Great British Energy Bill

Baroness Noakes Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Baroness Noakes (Con)]

My Lords, paragraph 4.52 of the Companion says that it is usual for a Member making a maiden speech to be congratulated by the next speaker only, on behalf of the whole House, plus the Front Benches if they wish. I shall be complying with that paragraph.

This is a seriously flawed Bill. At first sight, it looks a bit like the 2023 UK Infrastructure Bank Act, which set up the body that has renamed itself the national wealth fund, although it is of course no such thing. I shall return to that organisation later, because it seems entwined in how Great British Energy will work. I did not support the 2023 legislation in principle or in its detail, but it does at least have more substance than the Bill before us today. I shall explore that in Committee, but I flag for now that the 2023 Act sets out key governance requirements and requires periodic reviews of the UK Infrastructure Bank’s effectiveness and impact, which are mysteriously absent from this Bill.

Another major difference is that much of the detail of the operation of the UK Infrastructure Bank was available to the House in the form of a draft of the framework document, which was then finalised after the Act received Royal Assent. Importantly, that document covers strategic objectives, which have already been referred to, but also operating principles and investment principles, as well as details of the company’s capitalisation and financial objectives. It was quite substantial and ran to 28 pages. What do we have for this Bill? As far as I can see, we have nothing at all. The so-called founding statement published by the Government in July said that a framework would be established “in due course”. I hope that the Minister can update the House today on what that time-hallowed phrase means in practice for the framework for Great British Energy. I am sure that he is well aware that his job of getting this Bill through your Lordships’ House will be very much easier if the Government publish the draft framework document well in advance of Committee.

For example, we need to know how the financial regime for Great British Energy will work and what its financial remit will be so that we can be sure that this Bill contains appropriate guardrails and accountability measures. We also need to understand what money will be involved and how it will flow into and out of Great British Energy. The Labour Party in opposition talked up a green prosperity plan with a price tag of £28 billion every year, but that of course did not survive contact with reality. It eventually ended up with a plan to capitalise Great British Energy with £8.3 billion of new money over the whole of this Parliament. It might be a shadow of the earlier plans but it is nevertheless a significant sum.

One of my pastimes is reading Budget documents, so I have been hunting for the £8.3 billion in this year’s documents. I have to tell noble Lords that there is no £8.3 billion in the Government’s spending plans. Instead, there are a couple of references in chapter 3 of the Red Book to

“providing funding to kickstart Great British Energy”,

amounting to £125 million, which the Minister referred to earlier. That comprises £100 million capital funding for clean energy projects and £25 million to set up the Aberdeen headquarters. However, that £125 million is for 2025-26 only. There is no sign of anything after that.

Intriguingly, chapter 4 of the Red Book goes on to say:

“As GBE is established, the investment activity will be undertaken by the National Wealth Fund”,


which apparently will help Great British Energy

“to make initial investments as quickly as possible and draw on the National Wealth Fund’s resources, experience and pipeline of projects”.

I have never understood why Great British Energy was needed, given the existence of the UK Infrastructure Bank/national wealth fund, which my noble friend on the Front Bench referred to earlier. That was set up to do lots of the green things referred to in the Bill before us.

Can the Minister explain the relationship between Great British Energy and the national wealth fund? Will the wealth fund’s pipeline of investments be made by Great British Energy or by the wealth fund? Will the investments be funded from Great British Energy’s £100 million, which applies only for 2025-26, or will they come out of the wealth fund’s rather larger budget, which by the way is also rather hard to find in the Budget documents?

This is all rather opaque, and that is before we try to understand what kinds of investments will be talked about. Will they be loans or equity investments? If they are equity investments, will they be controlling stakes or minority stakes? If they are loans, where will they sit in the creditor hierarchy? To what extent will the private sector be involved? We have answers to none of these questions.

The UK Infrastructure Bank—and I assume this will continue to apply to the national wealth fund—is supposed to make a financial return on its investments, and it is also required to adhere to the additionality principle, so that it does not crowd private finance out. Do these requirements apply to Great British Energy? We need answers to that.

This is not only a Bill with almost no content, it is a dangerous Bill, because it grants almost unfettered powers to the Secretary of State for Energy and Net Zero, as other noble Lords have pointed out. He sets the statement of strategic priorities; he decides what financial assistance is given and on what terms; he has an untrammelled power of direction; and, as the owner of 100% of the shares in the company, he has the power to appoint or remove any or all of the directors. Parliament has no say in any of this and, as I mentioned earlier, it does not even receive a periodic review of effectiveness and impact, as is the case with the UK Infrastructure Bank, also known as the national wealth fund.

We need to look at all these areas in Committee, but I hope that, when the Minister winds up today, he will explain what transparency and accountability arrangements the Government see as ensuring that Parliament can effectively hold Ministers to account.

Lastly, to pick up on a point made by the noble and learned Lord, Lord Falconer of Thoroton, can the Minister confirm that the Subsidy Control Act 2022 applies to Great British Energy? Assuming that the promised £8.3 billion finds its way to Great British Energy somehow, there would be limitless opportunities for Great British Energy to subsidise activities and distort competition. It is clearly important that it is fully subject to the 2022 Act and I hope that the Minister will confirm that.

I am not a fan of the big state, or of state involvement in commercial activities. Nor do I worship at the altar of net zero. I do not like this Bill at all, but I accept that, as a manifesto Bill, it will become law. It is, however, the duty of your Lordships’ House to work during the passage of the Bill to achieve clarity, accountability and transparency about Great British Energy, all of which are currently missing from the Bill.

Great British Energy Bill

Baroness Noakes Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, I rise to speak to Amendments 4, 6 and 7 in my name. I start by reminding the Committee of my interests as a micro-generator of hydroelectricity.

Amendments 4, 6 and 7 are designed to probe—a bit like Amendment 3 in the name of the noble Lord, Lord Offord—whether it might be desirable to allow Great British Energy to accept minority equity finance. I thank the noble Lord, Lord Cameron of Dillington, for his support on this. As these are simply probing amendments, I will try to be brief.

As the Bill is currently drafted, Great British Energy can be designated as such only if it is wholly owned by the Crown and will lose its designation automatically if that changes. It follows, therefore, that none of its shares can be owned by another party, and therefore no equity finance could be raised, at least at the Great British Energy level, from parties other than the Crown.

I can imagine situations where being able to introduce external capital into GBE could be a good thing. Clearly, I can understand why the Government would wish to retain control, which is why in my amendments I have set a required level of ownership of at least 75% of the issued share capital. Shareholders with more than 25% have the right to block special resolutions; so as long as the Crown controls 75% or more, it would still have full control of the company.

In that aspect, Amendments 4, 6 and 7 are more restrictive than Amendment 3 tabled by the noble Lord, Lord Offord of Garvel, although they are probing the same question. Can the Minister explain why the Government feel that they need GBE to be wholly owned and why they would not want the flexibility to raise external equity finance in future, while retaining control?

I am also interested to hear the answers to the questions raised by the noble Lord, Lord Offord, on his Amendment 1 on the relationship with the former UK Infrastructure Bank, now called the National Wealth Fund. I see from the letter that the Minister kindly sent us after Second Reading that the activities of GBE will in fact be carried out, at least initially, by the National Wealth Fund,

“in line with the NWF’s investment and operating principles”.

