Energy Bill [ Lords ] (Fifteenth sitting)

Kerry McCarthy Excerpts

Committee stage
Thursday 22nd June 2023 Public Bill Committees

[The Chair]

Any more for any more?

[Kerry McCarthy (Bristol East) (Lab)]

I thought you were great.

Question put and agreed to.

New clause 72 accordingly read a Second time, and added to the Bill.

New Clause 73

Great British Nuclear

“(1) The Secretary of State may by notice designate a company as Great British Nuclear.

(2) A company may be designated under this section only if—

(a) it is limited by shares, and

(b) it is wholly-owned by the Crown.

(3) A notice under subsection (1)—

(a) must specify the time from which the designation has effect, and

(b) must be published by the Secretary of State as soon as reasonably practicable after the notice is given.

(4) The designation of a company terminates—

(a) if it ceases to be wholly-owned by the Crown, or

(b) if the Secretary of State revokes its designation by notice.

(5) A notice under subsection (4)(b)—

(a) must specify the time from which the revocation has effect, and

(b) must be published by the Secretary of State as soon as reasonably practicable after the notice is given.

(6) For the purposes of this section a company is wholly-owned by the Crown if each share in the company is held by—

(a) a Minister of the Crown,

(b) the Nuclear Decommissioning Authority established by section 1 of the Energy Act 2004,

(c) the United Kingdom Atomic Energy Authority established by section 1 of the Atomic Energy Authority Act 1954,

(d) a company which is wholly-owned by the Crown, or

(e) a nominee of a person falling within any of paragraphs (a) to (d).

(7) A company designated as Great British Nuclear under this section is exempt from the requirement in section 59 of the Companies Act 2006 (requirement as to use of ‘limited’ in company name).

(8) In this section—

‘company’ means a company registered under the Companies Act 2006;

‘Minister of the Crown’ has the same meaning as in the Ministers of the Crown Act 1975 (see section 8(1) of that Act).”—(Andrew Bowie.)

This new clause allows the Secretary of State by notice to designate a company as Great British Nuclear, provided that the company is limited by shares and wholly-owned by the Crown.

Brought up, and read the First time.

[Andrew Bowie]

I beg to move, That the clause be read a Second time.

Energy Bill [ Lords ] (Twelfth sitting)

Kerry McCarthy Excerpts

Committee stage
Tuesday 20th June 2023 Public Bill Committees

[Dr Whitehead]

I thank the Minister for that intervention. Following the assurances he has given on that basis, among others, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 260 to 263 ordered to stand part of the Bill.

Clause 264

Civil nuclear industry: amendment of relevant nuclear pension schemes

[Kerry McCarthy (Bristol East) (Lab)]

I beg to move amendment 103, in clause 264, page 234, line 31, at end insert

“, or on benefits in deferment or pensions in payment;”

This amendment means that the Secretary of State may not put a cap on revaluation of benefits in deferment or pensions in payment.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clauses 265 to 269 stand part.

[Kerry McCarthy]

It is a pleasure to see you in the Chair, Dr Huq. These clauses relate to nuclear pension schemes, and the amendment would provide certainty that Nuclear Decommissioning Authority pensions would not be capped. There is some ambiguity in the drafting of the Bill, and the door has been left open for the introduction of regulations to cap pension increases when that is not part of what has been agreed in the past among Government, unions and nuclear workers.

I say the door has been left open for such regulations because subsection (3) (c ) of the clause specifies that only increases for revaluation—that is, active deferred members—cannot be capped. It does not mention pensions in payment. The wording is

“not involving imposing a cap on any revaluation or revaluation rate”.

The amendment would mean that the Secretary of State could not put a cap on revaluation of benefits in deferment or pensions in payment, as well as the other schemes I have mentioned.

The provision as it stands is contrary to the heads of terms agreement between BEIS and the NDA, which explicitly states that pension increases will be in line with inflation, as measured by the consumer prices index, with no reference to any cap. It is also important to note that, although members of recognised trade unions in the NDA group voted in favour of the reforms that these measures facilitate, I am told that there was by no means an overwhelming endorsement. Many voted in such a way because they feared the Government would impose even worse reforms, which had been threatened, if they did not agree to what is now on the table. They felt that that was the best deal they could get, but they feel that the promises made to them have been broken and they are not happy. Given that, it is even more important that we ensure that the Bill reflects the compromise agreement that was reached.

It is also wrong to say that these reforms would bring pension provision across the NDA group into line with wider public sector pensions, which I think is what the Minister in the Lords said. Those pension schemes underwent much more radical reform long before Lord Hutton’s review of public sector pensions, and they have been closed to new entrants for many years. Lord Hutton recommended that public sector pension accrual remain on a defined-benefit basis, but pension provision across the NDA group is mostly on a defined-contribution basis. I have been approached by representatives of trade unions who are eager to meet the Minister to ensure that reforms are fully consistent with Lord Hutton’s review. I do not know whether the Minister can offer today to meet those representatives, so I can take that back to them.

