Draft Nuclear Safeguards (Fissionable Material and Relevent International Agreements) (EU Exit) Regulations 2018

Alan Whitehead Excerpts

Monday 14th January 2019 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Sharma. It is sort of a pleasure to continue with our most cordial debate about the process of nuclear safeguards as they concern exiting the European Union, and what sort of regime we should have in place if we are no longer members of Euratom.

We clearly need to put several things in place relating to nuclear safeguards. I will not repeat what the Minister said about the scope and coverage of nuclear safeguards, of which we became fully aware during the passage of the Bill, other than to say that we may both have become a little proof to the acronyms and obscure sayings that peppered that Bill Committee, so I apologise if any hon. Members who were not present have no idea what I am talking about—we got well into the legislation.

The statutory instrument is pretty simple. As the Minister said, it sets the stage for the wider statutory instrument that will be considered tomorrow. I am pleased that they are being considered the right way round; we could not do one without having done the other. This statutory instrument puts into legislation two important terms, about which it will be vital to be clear when we discuss the statutory instrument tomorrow afternoon.

The first term, as the Minister said, is fissionable material. Although it has quite a long definition attached, as far as I can see, it is a pretty straight transposition of what was previously the case as part of our membership of Euratom and what we had to deal with there, and therefore, what will be applicable for the discussion that should proceed afterwards.

The second definition concerns a relevant international agreement. We had some discussion during the passage of the Bill about relevant international agreements and what had to be done. As the Minister has outlined, a number of treaties were made with third party countries and the IAEA through Euratom, of which we were a member, on our behalf. Therefore, if we leave Euratom and we are still dealing with what was treated in the Bill as a contingency, but which we are now close to, we will no longer be covered by those international treaties and we will effectively have to negotiate them anew.

At the time of the Bill Committee, I thought that would be quite a task, and I think the Minister concurred that there was a fair amount of work to be done, but I see in October’s “Report to Parliament on the Government’s Progress on the UK’s Exit from the Euratom Treaty” that we have negotiated those international treaties with Australia, Canada and the United States, and that the voluntary agreement with the IAEA is in place. It is on the record that those agreements were laid before Parliament and ratified on 17 December, so they are done and dusted.

What is missing, however, is a possible treaty with Japan. That is puzzling, because during the passage of the Bill, the Minister said to me:

“The Government have the power to conclude international treaties under their prerogative powers. Of course, that cannot automatically change domestic law or rights and cannot make major changes to the UK’s constitutional arrangements without parliamentary authority. That remains the case for international agreements relating to safeguards that are currently under negotiation—for example, the nuclear co-operation agreements currently being negotiated with the US, Canada, Japan and Australia, and the new safeguards agreements with the IAEA. Parliament will therefore have the opportunity to consider those agreements before they come into force.”––[Official Report, Nuclear Safeguards Public Bill Committee, 2 November 2017; c. 56.]

I think the progress document came about as a result of an amendment that was agreed to the Bill, so I am grateful for that. It says:

“Good progress has also been made in discussions with Canada and Japan…The UK has had”—

I emphasise the tense—

“a bilateral NCA in place with Japan since 1998. The UK and Japan have had detailed discussions on this, and have now commenced negotiations formally to put in place arrangements to ensure that this NCA remains operable following the UK’s withdrawal from Euratom. Given this progress, we are confident that all priority NCA arrangements will be in place to enable international cooperation in the civil nuclear sector.”

Although there appears to have been an NCA in place with Japan, it is clear, both from what the Minister said at the time of the Nuclear Safeguards Act 2018 and from what has been said in the progress document, that there are negotiations and that those negotiations are intended to end in arrangements being in place so that this NCA remains operable. There may be a very good reason why the NCA that was originally in place, but has been a subject of negotiations, is not before us now and has not gone through the process that, as I just mentioned, has now been completed for those other agreements, but it is certainly the case that there is no new treaty with Japan in place at the time of this SI discussion. Therefore, in principle, the definition of international agreements is not fully completed in time for the discussion tomorrow.

[Stephen Kerr (Stirling) (Con)]

Given the fact that the Minister has fulfilled every single one of the commitments he has given to the House and to the Business, Energy and Industrial Strategy Committee, of which I am grateful to be a member, should we not put some trust in the stated intentions that the Minister has given us in his speech in this Committee?

[Dr Whitehead]

Yes, I fully concur with the hon. Gentleman’s point; in overall terms, what was said would be done, has been done. I appreciate that it was quite a difficult effort to get that done, but it has been done and I am delighted to see that it is all there in the very obscure Journal Office book of treaties that I had to go and find in a corner somewhere to ensure that they were there.

I do not for a moment want to say that this is a dereliction by the Minister or that the sky will fall in because this is not complete, but I want to draw attention to the fact that there appears to be some doubt about whether the NCA we previously had in place with Japan is sufficient to get us over the line, or whether a new treaty needs to be sorted out in time for these new arrangements to come into place and to be within the definition of international treaties. I merely want to hear from the Minister which of those positions is the correct one, or whether there is some ambiguity between the two.

I do not intend to delay the Committee to any great extent—I think I have spoken beyond five minutes, but I have tried my hardest not to—nor do I think we need to divide the Committee on this particular point, but I want to hear clearly what the position is on Japan, why it is not there and what the circumstances are under which we can reasonably safely proceed, assuming that the previous NCA is good enough for our future purposes, or, if it is not good enough, what is being done to make it better.

Draft Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2018

Alan Whitehead Excerpts

Monday 14th January 2019 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Davies. The Minister has given a customarily comprehensive exposition of the draft regulations and of what the Government seek to achieve with them. She also acknowledged the reason for them, which is that the original 2015 regulations were based on the idea that landlords could uprate their properties for energy efficiency purposes through the green deal programme. The manifest failure of the green deal meant that those regulations, which came on the statute book a month or so before the deal went down, were completely inoperable pretty much from the word go.

I cannot let the debate pass without briefly recording the history of the 2015 regulations, which arose from the Energy Act 2011. It took four years for them to come on to the statute book, and the target at the time was that landlords letting out F and G-rated properties would not be able to do so after 2018, unless they had taken up the green deal proposal to upgrade their properties or they had received an exemption because they had spent up to the limit of the proposal and still could not get their properties up to that level.

After the 2015 regulations were demonstrated to be inoperable, it has taken another four years for these regulations to come forward. The date by which the energy efficiency of those landlords’ properties should be upgraded has also slipped as a result of the long delay in getting the 2015 regulations on to the statute book. We could say that these regulations are the housing and energy equivalent of the controversy about the appearance of Harper Lee’s novels: they have taken a great deal of time to emerge, and when they do emerge there is a great deal of time before the one that puts the previous one right emerges to take its place.

[Claire Perry]

Of course, when they do emerge, they are considered to be tours de force and best-sellers. The point I am making, rather facetiously, is that it is much better to do something right and that will have an impact—I refer to the smart export guarantee of last week, which, again, took a little longer than I intended. We have to ensure that these regulations are proportionate and balanced and can be delivered, rather than being just a bit of writing on a piece of paper.

[Dr Whitehead]

I take the Minister’s point, but it was widely thought that Harper Lee’s second novel was substantially inferior to the original, to which I cast my mind this afternoon. There are two key points on these regulations that hon. Members ought to consider carefully. First, as the Minister has said, following consultations on what to do about the fact that the green deal no longer gave a route for landlords to improve their properties—in theory, at no cost to themselves because of the way the green deal worked—the Government produced consultations on the uprated regulations, which initially suggested that the expenditure limit should be £2,500, after which the landlord should be exempt.

The consultations drew a substantial number of responses. Some 79% of respondents argued that the limit the Government suggested as an alternative to the green deal was far too low. Of those, 60% suggested that the limit should be at least £5,000, which is the figure used in the work that looks at what the uplift to those properties would be. The Minister has said that according to the research, should the limit be set at £3,500—it was the only figure substantively put forward in the consultation—something like 48% of properties could be improved. To put it another way, the majority of properties in F and G would not be covered by this measure and would be exempted forever under the terms of this amendment—they would be lettable without the landlord having to do any more work, because it would not be possible to uprate the property to that level.

On the other hand, the £5,000 figure, according to some of the impact assessments, suggests that some 73% of F and G properties could be successfully uprated to band E. With a little bit more expenditure, the substantial majority of those properties could be uprated to band E. That is important, as the Minister mentioned, in the light of the clean growth strategy’s ambition for the private rented sector in general up to 2035. The Minister, who I think wrote substantial parts of the revised clean growth strategy, will know that it proposes that properties in the private rented sector should be band C by 2030.

The clean growth strategy not only suggests that upward movement by 2030, but suggests that in the meantime, there should be mandatory levels up to band D in the private rented sector by 2025. The regulation effectively takes half the properties that could be uprated to band E by 2020 and, potentially, permanently exempts them, while at the same time, the clean growth strategy’s ambition is to revisit the issue in 2025. The landlords exempted from band E by 2020 would presumably be exempted in even greater numbers from 2025 to 2030. In other words, the proposal goes in precisely the opposite direction from the trajectory that the clean growth strategy suggests.

