Interruption.] I wanted to get a mention of Marx into proceedings and that particular one is important.
The provision relates to the Secretary of State’s power to charge fees. It does so by inserting clauses into other pieces of legislation, hence my reference. It is necessary to look at the proposed new clauses to understand how the fees actually work. In the first instance, fees relating to recuperation of costs associated with functions relating to petroleum licences are laid down in part 4 of the Energy Act 2008. The clauses amend that Act to enable the Secretary of State to charge for functions in part 4. A further provision relates to the Marine and Coastal Access Act 2009, and allows the Secretary of State to charge for marine licence functions as they relate to oil and gas regimes.
That effectively means, returning to our earlier discussions on clause 13, that the following regime appears to apply: if an operator in the North sea is considering an application for a licence to explore for petroleum, a consideration of that licence by the Oil and Gas Authority is chargeable with a fee. It is, indeed, part of the remit of the OGA to charge a fee for that purpose. If, however, there is an actual licence, then the Secretary of State charges fees, not the OGA, under this arrangement. If there is a licence arrangement relating to the Marine and Coastal Access Act, a different Secretary of State, the Secretary of State for Transport, provides the licence and presumably charges a fee, which goes to the Department for Transport. As far as activities relating to petroleum and oil exploration activities are concerned, the Secretary for Energy and Climate Change charges for the licence. After transferring a number of people working for the Department of Energy and Climate Change to the OGA for the purpose of putting the organisation on a proper footing, a regime would presumably be developed in the OGA to charge for the consideration of licences under clause 13. Another group of individuals, remaining in DECC—not going to the OGA—would charge for a separate number of licences which are associated with the original arrangement on licences for exploration, but are now charged under those auspices.
A third set of remaining civil servants presumably collaborates with the Department for Transport to charge fees relating to the licences as they pertain to the requirements under clause 77(2) which are taken by this Secretary of State into the purview of the Department of Energy and Climate Change and away from the Department for Transport. To the best of my ability, that is my understanding of how this regime will work.
It raises the question, following our previous discussion about the remit of the OGA relating to fees: why has this arrangement been placed in this particular way in this particular Bill? Far from simplifying the licensing regime, it appears to make it more complex for different agencies issuing licences and charging fees for the scrutiny of the application of particular licence arrangements.
If I were a North sea operator, I would find not only navigating around the North sea but navigating those fee arrangements quite a complex procedure. From the point of view of the Department, I would find the relative inefficiencies of having at least three centres of fee and licensing arrangements in the OGA, DECC and possibly an association with the Department for Transport, not only a bureaucratic problem, but a problem of efficiency and interfacing with operators in the North sea.
Will the Minister elucidate for the Committee the thinking behind these clauses and how they are sited in the Bill? Had it been considered, for example, whether the OGA itself might have taken on some of the fee-charging arrangements? What was the rationale for keeping fee-charging arrangements for licences within the Department? Does the Minister agree that in an ideal world it might have been a better idea to concentrate on the various fee arrangements relating to licences under one authority, which, among other things, would immensely simplify the process for operators?
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
Good morning, Mr Bailey. It is a great pleasure to be back in Committee for what I hope will be a very interesting day. I assure the hon. Gentleman that this clause relates only to oil and gas functions, not to the functions of other Departments. These functions relate to a separate arm of DECC. As he will appreciate, it is an established practice, accepted by the oil and gas sector, that the costs associated with the provision of regulatory services should be recovered from industry. That is based on the well established “polluter pays” principle that exists across several sectors, ensuring that the taxpayer does not bear the burden of funding regulatory activities.
The clause simply permits the Secretary of State to make regulations, allowing her to recharge functions carried out under part 4A of the Energy Act 2008 and part 4 of the Marine and Coastal Access Act 2009. Those are set out in secondary legislation, which includes the overall fee and calculation, and an impact assessment will be prepared before the regulations are finalised. The clause specifically relates to oil and gas functions. It has been discussed closely with industry and is based on the widely understood principle that the polluter pays and recharges are made, so that the cost does not fall to the taxpayer.
