Great British Energy Bill

Earl of Effingham Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

I added my name to Amendment 19 tabled by the noble Lord, Lord Ravensdale, as he noted, because it mentions cost. In many of the debates we have about energy supply and the challenges of net zero, people forget about the importance of costs. My noble friend Lord Frost’s earlier amendment phrased the objective in terms of consumer bills. The amendment from the noble Lord, Lord Ravensdale, is narrower because it deals with the cost of energy supply, which is one component of the bills for consumers. Nevertheless, it is well worth supporting as something to ensure that Great British Energy has the ability to carry out activities that can reduce the cost. That is very important.

[The Earl of Effingham (Con)]

My Lords, I thank the noble Lord, Lord Vaux of Harrowden, for his valuable contributions to this group. The amendments noted are crucial for ensuring that Great British Energy remains aligned with its goals of promoting energy security, affordability and sustainability. This fifth group of amendments focuses on the objectives and duties of Great British Energy.

I begin with Amendment 10, which turns the focus on the trading element of GBE. By explicitly including trading, the amendment demonstrates a forward-thinking approach to GBE’s role. While market dynamics naturally encourage competition and efficiency, active participation in energy trading enables GBE to enhance price stability, bolster supply resilience and reduce market volatility. This strategic involvement not only fosters a more competitive energy landscape but empowers consumers by offering greater choice and flexibility. In doing so, it strengthens the UK’s energy security, ensuring the system remains adaptable to both domestic demands and global shifts, while at the same time promoting long-term sustainability and cost effectiveness free from overreliance on dominant energy providers.

Furthermore, on Amendment 11 to Clause 3, the insertion of the line

“including from schemes owned, or part owned, by community organisations”

is important when addressing the need for a more inclusive energy system that empowers local communities. By specifically including community energy schemes, this amendment acknowledges the growing role of grass-roots initiatives in the energy transition. It ensures that GBE will actively support, facilitate and encourage energy generation models that are owned or part-owned by local and community organisations. This naturally leads us to Amendment 15 to Clause 3, which outlines measures to increase low-carbon and renewable energy schemes owned or part-owned by community organisations.

This approach not only helps democratise energy production but empowers communities to take control of their energy future, fostering a more decentralised and resilient energy system. Community-led schemes have proven essential in driving local economic growth, creating jobs and promoting energy independence. By ensuring that GBE is aligned with these objectives, we not only advance environmental sustainability but cultivate a more equitable and diverse energy landscape, one that shifts power back into the hands of local communities.

Amendment 19 proposes important

“measures for reducing the cost of the supply of energy”.

This is a critical step in aligning GBE with the Government’s key missions for this Parliament. The Labour Government committed not only to

“make Britain a clean energy superpower”

but to deliver cheaper bills for British households. The amendment is a fair and necessary step to ensure that the Government deliver on their promises. By incorporating the reduction of energy costs into Great British Energy’s legislated objectives, it would ensure that affordability, alongside security and sustainability, remained a core consideration in its operations.

This leads us seamlessly to Amendment 34 to Clause 3, which would insert a definition of

“security of the supply of energy”

into the objects of GBE. The inclusion of system reliability, price predictability, fuel security and cybersecurity is vital to fully encompass the concept of energy security. This clear and detailed definition ensures that GBE’s mission is comprehensive and aligned with the broader goal of delivering a secure and sustainable energy future for all.

Amendment 27 would ensure that GBE took no action that risked the sustainability of commercial shipping. This is a key consideration in the broader context of balancing the development of renewable energy sites with other vital sectors, such as fishing and shipping. As we know, 90% of goods in the UK are transported here by sea. Ports, often specialising in certain goods, are essential to our economy, and well-established shipping lanes must remain open to ensure the smooth operation of this vital sector. If we are to invest in offshore energy infrastructure, we must not overlook the potential risks posed to these critical maritime routes.

The amendment draws a parallel with the Crown Estate amendments. It specifically aims to ensure that GBE does not take any action that could jeopardise the sustainability of commercial shipping. With offshore energy production, particularly offshore wind, continuing to grow, it is crucial that this growth is balanced with the needs of commercial shipping. If we are to meet our energy goals, we must not undermine the sector that is responsible for bringing nearly all the goods we rely on.