The Opposition think that it would have been more than prudent—rather, absolutely essential—for the Government to accept the overwhelming number of submissions to the consultation on the SI, and make the figure of £5,000 the limit above which exemptions would apply. I would argue that £5,000 would not be an enormous burden on landlords to ensure that they provide their properties in a lettable and saleable way. That is especially true given that, as the Minister has mentioned, a side effect of that work is that those properties increase in value by substantial amounts of money. She mentioned the figure of £8,500—even that is £3,500 more than the £5,000 figure.

We are concerned that after effectively eight years in the making, the regulations would uprate a frankly inadequate number of properties, and a pretty startling number of properties would be permanently exempt from that process. That is the first key point.

The second key point is about the overall definition in the 2011 Act of a private rented property, how that definition was incorporated in the 2015 regulations, and what one might have expected to have been incorporated in the regulations that we are considering. The 2011 Act, in the definition of private rented sector property and the measurements that should be undertaken for the purpose of complying with exemptions, raises the question of the property having an energy performance certificate. That arrangement is based on a European Union directive, so I wonder whether a statutory instrument is about to be introduced to redefine EPCs in the light of a possible early departure from the EU on a no-deal basis—we might see that in the not-too-distant future.

The EPCs, which were already in place and on which the whole of the legislation is based, only apply to properties that have been let as whole properties. Therefore, of the 4.3 million homes in the private rented sector, a substantial minority—houses in multiple occupation, where sections of the properties have been let at different times—are exempt from the requirements. Provided landlords rent out rooms within a building and not the whole building in one go, they are free—they do not have to do anything to their building as far as energy efficiency is concerned.

When the 2011 Act was passed, as I understand it from the Minister at the time—now Lord Barker—he was not aware that that huge exemption had been written into the legislation. Before the 2015 regulations were introduced, there were a number of indications that something ought to be done about that huge lacuna. One of the people indicating that something ought to be done was me. Indeed, I raised this issue in the House on 25 June 2014—I asked what should be done about the HMO sector and how the legislation might be uprated to get it right—so the Government cannot say that they were not told, that they did not know about it or that there were no ways to put it right. Indeed, as far as the 2011 Act is concerned, it should have been put right in primary legislation very shortly after the passage of that Act.

That is not an insignificant issue. My colleague representing the constituency next door to mine, the hon. Member for Southampton, Itchen, knows that Southampton is not only the private rented sector capital of the south coast, along with Brighton, but the HMO capital: 50% of the properties in the private rented sector in Southampton are houses in multiple occupation —so those HMO properties, many of which are in bad condition, will be completely exempt from the legislation.

When the 2015 regulations were introduced, given that the Government had been told about the problem, it was surprising that the guidance stated that

“there is no obligation to obtain an EPC on a letting of an individual non-self-contained unit within a property, such as a bedsit or a room in a house in multiple occupation”.

The Government actually told landlords at the time how to evade the arrangements. One might have expected, given that there were four years to get it right—tour de force though it may be—that that issue might have been put right in the regulations, but, on scanning them, there is nothing. The situation remains exactly the same as it has been since 2011. Many landlords will drive a coach and horses through the regulations and will not improve their properties simply because they will not let out all parts of their property at the same time.

The regulations are projected to make a substantial contribution to the clean growth strategy. They do not; they are a welcome uprating of landlords’ responsibility to their properties, but they fall far short of the ambition for the Bill when it was discussed in 2011. The Minister and I both served on the Bill Committee, and there has not been a happy outcome. What we thought would take place after the legislation was passed has not happened, and the outcome remains unsatisfactory.

Unless we have a statutory instrument that properly addresses, first, what contribution landlords should make to uprating their properties in line with the ambitions in the clean growth strategy, and, secondly, how many people can escape the obligation through the definition of their property—a particular sub-definition of “private rented” escapes completely—we will have a piece of legislation that just does not work. For that reason, we cannot support the regulations. Ideally, I would like the Minister to say that she will go away and come back with a statutory instrument that addresses those two points. We would all be able to support that because it would have an overall effect on the private rented sector and really would put us on the path to discharging our ambitions in the clean growth strategy.

[Claire Perry]

I am always grateful to the hon. Gentleman for his thoughtful and extensive contributions to our legislation. I am disappointed that, once again, the Opposition cannot support what most people outside this place feel to be sensible and proportionate changes, which will help the worst 6% of properties. I take his comments on board, but—as with the clean growth strategy, our ambitions on fuel poverty and the price cap Bill—it is a shame that he feels he is unable to support the changes. Let me try to answer some of his questions and see whether he will potentially review his position.

The hon. Gentleman is absolutely right—I pay tribute to his long-standing recognition of this issue—that houses in multiple occupation are covered by this minimum standard if they are required to have an EPC. Some do, and many do not. We are currently working with colleagues in the Ministry of Housing, Communities and Local Government to review the requirements. Although tenants can request energy efficiency measures, we do not want private rented properties to be reclassified into some sort of HMO bucket so there is another exemption.

We had a big call for evidence on EPCs—I hope the hon. Gentleman contributed to it—and this question came up in it. We will review the responses, and we will publish our response in the summer. This is a concern, but not one that should prevent this valuable contribution to alleviating the number of fuel-poor homes from being put on the statute book.

The hon. Gentleman raised the issue of delays and asked why this has taken so long. He will know that the original regulations set out that landlords needed to improve their properties or register an exemption by April 2020. With the consent of the Committee, we will put these regulations on to the statute book, and that will come into force. The 2018 limit applied only to new tenancies. He will ask me what the churn rate is in the tenancies; the answer is that I do not know, but I believe from the impact assessment that we are still capturing substantially the majority of properties in this sector.

I take the hon. Gentleman’s point about the level of a cap. To clarify slightly, 52% did not support the £5,000 cap. Although the majority of people thought it should be higher than £1,500, the majority did not support a £5,000 cap, for all the reasons that I set out: this cap is considered to be more proportionate. If he looks at the impact assessment he will see that the net present value of delivering at a £3,500 cap is substantially higher.

[Dr Whitehead]

Will the Minister clarify the distinction between the majority not supporting the £5,000 and those people in the consultation who supported the £2,500? If I add together those who supported the £2,500 and the rest of the consultees, I get to the figure of 52% who did not support it. However, the vast majority of people who did not support the £2,500 cap supported the £5,000 cap.

[Claire Perry]

Far be it from me to replay arguments about 48:52 in this lowly Committee—we could be here all day. We are not here to debate the calculations; the majority of people in the consultation did not support the £5,000 cap. They certainly agreed that the number should be higher than £1,500, as we do. The hon. Gentleman will notice that there are other amendments such as including VAT in the cap, removing the backward-looking grandfathering—stopping it in 2017, so that people are forced to continue to invest in those properties.

The hon. Gentleman asked about exemption length, suggesting that landlords will be let off forever. That is not true; all exemptions will expire after five years. Landlords will then be obligated to try again to improve the property, spending up to the level of the cap. Hopefully, with the continuing reduction in the cost of energy efficiency measures, people will be able to do more for less.

I am disappointed that the hon. Gentleman does not support the draft regulations, but they are the right thing to do. This is a proportionate set of measures: it is fair to landlords, most of whom are not large corporates but people who have invested in one or two properties, who want to do the right thing. He makes a good point about multiple occupancy and I would be happy to take that away and, as we often do, work in concert to take it forward, because that is an important additional change we could bring forward.

This statutory instrument is a good step forward; it has received widespread support and it means that the most inefficient homes will be improved, creating savings for tenants and capital value for those who own them. On that basis, I commend the draft regulations to the Committee.

Question put.

Draft Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2018

Alan Whitehead Excerpts

Monday 14th January 2019 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Sharma. It is sort of a pleasure to continue with our most cordial debate about the process of nuclear safeguards as they concern exiting the European Union, and what sort of regime we should have in place if we are no longer a member of Euratom.

We clearly need to put several things in place relating to nuclear safeguards. I will not repeat what the Minister said about the scope and coverage of nuclear safeguards, of which we became fully aware during the passage of the Bill, other than to say that we may both have become a little proof to the acronyms and obscure sayings that peppered that Bill Committee, so I apologise if any hon. Members who were not present have no idea what I am talking about—we got well into the legislation.

The statutory instrument is pretty simple. As the Minister said, it sets the stage for the wider statutory instrument that will be considered tomorrow. I am pleased that they are being considered the right way round; we could not do one without having done the other. This statutory instrument puts into legislation two important terms, about which it will be vital to be clear when we discuss the statutory instrument tomorrow afternoon.

The first term, as the Minister said, is fissionable material. Although it has quite a long definition attached, as far as I can see, it is a pretty straight transposition of what was previously the case as part of our membership of Euratom and what we had to deal with there, and therefore, what will be applicable for the discussion that should proceed afterwards.