Dr Whitehead
I thank the Minister for her response. I understand that these fees relate to oil and gas exploration activities and that the industry is au fait with them. My point was this: why can the OGA not be responsible for this particular licensing arrangement, since it relates to petroleum and gas exploration and exploitation and the OGA has the overall function of regulating that whole area? Would that not be simpler?
As far as the structure is concerned, there might have been a one-stop shop for the process of obtaining licences and paying the relevant fees, with consideration of the licences in the various interfaces those licences have with other considerations in the North sea. Would it not have been a better idea for all of that to be placed under one roof—the OGA—rather than have this dissipated arrangement, whether or not that is something the industry thinks it can, in general, work with? What we have in the Bill is effectively a three-way split in terms of how licences are considered, paid for and granted in relation to other activities in the North sea.
Andrea Leadsom
I am grateful to the hon. Gentleman for raising those points, but I would like to assure him that the clause goes to the heart of the OGA’s purpose. As he will be aware, it is the responsibility of the Department of Energy and Climate Change to cover the environmental protection of the North sea, whereas the establishment of the Oil and Gas Authority aims to enable it to manage the licensing of oil and gas exploration and extraction in the North sea. That separation of duties seeks clearly to maximise the recovery of reserves, while minimising the impact on the environment. That is why those roles are kept separate, and the charging for different activities within those responsibilities is therefore also kept separate.
Question put and agreed to.
Clause 77 accordingly ordered to stand part of the Bill.
Clause 78 ordered to stand part of the Bill.
Clause 79
Onshore wind generating stations in England and Wales
Dr Whitehead
I beg to move amendment 16, in clause 79, page 46, line 43, at end insert—
‘(2) Within six months from the date of this Act coming into force, the Secretary of State shall report to Parliament on the impact of this section and any other policy changes to the renewable energy sector with regards to how they affect the United Kingdom’s ability to comply with the 2020 EU renewable target.
(3) The report in subsection (2) must include an estimate of the cost to the taxpayer should the UK not comply with the 2020 EU renewable target.”
This amendment would require the Secretary of State to report within six months of this Act coming into force on how changes to renewable energy policy (including the changes stipulated in section 79 of the Act) have affected the UK’s ability to comply with the 2020 EU renewable target.
The clause and the amendment present two issues concerning wind generation. The clause under part 5 concerns wind power and I am sure there will be further debates about the wider issues later today.
Clause 79 amends section 36 of the Electricity Act 1989 and removes the obligation to secure consent to construct, extend or operate an onshore wind farm in England and Wales with a capacity greater than 50 MW. The previous arrangement meant that local planning authorities were effectively countermanded by the Secretary of State in the case of larger wind farms, by reference to a section 36 agreement, which is required to allow an onshore wind farm to operate in England and Wales.
By stripping out that countermanding, the clause means that in principle the final requirement for permission for wind generation at local level lies with the local planning authority. We discussed on Second Reading the desirability of that provision for the future of onshore wind and the idea that the local planning authority should have the final say in those application because it would reflect the wishes of the local population—assuming that the authority had taken proper soundings of local interests and thoughts regarding an application.
That exemplifies the principle on which the House agreed on Second Reading: that this would be a welcome change and give clarification of the future direction of onshore wind applications in England and Wales. We discussed whether the Opposition really meant that, and indeed it was emphasised by the shadow Secretary of State that we welcomed the proposed arrangements. I will not rehearse those arguments this morning other than to say that, in principle, the arrangements outlined in the clause are welcome, but I will look at the detail of the clause.
The provision does not stop at removing section 36 of the Electricity Act 1989. The explanatory notes outline the intention for the arrangements in the clause to be
“combined with secondary legislation to be made by Government to amend the Planning Act 2008.”
