Great British Energy Bill (Third sitting)

Andrew Bowie Excerpts

Committee stage
Thursday 10th October 2024 Public Bill Committees

[Michael Shanks]

I am delighted to hear the right hon. Gentleman’s wholehearted support for Great British Energy. That is fantastic. I did not know that, so that is wonderful, and I thank him for that great support. It has really cheered my whole day, in fact, that I now have his support. Things can only get better, as we say.

On the right hon. Gentleman’s specific point about efficiency measures, we are already taking a number of steps on that matter in other areas. For example, our warm homes plan will transform homes across the country, making energy in individual homes cleaner and cheaper to run. We announced a local grants programme to support that. Of course, that does not apply in Scotland, where such work is devolved. I think the Scottish Government could probably do more in this policy area. The Scottish Government have made significant budget cuts to projects—£133 million was taken out of energy efficiency measures in 2022 and 2023—so I think work could be done across the board on the matter.

On the point about updating Parliament, it is really important that we are talking about a publicly owned energy company. It will be independent of Government, but of course it will be responsible to Parliament in the way that any other independent companies wholly owned by the Secretary of State are. A copy of the strategic priorities will be laid before Parliament. Any directions given to Great British Energy by the Secretary of State will be laid before Parliament. Of course, there are already several other mechanisms that the right hon. Member for Aberdeen South, as an extremely well-versed parliamentarian—far more so than I am—knows he can avail himself of.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

In respect of the point that the Minister has just made, and also the point that he made to the hon. Member for South Cambridgeshire, who represents the Liberal Democrats, he said that the strategic priorities would be laid before Parliament. Does he have a timescale for that? He said it would be far quicker than six months, so are we talking about before Christmas? Are we talking about before the November recess? Does he have in mind a date when the strategic priorities may be laid before Parliament?

[Michael Shanks]

If the hon. Gentleman is proposing that the Bill will be through Parliament by Christmas, that would be great—we could move forward. Of course, we need the Bill to have Royal Assent before we can move forward. I welcome his co-operation on making sure that it has a swift passage through the House of Lords and the Commons. We will move as quickly as possible. It is in no one’s interest, let alone that of a Government who are moving as quickly as possible to deliver this, for it to be delayed any further.

Finally, the requirement in new clause 1, tabled by the right hon. Member for Aberdeen South, to report to Parliament on energy efficiency measures is unnecessary because there are already many mechanisms for that. We have been consistently clear that Great British Energy will be operationally independent. I hope that the right hon. Gentleman will therefore not press his new clause to a vote.

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[Michael Shanks]

Amendments 2 and 9 seek to add provisions on community energy to the Bill. As I have said in a number of answers in Parliament and in our session on Tuesday, support for community energy is something that I absolutely share, and it is clearly shared by a number of hon. Members across the House. It will be an integral part not just of Great British Energy, but of the Government’s entire energy strategy. That is why the local power plan is a key part of Great British Energy’s delivery model, and it goes broader than GB Energy, to every other part of Government policy on energy.

As my hon. Friend the Member for Na h-Eileanan an Iar pointed out, it is essential that communities are involved. It is not a nice-to-have; it is critical. If we are to build the infrastructure we will need in future, we want communities across the country to reap the rewards. A key part of that is community-driven projects and community-owned projects.

[Andrew Bowie]

Last year, almost to the day, we launched the £10 million fund for community energy projects, building on the success of previous community funds, to be delivered through local energy hubs. How does the Minister envisage Great British Energy working with those local hubs to deliver those community projects that we announced funding for last year?

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[Olivia Blake]

This is a really valuable discussion, even if the amendment does not make it into the Bill. In the last Parliament, I served on the Energy Bill Committee. Conservative Members will remember the hours and hours of debate—it felt like days, months, years—about wider energy policy, and unfortunately there was nothing on reducing home energy use through insulation. I pay tribute to the wonderful Alan Whitehead, who kept us all entertained as the shadow Minister on that Committee. [Hon. Members: “Hear, hear!”] He was a very good man and gave a lot to this subject in particular.

