UK Infrastructure Bank Bill [HL]

Baroness Hayman Excerpts

Committee stage & Lords Hansard - Part 1
Tuesday 14th June 2022 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, before I start to speak to this group, can we clear a piece of housekeeping with the Minister? I would be grateful if she could give us an assurance that, when she writes to one of us, she writes to all of us, unless there is an overwhelming case against it. I take her nod as an affirmative and thank her.

I move Amendment 2 and will speak to my other amendments in this group, Amendments 3, 8 and 20. Amendment 2 was tabled to facilitate a debate around the potentially competitive nature of the bank’s objectives. The bank has acknowledged that the climate and growth objectives are likely to come into conflict. To its credit, it has loosely committed to the “do no harm” principle. However, as we say so often during our consideration of legislation, a verbal or written commitment is not the same as a statutory safeguard.

As I referenced at Second Reading, the Government opted not to include a general climate change provision in the Subsidy Control Act. They wanted to give public authorities maximum flexibility when granting subsidies, even if they cause environmental harms. As we transition to a greener economy, one would hope that investment in and subsidy for polluting technologies will steadily decline, however there are no guarantees. As the front page of the Bill makes clear, this will become environmental law, once enacted. It therefore makes little sense to leave these matters to chance. What message does it send if our environmental law does not properly protect the environment?

Amendment 3 would broaden the bank’s climate objective to bring in the 2030 species abundance target under the Environment Act. As the Dasgupta review made clear, nature and biodiversity are inherently linked to our economic and wider well-being. We support the Government’s decision to include a species abundance target in the Environment Act and look forward to seeing the detail when it is brought forward by Defra. We worked with colleagues across your Lordships’ House to strengthen that target, and we are pleased that Ministers listened. Having set the ambition, we need concerted action to realise it.

There is not only a moral case for green, nature-based investment—those types of projects tend to have a higher cost-benefit ratio than traditional forms of infrastructure. Not only are there headline economic benefits but there are jobs to be created too. Projects to improve our natural environment could have a particularly positive employment effect in some areas with the worst labour market outcomes.

On jobs, I turn to Amendment 8, which would add job creation to the growth objective. The creation of jobs is mentioned as part of UKIB’s second objective in the Chancellor’s letter from 18 March. That document sets out the bank’s strategic steer. It is slightly curious that jobs are mentioned in that document, albeit only twice, but that has not been carried across to the Bill itself. The bank needs to be a force for good in all respects, which means creating highly paid, high-skilled jobs. The Government have long promised an employment Bill to ensure greater protection across the board, but curiously they have been unable to find parliamentary time to deliver on that commitment. The projects funded by the bank will create jobs, but it is not clear what weight, if any, will be given to the terms attached to those roles. I hope that the Minister can confirm that this is the Government’s intention for jobs created through UKIB’s investment—to be well-paid, secure jobs, rather than short-term or zero-hour contracts, with few rights and protections.

Finally, I have tabled Amendment 20, which seeks to expand the definition of infrastructure to include investment in the natural environment and the circular economy. This is a natural partner to several other amendments in this group, and the case for it is self-evident. What in a sense we are trying to do is to expand the two objectives to four; one of those objectives is about net zero, and the second is about levelling up. We want to include the environment and jobs; that way, the objectives will in our view become more balanced. I beg to move.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. As we approach this group, I have added my name to Amendment 2, which has just been so clearly introduced by the noble Lord, Lord Tunnicliffe. I do no more than to reiterate the point that including the “do no harm” requirement in the framework document and strategic plans is not, as the Minister suggested at Second Reading, actually significant. There is scope for conflict between these objectives, and we need to make it crystal clear in the Bill that the bank should not make investments or engaging in other activities that contradict its own objectives or the Government’s wider environmental objectives.

I would like to say my bit on the theme that will go through much of our discussions today about the absolute priority of putting essential policy components in the Bill, rather than any other accompanying document that does not have the force of legislation. We know that, when circumstances change, anything short of primary legislation can be changed or refocused. I hope that the Minister will forgive me if I remind her of our debates over the Financial Services Act. In those discussions, when asking to put things in it, we were assured that the “remit letters” to the PRA and the FCA would

“set ambitious recommendations relating to climate change”.—[Official Report, 24/2/21; col. GC 224.]