While offshore wind is undoubtedly a critical part of the UK’s energy future, accounting for 17% of our electricity in 2023, up from 14% in 2022, we must recognise the impact that the siting of wind farms and other offshore developments could have on existing industries. GBE has a responsibility to ensure that the growth of sustainable energy does not come at the expense of shipping lanes, port operations or coastal communities.

Amendments 20, 28 and 29 are designed to protect local communities. Amendment 20 would clarify the role of GBE in local area energy planning and governance, ensuring that decisions regarding energy infrastructure were made in collaboration with local authorities. As the energy landscape evolves, it is essential that local communities are not only kept informed but are actively involved in shaping their energy future.

By explicitly requiring GBE to engage with local authorities, the amendment fosters a more inclusive and transparent approach to energy planning, enabling communities to have a say in how energy systems are developed, managed and integrated at the local level. Such involvement is critical for addressing region-specific needs, ensuring that energy solutions are tailored to the unique characteristics and priorities of different areas, from rural communities to urban centres. The amendment supports the broader goal of decentralising energy governance, empowering local authorities to take a more proactive role in shaping the energy systems that affect their residents. It would also ensure that local insights were considered in the development of energy infrastructure, from renewable energy projects to the distribution and storage of energy.

Amendments 28 and 29 address the wider concerns that may be raised by local coastal communities. As we continue to develop renewable energy infrastructure, it is crucial that we consider the impact of such development on the very communities that depend on the seas for their livelihoods and way of life, including the tourism sector, which many coastal areas rely on. I hope the Minister will acknowledge that to achieve the Government’s 2030 renewable energy targets it is essential to balance the need for sustainable energy development with the preservation of those communities. Their voices must be heard; they are important working people, and their livelihoods must not be unduly impacted by offshore energy projects. The presence of offshore developments, particularly wind farms, can have significant consequences for local tourism, which is often a key economic driver for those communities. We must ensure that any developments do not disrupt the natural beauty or accessibility of those areas, which attract visitors year round. This is an additional consideration, not directly addressed by these amendments but worth highlighting.

We may return to this on Report, as I believe that a review and/or an annual report might go some way to reassuring Parliament that GBE is making decisions that truly benefit all stakeholders. Such a mechanism would ensure that potential trade-offs were identified, quantified and fully considered, especially as we navigate the complexities of offshore energy and its impact on local communities.

I trust that the Minister has listened carefully to the concerns raised by all noble Lords and hope that the Government will consider improving the Bill to ensure that GBE properly considers the impacts of its activities on fishing, shipping, coastal communities and the environment. We must not lose sight of the importance of those local industries and the people whose livelihoods depend on them.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I thank all noble Lords who have taken part in this debate. I agree with the noble Lord, Lord Vaux, and the noble Baroness, Lady Noakes, in relation to Clause 3. It does set statutory limits on Great British Energy’s objects, and these must be reflected in the company’s articles of association. However, the four objects in Clause 3 have been broadly drafted, so although they impose a restriction, it is very wide and intended to cover all the conceivable activities that Great British Energy may engage in. If I have confused the Committee by loose terms, I apologise.

In Amendment 10, the noble Lord, Lord Vaux, proposes adding “trading” to Clause 3(2)(a). I will resist this because, although trading is not explicitly referenced, the current objects in the Bill allow Great British Energy to facilitate or encourage the supply of clean energy. We see no reason why that activity could not include the encouragement or facilitation of a trade in clean energy. But, if the noble Lord has examples of schemes that are operating, we would be interested in the details.

Great British Energy Bill

Earl of Effingham Excerpts

Committee stage
Tuesday 17th December 2024 Lords Chamber

[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.

[The Earl of Effingham (Con)]

My Lords, I shall speak to Amendment 57 in my name. It addresses an essential aspect of transparency and accountability in the development of Great British Energy, as outlined in Clause 5.

This amendment ensures that all consultations conducted under Clause 5(4) to (6), which are critical for the development and implementation of Great British Energy, are not only carried out but made fully accessible to the public and—more importantly—to Parliament.