An amendment is necessary to remove any doubt about the status of nuclear workers’ pensions. I am sure we all agree that the effectiveness of the Civil Nuclear Constabulary is essential to maintain the UK’s nuclear security, and that the work of everyone at the NDA is really important, as we have already heard this morning. Those people are integral to keeping the public safe, and that should be recognised when legislation is being determined.

I hope the Minister accepts that the amendment has been tabled in a constructive spirit. It is designed to remove any uncertainty, and I hope he will accept it.

[Andrew Bowie]

I am searching in vain for a second Minister to take some of this Bill. Unfortunately, they do not seem to be available. I thank the hon. Member for Bristol East for moving her amendment and allowing us to debate an important issue, especially for employees of the Nuclear Decommissioning Authority. I recently had a constructive meeting with trade unions representing workers from the NDA and was happy to discuss the issues they are concerned about in depth and specifically the one we are debating today.

The Nuclear Decommissioning Authority agreed with unions as part of negotiations that the consumer price index should be used for revaluations and that it should not be capped. Both the reference to the CPI and that revaluations should not be capped are referenced in the clause. As the clause sets out, revaluations include pensionable earnings, benefits in deferment and pensions in payment. Pensionable earnings relate to the pension payments contributed by employee and employer while they are working. Benefits in deferment are those benefits that have been built up by an employee who has left the pension scheme but has not yet accessed it. Pensions in payment relate to those receiving their pension.

The Government are content, therefore, that the legislation as drafted does not exclude benefits in deferment and pension in payment from the non-capping of the revaluation of earning by CPI. It is therefore in line with the agreed scheme. However, I am happy to put on record that in the new scheme, both benefits in deferment and pensions in payment will be uprated by CPI and will not be capped. While I appreciate the hon. Member for Bristol East raising the issue and the importance of ensuring that those with benefits in deferment and pensions in payment do not have their revaluations capped, I do not think the amendment is necessary.

[Kerry McCarthy]

Can the Minister confirm that when he discussed this with the trade union representatives, they were happy to accept his assurances that that is what the Bill says? Certainly, they have not communicated that to us. As far as I am concerned, they still believe that getting our amendment into the Bill is still important.

[Andrew Bowie]

That specific element was not discussed or brought up in the meeting, but I am happy to meet trade unions again to continue the discussion on the matter.

[Kerry McCarthy]

If there is some ambiguity, is there a reason why he feels that putting a clarification in the Bill to spell it out and give those reassurances would not be acceptable? The amendment does not seek to change his position as I understand it; it just seeks to make sure that that is clear.

[Andrew Bowie]

I understand why some Members, including the hon. Lady and trade unions, would find that helpful. We do not believe it is necessary because I have stressed today on the record—it will be in Hansard—that it is the Government’s position that those benefits in deferment and pensions in payment do not have revaluations capped and that they will be uprated by CPI. We do not think it is necessary because that is already the Government’s position. It is on the record and I am happy to stand by that.

Turning to clause 264, the 2011 report by Lord Hutton of Furness started the Government on the road to the reform of public sector pensions. While the Public Service Pensions Act 2013 made a large number of reforms, it did not cover all public sector bodies, including those within the NDA group. The NDA is the statutory body responsible for the decommissioning and safe handling of the UK’s nuclear legacy, with 17 sites across the United Kingdom, including Sellafield. Even though the NDA was created in 2005 via the Energy Act 2004, many of its sites have been operating since the middle of the 20th century. That lengthy history has led to a complicated set of pension arrangements, which include two pension schemes that, while closed to new entrants since 2008, provide for final salary pensions and are in scope for reform. They are the combined nuclear pension plan and the site licence company section of the Magnox Electric Group of the electricity supply pension scheme. 

In 2017, the Government and the NDA engaged with trade unions to agree a reformed pension scheme that was tailored to the characteristics of the affected NDA employees. That resulted in a proposed bespoke career average revalued earnings scheme which, following statutory consultation with affected NDA employees and a ballot of union members, was formally accepted by the trade unions. Subsequently, a formal Government consultation was launched in 2018, with the Government publishing a response in December of that year confirming the proposed change.

The reformed scheme still offers excellent benefits to its members. Notably—and unusually compared with other reformed schemes—it still includes provision for members to retire at their current retirement age. For nearly everybody, that will be 60 years old. However, the complicated nature of the pension schemes, in the context of the statutory framework that applies to pension benefits across the NDA estate, means that specific legislation is needed to implement the new scheme.