Indeed, they did. However, there was significant emphasis adjustment to those recommendations this April in the light of the Government’s focus on domestic oil and gas production in their energy security strategy. I, too, regret that we did not make it clear in the Subsidy Control Bill and it makes me more certain than ever of the virtue of ensuring that what we want is in the Bill.

I have Amendment 4 in this group, and am grateful to the noble Lord, Lord Bourne of Aberystwyth, my noble friend Lord McDonald of Salford and the noble Baroness, Lady Young of Old Scone, for adding their names to it. This amendment, like many others in the group which I generally support, considers the scope and ambition of the UKIB’s objectives. I am afraid I cannot pronounce “UKIB” as one word because, if I do, it comes out sounding like “UKIP” and I then come out in hives. I hope noble Lords will forgive me for continuing to use the initials. The amendment’s objective is to highlight two issues: one is nature and the natural environment—there are several other amendments in this group on that issue—and the other is adaptation. I am extremely glad to see my noble friend Lady Brown of Cambridge in her place and hope we may hear from her on the latter issue.

My amendment uses wording that the Government themselves proposed and passed into the Health and Care Act 2022. I will not compare duties for the NHS with the objectives of the bank further, but it is worth making one point on this matter. For the Health and Care Act, the Government set out an overarching three- pronged approach to their environmental considerations: reducing emissions, achieving environmental targets and adapting to climate change. These are interlocking issues; the Government recognised this and took action to ensure that they were given priority in that Bill. We should do the same here.

On adaptation, in particular, we must recognise that, however effective we are in our pursuit of a zero- carbon world, there is, as the third UK climate change risk assessment said,

“strong evidence that even under low warming scenarios the UK will be subject to a range of significant and costly impacts”.

According to Net Zero Strategy,

“it is essential that the UK’s adaptive capacity is rapidly developed to prepare for”

this. This amendment would address that issue.

The amendment also ensures that the protection and restoration of nature are included in the Bill. The interdependence of the climate change and nature crises has, in theory, long been agreed by the Government, and was confirmed by the Minister at Second Reading. We know that the worst climate outcomes cannot be avoided without a significant expansion in nature restoration. We also know that nature restoration supports levelling up, and regional and economic growth, through improvements to mental and physical health and through the creation of valuable jobs. However, it is also clear that there is a significant funding gap, estimated at around £5.6 billion a year by the Green Finance Institute, which needs to be bridged to achieve the necessary investment.

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In short, all these amendments are seeking to push environmental, enabling and enhancement issues right into the Bill to make lives happy, healthy and humane.

[Baroness Hayman (CB)]

My Lords, I have Amendment 17 in this group, supported by the same cross-party group of noble colleagues as Amendment 4. It is a simple amendment which

“includes ‘energy efficiency’ within the definition of infrastructure.”

Last week, the IEA released new analysis showing that stronger efficiency measures can reduce energy bills, fuel imports and greenhouse gas emissions quickly and significantly. This was a point made by the noble Baroness, Lady Bennett, when speaking to her amendments earlier. In comments accompanying the analysis, the IEA executive director, Dr Fatih Birol, said that

“inexplicably, government and business leaders are failing to sufficiently act on this.”

Indeed, when the UK Government responded to the crisis in costs being experienced throughout the country, they committed £37 billion this year to help households with the cost of living crisis. However, when they implemented a tax on the revenues of oil and gas companies, they failed to announce any new efficiency measures which could help reduce energy demands and bills—in the long term, rather than the short term. It is, therefore, very important that we show a priority for energy efficiency in this Bill.

I will say something a little more broadly about Clause 2(5), dealing with the “technologies and facilities” included in the definition of “infrastructure”. The Government have got themselves into their own problem here. We know that the letter that was sent—the strategic steer—references energy efficiency. It mentions

“the urgent need to improve the energy efficiency of our buildings in the context of high energy prices and the Government’s renewed focus on energy security.”