In the modern world, transparency in governance is not just a nice to have: it is an absolute must-have. It is essential that both public and Parliament have access to the results of consultations that influence decisions on policies with such far-reaching consequences.

The energy sector is at the heart of the challenges we face today—whether it be securing a sustainable, affordable and clean energy supply for generations to come or meeting the ambitious carbon reduction goals that are integral to our environmental commitments. The implications of these decisions extend to every household and business and, indeed, to the global environment and climate. Too often, decisions are made by Administrations around the world which are disconnected from the lived realities of those who will be most affected. It is crucial that we bridge this gap. This amendment ensures that the voices of all stakeholders are heard.

Can we consider the important role of the devolved nations of Wales, Scotland and Northern Ireland? As your Lordships are aware, energy policy intersects deeply with our devolved Administrations. Each nation has its own priorities, challenges and opportunities, and the decisions made here and in the other place must reflect the needs and perspectives of all four nations that make up the United Kingdom.

Amendment 57 achieves precisely that. It ensures that the devolved nations are not sidelined in the policy- making process. Wales has made remarkable progress in renewable energy, with a strong focus on wind, solar and tidal power. The Welsh Government have set ambitious decarbonisation targets and are actively working to ensure that local communities reap the benefits of this transition.

Great British Energy Bill

Earl of Effingham Excerpts

Committee stage
Monday 13th January 2025 Lords Chamber

[Lord Petitgas (Con)]

My Lords, I support the amendments in my name and those of my noble friends Lady Bloomfield, Lord Trenchard and Lord Effingham. They aim to ensure that the proposed entity, Great British Energy, operates in a manner that aligns with fiscal responsibility, transparency, accountability and the overarching national interest.

Amendment 78, tabled by my noble friend Lady Bloomfield, mandates the reinvestment of all profits back into the company. The reinvestment question is a good test of what GBE is about and its future performance. As I said, GBE is de facto a permanent capital investment vehicle that will be deploying capital in illiquid minority stakes. It is very unlikely that it will ever be able to dispose of those and realise a lot of liquidity, so at best it will deliver some dividends. If it did, it would be best for it to be reinvested, ensuring that the £8.3 billion is the maximum commitment for taxpayers.

My Amendment 79 in my name stipulates that Great British Energy must not invest in projects that are reliant on government subsidies. GBE is already structured as a crowding-in investment, which means that it is likely to take more risk and accept lower returns than the private sector. This is what the mandate of “facilitate, encourage and participate” means to me. There is nothing wrong with that, but the private sector and foreign funds should be attracted to the GB partnership for that reason. Therefore, I see no reason to pile in and give the private capital two bites of the cherry by allowing it to work with GBE with government subsidies.

I spoke enough about Amendment 80 earlier. Amendment 81 builds on it with a firm measure of accountability. By requiring independent third-party evaluations of GBE’s investments, we introduce an essential safeguard against conflict of interest and political interference. Transparency and objectivity in evaluating investments are paramount, especially when the risk of poor decision-making with public funds looms large. As your Lordships know, I am particularly concerned by the lack of detail and definition of investment process and framework within GBE, at least at this stage. I believe that the Minister has taken good note of my concern about the lack of precision on an investment committee.

Finally, Amendment 82 limits Great British Energy’s investment to UK-registered companies. The purpose of this entity, as set out by the Government, is to bolster Britain’s energy security and our national economy. Investing in foreign-registered companies undermines that goal. We must ensure that any investment of public money supports British jobs, British innovation and British interests. This amendment ensures that GBE prioritises domestic enterprises, strengthening the UK’s energy sector and reducing dependency on foreign entities.

I will remind the House of the holy grails that I think we want to achieve with GBE. Number one is energy security; number two is energy sovereignty; number three is economic growth; and number four is low costs for bills and more employment. Indeed, we do not want GBE to outsource, be it our energy security, sovereignty or supply chains. We know it is an incredibly difficult topic because, as a country, we are ahead on decarbonisation, but we are behind in terms of ownership of our own infrastructure. We are also behind in terms of supply chains and we are behind on production of cable, wind turbines and other technology. Therefore, we have a lot of work to do in this area and I think it will be an extremely difficult topic because of supply chains, China dominance and the fact that we are behind on infrastructure and technology.

