Energy Trilemma
Alan Whitehead Excerpts(1 year, 8 months ago)
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Dr Kieran Mullan (Crewe and Nantwich) (Con)
I shall be happy to accommodate your request, Mr Deputy Speaker.
I thank my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) for securing the debate. Her framing of this issue—her description of it as an energy trilemma—is typical of her shrewd and clear thinking: it does an excellent job of setting out the nature of the challenge. I was delighted to be able to feed into the report that she produced, along with my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon), on deep geothermal and mine water technology.
This issue is more important than ever. The western world has come to learn, in an abrupt and challenging way, the cost of relying on states such as Russia for energy supplies. The record of Europe in this regard, and that of Germany in particular, will be viewed through the long lens of history as naive, and I am glad to see Europe now united in understanding the importance of prioritising our security—energy or otherwise.
I know that these Backbench Business debates are held in a less party political spirit than others, but I must say that I have been surprised by what the Opposition have had to say about this issue in recent months. Let me remind them, and the House as a whole, that it was Tony Blair who said, during an EU-Russia investment conference that he chaired in 2005, that increasing reliance on Russian oil and gas was not something to be concerned about. Both Mr Putin and Mr Blair insisted that the EU’s growing reliance on Russia for energy would not compromise the ability of EU leaders to express concerns, and that our economic futures were “bound together”. Opposition Members should remember that.
I have also noted with interest that it seems that the original Captain Hindsight, the Leader of the Opposition, has now been joined by a lieutenant in the form of the shadow Energy Secretary, whom I notified that I would mention him. When I looked through Hansard to find his contributions over the last few years, I was shocked to discover that he had not spoken about energy security in 2021, or in 2020, or in 2019; in fact, he had not spoken about it for 10 years when he finally did so in March 2022. Maybe he has spoken about it elsewhere and I have missed it. I can, however, confirm that the shadow Minister has been much more successful in that regard, raising the matter repeatedly. Perhaps he should put in for a job from the Leader of the Opposition.
Dr Alan Whitehead (Southampton, Test) (Lab)
Would the hon. Member like an edited copy of the speeches that I have made about energy security over the years? I think he might find something useful there.
Dr Mullan
As I explained, the hon. Member has a good track record. I was talking about the shadow Energy Secretary—as he was called until recently. I apologise if I did not make myself clear; I thought that I had. As I said, I think the Opposition should be cautious in their criticism of us. I make that point not to suggest that they have been unacceptably slow in this regard, but to show how, across the western world, we politicians have been too slow to recognise the danger and too quick to work with Russia.
As my right hon. Friend the Member for South Northamptonshire clearly laid out, we must find a path forward. Many of us in the House have advocated a variety of approaches, and I encourage the Government to be ambitious and innovative. I want to use the rest of my speech to talk about one technology that I think can help us meet the demand of the energy trilemma: deep geothermal heat and energy.
Deep geothermal heat and energy is an environmentally friendly, dependable and cost-effective source of heat and energy that can be found right under our feet. The technology is based on relatively simple concepts: first, that heat radiates from the earth’s interior; secondly, that while it dissipates once it reaches the surface, the heat remains significant at depths accessible with current drilling technology; and thirdly, that water can be used to absorb and transmit that heat to the surface.
Those mechanisms are what heat hot springs, most famously demonstrated in the UK by the Roman baths. Iceland has uniquely conducive geology and enjoys vast utilisation of geothermal energy. While natural occurrences of any significance are relatively rare, boreholes can be drilled to access this natural resource.
Deep geothermal energy heats 250,000 homes in Paris, and across France more than 600 MWh of heat is produced annually as the Government aim to increase the number of schemes by 40% by 2030. Munich is pouring in €1 billion through to 2035 to develop geothermal energy and make the city’s heating carbon neutral. Germany already produces more than 350 MWh of heat annually, and its Government are targeting at least 100 new geothermal projects.
The primary method by which we assess the scale of the opportunity for geothermal heat in Great Britain is geological temperature data collected from petroleum borehole data, mining records and a number of boreholes drilled as part of geothermal studies. I have been introduced to deep geothermal technology since my election as Member of Parliament for Crewe and Nantwich in December 2019, and my research has encouraged me to see its potential. Theoretically, it is able to provide enough heat energy to meet all our heating needs for at least 100 years, and even a conservative estimate of what we could utilise suggests that it could provide 15,000 GWh of heat for the UK by 2050.
In the UK, perhaps because of our past success in drilling for oil and gas and our status as a world leader for cheap wind and solar, we have fallen further behind on geothermal. But getting to net zero by 2050 in such a way that we share the proceeds of investment and utilise as much of our existing skills and workforce as possible will require us to pull every lever, and deep geothermal is an important one that will help us in the transition from oil and gas with our existing industries.
Like wind and solar were at the outset, schemes in Europe have been supported by things such as insurance and incentive schemes from Governments. I think it is the lack of such schemes in the UK that has led us to fall behind. I do not think the industry is asking for the open-ended subsidies that were originally in place for wind and solar, but a time-limited, targeted scheme of support would make a difference. I was pleased to see the set-aside in contracts for difference for tidal power and the green gas support scheme, which mirror the sort of thing that the industry is asking for.
I was delighted to be asked by the Prime Minister to conduct a review of geothermal technology and its potential in the UK. I am pleased to say that the first draft has been completed, and the report should be published shortly. It contains interesting figures on the potential overlap with levelling up, and I look forward to sharing the findings with the Secretary of State and the rest of the ministerial team.
Whether the technology is deep geothermal or nuclear, tidal or hydrogen, there are opportunities to create jobs, grow our economy and make us more secure. I look forward to seeing us drive this agenda forward, for the benefit of my constituency and the whole country.
Dr Alan Whitehead (Southampton, Test) (Lab)
This has been an interesting debate, and I congratulate the right hon. Member for South Northamptonshire (Dame Andrea Leadsom) on securing it. I thought that it was about tackling the energy trilemma, so I have prepared all sorts of interesting things about the energy trilemma and how it works. However, although the contributions have been interesting, the debate has not necessarily been about the energy trilemma.
The right hon. Lady spent a lot of her contribution talking about the 1922 Back-Bench committee report on energy, which sounds very interesting. Indeed, it appears to contain quite crucial insights, particularly on the need for speeding up the planning system as far as grid development is concerned, speeding up connections, and developing new connections and ring main in offshore wind. As far as I am concerned, those things are crucial to delivering the rest of our green agenda. I can offer her a slogan, “no transition without transmission”, which she might want to put on the front of a future report. They are crucial insights, and it would be a good idea for her to provide a submission to the Labour party national policy forum on this, because she would get a better hearing than she would from the present Government.
The right hon. Lady mentioned the three-legged stool. This is about how we achieve our net zero outcomes while taking the whole question of affordability and of energy security along with us as we go. This is not a zero-sum game. It is not the case that if we consider affordability and security, we take away from our net zero ambitions. After all, we in this House already decided which of those legs we are going for most strongly when we decided on net zero as our target as far as climate change is concerned. That means we have to consider the energy trilemma from the point of view of not whether we will get there but how we can get there with those other matters being taken into account.
I would prefer to put the question of energy security into a slightly different mode, and that is the one it was put in by the World Energy Council, which has done a lot of work on the energy trilemma as a tool for deciding how we make progress in these areas together. It has produced an isosceles triangle—I am confident that the word “isosceles” has not been recorded in Hansard before—that has spines going to the centre of it, and we can advance further along to each corner from the centre with various elements of the energy trilemma in it. We have decided to advance substantially down the left-hand spine, which is the sustainability part of the triangle. The job we have to do is make sure that what happens with the other two legs does not draw back the sustainability leg but enhances it, which is exactly the point that the hon. Member for Kilmarnock and Loudoun (Alan Brown) made.
It also means we have to take decisions in other areas that are compatible with the particular length of spine we have gone down on that triangle. I would politely say to the hon. Member for Banff and Buchan (David Duguid) that, while it may be the case that the hydrocarbons we bring into the UK are more carbon-intensive than the ones we produce in the UK for transport reasons and others, they are still hydrocarbons. With what we have decided, yes, we are going to need oil and gas in our future economy, but in far smaller quantities than is the case in our economy at the moment. We have to think about the right use for oil and gas in our future energy economy, making sure that as much of that as possible is produced in the UK as opposed to importing, but also that the total that we have coming into the economy as a whole is compatible with that net zero goal on the left leg of the sustainability triangle.
David Duguid
I appreciate the hon. Gentleman giving me the chance to come back on that point. Surely he will recognise, as I think he did in his statement just now, that there will be a gap for some time, and that we need to keep that gap closed. As rapidly as we all want renewable and low-carbon energy to be developed, we need to make sure that that gap is closed, and that we do not become even more dependent on foreign imports than we already are.
Dr Whitehead
The hon. Gentleman is absolutely right: we should not be dependent on foreign imports. However, we need to be thinking about a long-term overall reduction in what we are doing. I do not think that simply saying, “We’re going to increase oil and gas production over the next period” is an answer to our present problems, because in the end, that is incompatible with the commitments we have made on net zero. We cannot go down that path in the long-term future.
Dr Mullan
I was pleased to hear the hon. Gentleman say that he agrees that we should do as much of our own energy production as possible in the meantime, during the transition. Is that the official Labour party position—that we should be doing more oil and gas in this country while we’ve got to still be using it?
Dr Whitehead
No, what I said was that we should be trying to make sure that the reduced amounts of oil and gas that, in the end, we use in our system are as indigenous as they can be. That does not mean that we increase oil and gas production overall. We have to make sure that what we are doing in terms of our route to net zero and our energy provision for the future is secure and affordable.
For example, we are, I hope, on track to make our energy economy—for power—based pretty wholly on renewables. Certainly, that is a Labour target for 2030; I think the official Government target is 2035. Of course, as hon. Members have mentioned, that means that we have to take account of what the issue is for variables in that energy economy. But, we should not back those up with a whole lot more oil and gas; we should back them up with things such as storage, which the hon. Member for Stoke-on-Trent Central (Jo Gideon) mentioned, and methods of making sure that we can use our energy as flexibly as possible. Also, our variability must be accommodated by what we do alongside it to make the overall system work. That is actually working quite well so far, inasmuch as renewable energy is the cheapest form of energy there is at the moment. On the affordability criterion, we really are making progress on that front.
The hon. Member for North Devon (Selaine Saxby) mentioned the Celtic sea. If we expand our offshore renewables into the Celtic sea, we will have a further security addition to what our energy supplies are going to look like, which will make that second leg work very well as well. Those are the sorts of things we need to consider for the future in terms of how we solve the energy trilemma: not going backwards with higher hydrocarbons, but making the lower hydrocarbons that we have work as well as possible.
I was about to denounce the hon. Member for Crewe and Nantwich (Dr Mullan) for being nasty to me, but I gather he was not being nasty to me, but to someone else entirely. I thought he greatly redeemed himself with his passionate espousal of deep geothermal energy, which is bang on. We need to do a lot more work on geothermal energy for precisely the reasons I have mentioned in terms of the energy trilemma in this country, as it is affordable and low carbon at the same time.
I thank hon. Members for this excellent debate this afternoon. By the way, in how we balance out the three legs of the World Energy Council trilemma tool, we are fourth in the world. That may be a free gift to the Minister, but it is something we are not doing badly on in this country as a whole.
Draft Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2023
Alan Whitehead Excerpts(1 year, 9 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
The SI looks very straightforward. It proposes two minor amendments to the qualifying arrangements for the energy-intensive industries exemption scheme, which, as the Minister says, came into force in 2017. It replaced a discount scheme with one in which energy-intensive industries were eligible for a discount of 85% on the green and environmental levies charged to other industries to deal with, for example, the cost of the renewables obligation and contracts for difference.
As the Minister says, the continued eligibility of companies for the scheme was designed to be reviewed by 2022. Some companies’ eligibility may have lapsed because during the pandemic they did not produce to the same extent as they do now, or because they had other arrangements that they needed to carry out that might have infringed on the rules of the scheme. The arrangements proposed today shorten the period for which accounts and various other things need to be provided, so that eligible companies can be judged on the basis of their present performance, rather than their performance over five years.
I would be grateful if the Minister could elucidate other matters relating to the scheme, as they are quite important for our overall judgment of it. First, as she said, the original 2017 EII exemption applied to about 315 eligible businesses. Indeed, the SI that introduced the scheme provided a number of specified activities in sectors exempted because of their energy-intensiveness. However, although she suggested that those 315 businesses now have their eligibility up for renewal, it appears that when the scheme was launched in November 2017, only 170 companies applied. Unless there has been substantial changeover since 2017, and a number of new companies make up the difference between the 315 eligible businesses and the companies that applied, we appear to be short a number of companies—eligible companies that have not yet received the discount on their electricity bills, for reasons that I can only conjecture about. Perhaps they thought applying for the scheme was too difficult, or did not know about it.
We have a potential double problem. The SI suggests that things could be made easier by our relaxing the requirements on companies that are renewing their eligibility. It appears that a number of companies that were in principle eligible for the scheme as it was—not as it is now—still have not got any exemption. With these new reliefs and eligibility requirements, companies not in the scheme could be brought into it. Whether the Government have any positive methods of ensuring that they are brought in, I do not know; the Minister may be able to enlighten us.
In 2017, when the scheme came in, it gave an 85% exemption, but in August 2022 the Government announced that they would take the scheme further and introduce 100% exemption for energy-intensive industries. As far as I know, nothing has happened on implementing that proposal. There was considerable press coverage of the intention to increase the exemption to 100%, but there is very little press coverage of the fact that the Government appear to have done nothing to implement that increase—or if they have, it has passed me by, and it has certainly has not been recorded to any great extent.
If it is still proposed that the 100% scheme will be implemented in the not-too-distant future, that will make a difference to the extent of the exemption arrangement, and to the measures needed to make sure that the scheme is easier to requalify for, so that businesses can get an exemption more valuable than the 85% exemption.
Samantha Dixon (City of Chester) (Lab)
Forgive me if I have misunderstood, Dame Angela, but only this morning, I received a letter from a laundry based in my constituency, which made the point that its energy bills have escalated considerably. It appears—unless I misread the letter—that the laundry sector is not covered by the regulations. Does my hon. Friend agree that laundry—for the tourism trade in my constituency, but also for healthcare operations—is a vital sector that has soaring costs, and needs to not be overlooked?