The second definition concerns a relevant international agreement. We had some discussion during the passage of the Bill about relevant international agreements and what had to be done. As the Minister has outlined, a number of treaties were made with third party countries and the IAEA through Euratom, of which we were a member, on our behalf. Therefore, if we leave Euratom and we are still technically dealing with what was treated in the Bill as a contingency, but which we are now close to, we will no longer be covered by those international treaties and we will effectively have to negotiate them anew.

At the time of the Bill Committee, I thought that would be quite a task, and I think the Minister concurred that there was a fair amount of work to be done, but I see in October’s “Report to Parliament on the Government’s Progress on the UK’s Exit from the Euratom Treaty” that we have negotiated those international treaties with Australia, Canada and the United States, and that the voluntary agreement with the IAEA is in place. It is on the record that those agreements were laid before Parliament and ratified on 17 December, so they are done and dusted.

What is missing, however, is a possible treaty with Japan. That is puzzling, because during the passage of the Bill, the Minister said to me:

“The Government have the power to conclude international treaties under their prerogative powers. Of course, that cannot automatically change domestic law or rights and cannot make major changes to the UK’s constitutional arrangements without parliamentary authority. That remains the case for international agreements relating to safeguards that are currently under negotiation—for example, the nuclear co-operation agreements currently being negotiated with the US, Canada, Japan and Australia, and the new safeguards agreements with the IAEA. Parliament will therefore have the opportunity to consider those agreements before they come into force.”––[Official Report, Nuclear Safeguards Public Bill Committee, 2 November 2017; c. 56.]

I think the progress document came about as a result of an amendment that was agreed to the Bill, so I am grateful for that. It says:

“Good progress has also been made in discussions with Canada and Japan…The UK has had”—

I emphasise the tense—

“a bilateral NCA in place with Japan since 1998. The UK and Japan have had detailed discussions on this, and have now commenced negotiations formally to put in place arrangements to ensure that this NCA remains operable following the UK’s withdrawal from Euratom. Given this progress, we are confident that all priority NCA arrangements will be in place to enable international cooperation in the civil nuclear sector.”

Although there appears to have been an NCA in place with Japan, it is clear, both from what the Minister said at the time of the Nuclear Safeguards Act 2018 and from what has been said in the progress document, that there are negotiations and that those negotiations are intended to end in arrangements being in place so that this NCA remains operable. There may be a very good reason why the NCA that was originally in place, but has been a subject of negotiations, is not before us now and has not gone through the process that, as I just mentioned, has now been completed for those other agreements, but it is certainly the case that there is no new treaty with Japan in place at the time of this SI discussion. Therefore, in principle, the definition of international agreements is not fully completed in time for the discussion tomorrow.

[Stephen Kerr (Stirling) (Con)]

Given the fact that the Minister has fulfilled every single one of the commitments he has given to the House and to the Business, Energy and Industrial Strategy Committee, of which I am grateful to be a member, should we not put some trust in the stated intentions that the Minister has given us in his speech in this Committee?

[Dr Whitehead]

Yes, I fully concur with the hon. Gentleman’s point; in overall terms, what was said would be done, has been done. I appreciate that it was quite a difficult effort to get that done, but it has been done and I am delighted to see that it is all there in the very obscure Journal Office book of treaties that I had to go and find in a corner somewhere to ensure that they were there.

I do not for a moment want to say that this is a dereliction by the Minister or that the sky will fall in because this is not complete, but I want to draw attention to the fact that there appears to be some doubt about whether the NCA we previously had in place with Japan is sufficient to get us over the line, or whether a new treaty needs to be sorted out in time for these new arrangements to come into place and to be within the definition of international treaties. I merely want to hear from the Minister which of those positions is the correct one, or whether there is some ambiguity between the two.

I do not intend to delay the Committee to any great extent—I think I have spoken beyond five minutes, but I have tried my hardest not to—nor do I think we need to divide the Committee on this particular point, but I want to hear clearly what the position is on Japan, why it is not there and what the circumstances are under which we can reasonably safely proceed, assuming that the previous NCA is good enough for our future purposes, or, if it is not good enough, what is being done to make it better.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 8th January 2019 Commons Chamber

[Claire Perry]

I thank the right hon. Gentleman for recognising the incredible contribution that offshore wind can make, and I hope he will join me in wishing great success to our negotiating teams in bringing forward the vital sector deal. The point is, given that the price has tumbled since he was one of the people who designed the excellent auction structure, that we should be able to bring forward the amount of capacity we have said we need—1 GW to 2 GW—with that amount of subsidy. The system is working to get us to subsidy-free provision of this extremely important offshore wind energy.

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

The Minister will be aware that the recent EU Court judgment, which effectively freezes the capacity market in the UK, turned substantially on the lack of level playing field access to capacity market support for new low-carbon energy technologies such as demand-side response. Does she intend to respond positively to the judgment by recasting the capacity market to reflect remedies for this lack of equal access, or is she perhaps hoping that, after a decent interval—and a lot of damage to existing participants in the capacity market—normal service will be resumed?

[Claire Perry]

The hon. Gentleman raises an incredibly important point. We have been working on this issue closely with the industry for several months since the judgment came forward, and it is absolutely right that we reassure the industry and investors of our commitment to holding auctions in the near future to ensure electricity supply for next winter, and that we do all that we can to ensure that this market is put back on a legal and orderly basis. It does work—it is the envy of many countries around the world—and we are working closely with Ofgem and the industry to ensure that we can take that market capacity structure forward.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 20th November 2018 Commons Chamber

[Mr Speaker]

Before I call the shadow Minister, I know the House will want to join me in welcoming Speaker Elisabetta Casellati of the Italian Senate—a distinguished parliamentarian and the first female holder of that office. Madam Speaker, we wish you and your colleagues well on this visit and in all the important work that you do.

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

The Government say in their clean growth plan—indeed, the Minister has said it this morning—that they want to see more people investing in solar without Government support. I cannot think of a better way to discourage people who might be thinking of investing in solar than telling them that they will be expected to give away to the national grid half the electricity they generate from their investment. When we talk about the export tariff, we are not talking about a subsidy; we are talking about a payment for goods supplied. The Minister has elided the feed-in tariff and the export tariff. Can she just accept that she has messed things up on this occasion, call off talk of removing the export tariff and get on with using that tariff to support future subsidy-free solar investment?

[Claire Perry]

I am invited to say buongiorno to our visitor in the Gallery.

The hon. Gentleman and I are, as in many cases, in violent agreement. We signalled clearly several years ago the closure of this scheme. It is a very expensive scheme; it was going to cost £2 billion a year for decades to come to bring forward microgeneration. We now have much more energy-efficient and cost-effective ways of generating renewables. As I said, I absolutely agree that people who have gone through the installation process should not be captive takers, should someone want to buy their energy. I look forward to announcing further deliberations on this shortly.

Climate Change: Extreme Weather Events

Alan Whitehead Excerpts

Tuesday 13th November 2018 Westminster Hall

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

I congratulate my hon. Friend the Member for Bristol North West (Darren Jones) on taking the initiative of writing to the Backbench Business Committee to suggest we have this debate. I congratulate him not only on persuading the Committee to allow it but on putting the case this morning that his achievement in bringing this debate reflects the non-achievement of the House as a whole in putting the issue firmly on the Floor of the House. The fact that we are debating this matter here this morning with the cream of the usual suspects indicates that we are still a very long way from getting the issue debated with the importance and urgency it deserves. I therefore fully back and support the suggestion from my hon. Friend the Member for Bristol North West that the IPCC report should have been debated fully on the Floor of the House. Indeed, the developments from that report should be debated regularly on the Floor of the House from now.

The subject of this debate is extreme weather and climate change, which has been debated in this House previously. Climate change deniers have come to the Floor here and indicated that this extreme weather stuff is nothing to do with climate change; that it is all a bit of a hoax and we should just accept the fact that the weather changes, as I think a certain President of the United States recently opined, and we should not worry too much about it. Well, I think that has been comprehensively demonstrated to be not only a completely false conclusion but an alarming and complacent conclusion, because we know what action we will have to take on climate change over the next period.

The IPCC report, as hon. Members have mentioned this morning, is not just a wake-up call but a blueprint. As the hon. Member for Richmond Park (Zac Goldsmith) said, if we do not tackle the speed at which temperatures are rising and how much they are rising across the world, we will inevitably face a very difficult future. The extreme weather events that we are seeing at the moment are simply a signpost of the long-term enormous effects, as the hon. Gentleman set out, on the world’s economy and the livelihoods and lives of millions of people across the planet, and on the liveability, as my hon. Friend the Member for Bristol North West set out, of large parts of the planet in future. So the extreme weather events that we increasingly see are a harbinger of much wider effects in future—harbingers that we ignore at our extreme peril.

Hon. Members have drawn attention to a recent report by the Met Office on the changing nature of the climate in the UK. The report demonstrates to me that the issue is not only about hurricanes in the United States, flooding in south-east Asia or forests catching fire in northern Sweden but is very much here at home now and is the future that we will face to some considerable extent if we do nothing about it. The Met Office report is a stark reminder of how much and how rapidly things are changing. The creep of red across the map of the UK over the past 50 years shows the daily maximum temperatures of hot summer days and dry spells. Conversely, the creep of white across the country shows how icy days and daily minimum temperatures in winter change across the country. So we can see a clear change in climate.