The letter goes on to say:

“This will enable GBE to invest quickly and draw on the NWF’s experience and existing pipeline of projects”.


That raises a serious question as to why we really need GBE at all. If the National Wealth Fund’s investment and operating principles and its existing experience already cover what GBE is being set up for, as the Minister’s letter confirms, and if it already has an existing pipeline of projects, would it not make more sense simply to provide the National Wealth Fund with the additional finance and resources to carry out the activities that are envisaged for Great British Energy—whatever those are, given the lack of detail in the Bill—and to leverage the experience and scale already built up in the National Wealth Fund? Are we in danger of duplicating responsibilities and adding another unnecessary layer of cost and bureaucracy with the Bill?

We could go further. The Bill carves out an area of activity that is currently already covered by the National Wealth Fund’s objectives and activities—again, as confirmed by the Minister’s letter—and puts that into a vehicle that has substantially less clarity on the way it will behave and substantially less accountability for what it does, as both your Lordships’ Constitution Committee and the noble Lord, Lord Offord of Garvel, have pointed out. One wonders what the Minister would have said if the previous Government had tried to do that—I suspect we know.

While Amendment 1 is a probing amendment, the noble Lord, Lord Offord, might have hit on a very neat solution in proposing to make GBE a subsidiary of the National Wealth Fund, where it would be subject to the accountability regime that already exists, which has already been accepted by Parliament. It would not in any way prevent Great British Energy meeting its objectives, but it would solve a lot of the issues that will come up later around accountability and transparency, as well as reducing the possibilities of cost duplication and ensuring that the expertise already built up in the National Wealth Fund is fully utilised. It would streamline the way the two organisations work together, removing the potential for future conflicts. There is no reason why the subsidiary could not still be separately located in Aberdeen as planned. In fact, ownership by the National Wealth Fund would not stand in the way of any of the plans that the Government say they have for Great British Energy.

The more I think about it, the more it seems that a simple change of ownership from direct to indirect would solve a lot of the issues that we will debate as this Committee goes forward, with no obvious downside for the Government or their plans for Great British Energy. I strongly encourage the Minister to give Amendment 1 serious consideration.

[Baroness Noakes (Con)]

My Lords, I support what both my noble friend Lord Offord of Garvel and the noble Lord, Lord Vaux, have said about the confusing overlap between what is now the National Fund Wealth and Great British Energy. I am one of those sad people who look at annual reports and accounts, and I was anxiously waiting for the UK Infrastructure Bank’s reports and accounts, which finally dropped last Monday. Through that, I discovered that it had legally changed its name to the National Wealth Fund two or three weeks ago, although no announcement seems to have been made about that at the time.

I agree that Amendment 1 is a very neat way of tucking Great British Energy into a more satisfactory set of governance and oversight arrangements, which we wrestled with when the UK Infrastructure Bank was set up. But my main reason for speaking today is in connection with Amendment 3 in the name of my noble friend Lord Offord of Garvel and Amendments 4, 6 and 7 in the name of the noble Lord, Lord Vaux.

I do not support these amendments, because I think the concept of minority stakes in government-controlled companies is a complete nonsense. Over the whole history of nationalised industries and publicly owned corporations and companies, there are relatively few examples of entities in which minorities held equity stakes. The exceptions are normally accidents of history—such as in the case of RBS/NatWest—rather than acts of conscious design.

I cannot think of a single good reason to encourage the Government to seek private capital in Great British Energy, as opposed to seeking to leverage private capital alongside public investment in projects that need public involvement to help to de-risk them. Equity is always more expensive than debt, and minority holdings in illiquid shares are even more expensive. The Government do not need to pay that premium. They can borrow money, to the extent that GBE needs it, by issuing government debt. That will be much cheaper than raising equity for GBE, even after the post-Budget bond yield increases.

Equity costs more to raise than debt because it carries more risk than debt. It is the first bit of the capital stack to be wiped out in liquidation—at least, that is what happens in the private sector. But does anybody believe that minority holders would be wiped out if the state decided to liquidate an insolvent Great British Energy? The Secretary of State has so many powers over Great British Energy that in practical terms the Government will find it very difficult, if not impossible, to escape underwriting all the liabilities of Great British Energy, and that includes its minority holdings. If the Government did try to wipe out the minority holdings in a liquidation, I predict a decade or more of shareholder litigation.

Having minority holdings can also engage a lot of unnecessary legal problems around protections for minorities that are built into our company law to prevent minorities being treated unfairly. It can raise issues about dividends, which are not normally part of the regime for state-owned enterprises since retained earnings, if there are any—and history tells us that there are not usually any—are generally kept within the public corporation. I am not a fan of state-owned activity, but we should accept it for what it is, which is taxpayer or debt-funded activity, and not try to mimic the real world where equity investors genuinely do take on risk.

[Lord Cameron of Dillington (CB)]

My Lords, I added my name to my noble friend Lord Vaux’s Amendments 4, 6 and 7. This was largely because when the Bill went through its stages in the other place, the Government made frequent references to the fact that an essential quality of Great British Energy was that it would be flexible, vibrant, resilient and fleet of foot. These are all good qualities to allow this new company to take advantage of opportunities in the marketplace, maybe even sudden ones when, say, an international investor is looking to throw its weight behind a tidal initiative or a new hydrogen production plant but is looking for a commitment from the UK Government in the form of some investment from GBE.

What happens in these circumstances if the Treasury reduces its annual funding for GBE in future or if GBE’s annual budget has already been spent and there is a danger of this vital project going overseas unless GBE invests? Will the opportunity just get missed or, as my thinking goes, should GBE be truly flexible, vibrant, resilient and fleet of foot and be able to go out into the financial marketplace and draw in sufficient funds to promote and thus enable this one-off opportunity?

I recognise that, to be effective, GBE must be part of government and yet not part of government. That is why the figure of 75% government ownership is crucial; 24% of outside investment would not prevent the Government remaining in total control and, more importantly, being seen to be in total control, but it could also mean that the private sector could help contribute to the success of GBE.

Your Lordships may ask why the private sector cannot just invest in the proposed investment itself. The answer is that by investing in the parent company, GBE, the private sector would be hedging its bets by spreading its risk across the renewable sector generally rather than just putting its money into, say, a hydrogen project or whatever. Furthermore, allowing GBE to attract some outside investment would be a good way of taking some of the risk away from the Treasury.

There may of course be other ways of doing this, such as issuing class A shares with a different standing from ordinary shares, but I do not believe they would ever be as attractive as the solution in our Amendments 4, 6 and 7.

The noble Lord, Lord Vaux, and I are keen to see GBE succeed, but we think it needs the greater flexibility of being able to attract some investment from outside government.

--- Later in debate ---

That is why I submit that there needs to be a clear set of objectives in the Bill—for purpose, guidance, and to enable a judgment about success or failure. That is why Amendment 2 is necessary. I look forward to hearing the Minister’s reactions and the contributions from all noble Lords. Meanwhile, I beg to move.