That is when some very small alarm bells start ringing in my head, because if clause 79 is to be taken at face value and it is simply about removing section 36 of the Electricity Act, it appears to me that, by default, the power to decide resides with the local planning committee. That is something on which we all agree. If, however, the intention is to undertake further secondary legislation to further amend the Planning Act 2008, not through the Minister’s Department but, I would imagine, through the Department for Communities and Local Government, would that take away from that planning authority any power to make those decisions?
Chris Heaton-Harris (Daventry) (Con)
Will the hon. Gentleman take the opportunity to make it clear that he still supports local communities having a full say in such proposals?
Dr Whitehead
Yes indeed. I hope that the hon. Gentleman, who takes a close interest in these matters, will have taken from my words this morning that I am seeking clarity on how pure the Government’s intention is in that regard. Not only is it the Opposition’s position that local communities should have the final say on onshore wind applications, but I am seeking to ensure that that principle, on which I think he and I agree, is not in any way diluted, diverted or subverted by other legislation that may come along to get round that principle.
Chris Heaton-Harris
I am sure we will come later to the commitment in the Conservative party’s manifesto. To save much debate, there is a second part to that commitment:
“As a result we will end any new public subsidy for them and change the law so that local people have the final say on wind farm applications.”
Although I understand that we are going to have a debate about the subsidy bit, I assume that the hon. Gentleman will be in complete agreement with that last bit, about local people having the final say on wind farm applications.
Dr Whitehead
Yes, indeed, and on that second part, one could say that the clause, taken by itself and at face value, actually discharges that manifesto commitment. My question is: does it really? Does it really, taking into account the arrangements that might arise across Government to ensure that that manifesto commitment is carried out and not subverted? Does it really, taking into account how the DCLG would handle an application? Does it really, taking into account the announced intention that there will be further amendments to the Planning Act 2008 which may impinge on the Town and Country Planning Act where those applications are concerned? Among other things, in pursuit of this manifesto commitment, what assurances has DECC received from the DCLG that the process will be straightforward, simple and final for those local planning authorities?
My understanding is that under the proposed arrangements, an onshore wind farm applicant would simply apply for planning permission for an onshore wind farm, with all the caveats that apply to planning permission, all the arrangements and considerations that apply at a local level; then local planning officers may recommend to the local planning committee that planning permission be given and councillors on that planning authority may then agree with the planning officers that there are no technical objections and they want the scheme to go ahead. We have to recognise that local councillors may not necessarily always agree with what their officers say and may well reflect other issues marginally outside the exact terms of planning; nevertheless, by that particular arrangement, they may insert into that planning decision the central idea that the community really wants that particular development.
That applies not only to wind farms but to a number of developments where planning applications to some extent represent a two-stage process of looking at the technical issues and the not exactly political but local issues related to those technical issues. If that process is carried out properly and stops there, that discharges the Conservatives’ obligation in terms of their manifesto commitment on future onshore wind applications. If, however, changes are to be made to the obligation itself, either through new powers for the Secretary of State for Communities and Local Government to call in, on an enhanced basis, schemes that otherwise would be subject to only that process, or through constraints placed in secondary legislation on how the process is undertaken, that should cause the Secretary of State for Energy and Climate Change—the key proponent of this particular manifesto commitment being placed into law—to worry a little bit.
The Minister does not look worried, so I am confident that she will be able to put my mind to rest on what other Departments have in store for this Bill. Perhaps she will assure us today that her understanding of what the process will consist of once the clause has been put into law is identical to mine. We can then continue to agree happily across the Committee about the status of this piece of legislation.
The Opposition would like amendment 16 to be made because we believe that for every action, there is the potential for an equal and opposite action that needs to be understood and taken into account in future activity. Later, we will discuss at greater length actions recently undertaken by the Government on various matters relating to the progress of renewable energy. The foreshortening of the period in which the renewables obligation is available for wind farms is just one such action. A number of other actions call into question the Government’s trajectory as far as renewable deployment is concerned.