As the hon. Member for Richmond Park has rightly said, we cannot attribute particular weather events to the effects of climate change, but elementary physics teaches us that—I speak as the proud possessor of a relatively good grade in O-level physics, so I am at the elementary level—if the temperature of water increases, as we know is happening, the water expands. It is not just a question of global icecaps and various other things melting that adds to sea level increases across the world; it is just the fact that water expands as it gets warmer.

As water expands as it gets warmer, the air above it is affected and becomes more turbulent. It absorbs more energy and takes up more water vapour, resulting in more precipitation, exacerbating the effects on the weather. It is not the case that climate change causes tidal surges or hurricanes in the southern United States, but it exacerbates them and changes them. They are longer in duration, more severe and more frequent, and are the consequences of the physics of climate change, as I have described.

So we know what our future holds if we do not take urgent action not only to mitigate climate change but to adapt to it. My hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard) set out clearly what is in store for our own country’s infrastructure as a result of the changes. Indeed, I have observed the substantial effects of tidal surges and extreme tidal weather; a vital part of communication infrastructure has been severed. To a much lesser extent, I have had a small attempt in my constituency area to get much greater attention paid to flood defences for the Itchen valley. For certain, that valley will be flooded to an increasingly frequent extent as a result of tidal surges and changes.

Southampton put together a scheme for dealing with tidal surges and possible flooding. It obtained some funding through the local enterprise partnership to assist with flood relief, but the funding was then taken away on the instructions of the Government and placed into a road scheme. Unless we take the issue seriously, get our priorities right and adapt our country for what we know will be a future of far greater extreme weather events, with all the consequences that that will have on infrastructure and our daily lives, we will surely pay the price. Likewise, if we do not take seriously what the IPCC says about the global scale, we will pay the price.

I am worried about the extent to which past performance is prayed in aid for not doing as much on climate change and global warming as we might do. It is true that the UK has performed better than many other countries in taking action on climate change, but the sheer scale of the task facing us means that one country’s performance cannot be set against another’s.

The hon. Member for Richmond Park indicated that our clean growth plan is good in many ways. It has many good things in it, and includes many good responses to the requirements of the fourth and fifth carbon budgets from the Committee on Climate Change. However, the clean growth plan itself acknowledges that it will not get us to the terms of the fourth and fifth carbon budgets. Indeed, it states that it will fall short by about 5% in terms of emissions by the time of the fifth carbon budget. The failure between the fourth and fifth carbon budgets is much worse; the clean growth plan gets us only about 50% of the distance between them.

Given what we know about the difference between 1.5° C and 2° C, as the hon. Member for Richmond Park mentioned, we have to do so much more. I was therefore dismayed that when the Government wrote to the Committee on Climate Change to ask what it thought about a 1.5° C, net-zero target on climate change they specifically excluded action to change the terms of the requirements of the fourth and fifth carbon budgets. We are looking at what we can do about a world increase of 1.5° C, with the enormous differences that the hon. Member for Richmond Park says would result from 2° C. Yet we are proposing no change at all in the current carbon budgets, which, even by the Government’s own plans, we will not reach anyway.

A theme of this morning’s debate is that far more needs to be done and we have, as the IPCC report tells us, a very limited amount of time in which to get it done. We therefore need at the very least to express that urgency in the House, to ensure that the debate is shared among all Members. The urgency, effort and additional activities that are needed to combat climate change, and to adapt, must be properly brought before the whole House. As a result of this morning’s debate that call might be heard.

[Alan Brown]

In terms of parliamentary scrutiny, does the hon. Gentleman agree that the Government sent out the wrong signal when they abolished the Department of Energy and Climate Change and subsumed it into the much bigger Department for Business, Energy and Industrial Strategy, where these issues get lost among all the other stuff that the Government are looking at?

[Ms Nadine Dorries (in the Chair)]

Order. Dr Whitehead, I am sure that you would like to hear from the Minister after you answer that question.

[Dr Whitehead]

Indeed, Ms Dorries; I was just about to come to my last sentence when the hon. Gentleman asked me that pertinent question, to which I will take one second to reply. Yes—when the Department of Energy and Climate Change was subsumed into BEIS that gave out a bad signal about the Government’s seriousness about these issues. Whether or not that Department is re-established, the status of climate change within Government needs to be uprated, not just in BEIS but across all Departments, in terms of what we know we need to do.

I hope that the Minister will be in concord with what has been set out in the debate, and that she will take from it the message that more effort is needed, that the urgency is real, and that we look forward to the Government grasping the issue with the seriousness that it deserves. I am sure that she will agree that it deserves to be taken seriously and that action is essential. I am sure that she will set out exactly what that action will be.

Draft Electricity and Gas (Powers to Make Subordinate Legislation) (Amendment) (EU Exit) Regulations 2018

Alan Whitehead Excerpts

Thursday 1st November 2018 General Committees

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

It is a pleasure to serve under your chairmanship, Sir David.

I will not rehash in detail the function of this statutory instrument. In her comprehensive speech, the Minister gave us a good landscape of what the measures do. Essentially, they are part of the ongoing process of establishing EU network codes and guidelines through the third energy package in member state and UK legislation. As she says, some of those guidelines are completely in UK legislation; some are in UK legislation but have not yet become active; and some are in neither category. Clearly, there is a position where a number of those codes will no longer be completed on EU exit. That includes arrangements relating to networks in a number of other areas as well.

That process is not particularly in dispute. The question is rather more about what needs to be done at the point of exit to make sure the process is as smooth as possible. The procedure that has been chosen in this SI to do that is a little strange. I note that the SI did not fall foul of the Joint Committee on Statutory Instruments and came through without reference. However, I would point out that the structure of the SI, which is a secondary piece of legislation, enables the Secretary of State to make further secondary legislation on the back of the first bit of secondary legislation. To my mind, that is a deeply unsatisfactory way of making legislation.

The Minister assures us that changes would be made in the form of affirmative SIs and would therefore be debated in this Chamber. She is obviously fully aware that those are not amendable, so we would, effectively, have a process outside primary legislation, where the Secretary of State would make regulations and the most that could happen is that we would have a debate and raise our concerns, but that would be it.

The question is how those new regulations would be advanced, with what kind of discussion and through what authorities. There is nothing on the face of this SI that indicates how arrangements would be undertaken. It says merely that the Secretary of State can make regulations in the absence of the continuing implantation in UK legislation of the EU network codes and guidelines procedure, and effectively place this within a GB remit, but clearly there is rather a lot more to it than that.

It is a question of what has happened already in terms of those EU network codes and guidelines being established in UK legislation. That has been done, for example, through extensive discussion with industry and the long-established joint European stakeholder group. There is no mention of that procedure and how it would work as far as these arrangements are concerned; there is merely the idea that the Secretary of State can do these things because he or she can. The construction of the legislation is pretty unsatisfactory in terms of how the procedure will work.

The first question for the Minister is therefore whether she is satisfied that the SI, as it stands, tells the whole story about the UK’s implementation of these arrangements for the future, or does she intend to bring forward a further SI that clarifies them and creates a more rounded and satisfactory arrangement for the future?

The second issue is the status of these changes. Are they, in the form of an SI, contingent measures that—depending on what negotiations are undertaken with the EU as regards not only exit day but the transition period that follows—might fall should we not arrive at suitable negotiated arrangements, such as continuing membership of, or close association with, the internal energy market? If there is continued membership of the internal energy market or close association with it, my understanding is that these changes will not be necessary. Indeed, a note sent out by Ofgem to all interested stakeholders in July 2018 stated:

“Our initial conclusion was that we had found nothing in the current licence conditions that would appear to become inoperable on exit day”.

On the SIs that relate to changing those operating terms, Ofgem said:

“The terms of those Statutory Instruments depend on the outcome of the UK-EU negotiations. Those Statutory Instruments will amend the law that governs the regulation of our licences and so the specific changes to our licences cannot be finalised until it is clear how the law that they operate under is changed.”

[Chris Green (Bolton West) (Con)]

In the post-EU relationship that we are looking forward to, is the hon. Gentleman concerned more about the relationship between the United Kingdom and France on the undersea interconnectors or about the energy market on the island of Ireland, where there is that common framework?

[Dr Whitehead]

The hon. Gentleman slightly anticipates one or two things that I will say, particularly about Northern Ireland. There is substantial concern about that issue, and it ought to be addressed through the SI, but I do not think it is.

The hon. Gentleman rightly raises the issue of how interconnection will work when there are different codes at each end of the interconnector. I do not think that makes a great deal of difference to the interconnector’s efficient operation. I have other concerns about interconnectors and the UK’s relationship with the EU once we are not a member of it, but that is not an issue for today.