[Baroness Noakes (Con)]

My Lords, I thank my noble friend Lord Frost for bringing forward this amendment. It crystalised in my mind that the Bill is a solution in search of a problem. It does not have a clear statement of what it is trying to achieve. Without that, it is likely that Great British Energy will end up with a set of activities that lack proper cohesion.

Like my noble friend Lord Frost, I have been searching back through what the Government have been saying, from the manifesto through to the “founding statement” and the Bill. The Government have been quite clear that they regard energy security and keeping bills low as important objectives of their Great British Energy project.

Being able to specify overarching objectives is logically separate from what we have in Clause 3: the objects of the company. These objects are designed to constrain Great British Energy to doing particular things that in turn will, in theory, deliver the objectives. If the objective is to deliver energy security, that can be delivered in a number of ways. Some could argue that having more oil and gas would be one way of giving us greater energy security. That is not the way that the Government have chosen, so through Clause 3 they restrict what Great British Energy will do to clean energy. As my noble friend Lord Frost said, after a number of years we should be able to judge whether they have achieved energy security through the way they have chosen to set up Great British Energy and the specific objects that it has been given.

My noble friend Lord Frost has outlined the way that the sands seem to be shifting on whether bills will be reduced. I heard on the radio this morning that the Prime Minister will reiterate his £300 promise this week. We look forward to hearing what he will say. Reducing bills and holding them down is clearly something that the Government have been promising for a good number of months by way of Great British Energy, and they need to be judged on whether they achieve that. They are choosing to do it through clean energy, as proposed in the Bill. We will need to look in due course at whether that objective has been achieved.

I have just a couple of drafting quibbles with my noble friend’s amendment. First, and most importantly, I do not think that the objective relating to bills should be confined to household energy bills. We know that the energy bills borne by British industries are ruinously high—much higher than those of all our competitors. Energy bills should be reduced for all energy consumers, not just households.

My second quibble is that the second objective in my noble friend’s amendment refers to “promoting” the UK’s energy security. I do not think it is good enough for this organisation to promote energy security; it should achieve energy security. I hope that, if my noble friend brings this amendment back at a later stage, he will bring a somewhat tougher version. However, these are minor quibbles with the drafting and do not detract from the fact that his amendment is very good.

[Lord Hamilton of Epsom (Con)]

My Lords, I would like to support my noble friend Lord Frost’s amendment because we have to judge this Bill on what it achieves, rather than on the processes it goes through. I have a slight problem, because it seems to me that if you want lower energy prices, you want to recognise the advances made by technology and have lower feed-in prices paid by the consumer. That is the way you get energy prices down; but, of course, if Great British Energy is investing in the companies, it wants the feed-in prices to be as high as possible, so the companies make profits.

It seems to me that there is a conflict here, with government standing on both sides of the commercial argument. Let us face it, my noble friend Lady Noakes is right: the price industry is paying for energy as a result of this extraordinary pursuit of net zero is making us extremely uncompetitive in world marketplaces and makes the reindustrialisation of this country something we can only dream about. No company is going to locate in Britain to start a business here if it is paying much higher energy prices than in the rest of Europe, as my noble friend Lord Frost has reminded us.

The Government have to be much clearer in their own mind on what they are trying to achieve with Great British Energy. Just saying that it is going to lower energy prices is not quite good enough, really; you have to say how it is going to lower energy prices. That is something we all want to see, but it is very difficult to attain. Perhaps the Minister can explain how all this is going to be done.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

There is only one way to read the words the “objects are restricted to”. That is what the clause says.

[Baroness Noakes (Con)]

My Lords, the noble Lord, Lord Hunt, may not be as familiar with company law as the noble Lord, Lord Vaux. The object of a company, which is what the clause refers to, is a constitution document, and it restricts what a company can do. That is what company law sets up for it. The Minister is trying to read “objects” in a broader sense. It is very clear that the clause refers to the legal documentation that will surround the full legal implementation of Great British Energy as a company. It does not have any other meaning.

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is always helpful to have that kind of clarification, because I certainly was not intending to mislead the Committee in any way. From what I see in Clause 3, I am clear that GBE can participate in, encourage and facilitate the production, distribution, et cetera—informed, as I say, by the strategic plans and priorities. But I will obviously look at that and, if I have got myself confused, I will certainly reflect on it.

--- Later in debate ---

Debate on whether Clause 2 should stand part of the Bill.

[Baroness Noakes (Con)]

My Lords, I tabled the Clause 2 stand part notice to probe the reasons why Clause 2 rules out Crown status for Great British Energy, but I also tabled it to explore further one of the topics we have already discussed: the relationship between Great British Energy and the National Wealth Fund.

As we debated at Second Reading, the Bill is a partial cut-and-paste job on the UK Infrastructure Bank Act. The main difference is that some important chunks did not get all the way over to the paste bit of the instruction. One way in which this Bill and that Act differ is that Clause 2, which deals with Crown status, has no counterpart in the 2023 Act. I do not know why the 2023 Act was silent on this, and I do not think we debated it when we went through the UK Infrastructure Bank Bill, as it then was. But, since the National Wealth Fund is fairly closely controlled by the Treasury, it may well have Crown status.

As we have discussed, the precise relationship between Great British Energy and the National Wealth Fund is something of a mystery, and I have to say that it remains so after the Minister’s letter to noble Lords after Second Reading. The Minister told us in that letter that the Government will set out the relationship in detail

“as Great British Energy scales up”—

I think that is code for saying, “We will make it up as we go along”.

The Minister said, as has been referred to, that in the early days Great British Energy investments will be made by the National Wealth Fund. This is another plea for him to explain how the interaction between the National Wealth Fund and Great British Energy will work in the context of one possibly having Crown status and the other very definitely not.

--- Later in debate ---

[Lord Hardie (CB)]

My Lords, I support the amendment in the name of the noble Lord, Lord Vaux of Harrowden. Like the noble Baroness, Lady Hayman, in a past life I sat on the Front Bench where the Minister is and resisted amending legislation by making additions.

I appreciate the Minister’s reluctance to accept amendments that might constrain Great British Energy once it is established, but Amendment 10 is in a different category. It does not constrain Great British Energy; it empowers it to facilitate, encourage or participate in community schemes that trade in excess energy locally if that is what GBE wishes to do.

[Baroness Noakes (Con)]

My Lords, I start by underlining what the noble Lord, Lord Vaux, said about the difference between objectives and objects. It really does repay all noble Lords taking part in debates on the Bill to understand the differences between them. That is why earlier I supported my noble friend Lord Frost’s amendment trying to set objectives for the Bill. It may or may not have been the right list of them, but it would have been an important addition to the Bill.

Great British Energy Bill

Baroness Noakes Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

My Lords, I rise to speak in support of amendments tabled to Clause 4 of the Great British Energy Bill, particularly those in my name and the name of my noble friend Lady Noakes. These amendments are crucial as they aim to provide clarity, ensure accountability and protect the taxpayer in what is undoubtedly an ambitious and complex policy area.