Although I understand why the amendment has been tabled, this discussion is related more to wider energy policy than to the setting up of GB Energy. I understand why it has come up and it is good that we are discussing it, because it is a matter not just of energy efficiency but of human health. Sir Michael Marmot published a paper this year, reiterating the very human cost of poor-quality housing and the fact that so many homes in the UK have an energy performance certificate under level C. That is why I am pleased that in the run-up to the election we were championing the warm homes plan. I very much look forward to that, and I think it will cover the concerns of the hon. Member for South Cambridgeshire.

The Bill focuses not only on reducing emissions, but on reducing the use of energy within the objects. We have covered the issue with the words “energy efficiency” in clause 3(2)(c). I know that that sounds quite limited, but there is much more to energy efficiency than loss within our homes; it is also about loss of energy within the system, so it is right to have a broader framing of energy efficiency within the Bill.

[Andrew Bowie]

I will not detain the Committee long, but I want to express the Conservatives’ support for the Liberal Democrat amendment, primarily because of our concern about the impact of the removal of the winter fuel allowance from so many pensioners this winter, and the fact that the warm homes plan, as welcome as it is, will not be up and running until next spring, which leaves considerable concern over what might happen in and around this winter.

Those pensioners should be at the forefront of our mind as we look towards winter and as we are discussing an increase in the number of well-insulated homes in this country—on which, by the way, we had quite a good record when we were in government; we increased markedly the number of homes at EPC level C or above. For those reasons, we will support the amendment if it is pressed to a vote.

[Torcuil Crichton]

It is difficult to argue against home insulation, but I do not know whether we need legislation or an amendment to the Bill to achieve it, particularly when it is happening already in community-owned power companies such as Point and Sandwick Trust in my constituency. The company raises £1 million a year for its community, and distributed in the last 18 months £250,000 to people living in fuel poverty, to help with home insulation and heating costs. That is the template, the model and the example that GB Energy could help and sustain without need for the amendment.

[Andrew Pakes]

I share huge empathy with the sentiments behind the amendment, but I believe that the answer to home insulation sits not in the Great British Energy Bill, but in the wider clean power and clean energy mission. I find it quite rich for Opposition Members, who used to be in government, to talk about supporting an emergency home insulation programme when they decimated the apprenticeship programme that delivered the workforce that could actually insulate our homes.

[Andrew Bowie]

The record of the last Government was that we increased the number of homes that were insulated in this country to EPC C or above from 14% to more than 50% over our time in government. That is a record of which we can be proud. Can we do more? Absolutely—that is one of the reasons why we are actually backing the Liberal Democrat amendment—but I think that to castigate our record as somehow disgraceful, or to say that we did not deliver for the British people, is wrong. I ask the hon. Gentleman to withdraw or rethink his remarks.

[Andrew Pakes]

I thank the hon. Gentleman for being kind to me in the first intervention that I have ever taken in this House, but I will stick to my point: that we could achieve so much more in this country. We would be having a fundamentally different conversation about insulation efficiency and renewable energy if we had not gone through the last 14 years, in which budgets were cut. There are young people in my constituency of Peterborough who could have contributed, by moving from blue-collar to green-collar jobs, if we had had a further education system that was functioning and could train them—if we had a home insulation system that had a workforce that could get out and deliver.

Whatever we say in any resolution, motion or primary legislation in this place will not be enacted unless we have a people plan that delivers for it. That is why delivering on this issue should come in a different piece of legislation, even though I have huge empathy with the sentiments expressed by the hon. Member for South Cambridgeshire.

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[Michael Shanks]

In summary, clause 3 is about restricting Great British Energy’s activities to those specifically listed in the Bill, around “facilitating, encouraging and participating” in clean energy projects, reducing greenhouse gas emissions, improving energy efficiency, and ensuring energy security in the long term. Clause 3 thus provides the framework for Great British Energy to carry out the five functions outlined in its founding statement.

I turn to the objects set out in clause 3. Clause 3(2)(a) will enable Great British Energy to facilitate, encourage and participate in clean energy projects. Clean energy is defined in the Bill as

“energy produced from sources other than fossil fuels”.

The object will enable Great British Energy to drive the deployment of clean energy, helping to boost our energy independence.

Clause 3(2)(b) will enable Great British Energy to facilitate, encourage or participate in projects that would contribute to the reduction of greenhouse gases from energy produced from fossil fuels. Building on some of the evidence we heard on Tuesday, I want to be very clear that that includes, for example, projects relating to carbon capture and storage, or blue hydrogen.