Dr Whitehead
My hon. Friend makes a very good point that slightly anticipates my third and final question for the Minister. She is quite right, and by coincidence, I have in front of me the complete list of activities that qualify as energy-intensive industries. Laundry and associated activities are not on the list. However, interestingly, the mining of hard coal is. It is curious that those mining hard coal are exempt from all the levies that go towards mitigating the pretty bad things done to the environment through the mining of hard coal. I would have thought that the mining of hard coal should in no way be in the schedule of specified activities. My hon. Friend suggests other things that should be in that schedule and eligible for levy reductions. Does the Minister intend to review the schedule, which dates from 2017, and who is eligible for exemptions? If she does, what will be the criteria for inclusion among energy-intensive industries? If she does not, is she happy that mining hard coal continues to be 85% exempt?
Labour will not oppose this SI, because it represents a sensible change to the scheme and takes account of what happened during covid. I think the Minister will agree, however, that there are questions, some clear and some rather less clear, about the operation of the EII scheme that need answering before we can conclude our business this afternoon.
Amanda Solloway
I thank the hon. Member, as ever, for his valuable and well thought out contribution.
The exemption provides relief for key foundation industries, including companies operating in the steel, paper, chemicals, cement, and glass sectors. The scheme also supports emerging sectors, such as battery manufacturers and companies making semiconductors. The companies that the scheme supports are located across the country and provide high-paid, good-quality jobs, both directly and in the supply chain.
The hon. Member asked about communication. Communication is key in all that we do, and we will endeavour to ensure that we keep on communicating all we are doing to support the industry. The regulations are necessary to improve the operation of the scheme. They will make it easier for start-ups and businesses to apply. They will also allow businesses to account for the impact of covid-19 when applying for relief. We will update and publish our guidance on gov.uk in April 2023 to ensure that business is aware of the relief, and we will proactively engage with stakeholders to ensure that they are aware of the changes. All 320 companies have received a discount, and we know that other companies have already applied. The list of eligible sectors is based on the most electricity and trade-intensive businesses. We continue to engage with industry and other stakeholders to ensure that support is targeted at those sectors most exposed to high electricity costs.
The hon. Member asked about the 100% exemption. On 23 February 2023, the Government announced their intention to move to 100% as part of the British industry supercharger. The delivery mechanisms and timelines for the implementation of the supercharger will be consulted on this spring.
Dr Whitehead
What the Minister says appears to be a reannouncement of what was announced in August and not proceeded with. Is the Minister now saying that the 100% discount is being proceeded with, and will be in place, say, this spring or later on? When does she think that might happen?
Amanda Solloway
To reiterate, the Government announced their intention to move 100% as part of the British industry supercharger on 23 February 2023.
The Chair
Order. Rather than speaking while sitting down, the Member might want to intervene; I am sure the Minister would let him.
Energy
Alan Whitehead Excerpts(1 year, 9 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
As the Minister has said, these statutory instruments deal with alternative fuel payments within the general scope of the domestic energy price guarantee scheme and the non-domestic energy bills support schemes. They deal specifically with circumstances in which the customer does not hold a fuel account directly with the supplier but, either domestically or commercially, is able to secure assistance with energy costs by ensuring that the saving is passed through from the supplier to them. This applies to, for example, park home occupiers or, in business cases, end users such as those who run cafés and guest houses and are lessees of a landlord who pays the bills, and receives the rebate, in the first instance. There will be pass-through payments of £200 for domestic end users and £150 for non-domestic end users. It should be noted that in Northern Ireland alternative fuel payments have been combined with a main payment of £600.
These latest SIs represent what I hope is the end of a long line of provisions for various sub-categories of people for whom we seem to have been legislating for a very long time. However, we ought to note, at least in passing, that this has meant that schemes that were announced in the autumn and were supposed to run for six months are now in the last month of their operation, and some people who should have received support are still waiting for it six months after the scheme started. Lest there be any doubt about that, I can tell the House that in February the Government issued a press release headed “Households, businesses and organisations off the gas grid to receive energy bill support over the coming weeks”, which stated that:
“£200 payments for off grid households start today, while businesses off the grid are expected to receive £150 payments by 10 March”,
which is in three days’ time. I therefore think that the inquiry from the hon. Member for Kilmarnock and Loudoun (Alan Brown) about who had not yet received their payments is rather germane, given what the Government themselves said about the long delays in releasing the payments.
I appreciate that the support schemes have proved difficult to administer, and that there have been repeated instances of new sub-categories of people for whom separate secondary legislation has been necessary to secure the integrity of the schemes, but does the Minister really sit comfortably with the knowledge that a not inconsiderable number of customers, both domestic and non-domestic, did not receive help that was often desperately needed for virtually the whole passage of the scheme itself, and in some instances, as I have said, may not receive support until the middle of the month?
We will not be opposing the SIs. Indeed, we want to see them dispatched so that help, albeit late, can assuredly reach people, particularly those who are relying on pass-through arrangements for relief when they do not receive the up-front sums directly. We are discussing these SIs because—as far as I can see—of defects in the original pass-through SIs, which we have already debated, as reported to the Government by the Joint Committee on Statutory Instruments.
The Committee cited one particular defect in the Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023, which failed to make it clear that support is to be delivered as a single rather than a monthly payment. That has been corrected in the Non-Domestic Alternative Fuel Payment Pass-through Requirement and Amendment Regulations 2023. However, the Committee reported on a second defect in the legislation which I think is potentially serious: namely, the fact that there are requirements in both pass-through SIs for the intermediary in the scheme to notify the end user within 30 days of the provision of the scheme benefit of how and when the pass-through will take place and what amount will be passed through, and convey the important information that the end user can recover amounts to which they are entitled but do not receive as a civil debt.
All the information about how the end user can expect a pass-through benefit should be contained in the information from the intermediary. The Committee noted that no sanction is attached to the provision to cover cases in which the intermediary fails to inform the end user in that way. It seems that the vital part of telling someone that they will receive the benefit or can sue the intermediary if they do not receive it is essentially a voluntary act for the intermediary to perform.
Yes, they should send the information, and yes, the legislation says that they should, but if they do not, nothing will happen to them, and unless the end user is aware of their entitlements, they might remain in complete ignorance of an expected payment. Thus, nothing will happen as far as a payment is concerned. This is in spite of requirements being placed in the main legislation, the Energy Prices Act 2022. Section 10(b) of that Act states that regulations may make provision
“for the payment of a specified amount, on an application made in accordance with the regulations by a person who is an end user of an intermediary, where the intermediary fails to comply with a requirement by virtue of subsection (9) to provide information to the person”.
It is therefore clear in the main legislation what the secondary legislation is intended to achieve.
The Government’s response to the information they received from the Committee on this defect was to decide not to amend their approach and effectively to ignore this provision in the Act. They say so in the explanatory notes to this SI, and it is worth putting the Government’s line of argument for ignoring the main legislation on record. The explanatory notes state:
“Section 19(10)(b) of the Energy Prices Act 2022 provides that pass-through regulations may require an intermediary who is in breach of requirements to provide information to pay a specified amount on application by the end user to a specified person. The Department decided that the incentive for end users to make such an application for payment would have been insufficient given the time and administrative burden involved in doing so. However it is still considered that there is merit in including notification requirements in the instrument. This is on the basis that many intermediaries would be likely to comply with the requirements notwithstanding the lack of an enforcement mechanism.”
Frankly, that is a rather laughable defence for not doing in the secondary legislation what the original Act said should be done.
Is the Minister comfortable with this state of affairs where the secondary legislation has written out a provision contained in the primary legislation and potentially makes the receipt of relief from bills much more capricious in the process? Does she consider that there is arguably a case for action against the Government by those deprived of the information to which they are entitled on the grounds of negligence in doing their own pass-through, which is to pass the requirements of primary legislation into secondary legislation in such a way that it reflects the primary provisions? Clearly these are not in themselves grounds for chucking these SIs out on a vote, but perhaps the Minister should consider, since she is clearly no stranger to SIs, correcting the defects of previous SIs, and consider whether there might be a case for a further correction of these SIs to place the primary and secondary legislation on a watertight footing.
Energy Suppliers: Customer Credit
Alan Whitehead Excerpts(1 year, 10 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
I congratulate the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) on securing the debate. I share hon. Members’ disappointment that the Chamber is not more full this morning, because this issue is really important as regards the overall life of energy companies. Most importantly, as the hon. Member said—I am happy to repeat it—it is not the companies’ money but the customers’ money that is being used in such a way.
We know from the record what the large sum floating about in energy companies’ bank balances is used for—we cannot get an accurate picture, but £9 billion is probably not too far adrift—and we know how disastrous that is on occasion for the overall operation of those companies. Between the middle of 2021 and the summer of last year, we had the unfortunate experience of 28 energy companies going bust. Some research was done into what those bust companies had been doing with credit balances. A company called Oxera, commissioned by Ofgem, did a research project on seven failed energy suppliers that found that most of the companies did not just use credit balances, but were reliant on them for their business models.
Oxera stated that the companies,
“relied on receiving customer balances prior to the provision of services. Suppliers used these prepayments to fund the ongoing costs of the business and to act as a buffer against any short-term shocks. They then relied on growth in the customer base to keep ahead of future liabilities, making the strategy unsustainable in the long term during times when growth slows down”.
This was not just an accident of balances appearing in companies’ accounts because they had not accurately worked out what to do with direct debits. It was an integral part of the companies’ business model—or so they thought at the time—to accelerate their progress by using customers’ money to borrow ahead and fund their expansion, and of course they came horribly adrift as a result of the slowdown in the market.
The SNP spokesman, the hon. Member for Kilmarnock and Loudoun (Alan Brown), underlined the other part of that dreadful arrangement. When those companies went bust, the credit balances that they held had gone. The companies that took over through the supplier of last resort arrangement looked at the books and found that there were no credit balances in the books because the companies had borrowed and then gone bust, and they had to restore the balances to their new customers. That is what they did in most instances, but they then billed Ofgem for the work they had done to restore credit balances to those customers after the companies had gone bust, and they were paid for doing that. Guess who paid for those companies to restore the credit balances? The customer. It was socialised across their bills, so bills went up as a result of companies borrowing money, going bust and having to have those credit amounts restored.
The system is not just thoroughly rotten but systemically rotten. I do not want to resort to anecdotes, but I will talk about a recent experience I had—a small straw in the wind—when I changed my parliamentary flat. It is a one-bedroom flat that I inhabit now and again. I went to set up a direct debit, and the company quoted me £350 a month to start. I am sure it is a coincidence that it is exactly the sum that the Government have put up for the average household bills. I said, “This is just not right. You can’t start a direct debit at £350 on a small flat like that. I think I would prefer a smaller sum of £150.” We had a long argument on the phone, and the person eventually agreed, but I found when I went into my account that they had stuck with the £350. I had to have further phone calls to say, “I am not paying that amount of money in a direct debit per month. Can you put it down, please?”
Drew Hendry
I am grateful that the hon. Gentleman is talking about his personal experience. I looked into this on a personal basis and found that what my constituents were saying was true. What he has just relayed is the real difficulty in communicating with companies that are setting these arbitrary figures, and of course in the process building up credit balances. Does he agree that this poor communication and confusion is a far more common problem than perhaps even we in this Chamber expect?
Dr Whitehead
The hon. Gentleman is absolutely right. Had I not had a reasonably informed view of how direct debits work, I may well have just said, “Okay, I’ll go with that,” with the inevitable result that I would have built up a huge credit balance. That would have been good for the company’s working practices. I do not know whether it was an instruction from the company that the person should start with a high direct debit and then argue down, but it looked to me like they should not have been engaging in that practice.
After various companies went bust, Ofgem started looking at companies’ financial resilience, and that process is continuing. There have been a couple of reports and processes. Among them, Ofgem suggested a couple of arrangements that might help with this scandal of how much is in credit balances—money that is not for companies to use. It proposed that credit balances should be restored to nought at the end of each contract year, even if customers had not requested it. I take the point that, in general, it is often in the customer’s interest to smooth payments out over the year, so that higher bills in certain parts of the year are countered by lower bills at other times, and the overall account can be smoothed out, but there is no justification for a large ongoing credit balance in the company’s books after the end of the contract year.
That seemed a good plan from Ofgem, but it decided not to proceed, on the grounds that quite extraordinarily—guess what?—a number of companies responded to the consultation saying, “We would really like to keep the credit balances because it is very helpful to us.” Ofgem concluded that the proposal might be a bit complicated, so it has not been proceeded with, so the situation of rolling credit balances in companies’ books continues.
Another financial resilience proposal from Ofgem was that a company’s customer accounts should be ringfenced. The company might hold the credit balances on its books for the purposes of smoothing customers’ accounts, but they should be in a separate account, since that was not the company’s money; the money should not be usable for other purposes. The company may get some interest, but the money should not be used as working capital.
Ofgem consulted on that proposal. Again, a number of energy companies responded and said, “No, we don’t think that is a good idea, because that might cause us some problems with our working practices.” So Ofgem decided not to proceed with that proposal either, and there is no ringfenced money—except where, and I am finding it hard not to laugh, a company is thought by Ofgem to be in some financial distress. Then it might decide to ringfence the balances so that they could be rescued when the company went bust and not be used to pay further bills in cases such as those when the supplier of last resort took over the bust company only to find that all the money had gone. Presumably, thanks to Ofgem’s intervention, all the money would not be gone in these cases. That is perhaps a sort of progress, but it is not exactly the sort of progress anybody in this Chamber would see as a serious attempt to address the issue.
My concern is not that the matter has not been looked at by the regulator; it is that the regulator has failed to implement the more or less common-sense measures necessary to ensure that where there are credit balances, they are used for the purposes for which they are intended—smoothing over accounts and nothing else. After all, as the hon. Member for Inverness, Nairn, Badenoch and Strathspey said, this is not the companies’ money. The companies should use it on the basis that they have permission from the customer to keep it on trust for the customer, for their bills, and not for the company’s own purposes. That should be the central principle of this whole arrangement in the future.
I congratulate the Minister on her good practice in talking to the hon. Member for Inverness, Nairn, Badenoch and Strathspey. I hope that that good ministerial practice will wash over into good practice on energy companies. She might have a quiet-ish word with Ofgem and say, “Maybe your consultations and discussions on financial resilience did not work out quite as we all hoped. Could you reopen the matter and have another look?”
The principle on which we all agree is that people’s money is there in trust. It is not there for the companies to use; it is there only for the purpose of smoothing out bills. That is the principle that Ofgem ought to apply to protect customers, but I am sorry to say that in this instance that has not happened. It would be great if the Minister addressed that. I hope that she will respond positively and get on the phone to Ofgem to see what can be done.
Nuclear Energy (Financing) Bill (First sitting)
Alan Whitehead ExcerptsTuesday 16th November 2021
(3 years, 1 month ago)
Public Bill CommitteesRead Full debate Nuclear Energy (Financing) Act 2022 View all Nuclear Energy (Financing) Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 November 2021 - (16 Nov 2021)
The Chair
In that case, let us start with Her Majesty’s official Opposition, represented by Alan Whitehead.