As far as the relationship with France is concerned, we must look at that in the wider context of how we will operate the arrangements that are already under way, such as the internal energy market and the Trans European Replacement Reserves Exchange—Project TERRE—which is an EU-wide, inter-country balancing mechanism that would be under severe strain if there were not a negotiated agreement to allow those arrangements to continue.

I thank the hon. Gentleman for his intervention, because it brings me to my next point. Ofgem concluded that

“any necessary licence and industry code modifications can only be fully implemented once the changes to retained EU legislation have taken effect in GB law…We consider that the potential changes identified in our initial analysis are likely to be straightforward, seeking to remedy any technical deficiencies arising from EU exit, and as such would not justify the use of an SCR”—

a significant code review. Has the Minister had discussions with Ofgem about its original position? Has its original position changed and, if so, how?

Ofgem appears to be telling us that, although it would be a nice idea to have made these changes by exit day, they are not essential to the running of the market, with one exception. Therefore, does this SI signify an intention to have no further negotiations with the EU about the internal energy market and things such as Project TERRE? Does it represent the end of the intention to negotiate further and place into law things that make a clear break with the current arrangements? Or will the Minister clarify whether, like a number of the pieces of secondary legislation relating to Euratom, these are purely contingency devices that can be set aside if new arrangements come forward to continue the relationship?

[Chris Green]

My understanding is that it is very much along the lines of the legislation that the Department for Transport has prepared. It is preparation in case, but there is no expectation that it will be applied. Does the hon. Gentleman read it similarly?

[Dr Whitehead]

Again, I am grateful for the hon. Gentleman’s intervention, inasmuch as I am not sure which way I read this. There is certainly nothing in the SI to guide me clearly, whereas there has been in legislation, including secondary legislation, relating to membership of Euratom, for example. At the very least, I would hope that the Minister could clarify the position substantially; ideally—this would be a rather better idea—we would have an SI that set that out.

Another question follows on from the issue of whether this is a contingent break or an actual break with existing arrangements. If it is an actual break, what authorities are likely to be involved in implementing additional SIs to bring into UK legislation European legislation that is, as the Minister said, halfway in and halfway out? Would it be National Grid? Would it be Ofgem? Who would it be? At the moment, there is nothing in the SI to indicate what arrangements there would be—it says just that the Minister would be able to do these things.

I am reassured a little that the procedure would be affirmative, but there is nothing to guide us on how things would happen; indeed, Energy UK has raised concerns about how the arrangements would work. I mentioned the long-established joint European stakeholder group. Would that be the vehicle under which new SIs were looked at and agreed? What arrangements, other than “The Secretary of State can just do it,” would there be to allow for a satisfactory and transport procedure in the future? It is very unsatisfactory that we do not have that sort of guidance in this SI.

The final point I would like to raise is about Northern Ireland. Of course I understand that we are making legislation at the moment in the absence of a Northern Ireland Executive, but the position, if these changes are made by Parliament here in the absence of that Northern Ireland Executive, is that, on exit day, we would have one grid in Ireland running on two codes. The code for Northern Ireland would be clearly distinct on exit day, inasmuch as we are seeking by this SI to repeal all those pieces of EU legislation that may complete their passage through to UK legislation in the long term. Therefore, this is not a question of contingency, long-term considerations or otherwise; it is a fact that, on exit day, that will be the situation with EirGrid.

That is a matter of some concern, inasmuch as we would at the very least need assurances that it would not, in itself, undermine the integrity of EirGrid in the future, and that the difference in codes would not mean, metaphorically, that a gentleman would have to arrive at the border with a large pair of bolt cutters and snip the link to make sure that we were integral as far as codes and arrangements were concerned. I sincerely hope that nothing like that would happen, but it is clearly a matter for considerable further negotiations. There is a big question mark against whether we have jumped the gun in terms of those negotiations by putting these issues into practice here in the UK Parliament.

To summarise the Opposition’s concerns, we find this SI pretty unsatisfactory on a number of grounds. However, we understand that it is probably necessary to do a number of the things that it does as we move towards exit day. As the Minister is aware, there are no circumstances under which we can amend secondary legislation. What I would like to have done was to table an amendment to clarify some of these points. I therefore think we will have to signify that we are not happy with the SI and that we would prefer it to be written in another way by not supporting it this morning. That does not mean that we do not understand why a number of these things are taking place.

It would be good to hear from the Minister a specific response to the points that I have raised, to clarify why this SI is necessary right now, what its purpose will be and how that purpose can best be undertaken in the future—things I would like to have seen on the face of the SI. It may be that light can be shed on those things this morning in a way that causes us not to vote against it to indicate our displeasure. I trust the Minister will understand the position we are in, and I hope that one way or another—whether by the institution of a further SI or by further correspondence—we can clear up a number of these matters.

--- Later in debate ---

[Claire Perry]

As most Members here voted to trigger article 50 and begin a process of—[Interruption.] Well, most of us voted to trigger it, and most of our constituents would have expected us to do so, as we live in a democracy. My point is that, in the process of bringing forward the Brexit that our country voted for, we must ensure that there is a smooth and orderly transposition of EU law—the acquis—into UK law so we can exercise proper scrutiny of the sorts of powers that we are referring to. I believe it is called taking back control and exercising parliamentary sovereignty.

I commend my officials in the Department for Business, Energy and Industrial Strategy, the Clerks and the Panel of Chairs, because we will all be troubling them a lot over the next few months as we do what people expect us to do—transfer the powers to ensure that there is absolutely no break in the continuity of activity. That is vital to ensure we have a smooth Brexit. In some cases, we will take contingency powers, in the very unlikely event that we have a disorderly Brexit, which would be deeply unpalatable.

Some of the speeches that have been made, including that of the hon. Member for Inverness, Nairn, Badenoch and Strathspey, encapsulated a whole other load of stuff relating to devolution and the transfer of additional powers to the UK Government. I have reminded him several times that his constituents, like all constituents in our very powerful united group of countries, have benefited from legislation such as the price cap Bill, and the enormous growth of the renewable industries in Scotland has happened with the help of subsidies brought about by the taxes and powers taken by this Government. I suspect it is in his constituents’ interests to have as much alignment as possible with the Westminster Parliament on energy matters.

I should preface my remarks by saying that we will clearly have to prepare for a number of fractious Committees ahead if, in the process of introducing the legislation we have committed to, which is an attempt to transfer smoothly some very technical powers on day one, we try to turn this into a rerun of the referendum on Scottish independence, which was thankfully rejected, and the EU referendum.

The concerns of my opposite number, the hon. Member for Southampton, Test, were, as always, valid. He raised a number of issues. The first was what happens if there is no deal? Are we effectively putting things in place that we would have to change in a no-deal scenario? The answer is no. The regulations would be needed in all scenarios. They do not prejudge the outcome of the negotiations. They are designed to target a very limited set of legislative powers, which are held by the European Commission and would otherwise be left behind. They are helpful to our industry. Of course, it is entirely within our remit, once we have left the EU, to decide to change them completely.

One of the most important issues is how we consider gas security—a vital matter for us. It is entirely within Parliament’s power to introduce additional legislation or regulations to create our own domestic view of what gas supply, and reporting and security measures, look like. Those are not Henry VIII powers; as is set out in these regulations, if we wanted to do something as broad as that, it would be for the Secretary of State to introduce it, and it would be subject to the normal legislative scrutiny. We have not had much chance to scrutinise the current regulations under the rather remote functioning of the European Commission.

If we enter into an implementation period, which I believe strongly is what we need, these transfer powers would not need to be exercised immediately, but they may still be needed after the implementation period. The hon. Gentleman referred to an Ofgem note; I hesitate to suggest that it was referring to a slightly different issue, but it was—it was referring to domestic licences that had been granted. It is quite proper for Ofgem to determine whether any amendments are needed for conditions of its licences, in both an EU exit scenario or any other scenario. That is a different issue from amending the EU’s network codes and guidelines, which are currently directly applicable in the EU legislation.

[Dr Whitehead]

I am afraid I handed my copy of the Ofgem letter to Hansard, but my understanding of that letter is that although it relates primarily to domestic licences, there is reference to the European codes and what they represent. That is not surprising inasmuch as the European codes are intended to underpin domestic licences in any event. Therefore, what Ofgem said about whether those changes would be necessary on exit day relates to what is half in and half out of the legislation and what is completely in the legislation. That has a bearing on whether those changes are made immediately or at the end of negotiations.

[Claire Perry]

Again, I think we should all take comfort from that Ofgem letter, which suggests that the markets will operate smoothly, even without these changes. It is a prudent Government who ensure that we transpose relevant codes, as we said we would, where we believe there is a potential threat. We do not want to trouble a Committee in future months to make those changes; a potential change might come up as a result of the governance gap once we leave the EU.

The hon. Gentleman raised an important point about the single energy market in Northern Ireland, which is a critical element of ensuring that we have a smooth-functioning energy system. The substance of the codes created after exit day will be the same; these amendments are needed only to reflect the life of the UK outside the EU. This statutory instrument does not directly relate to the single energy market.