Clause 3(2)(c) will enable Great British Energy to deliver measures to improve energy efficiency. That could include, for example, supporting demand reduction through the local power plant.

Clause 3(2)(d) will enable Great British Energy to respond to any future energy crisis, and deliver measures to support the long-term security of supply. Great British Energy is part of a bold, long-term strategy to harness our nation’s clean energy potential, and ensure that we reduce our exposure to the volatile fossil fuel markets.

Through those objects, clause 3 provides the framework from which Great British Energy can carry out its five functions. Although the five functions are set out in the founding statement rather than in the Bill, it would be helpful to refer to them in the context of clause 3. First, Great British Energy will invest in and own energy projects. Secondly, Great British Energy will lead projects through their early development stages, to speed up delivery while capturing value for the British people. Thirdly, Great British Energy will deliver our local power plan, working with local authorities, combined authorities and communities to deliver the biggest expansion of community owned energy in British history. Fourthly, Great British Energy will work with industry to develop supply chains across the UK to boost energy independence, but also, crucially, to create good, well-paid, trade unionised jobs.

[Andrew Bowie]

On the point about supply chains, the sustainable industry rewards were being designed to come with the next auction round next year. How will GB Energy work alongside the existing frameworks to deliver those sustainable industry rewards, to ensure that we build up the domestic supply chain that everybody across the parties wants?

[Michael Shanks]

That is an important point. We will announce more about allocation round 7 in due course, and how our industrial work and British jobs will work together to create those supply chains. It is an important point about the broad nature of what we want to do: to give confidence to industry that a pipeline of projects will be coming long into the future—beyond 2030, actually, although that is our initial key target—so that it is worth investing in and building the factories and supply chains in the UK. Great British Energy will be part of that, but it will certainly not be the entirety of it. We are working with the national wealth fund and the UK Infrastructure Bank to deliver more of those projects in the UK.

The final function, which the shadow Minister will appreciate, is that Great British Energy will help advance the work of Great British Nuclear. We will say more in due course about exactly how those two organisations work together. Those five functions enable Great British Energy to deliver on its clear mission of driving forward clean energy deployment, boosting our energy independence, creating good jobs and ensuring that UK taxpayers, bill payers and communities reap the benefits of clean and secure home-grown energy.

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[Michael Shanks]

Great British Energy will be operationally independent, with the Secretary of State as the sole shareholder. To operate, Great British Energy clearly needs funding, and clause 4 will give the Secretary of State the power to provide financial assistance to Great British Energy. That is so that GB Energy can take action in line with its statutory objects set out in clause 3, including financing its investments, joint ventures and day-to-day running costs.

To be clear, our intention is that Great British Energy will become financially self-sufficient in the long term. Great British Energy will invest in projects and expect a return on investments, generating revenue and delivering profits that benefit the public. It will also create tens of thousands of good jobs. However, it is prudent to ensure that the Secretary of State has the power to provide further financial support if required. Just as private sector companies would rely on the financial strength of their corporate groups to raise funds, there could be a case for providing Great British Energy with further financial support for specific projects in the future. The clause will enable that.

I assure the Committee that any further financial assistance to Great British Energy provided by the Secretary of State will of course be subject to the usual governance and control principles applicable to public sector bodies, such as His Majesty’s Treasury’s “Managing Public Money”.

Finally, in the highly unlikely situation of Great British Energy facing financial difficulty, the powers set out in clause 4 would allow the Secretary of State to step in to help prevent any disruption to Great British Energy’s intended interventions. I commend the clause to the Committee.

[Andrew Bowie]

I am comforted that the Minister thinks it very unlikely that GB Energy will get into any financial difficulty. But let us look at state-owned energy companies around the world. Just last year, for example, EDF—a fantastic company investing a lot into the United Kingdom—had to be bailed out to the tune of about €20 billion. Although I am comforted by his assurance, I think we would like to see a little more evidence for that assertion before moving forward.

The Minister says that any financial assistance will be governed by the usual processes of being accountable to Parliament, and that the Secretary of State would be, should that be the case, but clause 4(3) states:

“Financial assistance under this section may be provided subject to any conditions the Secretary of State considers appropriate.”