Dr Alan Whitehead (Southampton, Test) (Lab)
Q
Julia Pyke: I think the emergence of the RAB model is very welcome. We obviously believe that the country very much needs nuclear, to support the growth of renewables and to produce electricity when the wind is not blowing and the sun is not shining. It is very important that we deliver nuclear in a way that reduces the cost to consumers to the greatest extent it can, and we believe that the RAB model is a way of doing that and enabling private finance.
A point that is not always made about the introduction of private finance is that if we want a nuclear fleet, which, you will not be surprised to hear, I believe would be a good thing, then always relying on taxpayer funding for that fleet is not necessarily going to promote the growth of a fleet, whereas getting nuclear on to a financeable footing means that the country can size the fleet to need rather than to the availability of taxpayer funding from time to time.
Dr Whitehead
Q
David Powell: Just to make things clear, I represent GE Hitachi, which was helping with the technology supply for the project that Horizon and Hitachi was taking forward. Hitachi was one of the main participants in trying to push forward the project at Wylfa, and I think that one of the big issues was the project’s financing aspects. It takes considerable time and a lot of effort to build two large-scale reactors, and I think that the RAB model could have helped. Obviously that is history now, and we would have to go back and look at that, but I think it would have helped at least in being able to move forward with the project.
Dr Whitehead
Q
Michael Waite: That is correct.
Dr Whitehead
Q
Michael Waite: As you say, Springfields has been fuelling the majority of the UK’s nuclear fleet for almost 75 years. It is the exclusive supplier to the advanced gas-cooled reactor fleet, which will all have retired by the end of this decade. Whether Sizewell C moving forwards under a RAB would mean a supply of fuel from Springfields has yet to be determined. From a Westinghouse perspective, we see RAB as part of the solution for enabling further nuclear projects after Sizewell C. Certainly, the 2035 zero-carbon targets for the electricity generation sector require there to be further projects., If we could start a project at Wylfa and deliver our AP1000 technology under RAB, that would absolutely take its fuel from Springfields for the life of the facility and secure the life of the plant.
Anthony Browne (South Cambridgeshire) (Con)
Q
Julia Pyke: The first thing I would say is that, of course, it is very important that the developer remains incentivised to minimise construction spend consistent with building safely and to time. The introduction of the RAB model will enable Sizewell to move ahead, so, primarily for consumers, not only will they need the electricity that Sizewell can produce but electricity bills will reduce when it comes on, because the alternatives to nuclear as the producer of electricity when the wind is not blowing and so on will cost more. Overall it will reduce consumer bills. It is, as you say, very important that we get the incentive regime right so that, although risk is shared with consumers, developers are always incentivised.
Dr Whitehead
Q
Julia Pyke: RAB is designed to attract low-cost capital, and the cost of capital will be set competitively. We anticipate a competition, which should drive down the cost of capital, between equity investors. We also anticipate that the cost of debt, which will actually be the majority cost of the project, will be set competitively. We do not have a hurdle rate, and deciding that hurdle rate will obviously be in part a matter for Government in terms of what will offer value for money. The Government’s impact assessment talks about example hurdle rates and we anticipate that the return will be somewhere in the region of the Thames Tideway tunnel rate, plus possibly some premium for it being nuclear, which is a novel asset class for private sector money in the UK.
Dr Whitehead
Q
Julia Pyke: We think the relevant rates to look at are the rates that are currently determined by Ofgem for investors in the £200 billion of existing UK regulated assets. That is the range that we anticipate will be relevant.
Dr Whitehead
Q
Julia Pyke: As the Government have put in their impact assessment, you can run this at percentages over inflation that equate to the existing market in investing in RAB. I do not want to suggest a particular number—that would not be appropriate, because we are going to set the cost of capital competitively—but you can see the ranges that the Government have used, which they have based on the evidence of what is invested today in RAB assets.
Dr Whitehead
Q
Julia Pyke: Do you mean whether I think the Government have been overly optimistic in assessing the likely cost of capital to be derived through competition? Is that your question?
Dr Whitehead
Q
Julia Pyke: I think we are talking about two things here. There is optimism bias in relation to the outturn capital costs. The Government have taken a cautious approach to applying optimism bias to the capital costs, given that we are replicating the Hinkley design, using the experienced team, and we can see the savings made in unit 2 compared with unit 1. In relation to the cost of capital, it is entirely sensible for the Government to have based their calculations on the existing market of investment in regulated asset base industries in the UK. I do not think there is an optimism bias issue around their evaluation of existing investment rates.
Dr Whitehead
Q
Julia Pyke: I would conclude no such thing. What investors choose to bid will be a function of how attractive the product is to the equity, what else is available in the market—it will be a whole range of considerations, but essentially it will be in the area of the existing investments in regulated assets in the UK, which are publicly available.
Dr Whitehead
Q
Julia Pyke: Indeed, it does depend on the hurdle rate, but—
Dr Whitehead
But you are not able to help us this morning.
Julia Pyke: I do not think anybody is questioning the assumption that, in moving to a RAB from a contract for difference model, the cost of capital will come down, so it will save money compared with a contract for difference model.
Dr Whitehead
Q
Julia Pyke: We cannot know how much, because it will be set in the future through competition.
The Chair
Unless any other of our colleagues have a one-minute question, we are at 10.24 am and that very neatly brings us to the end of our time. [Interruption.] I am afraid we only have one minute, Alan; one yes or no question, perhaps?
The Chair
Thank you all very much for being here. We will start with Her Majesty’s loyal Opposition and Dr Whitehead.
Dr Whitehead
Q
Sue Ferns: Certainly. At the moment, Springfields nuclear fuels faces a bit of a crisis, primarily due to the earlier than expected rundown and closure of the AGR—advanced gas-cooled reactor—fleet, which has been its major component of fuel manufacture, not the only but the major one. The effect of that is that from January of next year it will be producing only 55 tonnes of AGR fuel, compared with a normal load of about 200 tonnes. That obviously has implications for the workforce and it means that that plant will be operating in deficit as from January of next year.
There have been protracted discussions over the course of the year. We have seen two rounds of redundancy notices issued to the skilled and specialist staff on the site, and there is a danger, in the face of continued uncertainty, that more of those specialist skills and expertise will be lost.
I should say that fuel manufacturing is the key function of Springfields nuclear fuels but there is also much wider expertise. It provides a range of other services to the nuclear industry and is seen as a key part of the UK’s nuclear expertise. We very much fear for the future and are in active discussions with the company and Government about that.
There is both a short-term and a longer-term challenge, and a longer-term opportunity. If more nuclear power stations are constructed in the UK, we can see a good fuel load for Springfields from about 10 years’ time onwards, but the problem is that unless we solve the short-term hiatus in fuel orders, those skills and expertise will be lost and will not be easily recovered, if at all. The opportunity is for Springfields, as it was recognised in the nuclear sector deal, to continue as a centre of nuclear excellence and expertise as our unique UK fuel manufacturing capability, able to provide fuel to reactors in the UK of all types, and potentially to plants in other parts of Europe as well.
Dr Whitehead
Q
Charlotte Childs: The conversations that we have had with EDF in terms of building a nuclear supply chain, and the skills required to build both of those projects, and further projects, mean that the decision on the RAB funding model, hopefully leading towards a final investment decision in the near future, creates a really great opportunity for the timelines of those projects to line up, and for the skilled workforce who are needed at Hinkley Point to just about finish what they are doing there in time to move over to Sizewell. It creates certainty for the nuclear supply chain and for those who have gone through a training programme with Hinkley.
We have negotiated some industry-leading processes to ensure that people from the local area can go from low to no qualifications into qualified trades and apprenticeships. It creates an ongoing opportunity for those people and job security that we do not generally see in the construction sector. Time is of the essence. To maximise the benefit for the nuclear supply chain and drive down costs, because it is already in place, it is imperative that those decisions are made sooner rather than later.
Simon Coop: I reiterate those points. With regard to Hinkley Point C, it is really a no-brainer to adapt those transferrable skills and move them into Sizewell C in order to ensure that costs do not spiral out of control. There is a clear model already in use that we can learn from to move into Sizewell C. The timing of that transfer is of the essence in ensuring that we do not lose the skills from one project and that we develop and move them forward into Sizewell C. Urgency is needed to move that project forward as soon as possible in order to maintain the skills from Hinkley Point at Sizewell C. Any kind of developments have to be in line with industry standards, and we also have to make sure that any misgivings or fore learnings that we establish from Hinkley Point C are clearly ironed out as we move forward to Sizewell C. The replica gives us the opportunity not just to learn from what we have done but at Sizewell C to improve and iron out any problems that we have had to maximise value for money for all vested parties.
Dr Whitehead
Q
Simon Coop: The UK workforce are absolutely flexible and they are highly skilled. In construction, the same key workers with the key skills have moved to projects. I do not see that being a major problem in future construction projects. As a result of talking to the company, there are already plans to transfer the operational skills at Hinkley Point B to Hinkley Point C. Those operational skills are currently transferring and people are keen to move on and use those skills at the Hinkley Point C project. There should be no difference in terms of transfer to future construction projects.
Alan Brown
Q
Charlotte Childs: We are a member of that organisation, so the letter you received and the policy that we have set is based on a wide-ranging discussion with our members. In response to your suggestion about investment in manufacturing, it is not a this or that situation, is it? Scotland in particular has benefited greatly from the current nuclear civil generation, and the zero carbon generated by Torness and Hunterston B have contributed to southern Scotland consistently hitting the 2030 target, working alongside other renewables like wind to provide green energy. Without heavy investment in new nuclear projects we will not reach our net zero targets, and Scotland has set itself an even more ambitious target of 2045 to reach net zero. That simply will not be possible without having a consistent and reliable baseload that is net zero in its production of energy.
European Union (Withdrawal) Act
Alan Whitehead Excerpts(6 years ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
The Government projections that came out recently reveal that the proposals will probably impoverish the UK economy by about 3.9% over 15 years, removing some £100 billion from the economy. To those who say that the UK continues to grow, I would simply say that, if they systematically starve their children, they may well grow but they will end up much shorter than they might otherwise have been had they been fed properly.
That figure is significant in several ways. There was no hint of it in the referendum. The talk was of sunny uplands, of a Brexit dividend and of Britain booming through trade across the world. We now know that to have been a bare-faced lie. We know that the replacement of substantial elements of our trade arrangements with the EU by bilateral world deals would replace only a fraction of what might be lost. It is not a manageable loss, as the Chancellor says when he tries to defend the deal. It is a serious and permanent shrinkage of the UK economy over a sustained period. Of course, not only is it a permanent shrinkage but it is a shrinkage of those parts of the economy that need the economy to work most. London may well survive the shrinkage, but other parts of the country will not do so well. Indeed, many of those places were attracted to Brexit because they thought it would be good for the country as a whole.
That all brings me to the central question. The analysis was published relatively recently, but the Government surely knew much of the content previously. A disastrous series of red lines informed the negotiating process. The eschewing of the single market, the avoidance of the customs union and a number of other starting prejudices shaped the negotiations and led to the pitiful outcome that has now been presented to us. They were conceived in the knowledge that what would transpire from those positions would impoverish the country to the extent that is now apparent.
That is what we have in front of us: a group of politicians who negotiated all along knowing their stance was wilfully leading to a national impoverishment, yet they persisted and kept up a pretence of it being otherwise while they proceeded to throw away the country’s prospects and future in pursuit of a deal they thought could square away the arch-Brexiteers in their midst, who thought, even more catastrophically as it turns out, that salvation lay in crashing out of the EU in an unco-ordinated way—and they still apparently think that, despite all the evidence now before us. That is just an unacceptable way of going about dealing with the future of our country. No one went to the polls knowingly willing to do grievous damage to our country’s future economic welfare.
So here we are now, four months before the self-imposed timetable for exit is due to expire, with a half-cooked deal that will damage our country substantially. We all know now that it is not fit for purpose and will be roundly rejected by Parliament, and we are facing the need to pull something positive out of the wreckage into which this incompetent Government have plunged us. It is imperative that negotiations are restarted on the basis of known parameters that will not harm the UK economy. We know that the economy will be harmed if they continue to be ignored. I refer to membership of the customs union and close association with the single market—in other words, getting the best out of a disadvantageous situation rather than pouring petrol on the flames and making it worse.
Of course, the final rather obvious observation that goes with this is that an imperative first step in any plan to recover from this disaster is to put in for an extension to article 50 to enable meaningful negotiations to proceed. The fact that the Prime Minister keeps repeating that that is not going to happen just underlines how out of touch with the realities of the current position she appears to be.
Given what I have described, it is hard to see that anyone should have any confidence in the Government to conduct such future negotiations, and it would be preferable for someone else to do them. However, I know that is not the way things always happen, and it may well be that we will have a Government who have the confidence of the House but are practically unable to do anything: a zombie Government who are unable to respond properly to public concerns about the future of our country. If that is the outcome, it will be essential to test what the public think of all this. It will be evident that Parliament, for all its best endeavours, may not be able to resolve matters. That is where I think, in the end, a test might need to be effected: a half-baked non-deal against perhaps remaining in the EU and fighting for the changes that the country wants from the inside, rather than outside its structures.
Air Quality and Shore-to-Ship Charging
Alan Whitehead Excerpts(6 years, 8 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
It is a sad occasion that I cannot entirely join in the good wishes of the Deputy Leader of the House for the Easter Adjournment, because I am still here, along with you, Mr Speaker, and indeed a number of hon. Friends and hon. Members who have come to hear this debate and possibly to intervene briefly. I am very appreciative of their taking the time to stay behind, and indeed, of the Minister for coming along this afternoon to hear the last Adjournment debate before we finally start our Easter recess.
The city that I represent is home to one of the UK’s largest ports. Southampton’s thriving port hosts large numbers of container vessels, roll-on/roll-off ships transporting vehicles, and many general cargo ships, along with being the main UK base for cruise ships. In just the next five days in Southampton, more than 60 large vessels are due to arrive at the port, including five cruise ships, nine large vehicle/ro-ro vessels and 10 large container ships. They are all very welcome to the port. Southampton port is not just a great asset to Southampton, but is a national trading and passenger asset in its own right.
The ships are varied in size, content and function, but they all have one thing in common: when they are in port, often for several days at a time, they keep themselves going—their heating, lighting, power and so on—by running their engines and on-board generators as if they were at sea. During that period, a cruise liner, particularly, will consume an enormous amount of fuel—estimated to be some 2,500 litres of diesel per hour—in running its generators and keeping facilities in good order for perhaps 3,000 or 4,000 passengers. If we take account of the crew members and all the other people who are on the vessel, a cruise liner in port in the middle of Southampton running its engines in this way might be likened to a small town, perhaps the size of Romsey, turning up in the middle of a city and running exclusively on diesel generators, with all the consequences that that has for nitrous oxide and particulate emissions across the area.