It is the same point with interconnectors: they work under access agreements, as the hon. Gentleman knows. There are already potential changes in elements of the markets on both sides of the interconnector. The amendments we are bringing forward do not materially affect any of those interconnector contracts—as he knows, they are commercial decisions that essentially flow when the price signal is right, rather than Government decisions to bring forward supply.

[Dr Whitehead]

The Minister is right to distinguish interconnection from integrated market arrangements. Other than a brief response to an intervention, I did not mention the question of interconnectors in this context. In EirGrid, what is in place is the integration of what were previously interconnections into a single seamless grid. The question is not the relationship between interconnectors in Northern Ireland and the Republic of Ireland, but the status of an entirely integrated single grid system that is different from an internal energy market, which is another matter that presumably we need to deal with in a different way. There is a specific question here of an interconnection arrangement transformed into a single network, and the relationship with sets of codes on either side of what is not a border at all as far as EirGrid is concerned.

[Claire Perry]

Allow me to remind the hon. Gentleman that we are talking about the existing set of network codes being transposed, and making provision for codes that have already been announced and will come into place post our departure date, to ensure that we do not end up with a different set of codes. It will be our sovereign decision, should we wish to change any aspects of our energy market. We would expect to do that in proper and full negotiation with our EU friends and partners or companies involved in that process. In a way, we are talking about ensuring there is complete continuity, because we are talking about codes that are already announced.

[Dr Whitehead]

This SI repeals those part codes.

[Claire Perry]

No, it does not repeal the part codes; it essentially suggests that we will bring into force those codes that are announced but not yet in place on exit day.

I have set out that the instrument is one of a very large number of SIs that my Department will introduce to ensure that we have a smooth and orderly departure and that we are fully prepared in the event of a no-deal scenario. I hope that we scrutinise those instruments adequately. However, the hon. Member for Southampton, Test asked me why we are not setting out the full legislative programme that we would want to engage in were we to change any element of the legislation. I am not aware of any piece of legislation we go through where we ask how we would subsequently debate it were we to decide to amend it in the future. Frankly, that is probably an ask too far, given that the House voted to trigger article 50 and to start the process.

My No. 1 focus is ensuring that we have a very smooth EU exit for our energy system, to maintain security of supply and low prices and to ensure that the price cap Bill applies. I appreciate the hon. Gentleman’s frustration about being unable to amend the legislation, but if we are to re-run arguments about referendums and have arguments about how we might introduce future legislation when we are debating very technical and narrow changes to existing EU acquis being transposed into UK law, we are in for a very long and jolly autumn and winter. Of course, it would be a pleasure to share that with my friends on both sides of the House, but our constituents might not thank us for doing so. I commend the regulations to the House.

Question put.

Division 1

Ayes: 9

---

Conservative: 9

Noes: 8

---

Labour: 7
Scottish National Party: 1

[Dr Whitehead]

On a point of order, Sir David. I crave your indulgence in placing on the record that the explanatory memorandum states:

“It is therefore intended to revoke those provisions from exit day by regulations under section 8(1) of the Act. Those revocations will be made in a separate instrument.”

To my reading, that indicates that where provisions are not entirely established, it is the Government’s intention to revoke them and introduce a separate instrument amending them. That was the substance of the point that I made during the debate.

[The Chair]

That is not really a matter for the Chair, but it is noted.

Resolved,

That the Committee has considered the draft Electricity and Gas (Powers to Make Subordinate Legislation) (Amendment) (EU Exit) Regulations 2018.

Draft Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018

Alan Whitehead Excerpts

Thursday 25th October 2018 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Stringer. I am just getting over the title of the statutory instrument this morning; I concur with the Minister that they are beginning to set new records in sub-clauses and brackets. Perhaps we should keep a running tally, for reporting purposes, of the length of the titles of statutory instruments.

The essential element of this statutory instrument is what companies should do to report their emissions, energy use and various other matters. I completely concur with the Minister that reporting arrangements provide sunlight as a disinfectant. It is right that a scheme should allow that to happen. There was a previous scheme that allowed that to happen under the original carbon reduction commitment. The CRC arose from the Climate Change Act 2008; in its design, it not only required reporting but had a trading element, which was sub-traded between companies. It allowed an extension of the trading arrangements alongside reporting arrangements, which had originally been envisaged in the Climate Change Act for larger companies.

The CRC was systematically whittled away by various measures as it progressed: first by the end of the trading arrangements with companies; secondly by the element of the CRC that not only provided for reporting but for reporting league tables to be produced by the Environment Agency, to allow comparisons of companies’ performance. As the Minister has said, it also provided direct sunlight on to those companies’ activities by comparing them with others.

The third whittling away was the complete closing down of the CRC. It will finish in the 2018-19 reporting period and will be the end of the CRC as a whole. This replacement arrangement for the reporting elements of the CRC is very welcome, but it is the least one might expect following the closure of the CRC. Yes, in introducing additional requirements to the climate change levy on smaller companies the Government have introduced an element of revenue-neutral arrangements for trading, but the arrangements are a welcome successor to the reporting arrangements under the CRC. To some extent they extend those reporting arrangements, as a substantial number of non-quoted companies will now be included. Some 11,000 companies will be required to put these directors’ reports in their company filing.

The problem that we still have is that there appears to be nothing in this particular SI that requires or indicates what will be done with that material once it appears in directors’ reports. At the very least, I would expect spreadsheet reporting, perhaps through the Environment Agency, of collated versions of those company reports. At the very best, I would expect a new league table of those performances, using that data and reporting nationally. There is nothing in the SI that suggests that that will be the case, so the sunlight is apparently somewhat filtered.

A person can get the comparative material coming out of those companies’ reporting, but only if they trawl through every single directors’ report and sit there with a towel on their head for weeks on end trying to put those into line. The original CRC reporting and league table reporting substantially resolved that problem and was widely welcomed when it was originally published.

The slightly alarming backdrop to that is that league tables are theoretically available for company reporting from 2010 to 2012 under the original CRC arrangements. However, were someone to look them up, they would find that they do not exist. They have been deleted. There is not very much sunlight at all so far as historic CRC reporting is concerned. I warmly welcome the introduction of the reporting arrangements, but can the Minister tell me what her Department’s intentions are concerning the presentation of the material in collated form by Government? Better still, can she tell me whether there are any arrangements in hand or proposed for producing, as was the case with the original CRC, some form of league table presentation of those results? It may be that there are separate intentions that are not represented in this SI. If there are, I would very much like to hear about them this morning.

My final request is for the Minister to arrange to ensure that those original CRC league tables are restored to the public record. That would be a good idea because it is not satisfactory that they have been deleted, as they appear to have been. I would be grateful for the Minister’s assistance in getting those back into the public domain.

HELMS and the Green Deal

Alan Whitehead Excerpts

Tuesday 23rd October 2018 Westminster Hall

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

This debate revolves around a number of issues—not just the question of one rogue company, but wider issues relating to the nature of the green deal programme when it was set up, what it decided to do with regard to redress arrangements, how the relationship of payment to reward was set up, and various other issues. That positions the debate firmly as being about the Government’s response to a number of these issues, not just the legal responses to a particular company that has clearly acted reprehensibly in engaging customers in deals that were anything but green and anything but advantageous to them.

I therefore congratulate the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) on securing this important debate. It is a debate that goes back to when the green deal was set up in the first place, with the Energy Act 2011. As the hon. Member for Kilmarnock and Loudoun (Alan Brown) observed, the current Energy Minister participated as a member of the Bill Committee. I think the hon. Gentleman will also be aware that I, too, was a member of that Committee, and many of the issues that have been raised this morning concerning aspects of the green deal were raised during the process of bringing the Act into being.

One particular issue that I and others raised during passage of that Act was the concept of the golden rule in the green deal. The central selling point was that people would never pay more than they would get back in savings from arrangements relating to the green deal—what they would save as a result of green deal treatments would always be greater than what they paid up front.

It was pointed out during the passage of the 2011 Act that that idea was an elastic concept, and that it was always going to be difficult to get the right balance in the relationship between payments and savings. It is that aspect of the green deal that HELMS appears to have taken particular advantage of. In fact, it is fair to say that the company systematically exploited every single weakness in the green deal in its approach to customers. It took not only all the feed-in tariff from customers, but the export tariff, which it put into a separate company. It made a lot of money out of that process, because the feed-in tariff at that point was pretty generous to customers, yet it still engaged customers in loans for those properties.

The hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Glasgow North East (Mr Sweeney) have mentioned just how many of their constituents were systematically victimised by this scam. They were victims not only of a scam, but of a scam that appeared to them to have been authorised by the Government. During the passage of the 2011 Act, considerable efforts were made to ensure that the green deal was authorisable by Government, but not enough efforts were made subsequently to ensure that what was authorisable by Government was actually sound and authorised by Government. As hon. Members have mentioned, in the early stages a number of companies such as HELMS were praised by Ministers as great examples of companies that could be properly authorised and could safely go around carrying out green deal arrangements.