Should it not be conditions that Parliament considers appropriate? Will the Minister expand more on what those conditions might be?

[Michael Shanks]

I am always willing to give the hon. Gentleman comfort, in this and many other things. On both those points, the Bill quite rightly says that it is subject to any particular requirements of the Secretary of State. That is about saying that, instead of giving money to a company without any requirements, requirements will of course be put on what that funding is for—a fairly standard thing that I think we would expect.

On the broader point about parliamentary scrutiny, there are of course a number of mechanisms through which Parliament can bring scrutiny to these decisions. As I have already said, it will be outlined that any additional funding that should be given to GB Energy in the future will be in the course of the normal processes of any financial transactions that the Government undertake.

I think this is important, though: the hon. Gentleman has used the EDF example on a number of occasions, but he does not often reference the other side of the equation —hugely successful state-owned companies around the world. The truth, in all this Bill, is that for the first time in more than 70 years we are delivering a publicly owned energy company in this country, in the same vision as many of the publicly owned energy companies that are hugely successful around the world and delivering huge returns to their taxpayers every single year.

We are starting off GB Energy on a much smaller scale —of course we are—but, in time, we see it as a vehicle for delivering some of the huge successes that those companies have, and delivering a huge return to the public. We believe that public ownership of infrastructure is a good thing, and we hope that we can convince hon. Members across the House that this is the right thing to take forward.

Question put, That the clause stand part of the Bill.

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[Andrew Bowie]

I beg to move amendment 11, in clause 5, page 3, line 8, at end insert—

“(1A) The statement of strategic priorities under subsection (1) must include the reduction of household energy bills by £300 in real terms by 1 January 2030.”

[The Chair]

With this it will be convenient to discuss the following:

Amendment 12, in clause 6, page 3, line 38, at end insert—

“(1A)

(a) The Secretary of State must give a specific direction to Great British Energy that it must report to the Secretary of State on the progress made by Great British Energy towards the strategic priority of reducing household energy bills by £300 in real terms by 1 January 2030.

(b) A report under paragraph (a) must include a projection of how Great British Energy’s activities are likely to affect consumer energy bills over the following five years.

(c) A report under paragraph (a) must be made within two years of the date of Royal Assent to this Act and annually thereafter.

(d) The Secretary of State must lay a report made under paragraph (a) before Parliament.”

Amendment 24, in clause 5, page 3, line 8, at end insert—

“(1A) The statement of strategic priorities under subsection (1) must include a priority to reduce household energy bills by at least £300 in real terms.”

[Andrew Bowie]

It is a pleasure to serve under your chairship, Dr Huq, and a privilege to be back in another Committee Room debating a Bill on energy—we did not do enough of that last year.

Amendment 11 would provide a specific strategic priority for Great British Energy to reduce the average household energy bill by £300 in real terms by 1 January 2030. Amendment 12 would require an annual report to be laid before Parliament on how GB Energy activities are affecting household energy bills. The often repeated claim that the purpose of GB Energy was to save each bill payer £300 on their energy bill seems to be conspicuously absent from the legislation before us, which states that the objects of GB Energy are only to facilitate, encourage and participate in the production of energy, the reduction of greenhouse gas emissions, improvements in energy efficiency and measures for ensuring security of supply.

This morning, we checked the Labour party’s website. It still says:

“Great British Energy is part of Labour’s Green Prosperity Plan”,

which will

“cut bills by £300 on average and deliver real energy security.”

On 19 June, the Chancellor of the Exchequer said on Twitter:

“Great British Energy, a publicly owned energy company, will cut energy bills by up to £300.”

On 24 May, the now Prime Minister said on ITV’s “Good Morning Britain”:

“Well, we want to, as you rightly say, set up Great British Energy. That is a publicly funded, publicly owned company, which is owned by the taxpayer, making money for the taxpayer”,

and that it would reduce household bills by—he claims —£400. It is a little surprising that this has not made it into the legislation setting up Great British Energy, given that it was a prime reason for the delivery of this company in the first place.

[Josh MacAlister]

Can the hon. Member cite any legislation from the past 14 years that included a specific financial saving, to illustrate his point that it would be appropriate to put that in a piece of legislation? Does he not accept that his quote from the Labour party’s website includes the words “part of”—the point that the Government have made all along?