At the same time, Southampton is one of 18 cities in the UK facing possible infraction proceedings because of air quality issues in the city. Measures are under way in Southampton on the basis of commendable action by the city council to get a grip on air quality, including a future clean air zone for the city centre. The port of Southampton is working hard on its shoreside emissions. The port overall can be extrapolated as contributing overall perhaps some 25% of total emissions—of nitrous oxide, sulphur and particulates—but to date, it has not been able to do anything about the central fact of ships berthed in the port.
However, something can be done and indeed is being done in a number of ports across the world—that is, to plug vessels arriving in port into the port’s mains electricity system, so that a ship can switch off its engines and rely on shore power to do the job. Ports in a number of parts of the world, including the United States, the far east and some parts of Europe, have installed shore-to-ship electrical supplies—essentially a very large plug deriving electrical supply from local power that goes into an equally large socket on the ship at berth to take over the running of the ship’s power in port.
Shore-to-ship power is a very simple and relatively low-cost alternative to ships powering themselves when in ports close to densely populated areas. It also, potentially, makes money for ships at berth, since it is far cheaper for them to run on local power than to burn bunker fuel while in port. It certainly saves on emissions: a recent study in the United States showed that cruise vessels using shore power in one location saved 99% of their nitrous oxide emissions and between 60% and 70% of particulate emissions. Increasing numbers of vessels visiting ports in the UK now have the equipment on board that allows them to plug in. The problem is, though, that there are no shore facilities installed in Southampton, or indeed in any medium or large commercial port anywhere in the UK.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
My hon. Friend is making a very strong case for the argument he outlines. Does he believe that the absence of the shore-to-ship power supply is caused by a lack of regulation? Will he come on to what the shipping companies are expected to be able to do in terms of plugging in? Is it the responsibility of the port? Have the Government legislated on what ought to be the best practice in ports?
Dr Whitehead
My hon. Friend has raised some important points, and I shall touch on some of them in a moment. There are currently no regulations that would mandate the introduction of shore-to-ship power, although it is possible that European Union directives could be used for the purpose.
To the credit of Southampton port, it is looking into whether it can install facilities in one cruise liner berth, but, as far as I know, it is alone in that. No other major port in the United Kingdom is following suit. The arguments that are presented for doing nothing about it are multiple and familiar. It is argued that not enough ships have the facilities to “plug in”, so it would be a waste of money, or that it is too expensive to take the plunge unilaterally, or that there are other ways in which emissions from ships might be reduced.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
My hon. Friend is making a powerful case. As he will know, my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) and I have concerns about the Enderby Wharf cruise liner terminal that is planned for East Greenwich. In that instance, the developer is saying that the cruise liner company with which it is working does not have the necessary technology. Is there not a role for the Government here? Could they not regulate to encourage cruise liner companies to upgrade and retrofit their fleets so that they can utilise this option when ports and terminals take it up?
Dr Whitehead
There is certainly a case for doing that. In California, regulations require a certain proportion of ships visiting ports to use shore-to-ship facilities. However, in California the facilities are already there.
The arguments for doing nothing have some limited grounds, but unless the facilities are there, ships will have no incentive to equip themselves to use them, and, as I have said, there is currently no mandate for their use. Equipping a berth for large vessels would cost about £3 million, and fully equipping all Britain’s major and medium-sized ports would probably come to about £100 million.
Alex Sobel (Leeds North West) (Lab/Co-op)
Before I came to this place, I was a deputy executive member on Leeds City Council, and I attended many workshops with Southampton city councillors where I heard those same arguments. It was said that Southampton and other city councils were too hard pressed to introduce such measures. Does my hon. Friend agree that they are doing all that they can, but need Government support?
Dr Whitehead
I do agree, and in a moment I shall refer to the support that the Government might be able to provide. If we are to roll out shore-to-ship power across the country, we shall need a combination of stick and carrot.
The £100 million that I have just mentioned would, however, largely be recovered—eventually—in fees in subsequent years, because ships coming into port would be charged for the electricity that they used, although it would be cheaper for them than using their own bunker fuel. It is true that some companies are making an effort to modify the fuel that is used by generators when ships are in port so that they run on, say, liquid petroleum gas rather than diesel or bunker fuel, but nothing comes close to the benefit of shore-to-ship supply.
So how can we make a break in the apparent stand-off that currently exists in the UK? Ports may be aware that shore-to-ship power is beginning to happen seriously around the world, and ships are increasingly turning up ready to go, but everyone is looking over their shoulder to see whether anyone else is moving first. It might, commendably, be Southampton—although even then the initiative is for only one berth, which is a start but leaves a long way to go—but Southampton should not be in such a position.
My central call this afternoon is for Government to take the lead in the creation of a level playing field for all ports in the UK for shore-to-ship installations by giving notice of an intention to mandate their use in ports by a specified date and, if I can venture a suggestion, to place aside a modest fund to assist ports in installing the necessary equipment over the specified implementation period.
That is not exactly a novel idea, because an EU directive already exists—directive 2014/94/EU, to be precise, known as the alternative fuels infrastructure directive or AFID. It says this on shore-to-ship power, in article 4(5):
“Member States shall ensure that the need for shore-side electricity supply for inland waterway…and seagoing ships in maritime and inland ports is assessed in their national policy frameworks. Such shore-side electricity supply shall be installed as a priority in ports of the TEN-T Core Network, and in other ports, by 31 December 2025”.
Article 4(6) states:
“Member States shall ensure that shore-side electricity supply installations for maritime transport, deployed or renewed as from 18 November 2017, comply with the technical specifications set out in point 1.7 of Annex II.”
The Government have consulted and responded to the consultation on the directive, except that in the consultation they have scrupulously put the implementation of article 4(6) into train by insisting that statutory operators
“must ensure that new or renewed shore side supply installations must comply with certain technical standards”.
Frankly, I imagine that that will be fairly easy to comply with given that none exist. Of course, there is not a mention in the consultation or response of the rather more difficult point made in article 4(5).
In other words, as far as I can see, the Department does not intend to do anything about that. So my other call this afternoon—or rather perhaps a question—is about why the Department has apparently ignored one of the central points of the alternative fuels directive. Does it intend to put that right and get on with a programme of installing shore-to-ship charging before we are no longer mandated to do so at the end of the transition period of leaving the EU? Or does it just intend that such a mandate might just slip away and get lost after our exit from the EU is complete? If the latter is the case, that will be a sad outcome both for Southampton and all the populations of the ports around the country who welcome and support the port activity in their towns and cities but want those ports to be contributors to the health and clean air of their cities rather than detractors.
I hope that the Minister has a positive response for me this afternoon so that I can wish her, as well as everybody else, a happy Easter.
Jim Fitzpatrick
I sensed that my hon. Friend was heading to a conclusion. At the beginning of his speech, he said how important the port of Southampton is for the wellbeing of the city, so will he confirm that this is not an attack on shipping, which is a fundamental industry for the UK economy? Members want to support shipping and are asking the Government for leadership in ensuring that shipping is more environmentally friendly and clean in the future. That will mean that when new cruise terminals are proposed for places such as the centre of London, people will welcome that because of the economic benefit it will bring and because they know that it will operate on an environmentally clean basis.
Dr Whitehead
My hon. Friend makes an important point, which I want to emphasise a little more. The presence of the port and all the activity that goes on with it are wholly welcomed in Southampton. I am sure that that is exactly the same in other cities that are close to and host major ports in the UK. Those cities do not want to see the end of those ports; indeed, they want to see development and thriving arrangements. All the boroughs around those cities have a joint interest in ensuring that the ports thrive as best they can. Over the years, Southampton has been substantially supportive of the growth and development of the port, but we want ports to work on the same basis as everyone else, cleaning up the air around us and ensuring that we can live in an environment that is conducive to the thriving of those ports for the future.
Hoping that the Minister has a positive response for me this afternoon, I will end with the thought that that response will literally enable my constituents to breathe more easily.
National Spitfire Project
Alan Whitehead Excerpts(7 years, 8 months ago)
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Royston Smith
I agree with everything my hon. Friend has just said. In fact, I was about to come on to that very point.
Dr Alan Whitehead (Southampton, Test) (Lab)
I am sure the hon. Gentleman will accept that when he talks about Southampton, he means both sides of the city. Indeed, it is a pleasure for me to be here this afternoon to support him in what he is saying about the Spitfire, provided that the word “Southampton” is completely underlined in proceedings so far as the national monument is concerned.
Royston Smith
I am happy to agree with the hon. Gentleman, my neighbour and friend. Southampton is the home of the Spitfire. It just so happens that the Supermarine factory was located in my constituency. However, I am referring to Southampton in general.
Returning to the comment made by my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), sheds, garages, bus stations, industrial units and a hotel were used for production in and around Southampton—including Hendy’s garage, Seaward’s garage, Sunlight laundry, which were in the constituency of the hon. Member for Southampton, Test (Dr Whitehead), and the Hants and Dorset bus depot—before the aircraft were assembled and test flown at Eastleigh airport.
Within a few weeks, the Spitfire was back in production all over Southampton and the neighbouring towns and villages, including Salisbury, Reading, Newbury and Trowbridge. It was an enormously challenging business building the Spitfire in that way, and we should not underestimate that. The work was carried out at the height of the blitz, often by unskilled labour. A large part of the workforce was women, girls and retired men, because most eligible men were in the armed forces fighting for their country.
The effects of the war touched the lives of almost every family in Southampton, and they continue to do so today. In fact, Flight Lieutenant James Brindley Nicolson was awarded the Victoria Cross in 1940 for his bravery in a dog fight over Southampton. His bravery has been studied and recognised by children from Sholing Junior School in my constituency. The pupils designed and raised funding for a memorial to commemorate his achievements.
Once assembled, the Spitfire was delivered to air bases across the country by the Air Transport Auxiliary. Many of those pilots were women. One of note is Mary Ellis, who celebrated her 100th birthday last month. Her extraordinary milestone was marked by a flight in an extraordinary aircraft, the Spitfire, one of the aircraft types she flew during the war. In 1943 the women of the Air Transport Auxiliary were awarded equal pay to their male colleagues, making the ATA the first equal opportunities employer.
On 1 April 2018 the Royal Air Force will celebrate its centenary, commemorating 100 years of devotion and duty to our country. As a former Royal Air Force engineer, I am enormously proud to be standing in this place today promoting the National Spitfire Project and the tribute to the Royal Air Force in the shape of the Spitfire monument. Perhaps the RAF’s finest hours—they were certainly those of the Spitfire—were during the battle of Britain, when against the odds our brave pilots and engineers repelled the might of the largest air force the world had ever seen. I do not think anyone would say that the battle of Britain won the war, but it certainly prevented a German invasion and was a turning point in the fortunes of Hitler and his ambitions to occupy Great Britain.
The Spitfire played a central role throughout world war two, and our British pilots were joined by allied pilots from all over the world. In fact, up to 20% of pilots who flew in the battle of Britain were not British. Most notably, the Royal Air Force was joined by Poles, Czechs, New Zealanders, Belgians, Canadians, Australians, Norwegians, Greeks, Swedes, Italians, Indians and Pakistanis. Tomorrow the Prime Minister will write to Donald Tusk, the President of the European Council, informing him of the UK’s intention to leave the European Union. One of the first priorities of our withdrawal negotiations must be the status of European Union nationals living in this country and British nationals living in European Union countries. As the negotiations begin, it is important to take a moment to remember the significant contribution that those countries of the European Union made to our war effort.
A total of 145 Polish fighter pilots served in the RAF during the battle of Britain, making up the largest non-British contribution. By the end of the war, around 19,500 Poles were serving in the Polish Air Force in the UK and in the RAF. One Polish pilot of note was Stanislaw Skalski, who came to England after the fall of Poland. While flying with 501 Squadron, he shot down seven enemy aircraft before being shot down himself. After recovering in hospital, he joined 306 Squadron in February 1941 and by October he had claimed a further five enemy fighters.
Of course, this country produced its own heroes and the pilot credited with bringing down the most enemy aircraft from the cockpit of a Spitfire was Air Vice-Marshal Johnnie Johnson, who had 38 confirmed kills—that might well have been more, if he had not missed the beginning of the battle of Britain due to a rugby injury. Flight Lieutenant Eric Lock became the RAF’s most successful battle of Britain pilot, shooting down 16 German aircraft. In one week alone, Flight Lieutenant Lock managed to shoot down eight German aircraft—an impressive tally that earned him the Distinguished Flying Cross.
In November 2016 a new memorial was unveiled in Grimbergen, Belgium to honour the fallen Norwegians who flew Spitfires during the war. In the UK we have many monuments, including that to the women of world war two on Whitehall, the RAF Bomber Command memorial in Green Park and the National Memorial Arboretum in Staffordshire. It would therefore be fitting to further commemorate, in the Royal Air Force’s centenary year, those who dedicated their lives to protecting our freedoms.
In order to celebrate the fantastic achievements of the RAF over the past 100 years, the RAF 100 committee has a selection of events planned. Those national events will raise the profile of the RAF across the whole of our nation, enhance its reputation and promote a better understanding of what it does. It will showcase the RAF’s people, their depth of talent and their diversity. The events will celebrate the history of the RAF, but they will also demonstrate why it remains, and will continue to remain, vital to the security and prosperity of the UK. The national tribute to the Royal Air Force will be the only physical legacy to recognise and commemorate the RAF’s centenary. It will serve to remind everyone who visits the monument what a significant contribution the RAF and the Spitfire have made far into the next 100 years.
The project for the Spitfire monument has been led for many years by my very good friend and colleague, Councillor John Hannides. He is joined in his endeavours by retired Air Commodore Gordon Moulds, Paul Lester and Tony Edwards, and the president of the trust, Sir Ralph Robins.
Everyone in Southampton has grown up knowing the story of our brave pilots and the iconic Spitfire. As a constant reminder, a fully functioning Spitfire is still the major attraction at the excellent Solent Sky aviation museum in Southampton, run by the determined and dedicated curator Squadron Leader Alan Jones. The legend of the Spitfire lives on in countless films, documentaries, essays and books. My right hon. Friend the Member for New Forest East (Dr Lewis), who is unable to be here today due to his duties chairing the Defence Committee, is a keen supporter of the project and has himself written an acclaimed account about a highly decorated pilot, Kink Kinkaid, who died in Southampton water trying to break the airspeed record in a forerunner of the Spitfire, the Supermarine S.5.