As hon. Members know, the green deal was a complete fiasco and was closed down by the Government shortly after they took office following the 2015 election. Members may recall a former Energy Minister saying that he would not sleep at night unless millions of people had taken up the green deal. The number who did turned out to be only a tiny proportion of those who would have taken up the green deal. The interest rate on the loans was clearly a big factor in the low take-up. Indeed, as Members have attested to today, it is a factor in the overhanging loans that a number of people have, for up to 25 years, as a result of the mis-selling by HELMS and one or two other companies. This is not a happy tale at all. What we have heard about today are particular aspects of a wider scheme that was pretty flawed in both concept and execution.

Of course, on top of that is the fact that the Government not only withdrew from the green deal but then sold the whole loan book to a private company, the Green Deal Finance Company. It is now landed with a number of complaints, because the Government are effectively saying, “It’s nothing to do with us; it’s the Green Deal Finance Company, a private company.” It is fair to say, as hon. Members have reflected on, that the company is trying to do something about the overhanging debts that a number of people have as a result of being on the green deal loan book. Indeed, there are several reports of the Green Deal Finance Company reducing the loan debt of particular people to a level at which it does match the requirements of the golden rule, so that they are not continuing to pay more on their bills than they are saving in energy charges. But that is only scratching the surface, because only a few people have been dealt with in that positive way by the Green Deal Finance Company. There is clearly a much wider issue, which relates back to how the green deal was set up. A redress system was not built into the green deal as it unfolded, and the mess that resulted from those shortcomings is still with us today.

It is incumbent on the Government to take much greater responsibility for their own mess, for the consequences of the weaknesses in the green deal as it came forward, and certainly in the case of HELMS, a company that the Government were talking up, shall we say, until fairly shortly before it went out of business, with all the problems attached to that. I look forward to hearing from the Minister today what proposals the Government have to take this matter forward in a positive way. I note that, in answer to a written question at the beginning of the year, the Government said that they were actively involved with bodies relevant to this issue and hoped that there would be a resolution. I would be interested to know the bodies with which the Government have been involved in discussions, what they think would be an active resolution to this issue and how they are progressing with that active resolution.

My personal view is that it is imperative that some active resolution is brought about across the board, because this is a reputational issue for any future energy efficiency or home improvement scheme. If customers engaging with those schemes have no confidence in the schemes working, they will not happen. It is absolutely imperative that we get energy efficiency and green energy schemes going in this country as part of the challenge of decarbonising our energy systems and uprating the energy efficiency of homes across the country. It is important that that gets under way for the future with a clean slate and a clean bill of health for what is being done.

It is therefore incumbent on the Government, in order to foster good will towards future energy efficiency schemes and to put right the wrongs of the past, to actively engage in finding solutions to the problems of mis-selling that we have heard about this morning and to consider the wider issue of the deficiencies of the green deal scheme and the need to ensure that we get it right for any successor schemes, whether privately or publicly funded, in future.

Draft Electricity and Gas (Energy Company Obligation) Order 2018

Alan Whitehead Excerpts

Monday 22nd October 2018 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Walker. This is not any ordinary order; it is a complete ECO scheme in a box. The entire ECO3 scheme is there—all in one statutory instrument. As far as I understand, when and if the order is passed, the work of implementing ECO3 will be done and it will go ahead.

It is important, therefore, to talk about the entirety of the ECO scheme in the order and to compare it with the ECO schemes that went before it and with the programmes that went before them. We should consider what is at the heart of the order and ask: what are we in the UK doing about the appalling state of our homes and their energy efficiency, and what measures are we taking to bring the energy efficiency of those properties up to a decent standard?

[Mr Mark Prisk (Hertford and Stortford) (Con)]

I am unclear as to whether the hon. Gentleman thinks that the measure is sharply distinguished from the original scheme that he mentioned. I am concerned about the impact on fuel poverty not only in important areas such as Cornwall, but in areas that are often not defined as being in fuel poverty, such as Hertfordshire. What is his view of the comparative benefits of the two?

[Dr Whitehead]

The essential point about the overall aim of ECO is that it should be concerned with all those issues—with urban and rural fuel poverty and with bringing properties up to a decent level of energy efficiency to ensure that our properties are in a fit and good state with regard to climate change and energy use changes.

The concentration on fuel poverty could solve those wider issues to some extent, providing that the scheme is large enough to enable that to happen. We know that people living in fuel poverty are disproportionately concentrated in properties that have low energy efficiency. In the private rented sector in particular, a large proportion of properties are in bands E, F and G. A large proportion of people living in fuel poverty are in that tenure and in those property efficiency bands. In principle, concentrating on fuel poverty is a good way of targeting the wider issues, as long as enough other things are happening within the scheme. It all depends on the overall status of the scheme.

Several good things have happened between ECO2 and ECO3. I commend the Government’s decision to reduce the obligation threshold for suppliers. A large number of energy supply companies fall just below the current level of 250,000 accounts and are therefore not obliged to undertake any ECO measures. Problems also arise in respect of whether people who switch are eligible for certain schemes. Within a short period, the obligation threshold will be reduced from 250,000 accounts to 150,000, which is a Good Thing, with a capital G and a capital T. I thoroughly support it.

[Claire Perry]

I am craving support today. Does the hon. Gentleman support another measure, namely that which ensures that switching websites make it clear to people in receipt of discounts, such as the warm home discount, that they might lose them if they switch? We want to provide as much transparency in the system as possible, as well as to tackle supplier inflation. I hope that that is also a Good Thing.

[Dr Whitehead]

Indeed it is. As the Minister knows, I have been banging on about that problem for quite a while.

[Claire Perry]

And I have been listening.

[Dr Whitehead]

I also agree with increasing to 25% the proportion of the obligation that can be met through flexible eligibility. As the Minister mentioned, local authorities often know more than most about the whereabouts and construction of the property stock in their area, so involving them in that way is a very positive move. Does she think that such an arrangement could lead to area-based schemes being headed up by local authorities as part of the obligation? She will be aware that ECO has been criticised because its set-up means that energy companies go out to find individuals and treat their homes but do not capture those next door or down the road who are in the same position. Does she think that flexible eligibility arrangements could lead to a better system of area-based activity?

I am not too impressed with the reduction in solid wall treatments in the ECO scheme; that is not a progressive arrangement as far as ECO3 is concerned. We really have to get stuck in to solid wall insulation across the country. There are 8 million solid wall properties in the UK, and solid walls are one of the property elements least treated for energy efficiency, so reducing the target from 24,000 to 17,000 is a retrograde step.

As I mentioned, I support in principle the idea of increasing the concentration on fuel poverty. However, we have to note, at least in passing, that it is one thing to concentrate a scheme on fuel poverty, but if that happens at the expense of all other aspects of the scheme, which is what has happened on this occasion, I am not sure that we will get the whole picture as far as energy efficiency is concerned.

I give two cheers for placing greater emphasis on fuel poverty, but I am concerned about the overall aspects of ECO, which is where that concentrated effort on fuel poverty sits. The Committee on Fuel Poverty has indicated that even that concentration on fuel poverty will not be sufficient to reach current statutory fuel poverty targets. That is a reflection of the overall size of the scheme and its ambitions within its overall setting.

On that overall setting, we need to be clear on two things. First, as the Minister has said, this measure should be placed in the context of the clean growth strategy’s current ambition in respect of the energy efficiency of existing buildings. It is extremely important to note that some 80% of existing buildings will still be here in 2050, and their energy efficiency may need to be uprated so that they do not need to be treated again before then. We cannot get going with energy efficiency in properties simply by building more energy efficient homes; we need to deal with existing homes.

Indeed, the Government’s clean growth strategy document makes clear their ambitions in that respect, stating:

“To achieve this 2032 pathway, we will need to ensure existing buildings waste even less energy. This pathway could see a further six to nine million properties insulated, especially focusing on those in fuel poverty where we are aiming to have the 2.5 million fuel poor homes in England improved to energy efficiency rating C or better by 2030. More broadly, our aspiration is that as many homes as possible are improved to EPC Band C by 2035, where practical, cost-effective and affordable.”

It is salutary to consider that ambition in the context of what ECO was and what it has become. When it was first introduced in 2013, ECO represented a change from the previous Government’s programmes—namely the carbon emissions reduction target, the community energy saving programme and the Warm Front scheme—which had made a demonstrable difference to the standard assessment procedure ratings of properties. If we look at the SAP ratings in household condition surveys carried out on properties when those schemes were in place, we will see that they improved substantially.

By the time they came to an end, CERT, CESP and Warm Front came to a combined Government, taxpayers’ spend of about £1.6 billion a year. ECO is essentially a market-based scheme and is set against customer bills; it was not described as such, but energy companies basically recovered their obligation through customer bills.