Let me first address the central issue that these amendments seek to probe: the nature and scope of the financial assistance the Secretary of State can provide to Great British Energy. We all agree that our energy future is crucial, both for achieving net zero and for ensuring security of supply in an increasingly uncertain world. However, noble intentions must be underpinned by rigorous safeguards, and the current wording of Clause 4 leaves far too much ambiguity.

Amendments 35, 37 and 38 in my name are designed to question the breadth of the financial powers the Bill affords the Secretary of State. It is entirely appropriate to scrutinise these provisions. The taxpayers of this country, who have faced significant financial pressures in recent years, deserve reassurance that the Government are deploying their public funds prudently. The inclusion of vague terms such as the ability to provide assistance by way of guarantees, indemnities and other financial assistance could allow for open-ended commitments.

These are not theoretical concerns. History is replete with examples of well-meaning initiatives that spiralled into financial mismanagement. By narrowing or better defining these provisions, we can ensure that GBE operates within a framework that prioritises efficiency, accountability and value for money.

I turn to Amendment 36 in the name of my noble friend Lady Noakes. This amendment questions the inclusion of specific provisions under subsections (2)(b) to (2)(d). These allow for financial support in connection with acquisitions, liabilities or the provision of assets. While there may well be situations in which such support is necessary, we must ask what checks and balances will be in place and what mechanisms will ensure that public money is not used to underwrite reckless decision-making or speculative ventures.

These amendments are not designed to obstruct the creation of Great British Energy or its objectives; rather, they are about ensuring that its financial underpinnings are solid, transparent and accountable. British principles dictate that the Government must always act as a careful steward of public funds, balancing ambition with fiscal prudence. It is also worth noting that robust safeguards will strengthen the Bill. Clear financial rules do not hamper innovation; they foster confidence for investors, for industry and for the British people.

In conclusion, I urge the Government to take seriously the concerns raised by these amendments. By supporting them, we send a clear message that while we are committed to achieving our energy goals, we will not do so at the expense of fiscal responsibility. The energy transition must be sustainable, in not only environmental terms but economic ones. I beg to move.

[Baroness Noakes (Con)]

My Lords, in this group I have Amendment 36, which partially overlaps Amendment 37 from my noble friend Lord Offord of Garvel. My noble friend asked some general questions about the financial assistance clause. My Amendment 36 is somewhat narrower: it is trying to find out exactly how paragraphs (b) to (d) actually work.

I understand how paragraph (a) works: the Secretary of State gives money to Great British Energy, or possibly lends it money, or guarantees or indemnifies something that Great British Energy does. However, when we get to paragraph (b), somehow the financial assistance is provided by the Secretary of State acquiring shares or securities, but Great British Energy does not appear to be involved at all in that transaction.

--- Later in debate ---

[Lord Cryer (Lab)]

I see the point the noble Lord is making, but that is a matter for the board. I have a certain degree of faith in the Secretary of State and we have an extremely competent chair with a well-proven track record. In due course, we will hopefully have a board with a similar track record. I do not think we will be dealing with the sort of people who fritter money away because they happen to fancy it. But that is a matter for the board of GBE.

[Baroness Noakes (Con)]

At the outset, the Minister said that Great British Energy was going to be capitalised at £8.3 billion. That formulation was used in the manifesto, the July statement, et cetera. He then seemed to imply that the amount of financial assistance given under Clause 4 was not within the £8.3 billion. Could he clarify whether it is or not?

[Lord Cryer (Lab)]

Yes, it is within the £8.3 billion.

[Baroness Noakes (Con)]

Perhaps I could take us on to another aspect of the £8.3 billion. Helpfully, the noble Lord confirmed in response to my noble friend Lord Offord’s Amendment 40 that financial assistance would be included in general government debt, so we expect to see the £8.3 billion in the measurement of debt. At Second Reading, I raised the issue that I could not see the £8.3 billion in the Budget Red Book and therefore within the forecasts produced by the OBR for government debt—one of the key items in the Chancellor’s fiscal rules. I failed to ask the Minister for direct confirmation of that at the time. I do so now: is the £8.3 billion included in the current OBR forecasts for government debt?

[Lord Cryer (Lab)]

As far as I know, the answer to that question is yes. That is to the best of my knowledge. If it is not, I will have to write to the noble Baroness.

[Baroness Noakes (Con)]

I would be very grateful if the noble Lord would write, because it is very difficult to see the £8.3 billion. The £125 million for 2025-26 is visible in DESNZ’s departmental numbers, but it is not clear that anything else is. If the Minister is right, there is no problem. If he is wrong, it looks like another potential black hole in the nation’s finances—one wholly of this Government’s making. So it is important that we sort this out.

Great British Energy Bill

Baroness Noakes Excerpts

Committee stage
Tuesday 17th December 2024 Lords Chamber

I look forward to hearing what noble Lords have to say on these and the other amendments in this group. I hope that the Minister will be supportive of strengthening the level of accountability in the Bill, as he has been in the past for other Bills. I beg to move.

[Baroness Noakes (Con)]

My Lords, I have added my name to Amendment 51 from the noble Lord, Lord Vaux, and I also have four other amendments in this group. One of my concerns about the Bill is that Great British Energy is the last in a long line of unelected quangos, which have precious little parliamentary oversight and weak accountability processes. All the amendments in this group in one way or another seek to increase the role of Parliament, and thereby go some way towards remedying the accountability deficit that exists in the Bill.

As the noble Lord, Lord Vaux, has already reminded the Committee, the Constitution Committee has called out Clause 5 as being disguised legislation. I agree with that. I do not agree with it in relation to Clause 6, which I will explain when we get to that clause. The important thing is that this underlines the need for strong parliamentary processes around Clause 5.

Amendment 51 from the noble Lord, Lord Vaux, is important. If the Secretary of State delays setting out his strategic priorities, the company, Great British Energy, will be left rudderless and may start to spend taxpayers’ money in ways that are not in line with what the Secretary of State wishes to prioritise. Alternatively, a less generous perspective is that the Secretary of State might delay issuing the statement of strategic priorities in order to delay laying it before Parliament and thereby exposing it to public scrutiny.

There is no unanimity even among the green lobby as to what would amount to a good use of taxpayers’ money under the Great British Energy banner. Some of the things that the Secretary of State might choose to prioritise may well horrify some of the climate activists. We might expect nuclear to be one of those examples. The Secretary of State could probably get Great British Energy to act in accordance with his wishes without going through the Clause 5 process by using—or more likely, threatening to use—the Clause 6 power of direction, which we will debate later. He could thereby sidestep public and parliamentary scrutiny for quite some time.

Whichever analysis is the correct one, it is clearly important that we ensure that there is a public statement of priorities as soon as possible. The amendment from the noble Lord, Lord Vaux, generously allows for six months after the Act comes into force. I could easily argue for less time, but six months is good enough for today’s debate.

On the question of timing, I also note that in Clause 3 there is no time limit for the Secretary of State to lay his statement after he has prepared it. Amendment 51 concentrates on a time limit for the preparation of the statement, but similarly does not have a time for when it has to be laid before Parliament. That is another defect in this clause that we will need to seek to remedy on Report.