We now have a site on Southampton’s historic waterfront, generously donated by Southampton City Council, where the more than 1.8 million passengers on one of the 450 cruise ships that visit Southampton each year will pass. We have a detailed design for a stainless steel monument 1.5 times the size of the original Spitfire, which will soar 130 feet above the ground—nearly as high as the Statue of Liberty and twice as high as the Angel of the North—and be visible for miles around. We also have all the planning permissions in place. All that is missing now is the funding required to bring the project alive.
Since 2012, the Government, through the Financial Conduct Authority, have levied fines on the banks of more than £973 million for fixing LIBOR rates. Much of that has been allocated to worthy causes, and rightly so. The Chancellor has made clear his intention to use the remaining fines for armed forces and emergency services charities. I completely agree with that approach and I suggest that this project fits those criteria perfectly.
Sir Winston Churchill, one of our nation’s greatest ever leaders, summed up the debt of gratitude we owe to the Royal Air Force, when he said:
“Never in the field of human conflict was so much owed by so many to so few.”—[Official Report, 20 August 1940; Vol. 364, c. 1167.]
It is time for the many now properly to honour the few, and what better way than to immortalise them and their most famous aircraft in a fitting monument to the Spitfire.
Dr Alan Whitehead (Southampton, Test) (Lab)
I rise briefly to support the hon. Member for Southampton, Itchen (Royston Smith) in his debate this afternoon, which I congratulate him on securing. I also congratulate him on his tenacity in pursuing this aim of a national monument for the Spitfire in Southampton. The bottom line of what we are talking about today is a request for money. We need the money—ideally from the Government. The hon. Gentleman’s suggestion for where that money might come from would be an appropriate source for the rest of the funds. Many people have already contributed small and varying amounts to the fund to secure the aim of a memorial for the Spitfire on Southampton Water.
Why is the memorial so important? There are three things we might say along with all the other things that have been said about the Spitfire. In this context, I want to offer the story of my father, who was an aeronautical engineer with the Fleet Air Arm. He spent most of the war repairing aircraft, never leaving these shores. Unfortunately, the story does not neatly end with Spitfires, because he worked on Swordfish. As some hon. Members may know, Swordfish were in service at the same time as the Spitfire, but they looked like a completely different generation of aircraft. They were held together with bits of string, sealing wax and various other things. Although they did a good job, if we put the Spitfire next to the Swordfish, the Spitfire design appears to have been from the future and an imagination from I do not know where. They brought this amazing aircraft into being at a time when those aircraft were the staple—
George Kerevan
On that point, it is worth remembering that R. J. Mitchell also designed the Walrus biplane seaplane, which picked up so many downed RAF pilots. It looked as antediluvian as the Swordfish, but equally it was very efficient.
Dr Whitehead
Indeed. That underlines what I was about to say: R. J. Mitchell designed a plane that was never equalled throughout the whole of the second world war. Not only did the Spitfire save our bacon during the Battle of Britain but it went on to play all sorts of other roles across Europe and the world as the second world war progressed, due to its unique capacities and design and the way it stood head and shoulders above any other aircraft. Later in the war it was not only employed in a fighting capacity but was the first effective reconnaissance aircraft for the RAF. It could fly high at speed and take reconnaissance photographs. Indeed, it got the first reconnaissance photograph of German radar, the first photographs of the Peenemünde works for the V-1 rockets, and was instrumental as the war progressed in all sorts of other fields as well as in the battle of Britain.
Secondly, hon. Members have paid tribute today to the few who fought in the battle of Britain and the fact that they were an international cohort of pilots. Hon. Members have mentioned the large number of Polish pilots: 15% or so of the total number of pilots. They not only made a great contribution, but I understand that the particular way in which they flew the Spitfires was unlike anybody else’s, and they tested the aircraft to destruction. It did not get destroyed, it still flew, and the things they could do with that plane, as was proved throughout the war, is another tribute to the genius of the aircraft design.
Thirdly, for all those reasons, Southampton as a city is proud of its heritage as the progenitor and manufacturer of the Spitfire. As the hon. Member for Southampton, Itchen has said, the Spitfire was not only manufactured at the Supermarine works in Woolston. There was a remarkable arrangement subsequently whereby shops, factories and sheds produced that amazing aircraft literally in people’s back gardens in and around Southampton. The people from the city worked so hard to get the aircraft in the air and doing the job that they knew it could do.
So Southampton has an indelible and deep bond with the Spitfire. It is therefore absolutely appropriate that the site that has been chosen for the memorial faces out to Southampton Water, exactly under the path where the Spitfire pilots flew the planes from Southampton—or Eastleigh—airport, depending on your point of view. They flew over Southampton Water, absolutely at the centre of everything that happened that was part of the Spitfire legacy. The idea of a monument with a Spitfire soaring above Southampton Water seems absolutely the right use for the money that I hope will come in for that monument.
I congratulate the hon. Member for Southampton, Itchen on his efforts to make sure that the money comes our way. I am confident that his further efforts and hopefully those of the Members gathered here today will nudge the Government in the direction of making sure the money is available and will lead to an early and successful conclusion to this project. I will be first to applaud the successful completion of a long mission to get a monument to provide the recognition for the Spitfire that we in Southampton know is absolutely deserved, which can then go to a wider world.
Jane Ellison
I assure my hon. Friend that that has not been lost on me this afternoon. Rarely have I sat through a debate with such genuine passion felt across the House. His point about timeliness and the anniversary is well made, and as I said, we have already made moneys available to mark that for the RAF. I look forward to seeing some of those projects come to maturity. His point is extremely well made. I assure him that I will make the Under-Secretary of State for Culture, Media and Sport, my hon. Friend for Chatham and Aylesford (Tracey Crouch), who is responsible for sport, tourism and heritage, fully aware of both the project—I am sure she is aware of it already—and the ambitious plans to mark our heritage; and, indeed, of the passion expressed for the project today in Westminster Hall.
I hope that all hon. Friends will understand that the process for allocating LIBOR funding must be transparent and objective. There is a process that all bids must take, so although I know that friends and colleagues would wish me to go further, sadly I cannot commit further at this stage.
Dr Whitehead
I appreciate that the Minister is in some difficulty as far as allocating funds off the cuff is concerned, and I would not advocate a further banking scandal in order to try to release more funds for that purpose. Will she indicate, today or in future, and in particular to my colleague the hon. Member for Southampton, Itchen (Royston Smith), whether she can think of any other avenues in her area of competence that might be used to facilitate the process of, shall we say, coughing up for this monument? I am sure that she will be happy to undertake that with the hon. Gentleman for the good cause that we have all talked about this afternoon.
Jane Ellison
I am more than happy to commit to talk to my colleague in the Department for Culture, Media and Sport, who is the lead Minister on heritage, about the debate and to relay that request. I will reflect on whether there is more we can do in due course to direct my hon. Friend the Member for Southampton, Itchen to other sources of funding that might be available. I will reflect on whether it is possible for me to do that subsequent to the debate, or indeed to ask another Minister to do that from sources other than LIBOR funding.
However, I reassure all colleagues that, should further LIBOR funding opportunities arise, any application from the National Spitfire Project that falls within the published scope will be given full consideration along with other applications. In the meantime, I extend my good wishes to my hon. Friend and all involved with this project in its noble aim of creating a lasting memorial to a truly British icon.
Budget Resolutions and Economic Situation
Alan Whitehead Excerpts(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Dr Alan Whitehead (Southampton, Test) (Lab)
This is a Budget that should have come to the aid of local government. Instead, it continues a course of punishment for local government that has been with us for a number of years, with 20% cuts in local government spending up to 2015 and a further series of cuts announced in the autumn statement and the spending review. The Conservative chairman of the Local Government Association commented on those cuts:
“Even if councils stopped filling in potholes, maintaining parks, closed all children's centres, libraries, museums, leisure centres and turned off every street light they will not have saved enough money to plug the financial black hole they face by 2020.”
I am proud of my city council in Southampton, which has faced cuts of £71 million in the past three years, but by heroic efforts and enormous ingenuity has nevertheless kept the libraries open across the city, road repairing schemes up and running, and all children’s centres open, yet it faces further shortfalls in its budget that it will have to plug every year over the next period. We know where the cuts of £3.5 billion announced by the Chancellor for the next period are almost certainly going to fall—on local government and thereabouts. That will exacerbate the shortfalls that local government faces, not just in Southampton, but across the country.
We also face a business rates revolution, which at most can be described as half-baked because of the ill thought-out way it will come to the aid, if at all, of local government. This change in business rates will result in local government having to rely entirely on business rates and local taxation by 2020, but no thought has been given to changes in small business relief. We do not know how changes to business rates will be distributed. We do not know whether the change from the retail prices index to the consumer prices index will mean a substantial reduction in the pot for local government, relying as it does on business rates.
In short, the Budget does nothing to come to the aid of local government at a time when that is needed by people who rely on local government services now and in future. The Budget has failed those people and, unless rapid changes are made, it will continue to fail them.
Energy BILL [ Lords ] (Fifth sitting)
Alan Whitehead Excerpts(8 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
I remind the Committee that with this we are discussing the following:
Government new clause 1—Onshore wind power: closure of renewables obligation on 31 March 2016.
Government new clause 2—Onshore wind power: circumstances in which certificates may be issued after 31 March 2016—
‘(1) Part 1 of the Electricity Act 1989 (electricity supply) is amended as follows.
(2) After section 32LC (inserted by section [Onshore wind power: closure of renewables obligation on 31 March 2016]) insert—
“32LD Onshore wind generating stations accredited, or additional capacity added, on or before 31 March 2016
The circumstances set out in this section are where the electricity is—
(a) generated by an onshore wind generating station which was accredited on or before 31 March 2016, and
(b) generated using—
(i) the original capacity of the station, or
(ii) additional capacity which in the Authority’s view first formed part of the station on or before 31 March 2016.
32LE Onshore wind generating stations accredited, or additional capacity added, between 1 April 2016 and 31 March 2017: grid or radar delay condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited during the period beginning with 1 April 2016 and ending with 31 March 2017, and
(ii) in respect of which the grid or radar delay condition is met, or
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 April 2016 and ending with 31 March 2017, and
(iii) the grid or radar delay condition is met in respect of the additional capacity.
32LF Onshore wind generating stations accredited, or additional capacity added, on or before 31 March 2017: approved development condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited on or before 31 March 2017, and
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(iii) the approved development condition is met in respect of the additional capacity.
32LG Onshore wind generating stations accredited, or additional capacity added, between 1 April 2017 and 31 March 2018: grid or radar delay condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited during the period beginning with 1 April 2017 and ending with 31 March 2018,
(ii) in respect of which the approved development condition is met, and
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(iii) the approved development condition is met in respect of the additional capacity, and
32LH Onshore wind generating stations accredited, or additional capacity added, between 1 April 2017 and 31 December 2017: investment freezing condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited during the period beginning with 1 April 2017 and ending with 31 December 2017, and
(b) generated using additional capacity of an onshore wind generating station, where—
(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 April 2017 and ending with 31 December 2017, and
32LI Onshore wind generating stations accredited, or additional capacity added, between 1 January 2018 and 31 December 2018: grid or radar delay condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited during the period beginning with1 January 2018 and ending with 31 December 2018,
(ii) in respect of which both the approved development condition and the investment freezing condition are met, and
(iii) in respect of which the grid or radar delay condition is met, or
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 January 2018 and ending with 31 December 2018,
(iii) both the approved development condition and the investment freezing condition are met in respect of the additional capacity, and
(iv) the grid or radar delay condition is met in respect of the additional capacity.
32LJ The approved development condition
‘(1) This section applies for the purposes of sections 32LF to 32LI.
(2) The approved development condition is met in respect of an onshore wind generating station if the documents specified in subsections (4), (5) and (6) were provided to the Authority with the application for accreditation of the station.
(3) The approved development condition is met in respect of additional capacity if the documents specified in subsections (4), (5) and (6) were provided to the Authority on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station.
(4) The documents specified in this subsection are—
(a) evidence that—
(i) planning permission for the station or additional capacity was granted on or before 18 June 2015, and
(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached,
(b) evidence that—
(i) planning permission for the station or additional capacity was refused on or before 18 June 2015, but granted after that date following an appeal or judicial review, and
(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached,
(c) evidence that—
(ii) the period allowed under section 78(2) of the 1990 Act or (as the case may be) section 47(2) of the 1997 Act ended on or before 18 June 2015 without any of the things mentioned in section 78(2)(a) to (b) of the 1990 Act or section 47(2)(a) to (c) of the 1997 Act being done in respect of the application,
(iii) the application was not referred to the Secretary of State, Welsh Ministers or Scottish Ministers in accordance with directions given under section 77 of the 1990 Act or section 46 of the 1997 Act,
(iv) 1990 Act permission or 1997 Act permission was granted after 18 June 2015 following an appeal, and
(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, planning permission is not required for the station or additional capacity.
(5) The documents specified in this subsection are—
(a) a copy of an offer from a licensed network operator made on or before 18 June 2015 to carry out grid works in relation to the station or additional capacity, and evidence that the offer was accepted on or before that date (whether or not the acceptance was subject to any conditions or other terms), or
(b) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, no grid works were required to be carried out by a licensed network operator in order to enable the station to be commissioned or the additional capacity to form part of the station.
(6) The documents specified in this subsection are a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, as at 18 June 2015 a relevant developer of the station or additional capacity (or a person connected, within the meaning of section 1122 of the Corporation Tax Act 2010, with a relevant developer of the station or additional capacity)—
(a) was an owner or lessee of the land on which the station or additional capacity is situated,
(b) had entered into an agreement to purchase or lease the land on which the station or additional capacity is situated,
(c) had an option to purchase or to lease the land on which the station or additional capacity is situated, or
(d) was a party to an exclusivity agreement in relation to the land on which the station or additional capacity is situated.
(7) In this section—
“the 1990 Act” means the Town and Country Planning Act 1990;
“1990 Act permission” means planning permission under the 1990 Act (except outline planning permission, within the meaning of section 92 of that Act);
“the 1997 Act” means the Town and Country Planning (Scotland) Act 1997;
“1997 Act permission” means planning permission under the 1997 Act (except planning permission in principle, within the meaning of section 59 of that Act);
“exclusivity agreement”, in relation to land, means an agreement by the owner or a lessee of the land not to permit any person (other than the persons identified in the agreement) to construct an onshore wind generating station on the land;
“planning permission” means—
(a) consent under section 36 of this Act,
(b) 1990 Act permission,
(c) 1997 Act permission, or
(d) development consent under the Planning Act 2008.
