Energy Bill [ Lords ] (Second sitting)

Debate between Alan Whitehead and Bim Afolami

Committee stage
Tuesday 23rd May 2023 Public Bill Committees

[Bim Afolami (Hitchin and Harpenden) (Con)]

I want to add a note of caution in relation to this set of clauses—a word for those on the Treasury Bench and the Minister, who is a good friend and a good parliamentarian, and who is doing a fantastic job on the Bill and in his role.

There is a hidden danger in the Secretary of State and, indeed, the Department not having the ability, outside of an interim period, to intervene at all in the process vis-à-vis licences. If I have misunderstood anything, I stand corrected, but as I understand it, once we have gone past the interim period—in peacetime, so to speak—the regulator, Ofgem, will make a decision. That decision can be, rightly and very understandably, scrutinised. Appeals can be made to the CMA, which is the right place, but there is no provision for the Secretary of State to involve themselves in that process.

If my understanding is right, and it may be wrong, there is no ability for the Secretary of State to intervene in that process. That strikes me as dangerous in the event that there is an emergency, the economic situation changes hugely or the broader political environment changes to the point that the regulator has a very different view of the issue from that of the Department. I should have referred Members at the beginning to my entry in the Register of Members’ Financial Interests: I am chair of the Regulatory Reform Group.

My point is not a dry, technical one that has no real political or economic bearing; it could be hugely significant over the coming years. I urge the Minister and his officials to consider whether we should retain some ability for the Secretary of State to intervene directly in the process if that were required, although I suspect that most of the time it would not be.

[Dr Whitehead]

I was going to make a slightly different point from that made by the hon. Member for—

[Dr Whitehead]

I remembered the Hitchin bit, but I could not remember the Harpenden bit; I am sure that the hon. Member treats both parts of his constituency with equal reverence.

[Bim Afolami]

Of course.

[Dr Whitehead]

I was tempted to refer the hon. Member to the Energy Prices Act 2022, which was recently passed—I think, to paraphrase the Minister, not on his watch. The Act allows the Secretary of State to do pretty much anything that he or she wants in the energy sphere. I do not know whether that applies to the circumstances that the hon. Member for Hitchin and Harpenden suggested, but we are particularly concerned about the powers in that Act, and whether they need to be rowed back a little in this Bill.

I draw the Committee’s attention to the process of appeal from the economic regulator to the CMA. It appears to be a linear process. The appeal is set up by the CMA, effectively, and there is no going back afterwards. There is not a circumstance in which the economic regulator can say, “Actually, we think the CMA didn’t work as well it should in terms of casting that appeal. Can we appeal the appeal—not necessarily the substance of the appeal, but the way in which it has been carried out?”

What is apparent in terms of the CMA’s powers regarding appeals is that they give the CMA a lot of ability to misstep. Clause 20(4) states:

“The CMA may refuse permission to bring an appeal only on one of the following grounds”.

The CMA, actually on fairly wide grounds, can therefore refuse to bring an appeal. It appears to have pretty widespread powers to make a determination without any comeback. For example, clause 22(4) states:

“The CMA may allow the appeal only to the extent that it is satisfied that the decision appealed against was wrong on”

various grounds, including, among others,

“that the decision was based, wholly or partly, on an error of fact”.

Various things in the clauses emphasise the linear nature of the appeal process—that is, the CMA decides, and no one is looking at what the CMA is doing in terms of its appeal processes. I would like to hear whether the Minister thinks that that is adequate or whether a little more attention ought to be paid to what the CMA is doing in those circumstances, and whether the relationship between the CMA and the economic regulator under those circumstances is as good as it could be.

Environment Bill (Ninth sitting)

Debate between Alan Whitehead and Bim Afolami

Committee stage & Committee Debate: 9th sitting: House of Commons
Tuesday 3rd November 2020 Public Bill Committees

[Dr Whitehead]

I am afraid that we come to another discussion about the definition of a word in the Bill, which I know will cause some Members to groan. Nevertheless, as we saw in the last discussion, just a couple of words, or three, can have enormous significance in terms of a Bill’s wider consequences, so it is important that we look at them, what they mean, and their place in the Bill.

Amendment 195 seeks to define what is meant by “significant” where the clause states:

“The Secretary of State must report on developments in international environmental protection legislation which appear to the Secretary of State to be significant.”

The clause therefore provides for reports on what is happening around the world in terms of environmental protection legislation. What are the good and bad points, what can we learn from, and what things can we co-operate on? The clause kindly defines international environmental protection legislation as

“legislation of countries and territories outside the United Kingdom, and international organisations, that is mainly concerned with environmental protection.”

The clause also states:

“The Secretary of State must report under this section in relation to each reporting period.”

It then states what those reporting periods are to be. International environmental protection legislation is therefore defined, but the Secretary of State apparently has a completely free hand to decide which of those developments are significant, without any accompanying definition in the legislation of what that word means.

One might say that that is quite significant, because clearly there can be an enormous range of judgments on what, subjectively, a particular Secretary of State might think are significant international developments. For one Secretary of State, it might be that a particular state has adopted legislation similar to our own in their Parliament. Another might think it significant that another jurisdiction has decided that its army should be exempt from land holdings coming under its own environmental legislation, and that such an omission has produced riots and street clashes in that country as a result of the population deciding that it was a bad idea. A range of things might be regarded as significant or not.

[Bim Afolami (Hitchin and Harpenden) (Con)]

This point is fundamental. As drafted, the Bill has it as a subjective judgment by the Secretary of State. The hon. Gentleman’s amendment seeks to make it objective. In our system—this goes to the heart of the amendment, and many others—the Secretary of State and Ministers representing the Department are responsible to Parliament for their actions and whether any judgment they make is correct. The Bill deliberately leaves it in the hands of the Secretary of State to make that subjective judgment, and if the House disagrees at the time the debate will happen at the time.

[Dr Whitehead]

I thank the hon. Member for his intervention, but that is not quite right, really. The Secretary of State must report on developments and on international environmental protection legislation that appears to him or her to be significant, and after he or she has taken a judgment, he or she produces a report that must be laid before Parliament. What comes before Parliament is not what is before the Secretary of State. It is not a gazetteer of international environmental protection action. It is a report after the Secretary of State has decided what is significant and what is not significant. Those things that the Secretary of State defines as not significant are left out of the report.

Parliament could conceivably say, “Aha! We have done a great deal of separate assiduous research and we have decided that the Secretary of State has left this and this and this out—why has the Secretary of State left these things out?”, but that requires a separate series of actions from Parliament that are outwith the report, not about the report itself. The amendment seeks to define what the Secretary of State should reasonably put into a report for Parliament to look at. We have also tabled an amendment on what should be done in addition to the report being published, which we will come to in a moment.

The central point of the amendment is that the Secretary of State should

“consult on the criteria and thresholds to be applied in determining significance”

and then

“publish guidance on those matters”.

That still gives the Secretary of State some leeway in determining what is in the report, but it means that there is a body of guidance by which the Secretary of State should be guided in terms of what he or she puts in the report for the subsequent perusal of Parliament. At present, because there is no definition of “significant” in the Bill, that guidance is completely lacking.

I hope that now I have given that explanation, the hon. Member for Hitchin and Harpenden can support the amendment, as I think what he seeks to ensure is that Parliament gets a report and the chance to discuss what the Secretary of State has done. I would suggest that a much better way of doing that is by agreeing to the amendment, rather than the word standing unexplained, as it does at the moment.