The noble Lord, Lord Vaux, has already referred to some of my amendments. Amendment 119 is another way of making sure that the strategic priorities statement is pursued quickly. It allows Clause 5 to come into effect immediately after Royal Assent, but the rest of the Bill cannot come into effect until the statement is laid before Parliament. Importantly, that means that Great British Energy could not make any practical progress until the statement of strategic priorities had been dealt with in accordance with Clause 5.

Amendment 52 tackles a different problem, namely the toothless involvement of Parliament in the statement of strategic priorities. As we have heard, under Clause 5 the Secretary of State merely has to lay a copy of that statement, or any replacement statement, before Parliament. That is it. Parliament has no say whatever. My Amendment 52 gives each House of Parliament 40 sitting days to resolve not to approve it, and in that event the Secretary of State has to withdraw it and have another go. That is the procedure adopted, for example, in relation to the national procurement policy statement published under Section 13 of the Procurement Act 2023. As the noble Lord, Lord Vaux, has suggested, it is probably the lightest of the parliamentary procedures that are available to give Parliament some opportunity to challenge the Secretary of State’s priorities.

The amendment from the noble Earl, Lord Russell, is in similar territory but would require the Secretary of State to table a Motion. It does not, however, specify what that Motion might be or the consequences if the Motion were not agreed. There could be other formulations for parliamentary oversight of the strategic priorities. The important point is that it should not be a “take it or leave it” situation when Parliament is given the statement of strategic priorities. Parliament is entitled to some substantive involvement in the priorities.

My Amendment 128 is a companion amendment to Amendment 52. It is similar in structure to Amendment 119 so that the commencement of the Act after Royal Assent, other than in relation to Clause 5, would be delayed until 40 sitting days had passed. That would ensure that GBE could not be operationalised until Parliament had had an opportunity to consider the statement of priorities. That is a belt-and-braces addition to Amendment 52.

Lastly, my Amendment 58 in this group is also intended to enhance Parliament’s oversight of Great British Energy. Under Clause 5(8), Great British Energy’s articles of association have to ensure that GBE will publish its own strategic plans and act in accordance with the statement of strategic priorities. My Amendment 58 goes further and would require GBE to send a copy of the plans to the Secretary of State, who then has to lay them before Parliament. It is clearly insufficient for Great British Energy simply to upload its strategic plans to its website. There needs to be a formal communication of those plans to Parliament. That is all that my amendment is aimed at, and I hope that is not controversial.

The broad thrust of all the amendments in this group is effective parliamentary engagement. The Minister might not like the detail of the amendments, but he ought to subscribe to the notion that effective parliamentary engagement in the work of quangos is necessary. I hope he will see that the parliamentary involvement allowed for in the Bill falls short by some way. I am sure the whole Committee would be delighted if the Minister were to take this issue away and bring forward government amendments to achieve proper recognition of the role of Parliament in Great British Energy’s scrutiny. If he is unable to do that, I am sure we will need to return to this aspect on Report.

[Baroness McIntosh of Pickering (Con)]

I will speak to Amendments 53 and 90 in my name. Before I do, I lend my support to the two authors of the other amendments who have spoken. In particular, I congratulate the noble Lord, Lord Vaux, on his amendment and on setting out the problems of Clause 5.

I am a fan of the National Wealth Fund. I have been watching the Norwegian series on BBC Four, which ended at the point when Norway set up its sovereign wealth fund with the proceeds from oil and gas in the North Sea. I could not quite understand why we did not do the same when we were receiving all the profits that we did. We have fallen behind Norway in living standards in that time.

The points from the noble Lord, Lord Vaux, about the relationships of GBE and its ability to raise funds, were very well made. Previously in Committee we have questioned what its relationship to the National Wealth Fund will be. This goes to the heart of what the national transition plan for the National Wealth Fund will be. We keep hearing that there will be a transition plan, but I would be interested to know what that plan will be and what its relationship with the National Wealth Fund and GB Energy will be.

When will we see the sector-specific road maps for the five priority sectors? Will they be in the impact assessment or come at a later stage? Some clarity in this regard would be good, as well as some greater engagement at this stage between investors, both those of the National Wealth Fund and GBE, to raise these new funds, and to have local authorities develop projects and propositions which are investable as well. I lend my support to the amendments in this group in the names of the noble Lord, Lord Vaux, and my noble friend Lady Noakes.

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[Lord Teverson (LD)]

My Lords, perhaps I could come back into the real world. I agree with the amendments and their purpose but let us be clear: there is a duopoly in this Parliament that stops negative or fatal resolutions ever being passed in either House. We may say that we agree that an affirmative or negative resolution is needed on something equivalent to secondary legislation. In this Parliament, the practical effect—in relation to what is already in the Bill—is zero because the Labour and Conservative Parties have a duopoly agreement that they will not vote fatally on secondary legislation Motions. To the outside world, all the rhetoric in this debate looks great but, even if it went into the Bill, the effect would be zero. I wanted to make that point because I believe that if you look at this with a democratic point of view from outside this building, the workings of secondary legislation in this Parliament would be seen as completely fatuous.

[Baroness Noakes (Con)]

May I just say to the noble Lord that what was proposed in my amendment was not secondary legislation? It was the simple possibility of a Motion to disapprove of something. It did not fall within the category of secondary legislation, therefore the convention does not apply.

[Lord Teverson (LD)]

I accept that point entirely, except I cannot see this Parliament rejecting such a strategy under any circumstances, however it is dressed up. But I fully respect the intentions of the amendments in the names of the noble Lord and the noble Baroness.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, I am most grateful again to noble Lords who have raised a number of very interesting points in relation to Clause 5 and the statement of strategic priorities. I remind the Committee that the founding statement set out GBE’s purpose, priorities and objectives, including its mission statements and its five functions. The first statement of strategic priorities is intended to ensure that Great British Energy will be focused on driving clean energy deployment, boosting energy independence, creating jobs and ensuring that UK taxpayers, bill payers and communities reap the benefits of clean, secure, home-grown energy.

Clearly, Clause 5 is important in that respect. The noble Lord, Lord Offord, will not be surprised that I will resist his opposition to it standing part of the Bill. He made another point in relation to the investment bank legislation. I understand the point; he knows that we have looked at this legislation and taken parts from it, but we have also looked at Great British Nuclear, which his Government put through in the last Energy Act. In some cases, we think that that is appropriate to look at in relation to the way this legislation has been framed.

Amendments 51, 52, 53, 54, 57, 58, 90, 119 and 128 all refer to the statement of strategic priorities, with some amendments seeking to defer commencement of the Bill in relation to the statement. The noble Lord, Lord Howell, always speaks with great experience on energy, and he is threatening us with many more amendments the next time we meet. We believe that the best way to get stability on prices and security of energy, and to deal with climate change, is to move in the way that we have set out. Numerous organisations have looked at it and say that, in the context of value for money, investment decisions and cost to government, this will be the cheapest way forward in the end, and that staying reliant on fossil fuels, with the unreliability of the international market, would not be a productive use of our resources and would do nothing for climate change. That is why we are going down this path.