32LK The investment freezing condition
‘(1) This section applies for the purposes of sections 32LH and 32LI.
(2) The investment freezing condition is met in respect of an onshore wind generating station if the documents specified in subsection (4) were provided to the Authority with the application for accreditation of the station.
(3) The investment freezing condition is met in respect of additional capacity if the documents specified in subsection (4) were provided to the Authority on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station.
(4) The documents specified in this subsection are—
(a) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, as at the Royal Assent date—
(i) the relevant developer required funding from a recognised lender before the station could be commissioned or additional capacity could form part of the station,
(ii) a recognised lender was not prepared to provide that funding until enactment of the Energy Act 2016, because of uncertainty over whether the Act would be enacted or its wording if enacted, and
(iii) the station would have been commissioned, or the additional capacity would have formed part of the station, on or before 31 March 2017 if the funding had been provided before the Royal Assent date, and
(b) a letter or other document, dated on or before the date which is 28 days after the Royal Assent date, from a recognised lender confirming (whether or not the confirmation is subject to any conditions or other terms) that the lender was not prepared to provide funding in respect of the station or additional capacity until enactment of the Energy Act 2016, because of uncertainty over whether the Act would be enacted or its wording if enacted.
(5) In this section—
“recognised lender” means a provider of debt finance which has been issued with an investment grade credit rating by a registered credit rating agency;
“the Royal Assent date” means the date on which the Energy Act 2016 is passed.
(6) For the purposes of the definition of “recognised lender” in subsection (5)—
“investment grade credit rating” means a credit rating commonly understood by registered credit rating agencies to be investment grade;
“registered credit rating agency” means a credit rating agency registered in accordance with Regulation (EC) No 1060/2009 of the European Parliament and the Council of 16 September 2009 on credit rating agencies.
32LL The grid or radar delay condition
‘(1) This section applies for the purposes of sections 32LE, 32LG and 32LI.
(2) The grid or radar delay condition is met in respect of an onshore wind generating station if, on or before the date on which the Authority made its decision to accredit the station, the documents specified in subsection (4), (5) or (6) were—
(a) submitted by the operator of the station, and
(b) received by the Authority.
(3) The grid or radar delay condition is met in respect of additional capacity if, on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station, the documents specified in subsection (4), (5) or (6) were—
(a) submitted by the operator of the station, and
(b) received by the Authority.
(4) The documents specified in this subsection are—
(a) evidence of an agreement with a network operator (“the relevant network operator”) to carry out grid works in relation to the station or additional capacity (“the relevant grid works”);
(b) a copy of a document written by, or on behalf of, the relevant network operator which estimated or set a date for completion of the relevant grid works (“the planned grid works completion date”) which was no later than the primary date;
(c) a letter from the relevant network operator confirming (whether or not such confirmation is subject to any conditions or other terms) that—
(i) the relevant grid works were completed after the planned grid works completion date, and
(ii) in the relevant network operator’s opinion, the failure to complete the relevant grid works on or before the planned grid works completion date was not due to any breach by a generating station developer of any agreement with the relevant network operator; and
(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if the relevant grid works had been completed on or before the planned grid works completion date.
(5) The documents specified in this subsection are—
(a) evidence of an agreement between a generating station developer and a person who is not a generating station developer (“the radar works agreement”) for the carrying out of radar works (“the relevant radar works”);
(b) a copy of a document written by, or on behalf of, a party to the radar works agreement (other than a generating station developer) which estimated or set a date for completion of the relevant radar works (“the planned radar works completion date”) which was no later than the primary date;
(c) a letter from a party to the radar works agreement (other than a generating station developer) confirming, whether or not such confirmation is subject to any conditions or other terms, that—
(i) the relevant radar works were completed after the planned radar works completion date, and
(ii) in that party’s opinion, the failure to complete the relevant radar works on or before the planned radar works completion date was not due to any breach of the radar works agreement by a generating station developer; and
(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if the relevant radar works had been completed on or before the planned radar works completion date.
(6) The documents specified in this subsection are—
(a) the documents specified in subsection (4)(a), (b) and (c);
(b) the documents specified in subsection (5)(a), (b) and (c); and
(c) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if—
(i) the relevant grid works had been completed on or before the planned grid works completion date, and
(ii) the relevant radar works had been completed on or before the planned radar works completion date.
(7) In this section “the primary date” means—
(a) in a case within section 32LE(a)(i) or (b)(i) and (ii), 31 March 2016;
(b) in a case within section 32LG(a)(i) and (ii) or (b)(i) to (iii), 31 March 2017;
(c) in a case within section 32LI(a)(i) and (ii) or (b)(i) to (iii), 31 December 2017.”
(3) In section 32M (interpretation of sections 32 to 32M)—
(a) in subsection (1), for “32LB” substitute “32LL”;
(b) at the appropriate places insert the following definitions—
““accredited”, in relation to an onshore wind generating station, means accredited by the Authority as a generating station which is capable of generating electricity from renewable sources; and “accredit” and “accreditation” are to be construed accordingly;”;
““additional capacity”, in relation to an onshore wind generating station, means any generating capacity which does not form part of the original capacity of the station;”;
““commissioned”, in relation to an onshore wind generating station, means having completed such procedures and tests in relation to the station as constitute, at the time they are undertaken, the usual industry standards and practices for commissioning that type of generating station in order to demonstrate that it is capable of commercial operation;”;
““generating station developer”, in relation to an onshore wind generating station or additional capacity, means—
(a) the operator of the station, or
(b) a person who arranged for the construction of the station or additional capacity;”;
““grid works”, in relation to an onshore wind generating station, means—
(a) the construction of a connection between the station and a transmission or distribution system for the purpose of enabling electricity to be conveyed from the station to the system, or
(b) the carrying out of modifications to a connection between the station and a transmission or distribution system for the purpose of enabling an increase in the amount of electricity that can be conveyed over that connection from the station to the system;”;
““licensed network operator” means a distribution licence holder or a transmission licence holder;”;
““network operator” means a distribution exemption holder, a distribution licence holder or a transmission licence holder;”;
““onshore wind generating station” has the meaning given by section32LC(2);”;
““original capacity”, in relation to an onshore wind generating station, means the generating capacity of the station as accredited;”;
““radar works” means—
(a) the construction of a radar station,
(b) the installation of radar equipment,
(c) the carrying out of modifications to a radar station or radar equipment, or
(d) the testing of a radar station or radar equipment;”;
““relevant developer”, in relation to an onshore wind generating station or additional capacity, means a person who—
(a) applied for planning permission for the station or additional capacity,
(b) arranged for grid works to be carried out in relation tothe station or additional capacity,
(c) arranged for the construction of any part of the station or additional capacity,
(d) constructed any part of the station or additional capacity, or
(e) operates, or proposes to operate, the station;”.”
This New Clause provides for cases in which renewables obligation certificates may continue to be issued in respect of electricity generated after 31 March 2016 by onshore wind generating stations in England, Wales or Scotland, despite the general closure effected by New Clause NC1. The cases are those described in the new sections 32LD to 32LI of the Electricity Act 1989.
Amendment (b) to Government new clause 2, in new section 32LJ(4)(b)(i), leave out “planning permission” and insert
“an application for 1990 Act permission or 1997 Act permission”.
Amendment (c) to Government new clause 2, in new section 32LJ(4)(b)(i), leave out “or judicial review”.
Amendment (d) to Government new clause 2, in new section 32LJ(4)(c)(ii), after the second “Act”, insert
“(excluding an extension agreed for the purposes of section 78(2) of the 1990 Act or section 47(2) of the 1997 Act)”.
Amendment (e) to Government new clause 2, in new section 32LJ(4)(c)(ii), leave out new section 32LJ(4)(c)(iii).
Amendment (f) to Government new clause 2, in new section 32LJ(4)(c)(iv), leave out “following an appeal” and insert
“or after a decision made by the Secretary of State, Welsh Ministers or Scottish Ministers following directions given under section 77 of the 1990 Act or section 46 of the 1997 Act, and”.
This amendment covers cases where the statutory period for the determination of planning applications expired on or before 18 June 2015, but where a time extension had been agreed between the developer and the Planning Authority. It would also address cases in which a project’s statutory period for the determination of planning applications expired on or before 18 June 2015, and which are subsequently “called in” by a relevant Minister and approved.
Amendment (a) to Government new clause 2, in new section 32LJ(4) at end insert—
“(da) evidence that either—
(i) a grant of planning permission was resolved by the relevant planning authority on or before 18 June 2015,
(ii) planning permission was granted after 18 June 2015 but not later than 18 September 2015, or
(iii) planning permission, consent or development consent was granted after 18 June 2015 under section 73 of the 1990 Act, section 42 of the 1997 Act, section 36(C) of this Act, or under the Planning Act 2008 varying a planning permission, consent or development consent granted on or before 18 June 2015,
(db) evidence that—
any condition as to the time period within which the development to which the permission relates must be begun have not been breached.”
This amendment would include schemes within the grace period that have received planning consent from local planning authorities by the relevant date, but have not received final documentation, providing that final documentation is received by three months after this date.
Amendment (h) to Government new clause 2, in new section 32LJ(4), at end insert—
“() evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2015 for the station or additional capacity,
(ii) the period allowed under section 78(2) of the 1990 Act or (as the case may be) section 47(2) of the 1997 Act (excluding an extension agreed for the purposes of section 78(2) of the 1990 Act or section 47(2) of the 1997 Act) ended on or before 18 June 2015 without the things mentioned in section 78(2)(a) or (aa) of the 1990 Act or section 47(2)(a) or (b) of the 1997 Act being done in respect of the application,
(iii) the application was referred to the Secretary of State, Welsh Ministers or Scottish Ministers in accordance with directions given under section 77 of the 1990 Act or section 46 of the 1997 Act,
(iv) 1990 Act permission or 1997 Act permission was granted after 18 June 2015, and
(v) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment (i) to Government new clause 2, in new section 32LJ(4), at end insert—
“() evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2015 for the station or for additional capacity,
(ii) the relevant planning authority resolved to grant 1990 Act permission or 1997 Act permission on or before 18 June 2015,
(iii) 1990 Act permission or 1997 Act permission was granted after 18 June 2015, and
(iv) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment (j) to Government new clause 2, in new section 32LJ(4), at end insert—
“() evidence that—
(i) an application for consent for the station or for additional capacity was made under section 36 of this Act,
(ii) the consultation period prescribed by Regulations made under paragraphs 2(3) or 3(1)(c) of Schedule 8 to this Act had expired on or before 18 June 2015,
(iii) the Secretary of State caused a public inquiry to be held under paragraph 2(2) or 3(3) of Schedule 8 to this Act or decided that a public inquiry need not be held,
(iv) consent was granted by the Secretary of State after 18 June 2015, and
(v) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment (k) to Government new clause 2, in new section 32LJ(4), at end insert—
“() evidence that—
(i) an application for development consent for the station or for additional capacity was made under section 37 of the Planning Act 2008,
(ii) the deadline for receipt of representations under section 56(4) of the Planning Act 2008 had expired on or before 18 June 2015,
(iii) consent was granted by the Secretary of State after 18 June 2015, and
(iv) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment (l) to Government new clause 2, in new section 32LJ(4), at end insert—
“() evidence that—
(i) planning permission for the station or additional capacity was granted on or before 18 June 2015,
(ii) planning permission under sections 73, 90(2), 90(2ZA) or 96A of the 1990 Act or sections 42, 57(2), 57(2ZA) or 64 of the 1997 Act, a consent under section 36C of this Act, or an order under section 153 of, and paragraph 2 or 3 of Schedule 6 to, the Planning Act 2008 varying the planning permission under Clause 32LJ(4)(i)(i) was granted after 18 June 2015, and
(iii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment (m) to Government new clause 2, in new section 32LJ(4), at end insert—
“() evidence that—
(i) 1990 Act permission or 1997 Act permission for the station or additional capacity was granted on or before 18 June 2015,
(ii) consent under section 36 of this Act that permits a greater capacity for the station than that permitted by the planning permission under Clause 32LJ(4)(j)(i) was granted after 18 June 2015, and
(iii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment (n) to Government new clause 2, in new section 32LJ(4), at end insert—
“() evidence that—
(i) planning permission for the station or additional capacity was granted on or before 18 June 2015,
(ii) planning permission under Clause 32LJ(4)(k)(i) was superseded by a subsequent planning permission granted after 18 June 2015 permitting a station with the same or a lower capacity than that granted under the planning permission referred to in Clause 32LJ(4)(k)(i), and
(iii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment (o) to Government new clause 2, in new section 32LJ(4), at end insert—
“() evidence that—
(i) planning permission for the station or additional capacity was granted or refused on or before 18 June 2015, and was subsequently confirmed or granted after that date following a statutory challenge under section 288 of the 1990 Act, section 237 of the 1997 Act or section 118 of the Planning Act 2008, or following a judicial review, and
(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment (p) to Government new clause 2, leave out new section 32LJ(5)(a) and insert—
“(a) evidence of an agreement with a network operator to carry out grid works in relation to the station or additional capacity and was originally made on or before 18 June 2015 notwithstanding the fact that may have subsequently been amended or modified, and
“(ab) a copy of a document written by, or on behalf of, the network operator which estimated or set a date for completion of the grid works which was no later than 31 March 2017; or”
Amendment (q) to Government new clause 2, in new section 32LJ(7), after
“section 92 of that Act);”,
insert
“and includes planning permission deemed to be granted in accordance with section 90 of that Act.”
Amendment (r) to Government new clause 2, in new section 32LJ(7), after
“section 59 of that Act);”,
insert
“and includes planning permission deemed to be granted in accordance with section 57 of that Act.”
Amendment (s) to Government new clause 2, in new section 32LK(4)(a)(i), leave out “from a recognised lender”.
Amendment (t) to Government new clause 2, in new section 32LK(5), leave out from “means a provider” to “credit rating agency;” and insert—
“means a bank or financial institution or trust or fund or other financial entity which is regulated by the relevant jurisdiction and which is engaged in making, purchasing or investing in loans, securities or other financial instruments.”
Amendment (u) to Government new clause 2, leave out new section 32LK(6).
New clause 3—Use of Northern Ireland certificates: onshore wind power—
‘(1) The Electricity Act 1989 is amended as follows.
(2) Before section 32M insert—
“32LM Use of Northern Ireland certificates: onshore wind power
(1) The Secretary of State may make regulations providing that an electricity supplier may not discharge its renewables obligation (or its obligation in relation to a particular period) by the production to the Authority of a relevant Northern Ireland certificate, except in the circumstances, and to the extent, specified in the regulations.