The question that the amendment attempts to address is: how do those actions relate to the position in 2020? That will be a reckoning point for the European Union renewables target, and a very real reckoning point for the UK because the UK has signed up willingly and enthusiastically to the EU renewables target. The overall target is set within the EU; each country is provided with its own target to reach within that overall goal; and each country sets sub-targets for various sectors of renewable activity—for example, electricity or heat provided from renewables and renewable transport fuels and activity. Together, those three areas make up a country’s target and in theory would discharge the obligation that a country had entered into on the overall EU target.
Dr Whitehead
I am at a slight disadvantage because at the conclusion of my previous comments I handed the copy of the Secretary of State’s letter to the Hansard writers for their perusal, so I do not have it in front of me. [Interruption.] Thank you, I do now have it and, by the way, Hansard will get this back in a moment. In her letter, the Secretary of State makes some further comments on her position on the UK’s trajectory towards the 2020 targets. She states that essentially the Department has a public position and private position. She writes:
“Publically we are clear that the UK continues to make progress to meet the target.”
However, she is clear that privately, that is not the case. The figures set out in her letter indicate that what is stated publicly is not, shall we say, untrue, but a shaving of the completeness of information that might otherwise enable people to make an independent decision on where we are. There appears to be a difference between what is acknowledged privately to be the case in the Department and what is stated publicly on the progress of the trajectory.
That important point needs to have a substantial light shone on it. It is true, as the Minister states, that the Department has published various figures relating to progress, but I wonder whether they are in the realm of the statement made publicly that the UK continues to make progress to meet the target, or privately that we are clear that we are not making progress to meet the target. As suggested here, a report would clear up that issue and could be an important accurate fix on our progress.
I do not expect the Minister to comment on the exact syntax and grammar that the Secretary of State may have used in her correspondence, but there is a point at issue as to the clarity with which progress towards the target may be made and whether there would be further issues to be considered if they were properly in the public domain and related to the question of what costs might be otherwise be sustained in the future. I hope the Minister will give further clarification on that point. With that, I hand my letter back to the Clerk.
Andrea Leadsom
I assure the hon. Gentleman that the UK is making progress towards the 2020 renewables target of 15%, and that in the latest report we have surpassed our interim targets for 2013 and 2014 with an average of 6.3% of final energy consumption coming from renewable sources over the two years against a target of 5.4%. The hon. Gentleman quotes from a letter that I do not have in front of me, so I hope that he has not given his version of what it says. I can tell him that the UK is committed to meeting our legally binding targets and that we are making progress towards those targets.
Dr Whitehead
I do not wish to press the amendment to a vote, but I hope that the points about transparency on this issue will be taken on board. Indeed, should the Minister wish me to retrieve the letter a further time—[Interruption.] There we are. I am sure that she can have a look at it for herself. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 79 ordered to stand part of the Bill.
Clause 80
Emissions trading: United Kingdom carbon account
Question proposed, That the clause stand part of the Bill.
Andrea Leadsom
Clause 80 was inserted into the Bill by the Opposition in the other place and intends to restrict the carbon accounting rules that are permissible under the Climate Change Act from 2028, which is the start of the fifth carbon budget period. This is quite a technical area and to aid Committee members’ understanding, I thought it would be helpful to explain briefly how carbon budgets and carbon accounting work at the moment. I hope hon. Members will bear with me as I explain that before I come to set out our reason for seeking to remove the clause from the Bill.
The Climate Change Act sets a target for the UK to reduce emissions by 80% from 1990 levels by 2050. It also requires us to set intermediate targets called carbon budgets to reduce emissions along the way. Carbon budgets are a cap on the emissions allowed over successive five-year periods. For example, the first carbon budget covered the period from 2008 to 2012, and we met that budget with 36 million tonnes of carbon dioxide equivalent to spare. We set carbon budgets 12 years in advance, so by 30 June this year we will be setting the fifth carbon budget to cover the period from 2028 to 2032. As well as setting each carbon budget, we make regulations that set carbon accounting rules for each budget period. The rules, in addition to what is set out in the Climate Change Act, tell us how to calculate the budgets and therefore whether we have met them.