I come to the amendment of the noble Lord, Lord Vaux, and his opening remarks on this group. We do not wish to escape parliamentary scrutiny. I say to the noble Baroness, Lady Noakes, that we do not want to weaken accountability processes. I assure her that there is no way we will use the power of direction in the way that she suggested might happen. She referred to the power of direction and from what she said I took it that she thought it could be used in a way which would simply direct GBE, instead of the statement of priorities, but perhaps I have confused that.

[Baroness Noakes (Con)]

The noble Lord might like to read Hansard. I did not say that, but I do not think that need hold us up. We are not talking about the power of direction in this set of amendments.

[Lord Hunt of Kings Heath (Lab)]

I know we are coming to that in later amendments, so I will certainly do that.

I understand the points that noble Lords are making about parliamentary involvement in the statement of strategic priorities. I have read the report of the House of Lords Constitution Committee. The Government have no interest whatever in delaying the statement of strategic priorities in order to escape parliamentary scrutiny. I would have thought that the publication of our clean power action plan, and the work of the National Energy System Operator in its advice to the Government of a few weeks ago, would suggest that getting to 2030 in the way we wish to do will be very challenging. We believe we can do it, but we cannot mess around.

The statement of strategic priorities is certainly an important element in allowing Great British Energy to move forward, but we have to work through a number of important issues. We have to consult the devolved Governments. I take the point made by the noble Earl, Lord Effingham, about the need for that to be a thorough process, and that will take time. Time is imperative. There are issues about the delay that would be built into this, if we were to accept some of the amendments being proposed.

I hesitate to bite on the comments of the noble Lord, Lord Teverson, about the effectiveness of secondary legislation. I suppose the real response to him is that, in 1911, there was very little secondary legislation, and therefore the Parliament Act 1911 did not encompass it, the result being that your Lordships’ House has an absolute veto on secondary legislation, which it has been loath to use for very understandable reasons.

Amendment 53, from the noble Baroness, Lady McIntosh of Pickering, would require all versions of the statement of strategic priorities to be put before the chair of the relevant Select Committees. Clause 5 already requires the statement to be laid before Parliament, and the chairs of any relevant Select Committee could access the statement and any revised or replacement statements. I assure the noble Baroness that it is the normal practice of my department to provide such information on a regular basis to the chair of the energy Select Committee in the other place. Moreover, where Select Committees in your Lordships’ House have produced reports that are relevant to any announcement being made, it is normal practice to send a copy to the chairs of those Select Committees. I accept absolutely the principle of what she is proposing.

Let me be clear that the process of developing, agreeing and publishing the statement of strategic priorities is intended to enable the Secretary of State to provide strategic steers to Great British Energy within the framework of its objects, as set out in Clause 3. The statement of strategic priorities cannot overrule the objects clause in Great British Energy’s articles of association. Those objects set the overarching framework for Great British Energy. We believe it is right that the framework provided for in legislation is scrutinised by Parliament, through Clause 3, as we have already done in the previous day in Committee.

Great British Energy Bill

Baroness Noakes Excerpts

Committee stage
Monday 13th January 2025 Lords Chamber

[Lord Roborough (Con)]

My Lords, I refer the Committee to my register of interests, including in solar and wind energy development and ownership, as well as as an investor in energy-related equities and as a farmer and lands manager.

I shall speak in particular to Amendment 80 in the name of my noble friend Lord Petitgas, but also support Amendments 85A in the name of my noble friend Lord Hamilton of Epsom and the amendments listed in the name of my noble friend Lord Offord of Garvel. These amendments put detail to the questions I posed to the Government, in my response to His Majesty’s gracious Address, regarding financial reporting and accountability.

Great British Energy is tasked with investing taxpayers’ money to allow taxpayers to benefit from the financial returns from the energy transition, as well as to accelerate and stimulate that transition. It must be right, as with any publicly listed company, that the company is accountable to its owners for its performance. That requires high-quality financial reporting. Listed companies report unaudited financials quarterly and audited annual reports—which also include carbon emissions accountability, as my noble friend Lord Petitgas pointed out. The first effect of Amendment 80 would be to bring GB Energy in line with those requirements.

The second effect would be to introduce a more granular analysis of the returns from each investment. This is usual with investment trusts and common in private equity. I see no reason why GB Energy should not report in equally great detail. Fully commercial organisations may choose not to do so to protect commercial confidentiality. However, in GB Energy’s case, it must be desirable to highlight where returns are the greatest in order to direct more private sector capital into those areas and help achieve the primary purposes.

It is also essential that GB Energy is fully accountable to Parliament on an individual investment basis, as well as holistically. This is taxpayers’ money, which could have been used to avoid destroying farmers’ and family businesses’ desire to invest and grow. That places a heavy burden of responsibility for GB Energy to perform well. The Minister may suggest that this is too expensive and cumbersome, but I point out that listed companies measured in the tens of millions of pounds are well able to comply without issue. GB Energy appears unlikely to be an operating company but more of an investment company. That should make these obligations straightforward to comply with, while ensuring that its investee companies and projects also have to keep accurate and timely books to allow GB Energy to comply.

The Minister may suggest that UK company registration requirements to lodge accounts are enough, as has been said in previous groups. Anyone familiar with those accounts will know that they tend to be published around nine months after the close of the financial year, are annual only and contain the least possible information to comply with registration requirements. There is little here that can be helpful in assessing performance.

Amendment 80 creates financial and climate reporting discipline that will then have to be extended throughout the organisation, to all of the investee companies, to everyone’s advantage. Examples of successful government investment in the private sector are hard to find. If this Government are confident that this will be the unicorn, surely the Minister will welcome the amendment, which will create many opportunities to showcase that success.

I also add my voice to Amendment 65 in the name of my noble friend Lord Offord of Garvel, and I have many of the same concerns as my noble friend Lord Howell and the noble Lord, Lord Cameron of Dillington. While this may almost seem like stating the obvious, there are a number of issues around grid connection, and I would be most grateful if the Minister could update us with progress. The first is the issue of nameplate grid capacity. Does the National Grid’s £35 billion investment plan from 2026 to 2031 fully address this need? And, given the increase in the UK Government’s borrowing costs and likely impact on UK companies, does the Minister anticipate any refinancing requirements to build out this transition?

The second is the human capacity of distribution network operators to work through projects with developers, to plan and deliver the grid connection. I understand there is a lack of capacity in this area and it is possible that DNOs could be prioritising their own projects at the expense of third parties. They do not appear to be meeting obligations, which is costing developers millions in delays and cost increases. I understand the bottleneck is largely human capital, which exists in Europe but of which there is not enough in the UK. The Minister has discussed training in previous groups, but would it not be also wise to fast-track visa applications for skilled operatives? Is the Minister confident that his Government have a plan that can deliver beyond 2030, as anecdotally the grid queue analysis and action that has been taken appear to have sacrificed confidence in developments beyond that timeframe in order to meet 2030 commitments?

Under the national electricity system consultation, I understand developers have been given only three weeks to consult on up to 16 documents per project. These developers need to see more resources and more evidence of planning beyond that timeframe in order to keep a strong project pipeline alive. Can the Minister update the House on the impact these actions have had on the developer community? Is he satisfied that the capital and talent are still available in that sector to meet his Government’s objectives?