[Andrew Bowie]

The fact is that the Labour party has brought forward this legislation and is creating this company—a company that the Prime Minister, the Chancellor of the Exchequer and Labour candidates, now MPs across the country, claimed time and again through the election would cut bills by £300. It was one of the reasons why Labour is creating the company in the first place, so it is surprising that it did not want to put the £300 as a specific object in the Bill, given that it was so proud of the fact that this would deliver the savings it said it would.

[Torcuil Crichton]

I, too, have been checking online—with Full Fact, which discloses that the £300 figure that the shadow Minister raises is not based on Labour’s plans; it comes from a report from an energy think-tank Ember, and it is an estimate of what people would save. There was no Government commitment—there never was a Government commitment—to such a figure.

[Andrew Bowie]

That might be in Full Fact, but if the hon. Member goes to Channel 4’s “FactCheck”, he will see that it says:

“During the election campaign Labour suggested bills would be brought down around £300 a year”

through its “net zero energy plans”, including the creation of GB Energy. The Prime Minister said:

“Yes, I do. I stand by everything in our manifesto and one of the things I made clear in the election campaign is I wouldn’t make a single promise or commitment that I didn’t think we could deliver in government.”

So the question is this: will energy bills be cut by £300 by 2030 and, if so, why is that not in the legislation before us?

[Andrew Pakes]

The hon. Member sets great stock in saying what this Government might do. To give us context, can he tell us what his Government did? Did bills go up or down in his tenure as a Minister?

[Andrew Bowie]

While we were in government, we paid half of every single person’s energy bill in this country to get us through the energy crisis, which was created as a result—

[The Chair]

Order. We are going out of scope.

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[Andrew Bowie]

It was created as a result of the invasion of Ukraine by Vladimir Putin, as everybody in this room knows. I know that out there in the country, constituents would like clarification that that remains an express aim of GB Energy, especially the cutting of £300 from their energy bills and particularly for the pensioners out there who are having that exact amount removed from them by this Government, as one of their first acts having got into power.

The Secretary of State has reiterated that clean energy will deliver cheaper energy; it has been repeated in the House, on the campaign trail, in videos and in leaflets. I believe it is important to enshrine accountability to that ambition in this Bill, which will create the institution of Great British Energy. We must introduce a mechanism by which the Secretary of State and GB Energy are accountable to households.

[Olivia Blake]

Surely the shadow Minister agrees that Great British Energy will reduce the costs of energy, because the types of energy projects in which it will be investing will be of lower-cost energy production and we will be less reliant on foreign fuel markets, which have been very volatile for a range of reasons. I accept what he says about what he did as Minister in the last Parliament, but this Government, in our first piece of legislation, are acting to create a vehicle that will enable us to get much further.

We have had a very successful auction, compared with the absolute farce of an auction at the back end of the last Parliament, for clean energy projects that are cheaper and will hopefully deliver on a scale never seen before in this country. I am proud to stand here and say that I think the amendment is not necessary. It is playing quite cute with the rhetoric around this question; it should be withdrawn, because it is playing politics rather than tackling the substance of what the Bill is intended for, which is very serious, as we face a climate and nature emergency.

[Andrew Bowie]

I do not disagree entirely with the hon. Lady. I think we should be aiming to reduce the cost to taxpayers, and that investing in new cleaner technologies, including nuclear, will see energy bills fall in the long run—so why not have that as one of the objects of the company in the Bill? The Bill states that the objects of Great British Energy will be

“the production, distribution, storage and supply of clean energy…the reduction of greenhouse gas emissions from energy produced from 15 fossil fuels…improvements in energy efficiency, and…measures for ensuring the security of the supply of energy.”

There is not one mention of reducing consumers’ bills. Surely we want to enshrine that in the legislation, if that is indeed one of the aims of the creation of this company.

My amendment 12 would include the necessity to present

“a projection of how Great British Energy’s activities are likely to affect consumer energy bills over the following five years.”

Transparency and accountability should be key to the operation of GB Energy, particularly when the investments and activities that the organisation undertakes have a potential impact on household bills for every family in this country. Thank you for allowing me to speak to the amendment, Dr Huq; I do so to ensure that the Bill makes provision for GB Energy to be held accountable on its aim to reduce energy bills for households.