I will now briefly explain how the current carbon accounting rules work before setting out the intended effect of clause 80 to the Committee. Under the current rules, we count the UK’s actual emissions for some sectors and for other sectors we reflect how the EU emissions trading system works instead of counting actual emissions. For transport, buildings, agriculture, light manufacturing and some other areas, we count the UK’s actual CO2 emissions. For the power sector and heavy industry, we effectively reflect how the EU ETS works instead of counting the UK’s actual emissions. The EU ETS is a scheme in which emissions from power and heavy industry are capped and reduced at an EU level. Emissions are reduced by issuing a declining number of emissions allowances to member states. The emissions allowances are then traded by power stations and industrial sites across the EU. Our current carbon accounting rules tell us to count the UK share of the EU ETS emissions cap for the purpose of carbon budgets. In that way, carbon budgets reflect how the EU ETS works.
Clause 80 is intended to stop us reflecting how the EU ETS works in our accounting for carbon budgets. It amends the Climate Change Act to say that EU ETS units cannot be debited or credited from the UK net carbon account. I clarify that, even with that change, we will still participate in the EU ETS; we would just not reflect how it works in our carbon budgets.
There are positives and negatives in different accounting methods. Weighing them up needs careful consideration of a number of factors, such as the potential impact on consumers, on businesses, on industry and, of course, on cutting emissions at the lowest cost. It is absolutely right that we keep our accounting practices under review. However, I make it clear to all hon. Members that now is not the right time to make this change. The Government are totally focused on setting the fifth carbon budget by 30 June, and we have already been working on it for upwards of a year, as required by the Climate Change Act. That 30 June deadline is less than six months away.
We have been working on the basis that it will be permissible to use the current accounting framework, which is also the basis on which the Committee on Climate Change has produced its advice on the level of the budget. Accepting clause 80 would threaten serious delay in setting the fifth carbon budget, putting us at risk of not complying with the Climate Change Act at a time when the UK should be showing clear, decisive leadership following Paris. It is therefore my strong desire to see clause 80 removed from the Bill.
Dr Whitehead
We come now to the last part of the Bill. It is always worth having a look at a Bill’s final provisions and at how they make the rest of the Bill work. Clause 81 relates to the powers to make regulations under the Act, which can famously include so-called Henry VIII clauses effectively enabling the Secretary of State to amend parts of a Bill that has just been passed by orders of various kinds, whether or not the intention of such orders actually featured on the face of the Bill. There has been a tendency in legislation in recent years to backload Bills so that the Secretary of State is given rather a lot of power to change something that might otherwise have been in a Bill.
Although I would not say that this particular Bill falls prey to that temptation to any great extent, there are nevertheless provisions for regulations either under the affirmative procedure or the negative procedure, which require prayers to annul, relating to effectively all the Bill’s clauses. There is a distinction between what regulations can be passed on an affirmative basis, therefore requiring a debate and a vote, and what can be made by negative statutory instruments, which are just laid and—not to put too fine a point on it—no one notices unless someone is sharp-eyed enough to come forward with a prayer to annul, leading to an instrument being subject to the provisions in subsection (4), which governs the instruments that must be made by a draft being laid before and approved by Members of both Houses.
First, why has a distinction been made between those clauses of the Bill which may be amended, effectively, by affirmative resolution and those clauses which may be amended simply by statutory instruments being laid before the House and therefore subject to a motion to annul? There is then a further question about the distinction made between the regulations in this clause. Under subsection (4), do statutory instruments that may be moved, positive SIs approved by resolution of each House of Parliament, which specify particular regulations and clauses of the Act—a number of which relate, for example, to the organisation of the OGA—cover the amendment of previous SIs that relate to the conduct of the Bill?
I have in mind an SI passed in September 2014, the Renewables Obligation Closure Order 2014, SI 2388, which contains a number of very interesting provisions. It provides for the closure of the renewables obligation on or before 31 March 2017 and states:
“No certificates to be issued in respect of electricity generated after 31st March 2017.”