The first ECO that came in reduced that overall ambition to £1.12 billion per annum. That was the only spending on energy efficiency in homes at that particular point in 2013, and that was reduced further when ECO 2 came in, to £0.87 billion per annum. Not surprisingly, that meant that over the period there has been something like a 50% to 60% reduction in overall spend on energy efficiency measures and, as the Association for the Conservation of Energy has pointed out, in the period from the early 2010s up to the present, there has been something like an 80% reduction in energy efficiency measures in homes. ECO has presided over not just a substantial reduction but a crash in energy efficiency measures over that period. ECO3 is coming forward, and the obligation figure—which is in the SI, so it is not an imagined figure—is £0.64 billion. That is a halving of overall energy efficiency measures since ECO was first introduced, and since the further reduction that took place when the schemes put in place by the previous Labour Government came to an end.

If we set that ambition—or, should I say, lack of ambition—against the aspirations in the clean growth plan, we can clearly see that even if ECO3 is extended to 2028, as the Government has said and the Minister mentioned, at the present level, it will fail miserably to get anywhere near those aspirations. Will the Minister explain why she is advocating an ECO programme that will signally fail to get anywhere near those ambitions, and whether she has a host of new schemes in her pocket that could help to meet them. If we go to 2022 with ECO at its present level, even with the changes that have been made, and then agree that ECO will continue at that level to 2028, we will get nowhere near those targets. Not only that, but we will miss our one chance to get properties uprated over the next period in line with what the fourth and fifth carbon budgets tell us about the number of properties that need to be uprated. We will fail to make the contribution to energy efficiency, decreasing fuel use and reducing fuel poverty that will help develop an economy in which energy production is both energy efficient and low in carbon.

I am afraid that the Opposition cannot support the scheme in its present form. We have been developing policies that seek to insulate and uprate the energy efficiency of approximately 4 million homes per Government term, for at least two terms over the next 10 to 12 years. That sort of level is necessary to get anywhere near our carbon budgets—and, by the way, our scheme will not be done on the basis of an obligation. As with previous CERT schemes, it has to be done on the basis of all of us putting money into those schemes, to achieve the public good of energy improvement in properties. I am afraid that the market-based arrangements in the instrument will not get us anywhere near our goal. As I say, it would be good if the Minister were able to comfort me somewhat by saying, “We have a load of stuff that we have not told you about yet, which is going to meet the aspirations we set out so eloquently in the clean growth strategy. ECO3 is going to be part of that.” If that were the case, I might be willing to take a slightly different view of the instrument, but my understanding is that as far as energy efficiency in homes is concerned, this is the only show in town. If that show were a theatre production, it would close after three performances.

I am afraid that the Minister will not have the support of the Opposition this afternoon, although she has my personal support on a number of the changes she has sought to make within the existing ECO envelope on how ECO works. Overall, the scheme is not good enough; it is not good enough now, and it certainly will not be good enough by 2028, which is only four years away from the 2032 target. Really, the Minister has to go away and think through a number of measures that can get us there and come back and tell us what they are, so that we can all sit down together and sort out how we are going to get to the goal we all want to reach on energy efficiency in buildings.

--- Later in debate ---

[Claire Perry]

I thank Members for their interesting set of points. I welcome the support of the hon. Member for Southampton, Test for some of the measures in the scheme. To answer his question about whether the area-based approach allows us to deal with more than one household at a time, the answer is yes, we are encouraging infill measures for certain installations.

The hon. Gentleman asked about solid walls, which links to some of the other points. As he will know, solid wall insulation is one of the most expensive measures, costing an average of £8,000 a household. Historically, ECO has not been as focused on fuel poverty. Indeed, I have been told that one of the criticisms of ECO was that it was buying LED lightbulbs for rich people, which is not something that Government or bill payers’ money should be in the business of doing. With solid wall insulation, many of the contributions have been topped up with householder contributions. Clearly the households we want to be helping with this scheme will not be able to do that.

That is why the number has been cut, but it is also why we have encouraged installers to think more creatively. Often the benefits from solid wall insulation can be achieved by under-floor insulation, using the amazing Q-Bot robot that the BEIS innovation money has funded, or by better loft insulation or improvements in windows. Rather than just having a one-size-fits-all proposal, the idea is that many other measures can be delivered.

I can tell by the way that Opposition Members are whipped that, regardless of what I say, the hon. Gentleman will press the order to a vote, but let me at least have a try. He will know, because he is a very intelligent man, that the challenge with these schemes is to balance the carbon reduction against the cost and whom it falls on, and the creation of a competitive advantage. The Government should direct funding—whether taxpayers’ money or, as in this case, bill payers’ money—in a way that creates better products by pushing a particular market. The challenge is that, while we have been rolling out ECO, there has been a precipitous decline in the cost of some energy-saving measures. The cost of LED lightbulbs is down 80%. That was nothing to do with ECO; somebody just figured out how to make them much more energy efficient. I imagine that most people in this room have fitted at least one LED lightbulb in their home, not because the Government have suggested that they should get money for doing so, but because it saves them money on their energy bills.

The missing piece in what the hon. Gentleman was saying—he said that this is nowhere near enough, and that we need to spend more just to do the same—is that there have been dramatic price falls for many products, but not for those that this scheme has supported. This scheme, in focusing in on tried-and-tested technologies such as cavity wall insulation, has led to very little innovation. Look at what is happening around the world. Thermal paint, for example, can help with the heating and cooling of a property, but we ain’t doing none of that in this country using ECO money or other forms of money.

We are directing £0.64 billion a year into these measures. We must focus that on innovation to ensure we develop new products. We could support products such as home thermostat systems. I am not allowed to mention brand names, but smart thermostats can make a dramatic improvement in a home’s energy efficiency and can lead to bill savings—we want people to save money, as well as have a warmer home. They have not been supported by the scheme, even though they can save people substantial amounts. The purpose behind the scheme is to do something to drive down the cost of those products so more people can buy them, benefit from the energy efficiency savings and potentially invest their own money in the scheme if they can afford it.

[Dr Whitehead]

Will the Minister reflect on whether the cost per treatment of the innovations she is talking about has overcome the more than 50% loss in funding for ECO schemes since they were first introduced?

[Claire Perry]

If the scheme can pivot away from extremely expensive, highly interventionist measures, and deliver many more measures that in aggregate have the same cost, that would be a good outcome. The hon. Gentleman says that the Labour party has all these grand plans, but I see no evidence, as always with the Labour party, about how they will be paid for and who will bear the burden. He and I spent many a happy hour debating the price cap Bill. We know that consumers want warm homes and the eradication of fuel poverty, but do not want to overpay for their electricity or gas. I have a sneaking suspicion that the Labour party’s uncosted plans would inevitably lead to whacked up consumer bills and taxes.

[Dr Whitehead]

indicated dissent.

[Claire Perry]

But no one has ever said how Labour will pay for any of this stuff—including the shadow Chancellor—so it is all ambitious pie in the sky as far as I am concerned. What we need to do is to balance continually the cost of what we are doing, the carbon dioxide reduction and the competitive advantage, because by solving our own problems in the UK we can help to solve the world’s problems.

Unlike the Labour party, I do not have a quiver full of magic arrows and the promise of a unicorn at the end of every garden. What I have is a serious and sober set of policies, based on regulation. As the hon. Gentleman knows, we have already regulated for an improvement of the energy efficiency of the worst-performing private rented homes in the market. Those regulations are in force, and we think they will have a material impact.

We are rolling out the world’s biggest smart meter programme. Why do people get smart meters? Because they want to take control of their energy, and because smart meters help them to reduce their energy consumption. By the end of 2020, every home in the country will be offered a smart meter, or an upgraded smart meter if they already have one, to ensure that there is no interruption of data.

We are investing our own money. Sorry—the Government do not have any money of our own; it is always other people’s money. That is another lesson for the Labour party. We are investing other people’s money in energy efficiency measures in many parts of the housing stock right across the country. I am also told that increasingly large sums of money are coming particularly from pension funds and other private sector investors who want to invest in such things because doing so is good for their investment return.

I want to create markets that invest in the right sorts of technologies and that bring in the greatest amount of capital. The hon. Gentleman knows, although his Front-Bench colleagues do not, that Governments can never take enough in taxes or control enough of the economy to make a difference by themselves. We always have to incentivise others to innovate and to invest. Another quiver in our bow is the £2.5 billion of innovation money that I am putting into the smart energy space over the course of this Parliament—money that is targeted to get costs down, get carbon down, and build a competitive advantage.

I am disappointed that I am unable to persuade the hon. Gentleman to support what I think is a very sensible set of measures, which manage not to overburden consumers, who are paying for them, and manage to take a scheme that has for too long not focused on helping those who are in the worst financial straits or living in fuel poverty, often in rural areas, and will then drive up innovation and the level of local flexibility, which will mean that the scheme is better targeted.

I conclude by addressing the point made by the hon. Member for North Ayrshire and Arran. We already have many co-operative energy companies running south of the border. There is no barrier to one being set up. If an energy company wants to start up and focus entirely on that issue, that is absolutely fine. She knows that I applaud what is being done by the devolved Administrations, but energy bills and large amounts of energy policy are set and, in many cases, paid for by Westminster taxpayers. It is good to see the innovation, but she should never forget who is actually paying for much of the innovation that we are seeing north of the border.