(2) A “relevant Northern Ireland certificate” is a Northern Ireland certificate issued in respect of electricity generated—
(a) after 31 March 2016 (or any later date specified in the regulations), and
(b) by a Northern Ireland onshore wind generating station accredited after 31 March 2016 (or any later date specified in the regulations).
(3) In this section—
“NIRO Order” means any order made under Articles 52 to 55F of the Energy (Northern Ireland) Order 2003;
“Northern Ireland certificate” means a renewables obligation certificate issued by the Northern Ireland authority under the Energy (Northern Ireland) Order 2003 and pursuant to a NIRO Order;
“Northern Ireland onshore wind generating station” means a generating station that—
(a) generates electricity from wind, and
(b) is situated in Northern Ireland, but not in waters in or adjacent to Northern Ireland up to the seaward limits of the territorial sea.
(4) Power to make provision in a renewables obligation order by virtue of section 32F (and any provision contained in such an order) is subject to provision contained in regulations under this section.
(5) This section is not otherwise to be taken as affecting power to make provision in a renewables obligation order.
(6) Regulations under this section may amend a renewables obligation order.
(7) Section 32K applies in relation to regulations under this section as it applies in relation to a renewables obligation order.”
(3) In section 32M (interpretation)—
(a) in subsection (1), for “32LB” substitute “32LM”;
(b) in subsection (7), for “32L” substitute “32LM”.”
This New Clause allows the Secretary of State to make regulations preventing an electricity supplier in England, Wales or Scotland from using a renewables obligation certificate issued in Northern Ireland to discharge its renewables obligation, where the certificate was issued in respect of onshore wind power generated in Northern Ireland after 31 March 2016. The regulations can specify exceptions.
Amendment (a) to Government new clause 3, leave out new section 32LM(2)(a) and insert
“which—
(i) is a 33kV connected onshore wind generating station consented after 30 September 2015, or
(ii) a cluster connected onshore wind generating station consented after 31 October 2015”
New clause 15—Onshore wind power: renewables obligation—
The power to make a renewables obligation closure order in respect of electricity generated by an onshore wind generating station in Scotland may only be exercised by Scottish Ministers.”
This new Clause would return to the Scottish Ministers the power to close the renewables obligation in relation to electricity generated by onshore wind generating stations in Scotland.
Dr Alan Whitehead (Southampton, Test) (Lab)
The end of this morning’s proceedings was a little like an episode of “Neighbours”.
Dr Whitehead
Indeed, but one in which we do not get to know the dénouement until the next episode. The dénouement is, as the Minister will know, that the commitment in the Conservative manifesto was to end any new public subsidy for onshore wind. The question is whether that means new public subsidies, or public subsidy that previously existed but applies to new projects. Clearly, the renewables obligation is a long-standing subsidy and unless one places a very specific interpretation on that manifesto pledge, it is about new forthcoming subsidies and we should bear that in mind in our discussions.
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
I am excited to hear the question of the hon. Member for Southampton, Test. I had not anticipated that it would be that, simply on the grounds that, as I, my right hon. Friend the Secretary of State and many Members in Committee and on Second Reading have made absolutely clear, our manifesto commitment was to end subsidies for onshore wind early. I therefore say philosophically to the hon. Gentleman that, had we meant new subsidies we would have said “new subsidy schemes”, which is the interpretation I think he wants to put on our manifesto commitment.
Let me be clear: the Government were elected with a clear manifesto commitment to end new subsidies for onshore wind and to ensure that local people have the final say on where onshore wind is built. I hope that hon. Members will accept that it is for the Government to agree what their manifesto commitments are. We have gone to great lengths to assure all hon. Members that what we meant was to close the subsidy early; we are not referring to new subsidy schemes. Had we meant schemes, we would have said schemes.
Andrea Leadsom
As the hon. Gentleman knows, there are separate binding targets for different types of renewable energy. He also knows that we are making good progress in meeting our targets. We expect to be within the deployment range for onshore wind that was projected in the electricity market reform plan.
If we do not implement the early closure proposals in these amendments, there is a risk that we will deploy beyond the range that we forecast. There is the potential for up to 7.1 GW of further onshore wind under the renewables obligation. Without action to close the renewables obligation early and manage the spending under the levy control framework, there is a risk of deploying beyond the delivery plan range, which would add more costs to consumer bills.
I remind the Committee that, as my right hon. Friend the Secretary of State for Energy and Climate Change said on 18 January,
“Subsidies should be temporary, not part of a permanent business model.”—[Official Report, 18 January 2016; Vol. 604, c. 1152.]
That is what we seek to implement.
Dr Whitehead
May I press the Minister on her point that it is necessary, among other things, to cap the deployment of onshore wind, bearing in mind that we already have deployment over the EU 2020 renewables target? The legal target, the one for which we would get fined, is the overall target. The sub-targets, which relate to heat, transport and renewable energy, are not legal targets, but they are aspirations towards the legal target. Therefore, the consequences of whether one underperforms or overperforms in any particular sector relates only to the overall target. Overperforming in particular areas would actually make a positive contribution towards ensuring that we do not get fined as a result of not meeting the 2020 targets. Is that the Minister’s understanding of how the targets work? If so, does she want to amend her point about how onshore may play a role in meeting them?
Andrea Leadsom
I guess that the hon. Gentleman makes the reasonable point that one could be traded for another, but the object of our renewables policy is not merely to avoid getting fined by the EU. I am quite sure that he does not mean to imply that that is the case. The idea is to decarbonise the UK economy. Yes, we could decide to take one route only and therefore not worry about other sectors such as transport and heat, but I am quite sure that the hon. Gentleman is not seriously suggesting that. Even if he were, it is absolutely still the case for the renewables sector that if we continue to offer generous billpayer subsidies, costs to consumers will continue to rise.
The policy was well thought through and had deployment ranges that forecast the achievement that we sought against our legally binding targets. We believe that we are in a position to meet the target with onshore wind. Simply saying, “We should carry on with it because we can do more than we set out to do,” is not a way to run anything, so I cannot agree with the hon. Gentleman that it would make sense to continue with subsidies at the expense of billpayers. This is not free money. We frequently discuss in the Chamber the problem of people being in fuel poverty and those are the people who will have to keep paying for subsidies if we choose to deploy beyond the level that we have already set for ourselves.
Andrea Leadsom
I remind the hon. Gentleman that, in making progress towards our 2020 renewables target of 15%, we have surpassed our interim target for 2013 and 2014 with an average 6.3% of final energy consumption coming from renewable sources over those two years against a target of 5.4%. The contribution of renewables to energy generation is increasing across heat, electricity and transport. Heat from renewable sources increased by 4.6% during 2014. As hon. Members have pointed out, a record 19.1% of electricity generation came from renewables in 2014. Renewable biofuels for transport also rose by 14% during 2014.
I can again say to the Committee that we have targets for each of our energy sectors, and it is simply not realistic to say that just because onshore wind benefits from a generous subsidy and other projects could come forward, we should change our deployment target aspirations, putting the ensuing costs on to consumers’ bills at a time when we are already comfortably meeting our targets.
Andrea Leadsom
I want to make some progress. We have discussed this point and I have given hon. Members the chance to give their views, but I have been clear that I do not agree that we should overcompensate on electricity generation.
We are mindful of the proposals’ potential impact on industry and of the need to protect investor confidence, which is why we have been listening and continue to listen closely to what people have to say. In fact, the grace period provisions, which were first tabled in the other place and have been re-tabled for debate here today, have been developed directly in response to industry feedback on our proposals. We must move forward with these proposals, not only to protect consumers but to provide much-needed certainty to both onshore wind developers and investors. I will now speak about each Government amendment in turn.
Chris Heaton-Harris
As I said on Second Reading, we need to evolve our planning system so local communities benefit very much from any developments. I cited the French system which my fellow Eurosceptic colleagues will be very uptight about. There is a better way of dealing with planning when it comes to helping local communities to decide whether to take onshore wind, fracking or other things, but I do not think we are there yet.
To return to what happened in my constituency with onshore wind, with which this part of the Bill deals, we launched a very simple campaign. We got on board, some Members will recall, the former Energy Minister, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), who said, “Enough is enough. We are going to make changes.” I thought that was a good signal that the Conservative manifesto might have something fairly solid on this. The following Energy Minister, my right hon. Friend the Member for West Suffolk (Matthew Hancock), said on the Floor of the House on 6 March 2015—a date that in my mind definitely came before the General Election campaign:
“We have made it absolutely clear that we will remove onshore wind subsidies in the future, and that the current 10% that is in the pipeline for onshore wind is plenty.”—[Official Report, 6 March 2015; Vol. 593, c. 1227.]
I thought that was probably enough of a signal as to where our manifesto was going. Forget the petitions, the questions, the debates and all the other points that were made on the Floor of the House. I was very pleased when I saw the Conservative Party manifesto.
If Opposition Members choose to dance on the head of a pin about whether “new public subsidy” refers to renewables obligation certificates or anything else, perhaps that allows me to talk about things in the second part, which we have all agreed. Let us talk about the way that local people can have the final say on these matters. Let us talk about something the Committee has agreed on previously—how we decommission big energy projects.
It cannot be said that these are not big energy projects. Supposedly, decommissioning is a given—the costs are being set aside when it comes to the North sea—but it is not yet part of the Bill when it comes to onshore wind. The Committee debated earlier the jobs, the supply chain, recycling, the sites that are properly and safely returned to nature—all phrases used by the hon. Member for Southampton, Test about the decommissioning of oil and gas. Yet we currently have a system in place that simply does not allow for decommissioning bonds or any way to ensure that the developer ends up paying to decommission a huge chunk of metal being stuck in the countryside. If we are talking about making sure that local people have the final say on wind farm applications, perhaps we should allow them to include the costs of decommissioning to be stuck into a fund and subtracted from subsidy at source.
Dr Whitehead
The hon. Gentleman has mentioned schemes that are in the pipeline and related that to the “Enough is enough” comment made by the right hon. Member for South Holland and The Deepings. He has also mentioned local people having their say. Does he agree that a scheme on which local people had had their say and was therefore given planning consent was, first, “agreed by local people”, which is the first test of the Conservative manifesto, and secondly, “in the pipeline”, which is test two of the Conservative manifesto? Does he agree that that is a pretty accurate description of his position?
Chris Heaton-Harris
I agree with the first part of that, but I cannot believe that many of these developments are in the pipeline, as the hon. Gentleman says, at this point in time.
I want to discuss how the second part, which we all agree on, could be strengthened, should the Government choose to do so, were their clear manifesto commitment to be derailed, perhaps not here in Committee, but in another place. Members, particularly the SNP Members whom I heard on the Floor of the House only last week, have rightly been concerned about people’s safety, whether it is nuclear sites or energy sites generally. Everyone has been concerned about safety.
There is an element of safety that I believe could be built into the planning system. My hon. Friend the Minister knows that I have been lobbying hard for this to be included in the planning system in respect of onshore wind. This is a crucial difference between onshore and offshore wind: although they are similar technologies, offshore does not raise this concern about excessive amplitude modulation. That is the low thumping noise that people hear if they stand in the appropriate place away from a turbine. It is possible to predict where it will fall and it causes huge concern to local people near onshore wind turbines. Offshore wind does not have the same effect because there are no people living in dwellings nearby, supposedly.
The noise from wind turbines could quite possibly be the next big public health scandal. It has been known about for a very long time. There have been reports since 1995 on the phenomenon of how very low frequency noise generated by turbines, which has been defined to include infrasound, was the cause of annoyance reported by neighbours. The reports included numerous physiological responses that were described as sensations including a feeling of pressure, a sense of uneasiness, booming and thumping pulsations. A huge amount of work has been done in Australia, Japan and now in the United Kingdom on where turbines are situated and how that affects people’s sleep and patterns of stress.
Normally, one would expect this to be taken into account when a planning order is drawn up. In 1987, this was all well known but in the early 1990s, as more and more onshore wind turbines were built, there was a policy decision, I guess one might say, to ensure that concerns about noise limits and planning criteria would not affect where turbines could be situated. A document for noise called ETSU-R-97 was therefore drawn up. It has been massively criticised ever since, but until recently there was no silver bullet to show that it did not work properly because it did not measure the very low frequency background whumping sound that causes people great difficulty.
It could be said, and has been said in debates in this place, that this was a noise condition devised by the wind industry for the wind industry to promote the wind industry and ensure that local concerns about noise were not taken into account. It was certainly referenced in the Kelmarsh decision. Over the last decade or so, the wind industry has fought tooth and nail to defend those standards and guidelines. It has resisted every attempt by anyone to try to change them, but things have changed massively in the past couple of years. The Department itself has recognised that amplitude modulation exists and causes great concern. I FOI-ed every local planning authority in England to find whether they had had issues with noise from wind turbines. A large number had had such issues and had sent environmental health officers to investigate, but there was no central Government guidance on this particular type of noise, which is causing people to become sick. Just recently, the wind industry itself has recognised that amplitude modulation causes the issues I have described.
If we were truly concerned about amplitude modulation and how it might affect individuals up and down this country, we would allow local people—in line with the final part of the paragraph in the Conservative party manifesto that I mentioned—to stick in noise conditions for any planning applications that came forth for onshore turbines. We surely want to avoid a public health crisis in future. We probably recognise that we have not done enough in the past to ensure that people’s health is properly taken into account. There are ways in which the whole Bill can be tightened in this area.
Dr Whitehead
My hon. Friend might like to think about two points. First, the relative capacity margin of different forms of energy takes into account theoretical running time relative to downtime, and other factors, and therefore the figures should not be remotely near 80% or 90%. Secondly, will he speculate for a moment on the question of ramping down and ramping up? Wind is particularly good at that as far as balancing the system is concerned.
Jonathan Reynolds
Absolutely. There is an obsession in the Conservative party with onshore wind, and often with other types of renewables, too. Arguments are applied to onshore wind that are often illogical. I simply ask hon. Members to spend some time going to see how the system is run and how all these issues apply to different assets on the grid. If they did that, some of their fears might be allayed.
Simon Hoare
The hon. Gentleman knows that it was clearly written post-2013, but the sector should have known of the irrepressible commitment of my hon. Friend the Member for Daventry, with his 101 Dalmatians, or however many it was, who had been making such comments during the course of the previous two Parliaments, and realised that something was likely to happen.
One thing that I find of genuine interest/concern—we sometimes have faux interests and concerns, but this is genuine—is that the onshore wind sector is fairly mature and well established. We do not need to argue about its bona fides. We do not need to argue about whether it is generating 1%, 5%, 6% or 14% of electricity, because it varies. It is here and we have it. Very often, Governments of all stripes will provide some form of financial support and backing to a nascent industry or sector, but once it is on its feet and has proven its bona fides, it should be able to stand on its own two feet without subsidy.