This is, indeed, the statutory instrument that defines the date of closure of the renewables obligation. It is derived from the Energy Act 2013 which, while it envisages in chapter 7 the closure of support under the renewables obligation does not specify a date at which that support should be taken away. The statutory instrument of September 2014 provides a date for that closure. The question is, in what circumstances under this clause might the Government change this statutory instrument?
The statutory instrument can be read in two ways. The heading of article 3 of the SI,
“No certificates to be issued in respect of electricity generated after 31st March 2017”,
can be read as the statutory instrument giving effect to what is set out in very general terms in the Energy Act 2013. Conversely, it could be read as saying that up to 31 March 2017 in certificates in respect of electricity generated should be issued. In that particular clause, the Bill changes the point at which the renewables obligation will cease for onshore wind. Of course, the 2014 SI deals with forms of renewable generation other than onshore wind, and they are not affected by the changes in the Bill. Onshore wind is eligible for renewables obligations up to 31 March 2017—that is pretty clear under the SI—and that will be changed at a stroke to a year earlier. We will debate that particular detailed question this afternoon. By the way, the 2014 SI has provision for particular grace periods, and we might touch on that later.
The point about the SI is that it specifically sets out not just the point at which that renewables obligation requirement will stop, but the period during which that renewables obligation requirement has to continue. As we can see with what the Secretary of State can do under the clause to amend legislation, subsection (5) of the clause allows statutory instruments based on any of the Bill’s provisions to be made under the negative resolution procedure, with the exception of those measures specified under subsection (4). Subsection (5) states:
“A statutory instrument containing any other regulations under this Act is subject to annulment in pursuance of a resolution of either House of Parliament.”
Subsection (6) states:
“Subsection (5) does not apply to a statutory instrument containing regulations under section 83.”
We have not yet discussed clause 83, but it relates to the commencement of the Bill and when it becomes an Act. As I have said, the Bill changes the date by which the renewables obligation should cease to be available to developers under the terms of the statutory instrument from March 2017 to March 2016. Clause 81(6) relates to the change to the renewables obligation, and clause 83(1) states that the Bill,
“comes into force on the day on which this Act is passed.”
That is important in defining when the Act is passed. I understand that that happens when the Act receives Royal Assent. In clause 83, there are not only definitions of when the Act is passed, but when other parts come into force. For example, one part
“comes into force two months after the day on which this Act is passed.”
That is important, because while we trust that the Bill will be passed in the not too distant future, it is more than possible that that will be after the date that the renewables obligation ceases to be available to developers, which will be foreshortened from March 2017 to March 2016—not that one needs to indulge in a great deal of speculation. Obviously, I am not privy to Government legislative timetables, but we are here in Committee at the beginning of February. We have parliamentary sitting time until the end of March, minus a week. The Bill has to go back to another place, at which point there will undoubtedly be discussion about its provisions, and it will come back to this House for final consideration before the process of Royal Assent is undertaken. By the time Royal Assent has been obtained, we could be past the date by which the Bill’s provisions come into force.
Andrea Leadsom
As I speak to the Government amendments, I would like to remind the Committee why the clause was first introduced. The Government were elected with a clear manifesto commitment to end new subsidies for onshore wind and to ensure that local people had the final say about where onshore wind stations were built, and we intend to do exactly that. It is for the Government to say what they meant by their manifesto commitment and it is not, with the greatest respect, for anyone else to put their own slant on it.
Our manifesto commitment is very clear. From the very start, the Government made their intentions regarding onshore wind clear: it should be developed only where local people want it and there should be no more public subsidies.
I take the opportunity to acknowledge the written evidence we have received in support of the policy. It clearly demonstrates public support for the manifesto commitment and its timely implementation.
Dr Whitehead
May I make a very minor point, to set the scene a little better? Does the Minister agree that the manifesto commitment—