I entirely agree with my noble friend Lord Hamilton of Epsom’s comments on the sustainability of biofuels. Displacement of food production in favour of growing energy crops risks causing higher prices for everyone. I draw the Minister’s attention to the US blending mandate, which has been in place for several decades and has led to around a quarter of the US corn production going into bioethanol for blending with gasoline. This has had a structural impact on food prices around the world and simply displaces one problem into another.

I disagree with my noble friend Lord Hamilton on green hydrogen, unfortunately, as its cost simply seems to be too high for most applications. Around one-third of the energy is lost in electrolysing water into green hydrogen, and another third is lost in turning it back into electricity, giving it a structural disadvantage versus other forms of energy.

[Baroness Noakes (Con)]

My Lords, I want to offer a slightly different perspective on this group of amendments. All the amendments in this group, and indeed some later groups, involve a series of rather worthy things—for which there are to be reports or other consequences—to be achieved by giving a direction to Great British Energy. While I support the amendments on the basis that they are probing amendments, I find it difficult to support the structure of the amendments themselves.

It seems to me that, by using the power of direction in Clause 6, the amendments would undermine the nature of that power and subvert the effectiveness of the power of direction, which is a long-standing feature of the control framework for public corporations. Powers of direction for nationalised industries were commonplace when nationalisation took hold from the 1940s onward. I do not know whether they existed before that, but they certainly have a pedigree of nearly 80 years. The first one of which I am aware is in relation to the Bank of England Act 1946, which nationalised the Bank of England. They have been a feature of public body legislation ever since, except in relation to bodies which are created as regulatory bodies.

The power of direction was never conceived as a mechanism for giving routine instructions to public bodies, which is what all the amendments in this group and the subsequent groups are trying to do. In fact, throughout the history of nationalised industries, the power of direction has almost certainly not been used. In relation to the Bank of England, I asked the previous Government fairly recently whether they would like to give up the power of direction over the Bank of England and whether they had used it since 1946; the answer was that they had never used it since 1946, but they definitely wanted to keep it. The fact that a power has not been used does not necessarily have any meaning, because it is designed as a backstop power for use in extreme circumstances. The mere fact of its existence can be a powerful weapon in the hands of the Government of the day.

It should be an uncontested fact that the Government ultimately call the shots in relation to public corporations, however much operational independence they claim to be handing over to them when they set the bodies up. The board of a public body should be very wary of not following the wishes of the Government of the day, unless those wishes conflict with their legal and statutory objectives.

I will always defend the ability of the Government to give directions to a public body, because public bodies should not be above the Government of the day. I think there are far too many public bodies, but if we have to have them, we must have an effective power of telling them what to do when necessary. I would definitely not want that core power to be diluted by being cluttered up with a lot of more day-to-day matters, which is partly what the amendments in this group and subsequent amendments do.

The concerns of my noble friend on the Front Bench and indeed other noble Lords who have drafted these amendments would be better met by placing specific requirements in the Bill, rather than by cluttering up the power of direction which has a very special place in the control framework for public bodies.

[Lord Ashcombe (Con)]

My Lords, I support my many noble friends in their amendments in this wide-ranging group. I declare my interest as an insurance broker in the energy industry for Marsh.

In the Labour manifesto under the section entitled “Make Britain a clean energy superpower”, its second mission to rebuild Britain, there is a plan to create 650,000 jobs by 2030. This will obviously need to include the supply chain, as the number of jobs required for running energy projects will never reach this amount.

In the Great British Energy Founding Statement, we learn:

“Backed by a capitalisation of £8.3 billion of new money over this Parliament, Great British Energy will work closely with industry, local authorities, communities and other public sector organisations to help accelerate Britain’s pathway to energy independence. That means installing thousands of clean power projects across the country, crowding in investment for next-generation technologies, and providing vital support to accelerate large-scale projects”.


For new money, we can read taxpayers’ money.

When taxpayers’ money is being spent, it simply cannot be thought of as a blank cheque, in this case with a large upper limit. It is imperative that there are checks and balances in the system to ensure that money is spent wisely to the benefit of the country. I suggest to the Minister that some of these measures might include the following: the need to demonstrate the benefit in each venture towards the £300 saving so heavily touted in the run-up to the general election; the need to demonstrate the benefit in each venture towards the creation of 650,000 jobs on the back of this clean energy drive and again touted in the run-up to the general election; and the need to ensure that grid connections, as have been mentioned, to connect the new generating assets are available as and when needed, something that has been very difficult to achieve in the past. That would also prevent ludicrous curtailment payments. The costs from NESO to do this are enormous—I believe I am right in saying some £40 billion a year until 2030.

The measures also need to show the net effect of carbon emissions and the reductions being made as the years progress, which is what this Bill is all about. However, it is especially important to consider not only scope 1 emissions, being direct greenhouse gas emissions that occur from sources that are controlled or owned by an organisation, and scope 2 emissions, being indirect greenhouse gas emissions associated with the purchase of electricity, steam, heat or cooling but also—and possibly most importantly—scope 3 emissions, being the greenhouse emissions resulting from activities from assets not owned or controlled by the reporting organisation but that the organisation indirectly affects in its value chain. My noble friend Lord Hamilton talked about one specific example. In my opinion, this has specific reference to solar panels, which are manufactured predominantly—some 85%—in China, and wind turbines, of which 60% are manufactured in China, which has certainly not demonstrated any restraint in curbing emissions. Then, there is the subsequent voyage to the final destination. Let us not forget what the noble Lord, Lord Alton, said.

There is also the need to show a reduction in imported energy—both via electrical interconnectors and hydrocarbons as LNG or by pipe from Norway and the continent—balanced against the production of our own North Sea gas and being allowed to continue to search for more off our abundant coasts.

Further, there is the need to show that a significant percentage of the materials used in any work done is generated in the UK and the need to demonstrate that we are becoming more self-sufficient in power generation—something we have not got to yet. Finally, but of no lesser importance, there is the need to demonstrate financial return to the benefit of the taxpayer.

In a number of these amendments, various timeframes have been suggested to produce a fair audit trail for Parliament and the taxpayer. Without them, who will know the real benefits of all this expense? Does the Minister agree that measurement provides results and therefore helps to determine the way forward?

--- Later in debate ---

[Lord Roborough (Con)]

My Lords, I rise briefly to support the amendments in this group. It is clear from this and other groups that the mood of the Committee is in favour of fuller accountability to this House of the activities of GB Energy. This is not micromanaging; it is simply accountability and transparency. How the actions that are taken by GB Energy are directed, as is addressed by Amendment 66 in the name of the noble Earl, Lord Russell, and addressed more fully in Amendment 87 in the name of my noble friend Lady McIntosh of Pickering, is an essential part of that.

Financial markets have periods of irrational exuberance where greed triumphs over caution and experience. Most recently, we have seen the ill-fated wave of SPACs: special purpose acquisition companies. They are generally launched with great excitement and fanfare and with very loose objectives and end in disappointment. GB Energy is clearly a serious undertaking and its chances of success will be greatly aided by rigorous discipline and concentration of force. Applying strong parliamentary oversight of its directions can only aid that.