All these amendments share a common theme: safeguarding taxpayer money, ensuring operational transparency and prioritising the interests of the British people. Conservatives believe in the power of the private sector and market-led solutions and, where state intervention occurs, as in this case, oversight is extremely important. We urge the Government to accept these amendments and commit to ensuring that GBE operates as a responsible, efficient and transparent entity.

[The Earl of Effingham (Con)]

My Lords, I rise to speak in support of the amendments I have tabled to Clause 6 of this Bill, along with the contributions from the noble Viscount, Lord Trenchard. These amendments reflect three core principles of fiscal restraint, operational transparency and the safeguarding of national interests.

Amendment 83 seeks to limit the number of Great British Energy representatives attending conferences of the parties to the United Nations Convention on Biological Diversity to no more than five. I greatly understand the importance of international collaboration on biodiversity, but we absolutely must be realistic about the need for cost control and proportional representation. These international summits are indeed vital, but we have to recognise also that very significant amounts of taxpayers’ money are spent on travel and accommodation. It is simply not appropriate for Great British Energy, funded by the public purse, to send unnecessarily large delegations. By limiting attendance, this amendment ensures that taxpayers’ money is spent wisely, without detracting from the company’s core mission, which can be accomplished with a lean and laser-focused task force.

Amendment 84 would require Great British Energy to publish its principles, policies and criteria for evaluating prospective investments. One of the most persistent criticisms of government-led initiatives is the opacity with which decisions are often made. Entrepreneurs, innovators, universities and companies across the country deserve clarity when applying for backing from Great British Energy. For example, what metrics will Great British Energy use and what constitutes a worthwhile investment? By requiring the publication of this information, we will not only promote transparency, which should be encouraged, but foster a more competitive and accessible process for any prospective partners. This is good governance in action.

Finally, Amendment 85, tabled jointly with the noble Viscount, Lord Trenchard, addresses the critical issue of national security and economic prudence. It would require that Great British Energy does not co-invest with Chinese state-owned companies without prior notice to the International Trade Committee of the other place. The risks associated with Chinese state-owned companies are well documented. Co-investment with such entities could compromise the integrity of Great British Energy and pose long-term risks to our national security. Furthermore, it would expose the UK to significant economic and political vulnerabilities. To be clear, this amendment does not propose an outright prohibition, but it does mandate a right and proper process of scrutiny. Requiring advanced notice to the International Trade Committee will introduce a layer of accountability which will ensure that such decisions are not made in haste or without proper oversight.

Together, these amendments reflect a responsible approach to managing Great British Energy. They ensure that the company operates in a manner that is transparent, cost-effective and aligned with the UK’s strategic interests. I urge all noble Lords to support these amendments and help guide Great British Energy to be an entity that truly serves the British people both efficiently and prudently.

[Viscount Trenchard (Con)]

My Lords, I rise to support my noble friend Lord Effingham in his Amendment 85, to which I have added my name. Certainly, there are good reasons to be very cautious in selecting international partners with whom we will co-invest in the energy sector. Chinese state-owned companies are managed under rather different governance systems from those which the London Stock Exchange would consider appropriate for its listed companies. I agree with my noble friend that the Secretary of State should consult the International Trade Committee of another place before considering such co-investment.

Among other amendments in this group, I also support my noble friend Lady Bloomfield of Hinton Waldrist in her Amendment 78, which would ensure that GBE will reinvest all profits into the company. I agree with what she said in her speech, especially as GBE, as a publicly owned company, will not be subject to the disciplines of the marketplace, and its shareholder will be more concerned with achieving policy objectives through GBE than with maximising its return on investments and contributing to long-term growth.

--- Later in debate ---

[The Earl of Effingham (Con)]

That is one example of where, to monitor the cost, we need to keep a tight grip on the number of people we send in delegations. It does not aim at that organisation specifically; it is that plus anything else to which GBE might wish to send delegates.

[Lord Teverson (LD)]

I understand the issue of public expenditure, travel and all that, but the noble Earl specifically names a culprit in his amendment. That is what the Committee looks at and what it tries to get into Bills, so the amendment specifically aims at that organisation rather than the broader canvas.