So they have given us the steer that this is a priority. However, in the Bill, they give a list which does not mention it. As the noble Baroness, Lady Bennett, pointed out, the list includes roads, gas and all sorts of things which might not be in line with the priorities. There is a real problem, which we have all discussed many times, with lists in legislation. Including a list like this implies that these are priorities—although I understand that other things are not excluded by the inclusion of some things in the list—but there is an implicit suggestion that these are the main or important priorities.

The Government really must think about that, as they must also think about the issue which we were discussing earlier about what falls within the framework document and what falls within the Bill. I was not alone in not finding the definition of parliamentary scrutiny for the framework document, which the Minister conjured up for us earlier on, very comforting: it may be scrutiny, but not as I know it in the most rigorous of ways. Of course, we can ask questions about it, but that is not quite what the noble Lord, Lord Vaux, was getting at when he asked his question.

The problem that illustrated is that, within those two objectives of the Bill, when people said that the objective about economic growth could include vanity projects in very rich areas of the country, the Government’s response was, “Yes, it could, but we won’t do it.” When we said that the Government are not explicit about nature, biodiversity and adaptation projects, alongside the net-zero target, they said, “Ah, but don’t worry, because it could include those.” I really think that there is a problem in saying, “Yes, those are the words on the paper, but don’t worry about, because we can sort it all out.” I suspect that a lot of the rest of today, and on Report, will involve wrestling with exactly where that balance between the Bill, the steer that was given and the framework document should come.

[Lord Deben (Con)]

I do not think we should add too many details, so that the thing becomes a Christmas tree. Although I think I agreed with every suggestion that my noble friend Lord Holmes put forward as a principle, I am not sure that all of them are of equal value in this. However, I think the comments of the noble Baroness, Lady Bennett—she will be pleased, on this occasion, to find we are entirely aligned—are absolutely right. The Climate Change Committee has sought for a very long time to get the Government to take energy efficiency and demand reduction seriously, and there seems to be some utterly inexplicable reason that they can never do this.

I am beginning to think that this is a kind of male thing: they want to build big things—“Nuclear power stations; let’s do that”—instead of doing much simpler things. I am in favour of nuclear power, but the much simpler things are reducing the need to generate, reducing the need to use and understanding that this is as crucial a part of what we are doing as anything else. I hope that, because we have so eminent a female Minister here, she will push against this rather aggressive view of dealing with climate change, which is always to do big things. I think it is because the Government think they get votes for that, whereas with energy efficiency it is very difficult to get people to feel you have done something useful, but we are going to have to do it.

Take the electric motor car. If we are not careful, we will all be driving too much, as I do. What fun and how much better the electric motor car is than anything else, but I have to say that I ought to be careful about how often I use it, because there are resources involved which one ought to think about. If we do not have that attitude throughout, frankly, we will get the infrastructure arrangements wrong. Taking a wider view of infrastructure without thinking about the resources we are using and a reduction, within the infrastructure rules, in the use of those resources, seems to me to misunderstand what we should be doing.

Although I would not want to add all sorts of examples of things we ought to be doing, I want to make it very clear that the last speaker, as so often, got it absolutely right: if we have a list, something as important as this should not be left out, or the answer will be, as it always is, “Well, our priorities are laid down in the Act”. The Government have done that and, really, this is only an auxiliary, an addition. I want it to be central because it actually is central. It is not a question of my inventing it—it is utterly central.

I also want it to be here because this is what the Government’s advisers have said to them again and again. It really is difficult. We saw this yesterday with the so-called food strategy—it is not a strategy at all, of course. I had to ask why the Government have not even addressed the advice of the Climate Change Committee, or half the recommendations of the Dimbleby report. I think the Government have to think much more seriously about the fact that if they have advice and do not intend to do what that advice suggests, that is perfectly all right—they are the Government—but they must explain to their advisers why they do not think that energy efficiency is central to this, when that is the advice that has been consistently given.