It is in the best interests of GB Energy and of the British public that the company have a clear directive to ensure, through investment in clean energy technology, that the cost of household energy is reduced. Labour MPs made clear the intention of GB Energy to reduce bills—indeed, they campaigned extensively on the £300 reduction—so I hope that they will support amendment 12, which would support them in achieving that goal, along with including provisions on accountability and transparency to the public on the overall impact of GB Energy’s investments on consumer bills.

[Stephen Flynn]

I rise to support amendment 24, which is broadly similar to the shadow Minister’s amendment 11. I am intrigued by the discussion that we have had, various aspects of which appeared to disagree with evidence we have heard.

First, the hon. Member for Sheffield Hallam, if I picked her up correctly, made great play of the fact that GB Energy will reduce costs. Yet just a couple of days ago, each and every one of us was in the room with the chair of GB Energy, who was very clear that reducing bills

“is not the scope of Great British Energy”.––[Official Report, Great British Energy Public Bill Committee, 8 October 2024; c. 6, Q5.]

We can all watch the footage online, and we can all read Hansard.

Secondly, the hon. Member for Na h-Eileanan an Iar made the argument that the £300 promise was not actually a promise. Which is it? Will it or will it not reduce costs?

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[Andrew Bowie]

The Minister is being generous with his time, and I appreciate that; he is a generous individual. If he will not commit to a £300 cut, why will he not stipulate that one of the objects of GB Energy is to reduce consumer bills? That is one of the arguments that Labour used in favour of its creation throughout the election, and indeed afterwards. Why will he not consider at least putting on the face of the Bill a commitment to reduce consumer bills?

[Michael Shanks]

For the reasons I have already outlined, that is implicit in the policy; it is why we are doing it. I think the shadow Minister agreed in response to one of my hon. Friends that this is a useful approach to reducing bills, and the push towards green energy is important.

[Andrew Bowie]

indicated assent.

[Michael Shanks]

The shadow Minister nods in support. I look forward to his support for the Bill as a vehicle for delivering it.

[Andrew Bowie]

indicated dissent.

[Michael Shanks]

He stops short of that.

The shadow Minister spoke earlier about the rising bills caused by Putin’s invasion of Ukraine, as if somehow the UK had no vulnerabilities that particularly exposed us to that invasion. Of course it was an external factor, but it led to huge price spikes in this country, and we are still exposed to volatile fossil fuel markets. We are determined to push towards energy security through cleaner green energy. That is moving at pace—our recent renewables auction was the biggest we have ever had, with 131 projects—and Great British Energy will drive that forward.

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[Michael Shanks]

I fully suspect that in my time as Energy Minister, I will come back to the hon. Lady’s question. It is an important one, and I am very happy to discuss it.

Turning back to the amendments, we have been very clear that the creation of Great British Energy is about helping us to harness clean energy and reduce our reliance on volatile fossil fuels. But it is important—with the patience of the Chair—to outline the other things that we are doing, more broadly than Great British Energy and the Bill. It is important that Labour’s reforms dovetail with what Great British Energy is doing, particularly the review of market arrangements started by the previous Government. We will conclude that work.

We will continue to deliver the warm home discount, which provides a £150 annual rebate off energy bills for eligible low-income households. We are also looking at the burden placed on bills by standing charges, which still make up too much of so many people’s bills; the Minister for Energy Consumers, my hon. Friend the Member for Peckham, is looking at that now. We are working with Ofgem to look at how we can reduce that.

There is a series of measures that are all important and that all work towards the same goal. GB Energy is one of those, and it is important that we implement it as quickly as possible so that we can move forward with increasing our capacity for cheaper energy and reduce bills in the long term. For that reason, the amendments are not necessary.

[Andrew Bowie]

The Minister has our full support on the broad approach that he is taking on market frameworks, standing charges and working with Ofgem, given that we started that work when we were in government. However, a commitment to work towards reducing consumer bills, and specifically the £300 reduction that the Labour party promised during the election would result from the creation of Great British Energy, should be in the Bill. That is why our amendment is essential. I will press it to a vote.

Question put, That the amendment be made.