Amendment 86 in the name of the noble Lord, Lord Cameron of Dillington, and Amendment 86A in the name of my noble friend Lord Trenchard, will help in the rigour of those directions. The clause as drafted is simply too vague, as has been pointed out by other noble Lords. There is great and relevant knowledge in the five bodies nominated between these two amendments. It would seem essential for all directions that the Secretary of State should access this knowledge to ensure that these directions are as beneficial as possible.

I ask the Minister: how specific do his Government intend those directions to be? Will they prioritise jobs, bills, net zero or the commerciality of GB Energy itself? Having such directions is vital to ensure that GB Energy does not drift off course and stays aligned with the Government’s will. But the risk of conflicting objectives is confusion and muddle.

[Baroness Noakes (Con)]

My Lords, I do not support Amendments 66 and 87 in this group, for similar reasons to those that I gave on the first group that we debated today, in that they would weaken the role of the power of direction. The noble Earl, Lord Russell, referred to the fourth report of your Lordships’ Constitution Committee. I am not sure that that report stands up to close scrutiny. It is a very brief report with relatively little argumentation, and it is difficult to understand what the underlying logic really was. I suspect that the committee did not fully take account of the historical role of powers of direction in relation to public corporations, and it may well have reached a conclusion on the basis of a partial understanding of the role of public corporation powers of direction as they are designed.

--- Later in debate ---

Moved by

[Baroness Noakes]

88: Clause 7, page 4, line 10, at end insert—
“(1A) The period allowed for filing the reports and accounts of Great British Energy under section 442 of The Companies Act 2006 is six months.”Member’s explanatory statement
This amendment ensures that Great British Energy files its reports and accounts in line with the period allowed for public companies.

[Baroness Noakes (Con)]

My Lords, we now move to some more technical aspects of the Bill, compared to some of the really significant issues we have been debating in recent groups. I am sorry that the Minister dealt with these recent groups in such a perfunctory way. We did not get a response of substance at all to the very significant points that my noble friends have been making, and I think it is right that the Government think again about their attitude to whether or not they are prepared to accept proper legislative scrutiny in your Lordships’ House. I hope that we can move to a more constructive phase going forward.

I shall also speak to two other amendments this group. I have Amendment 92, to which the noble Lord, Lord Vaux of Harrowden, has added his name, and I have added my name to his Amendment 89.

Great British Energy will be a company formed under the Companies Act 2006, an Act imprinted in my memory. At the time, in 2006, it was the longest Act ever produced, and it took many months of my life. Under Section 442 of that Act, private companies are given nine months to file their accounts, while public companies have only six months. I am assuming that Great British Energy will be a private company, as there is no ability for its shares to be offered to the public; it will therefore have nine months to file its accounts, and my Amendment 88 changes that to six months, in line with public companies. GBE will be a substantial company, with upwards of £8 billion flowing through it, and it ought to be subject to the same degree of scrutiny that large public companies have.

Many public sector bodies manage to get their accounts out and laid before Parliament before the beginning of the Summer Recess, which gives them nearly four months, which should be plenty of time. Listed companies generally get their accounts out very much quicker, mainly because it makes no sense whatever to spend a long time in the new financial year looking backwards.

I would not normally have thought that an amendment like this would be necessary, but I was shocked to discover this autumn that the National Wealth Fund’s report and accounts for 2023-24 were not signed off until 21 November 2024. I was even more shocked to find that the previous year was only about four weeks better than that, with the report and accounts being signed off on 23 October 2023. I do not think we should tolerate such a laid-back approach to putting the only regular accountability document relating to Great British Energy into the public domain. If six months is good enough for plcs, it ought to be good enough for GBE and, indeed, any other public sector body.

The Government have been very unresponsive to calls in the various other amendments that we have been considering during this Committee for extra reporting going above and beyond what is included in the annual report and accounts. This underlines the need for a very timely approach to the one accountability document that the Government are prepared to concede will exist for Great British Energy—namely, its annual report and accounts.

My other amendment, Amendment 92, is more of a probing amendment. It would require the Comptroller and Auditor General to be appointed as Great British Energy’s auditor. Allowing the Comptroller and Auditor General to do company accounts was, incidentally, one of the minor achievements of the Companies Act 2006, reflecting the trend at the time for increasing use of limited liability companies to carry out public sector activities more extensively. I hope that the Minister will confirm that the Comptroller and Auditor General will be appointed as Great British Energy’s auditor. He is the auditor to the National Wealth Fund, and I cannot see that there could possibly be a case for not using him.

As I said earlier, I also support Amendment 89 in the name of the noble Lord, Lord Vaux. I will not steal his thunder, but I highlight the importance of proposed new paragraph (d) of his amendment, which would require Great British Energy to report on the extent to which its investments have crowded private sector money in. There will be many other measures of success for Great British Energy, but this is a key one. The Government have been very quiet about exactly how Great British Energy will work with the private sector. It is essential that there will be good public reporting to shed light on this area as Great British Energy moves into its operational phase. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, once again we return to the issue of accountability and transparency. I hope the Minister is starting to hear the trend. In this group we are looking at the annual reporting requirements that apply to Great British Energy, and I hope at least that the Minister will agree this time that Clause 7 is the right place to talk about reporting.

I thank the noble Baroness, Lady Noakes, the noble Lord, Lord Cameron of Dillington, and the noble Viscount, Lord Trenchard, for their support on Amendment 89. First, however, I state my complete support for Amendments 88 and 92, tabled and just introduced by the noble Baroness, Lady Noakes. We are talking about a company that is going to be spending £8.3 billion over the next five years, so it must be right that at least the discipline that applies to public companies should apply to GBE in terms of providing timely information and its audits.

The Minister said earlier that he thinks the Bill includes the appropriate levels of accountability and transparency. I find that quite hard to understand. As the Bill is currently drafted, the only reporting that GBE will be required to provide publicly—or to the Secretary of State—is the annual accounts and reports referred to in Clause 7, which need to comply only with Section 441 of the Companies Act 2006, as we have just heard.

The contents of such accounts are quite limited, and they do not have to include much information that will allow Parliament—or other parties—to scrutinise the performance of GBE against its objectives. Indeed, it is not impossible—depending on how the Government choose to finance GBE—that it might even be able to take advantage of small or medium-sized company exemptions to the information it must provide in its accounts, especially given the increase in the limits for those that are going to take effect this April.

The impact assessment that accompanies this Bill says:

“Future benefits will depend on GBE’s future activities and spending decisions which are not in scope of this impact assessment. Therefore, no quantification of benefits has been provided at this stage. All investment into and expenditure of GBE will be subject to future spending reviews and business cases, which will set out in detail the monetised and non-monetised impacts of GBEs activities”.


It says exactly the same in respect of the costs. My first question for the Minister is therefore simply whether, and in what form, those spending reviews and business cases that the impact assessment talks about will be published and reported on. I asked the same question at Second Reading, but I am afraid I did not receive a reply at that point.

In the absence of those spending reviews being published—which I suspect will be the case—and any reporting on actual performance against them, we need something more than the limited information that must be published in the accounts in accordance with Section 441 of the Companies Act. My Amendment 89 seeks modestly to expand those requirements for publishing information by which the success, or otherwise, of GBE can be measured.