In the conversations I have had with people from the sector, the question that was always very hard, if not impossible, for them to answer was what cut-off point they envisaged for the ending of onshore subsidy. When I asked, “What are you saying to Government and to Ministers about how you see this support going?” the general response was, “We will continue to take the subsidy as long as it is there.” That is no way to run a policy, even if the books are buoyant and in the black. It is certainly no way to run a policy when the books are anything but.
I was interested when the hon. Member for Norwich South seemed to suggest that because the subsidy was coming from the public—from their direct debits, bank accounts, purses and wallets—and not directly from Her Majesty’s Treasury, there was some difference. I keep making this point: although the national average salary is around £24,500, in North Dorset it is £17,500. I do not think that my constituents saw it as particularly fair or equitable to provide, through their bills, subsidy to very successful businesses and the landowners who were also getting their percentage of the deal.
Simon Hoare
Let me make this point, because I think this is how the market operates, and will operate in future.
The hon. Member for Coatbridge, Chryston and Bellshill was discussing the planning system. Anybody who has any understanding of the commercial planning process—onshore wind turbines are part of that process as much as supermarkets or hotels are—will know that there are risks attached to it. People can spend an awful lot of money optioning up the land, paying consultants, having surveys done and so on, yet still fall foul of the process. Even if someone does not fall foul of it and secures consent, they might suddenly find that the funding regime from the banks or pension funds has altered or the appetite for the product they were seeking to develop has waned. They just have to chalk it down to experience. If we have some form of system in which as soon as anybody makes a planning proposal the automatic presumption is that, de facto, they will always have consent, that would be a very dangerous sign to send to the commercial development sector.
Simon Hoare
I hear what the hon. Gentleman says. He obviously has a little more faith—I will be charitable and say faith—because I am not entirely convinced that any sector that is so sated by subsidy would ever turn round at any point and say, “Do you know what? Now is a really good time to end the subsidy.” There will always be a reason. We heard it from the solar sector: “Give us another 10 more years because we are on the cusp of doing something quite exciting with storage batteries.” Why they did not think about that when the sector was nascent, I do not know. People who receive a subsidy will always find an argument for the maintenance of the status quo.
The hon. Member for Southampton, Test, who leads for the Opposition, is about to burst a blood vessel unless I let him in. Having listened to him for the past two and a half days, I am loth to do so, but of course I will let him in.
Dr Whitehead
May I gently ask the hon. Gentleman whether he has ever heard of digression? When the subsidies for wind were first introduced, one of the reasons that they received clearance for state aid in the EU was that they were not permanent and were based on digression, and everyone agreed that that should be the case. Secondly, I could have sworn the hon. Gentleman was here earlier in the debate when we were discussing the application of subsidies to a mature industry: North sea oil and gas exploration. Will he compare what happened earlier in the debate and what is happening now?
Simon Hoare
In fairness to the hon. Gentleman, he makes a valid point, and I will answer his point in the way that I have answered it when constituents have talked to me about it. For those who try to seek a golden thread of thinking that runs through all of energy policy, they will look in vain, because there are inconsistencies. I am a huge supporter of the nuclear sector. I must confess it makes me slightly glow. [Interruption.] No, that is not the word I am looking for. It is not a rational approach to say I do not like subsidies for onshore wind, but I can understand the need for a subsidy for the nuclear sector. The problem with what the hon. Gentleman is trying to find—and he is legitimate in his search—is that we have so siloed our means of energy generation that they have to be viewed silo by silo, rather than according to the product that is being generated: electricity.
I do not want to take up the Committee’s time more than I need to, but I want to slightly echo what my hon. Friend the Member for Daventry said. My hon. Friend the Minister may recall that I mentioned this point on Second Reading in the House. At some point, there will need to be a side conversation between her Department and the Department for Communities and Local Government about the national planning policy framework. There is a slight danger that in the Localism Act 2011, we raised too much expectation of the phrase “local decisions”.
The Minister confirmed this morning—we are absolutely right to keep to this regime—that an aggrieved applicant would still be able to trot off to the Planning Inspectorate to appeal a decision, in the same way as the Secretary of State will be able to recall an application that may have been determined favourably by the local planning authority. Again, both an aggrieved applicant and an aggrieved third party will still have recourse to the courts for a judicial review, but the wording of the national planning policy framework—I am afraid I do not have the paragraphs to hand—provides a strong and reliable crutch to the inspectorate. It says that national planning policy, such as decarbonisation and so on, will trump a number of the key topics that my hon. Friend the Member for Daventry was talking about: areas of outstanding natural beauty, sites of special scientific interest, heritage and listed buildings and so on.
I do not think that we need to ramp that up too much, but I welcome the fact that instead of segregating proposals by size, local councils will be able to determine applications through the democratically elected process of the council chamber. Local people will, of course, be able to have a say there and will be able to appear as third parties at a public inquiry, but the final decision will not be taken by local people if an applicant decides to appeal. In my constituency, prior to the election, we had a terrible proposal for a very obvious place in terms of local vista and impact. North Dorset District Council turned it down, to the huge relief of the community, and the applicant read the room and did not appeal, realising that they would not get it. However, that avenue will remain open to an aggrieved applicant or developer.
It goes back to the point that I was making to SNP Members and others: all planning has a risk. In the absence of a provided subsidy, it may well be that applicants and landowners will think far more carefully about what they are applying for and where they apply for it. If they are reliant on the private sector to fund their initiatives and enterprises, we may find—
Matthew Pennycook
I absolutely agree; my hon. Friend makes the case very powerfully. It is what I have heard on the Select Committee time and again, across a variety of renewable technologies. No one argues with the Minister’s point that as costs come down, subsidies should, in a stable and certain flight path, also reduce with them. What we take issue with is the early closure, as announced in June with very little consultation.
This could have been done in a much more effective way, in negotiation and consultation with the industry, where we move to different contracts for different regimes more stably. If the Minister is willing and happy to give the onshore wind industry the certainty that it is looking for around contracts for difference, I am sure we would be happy to hear that. What we have at the moment is a policy vacuum, when we had, before, not indefinite public subsidy but a certain flight path off it through the ending of the renewables obligation in 2017.
I return to my point about the EU renewables directive. When we look at the figures, we see that the situation is stark. We need 180 TW of new low-carbon generation by 2030. Every megawatt of generation that we do not get from onshore wind, in the sense of falling below our EU renewables target, will have to come from a more expensive form of renewable technology, be it offshore wind or nuclear.
Given how far behind we are on heat or transport—and I hope the Minister will agree with the Secretary of State that we do not have the right policies in place; we are behind on those targets and that part of renewables—the idea that this will bring down bills, which I understand is a large part of the rationale, at least according to Ministers, not the windy caucus, is unlikely. Even that 30p in the central scenario in the impact assessment is unlikely to happen, because we will be forced to turn to more expensive forms of renewables to meet our targets.
The worrying signal that this policy has sent, not just for investor confidence, is that the Government have abandoned their previous commitment to a technology-neutral approach at a time when the overriding priority must be decarbonisation at the lowest possible cost, regardless of what technology best aids that. So I support the Bill as it stands and I oppose the amendments.
Dr Whitehead
I do not rise to head up the debate, because my hon. Friend and fellow Front-Bench spokesman the Member for Norwich South has already done that admirably this afternoon. We are debating a number of amendments together in a process whereby something is potentially coming back into the Bill where it was not previously. Therefore, a principal series of amendments and consequential amendments to those amendments are being debated essentially at the same time, although I am sure we will have an opportunity to disentangle those two aspects of our debate; I am talking about the formal process of putting Government amendments 1, 2 and 3 to the Committee and considering whether we should divide on them, subsequently to which amendments to the amendments may then be considered formally. I understand that that is how we are going to do it.
Although Opposition Members are relatively confident that the strength of the argument made so far means that those original amendments will not pass, it is nevertheless possible that they might. We need to be clear in this debate about what the consequential amendments consist of. I will restrict my remarks solely to amendment (a) to new clause 1, which is in my name.
The hon. Member for Coatbridge, Chryston and Bellshill has done this Committee a service by setting out the range of issues relating to the grace periods, which are a consequence of the proposal to put back into legislation a clause bringing the renewables obligation to an early halt. I appreciate that we have in the Committee what one might call the “windy caucus”—the “ultras” is another way of describing them—who would have no grace periods and feel the process should have stopped immediately, the day after the general election. However, we have grace periods, and if one is to have them, it is important we get them right.
Grace periods should be reasonably equitable. Clearly, it is not equitable if instead of being a slamming shut of the door in its own right, a grace period slams another series of doors shut in the process of being exercised. There are a number of instances where that has apparently occurred.
One of the most egregious instances of a door being shut by a grace period when that grace period should be holding the door open is where applications have gone down exactly the path set out in the Conservative manifesto for wind farms—that is, local people have the final say on wind farm applications. They have specifically gone into the process of seeking approval. Without strings attached, without attempting to go for non-determination and without attempting to go straight to appeal groups, they have wholeheartedly gone into the process of properly consulting and seeking agreement at local level and have gone through all the procedures relating to local planning committees. Indeed, they have done exactly what would be envisaged for the process in the future, were the second part of that Conservative manifesto commitment to have been put into place.
Those particular schemes have not only gone through that process but received planning consent through it—that is, they have applied for consent and a planning committee has considered it and consented to the application, with all the issues concerning the consent having been resolved.
As hon. Members will know, in all planning arrangements—this is not only a question of wind farm applications—a number of sub-conditions may be discussed; for example, section 106 arrangements or, in some instances, a variation of a previous planning condition that needs to be discussed. Essentially, the degree or the qualification has been passed, but the degree ceremony has not been held and the certificate has not been given out, yet to all intents and purposes that application has been determined and the scheme is therefore in the pipeline. It is in the pipeline because it has been agreed by local determination.
Dr Whitehead
I seek a little more clarity from the Minister on varying planning consent. My understanding, from what she has said, is that where a development received planning permission consent or development consent before 18 June 2015 but a variation on that consent was subsequently undertaken, it is within the grace period. Modifying the grace period in order to accommodate that is therefore not necessary, because it is definitely already in the grace period. Anyone who undertakes that development therefore has a clear understanding from the Minister that their development will not be impeded as a result of that process.
Andrea Leadsom
That is correct, yes.
Amendments (q) and (r) relate to projects that are the subject of a deemed planning permission. I am pleased to reassure the Committee that a planning permission deemed to be granted as part of the consent granted by the Secretary of State under section 36 of the Electricity Act 1989 is already allowed for within the current drafting, as long as the section 36 consent is granted on or before 18 June last year. Planning permission deemed granted under section 36, like other planning permission, meets the conditions of the grace period so long as it was deemed to be granted on or before 18 June. Again, the intent of the amendments is already the intent of the policy, so changing the drafting is unnecessary.
Amendments (s), (t) and (u) relate to the proposed investment freezing condition, and I thank the hon. Member for Coatbridge, Chryston and Bellshill for tabling them. The investment freezing condition was not a part of our original policy proposals but was developed in response to my Department’s extensive industry engagement, following the announcement on 18 June. We listened to stakeholders, including the devolved Administrations, developers, supply chain and investors. A number of stakeholders expressed concerns about the impact that the lack of legislative clarity was having on certain financiers’ willingness to lend, and we are committed to addressing that.
To ensure that projects that otherwise meet the grace period criteria are not held back from deploying, we developed a proposal to allow an additional nine months in which to accredit those projects that already meet the approved development condition but that have suffered from the investment freeze. That nine-month period is intended approximately to reflect the time period between the date of the Secretary of State’s announcement and the Bill’s expected Royal Assent. The amendment will ensure that we meet the intent of our original policy without unfairly affecting projects. The evidence we received during engagement with industry suggests that those most likely to be affected by an investment freeze were those funded by banks, so the definition of “recognised lender” has been drafted to reflect that.
The investment freeze condition is about protecting projects that evidence demonstrates are affected by this issue; it is not about giving developers a better chance than they would otherwise have had to access the RO before its closure date. Unfortunately, the amendments tabled by the hon. Member for Coatbridge, Chryston and Bellshill risk doing exactly that. Removing the requirement that a project must need funding specifically from a recognised lender and widening the definition of a recognised lender as suggested could open up the grace period to gaming. As I have said, we must limit deployment to what we believe is affordable. The Government’s policy does exactly that in a fair way for developers while clearly and sensibly managing potential risks and protecting consumer bills.
I understand that, through amendment (a) to new clause 3, the hon. Gentleman seeks to ensure that the power relating to Northern Ireland renewables obligation certificates may only be exercised in relation to certain wind generating stations. In particular, he seeks reassurance about the equivalence of the eligibility dates for the grace period in Northern Ireland. I reassure him that the intent of the clause is only to protect consumers in Great Britain from the cost of any additional support that is given to onshore wind in Northern Ireland beyond what would be available in Great Britain. The Government’s position is that the power will not apply to projects meeting grace period conditions that are equivalent to those applying to projects in Great Britain. Those projects meeting equivalent conditions will be excluded from the power. Therefore, Northern Ireland renewables obligation certificates for such projects will continue to be redeemable in Great Britain.
The Government have been in regular discussions with the Northern Ireland Executive about the implementation of this policy. In September, the Government agreed a position with Northern Ireland regarding the equivalent terms for closure. On that basis, the Northern Ireland Executive published their consultation on proposals for early closure of the renewables obligation in Northern Ireland to onshore wind, which included reference to the eligibility dates mentioned in the amendment.
I thank the hon. Member for Aberdeen South for tabling new clause 15. My understanding is that he wants only Scottish Ministers, and not the Secretary of State for Energy and Climate Change, to be legally able to close the renewables obligation to onshore wind in Scotland. I remind hon. Members that energy policy across Great Britain is reserved to the UK Government. The power to make a renewables obligation closure order is reserved to the Secretary of State for Energy and Climate Change under section 32LA of the Electricity Act 1989, which was inserted by the Energy Act 2013 specifically to ensure that closure could be effected consistently across Great Britain. Because the policy is reserved, the provisions to close the RO early to onshore wind in the present Bill will also apply to Great Britain.
The hon. Gentleman’s proposed change would reverse the policy implemented by section 32LA of the 1989 Act and set out in the original Renewables Obligation Closure Order 2014. I remind the Committee that it is imperative that we maintain consistency across Great Britain as a whole, providing consistency and certainty to industry and, importantly, fairness to consumers. We estimate that in 2015-16, £850 million of the support under the RO as a whole will go towards funding onshore wind across the UK. Of that, we estimate that about £520 million, or approximately 60%, will go towards funding Scottish onshore wind farms, even though only about 10% of UK billpayers are in Scotland.