Clause 264 provides the Secretary of State with the power to make secondary legislation designating a person who will be required to amend the provisions of a nuclear pension scheme. That is necessary, as at the current time the scheme rules limit the NDA’s ability to make changes to pension scheme arrangements. Clause 264 uses the phrase “relevant nuclear pension scheme” to describe the types of schemes that a designated person could be required to amend by virtue of that amendment. Clause 265 explains what is meant by that phrase. Clause 265 also clarifies the UK Atomic Energy Authority pension schemes and pension schemes that benefit persons specified in the Public Service Pensions Act 2013 are not relevant pension schemes.

Clause 266 relates to the provision of information. In order to implement the proposed pension reforms, the NDA—and, in the case of the MEG-ESPS, Magnox Limited—will need information from others. Clause 266 gives a person who has been required to amend a relevant nuclear pension scheme the power to require persons holding any information they might reasonably require to provide that information. That could include the number of members in a pension scheme, and the salaries and ages of those members.

Data protection legislation may still prevent the information from being shared. The clause specifies, however, that in making that assessment, the requirement to disclose imposed by the clause must be taken into account. The clause also provides that disclosure does not constitute a breach of confidence or breach of any other restriction on the disclosure of information.

Clause 267 sets out definitions relevant to the clauses about amendments of relevant nuclear pension schemes. Clause 268 relates to the protection that is in place that would currently block any change of pension. Although the reformed pension to be provided to affected NDA workers is still excellent, it has always been clear that the reforms to public sector pensions would result in lower levels of benefits to members than is currently the case. Although that is the acknowledged effect of Government policy in this area, it does bring it into conflict with existing legislation. Both schedule 8 of the Energy Act 2004 and regulations made under schedules 14 and 15 of the Electricity Act 1989 effectively mean that any change to NDA pensions must be “no less favourable”.

Clause 268 effectively expands a power made under an earlier clause, providing the ability for regulations made by the Secretary of State to amend or disapply schedule 8 of the Energy Act 2004 and regulations made under schedules 14 and 15 of the Electricity Act 1989. Given that this is not a hybrid Bill, we believe it is more appropriate for those powers to be exercised via regulation rather than primary legislation.

Clause 269 relates to the procedure for the regulations under this chapter. The Government believe it is right and proper for regulations under this chapter to be subject to the affirmative procedure. We also believe that these regulations should not be subject to the hybrid instrument procedure. There has been considerable consultation with those affected, and the policy is in line with pension reform across the public sector.

[Kerry McCarthy]

I welcome the Minister’s assurances and his offer to meet the unions to discuss this point. I have spent a lot time looking at the wording. Although I agree that it could be interpreted in the way the Minister says, that is arguable. I still feel it would be best to have clarity in the Bill and, therefore, would like to press the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Andrew Bowie]

That is demonstrated by the clause, and that is why I believe that now is not the right time to make the changes suggested by the Labour party. We will oppose the clause.

Finally, I will address clauses 272 and 273 on community energy, which I also oppose. I recognise that several Members spoke in support of these clauses on Second Reading. However, the Government continue to believe that this is a commercial matter that should be left to suppliers, and further work is needed before considering whether primary legislation is needed.

In evidence submitted to the Committee and published on 13 June, Energy UK set out its in-principle support, much like the Government, for community energy, and recognised the role that it will play in our energy system. However, it asks that

“these measures be removed to give the Government, the regulator, and the industry time to fully consider the best approach to integrating community energy effectively, protecting consumers and preventing additional costs being added to all consumers’ energy bills on behalf of a currently small portion of the population.”

[Kerry McCarthy]

Does the Minister accept that the wording inserted in the Bill by the Lords reflects the exact same wording of a private Member’s Bill—I think it is the Local Electricity Bill—that more than 120 Conservative MPs previously pledged to support? I checked to see whether any members of the Committee supported that Bill, and apparently the hon. Members for Hyndburn and for West Aberdeenshire and Kincardine were among those 120 MPs. I think the rest of the Committee gets off the hook on that. Would the Minister like to explain why he has changed his mind?

[Andrew Bowie]

The hon. Lady is hearing me explain at great length why the position of the Government is what it is.

Clause 272 seeks a minimum export guarantee scheme. Community energy projects can already access power purchase agreements, which are arrangements for the continuous purchase of power over a given period with market-reflective prices. For example, Younity, a joint venture between Octopus and Midcounties Co-operative, already purchases electricity from more than 200 community groups of all sizes. It has PPAs of varying contract lengths, from six months to five years. Renewable Exchange has also enabled more than 100 community projects to sell electricity via PPAs since 2018.

When we introduced the smart export guarantee, we consciously moved from a consumer-funded subsidy model to a competitive market-based system with cost-reflective pricing. That was in line with the vision to meet our net zero commitments at the lowest net cost to UK taxpayers, consumers and businesses. Introducing a fixed price would be a step backwards, as it requires all energy consumers to pay more than the market price for electricity to subside local communities that benefit from community energy projects. An electricity export guarantee indexed to the wholesale price is inconsistent with the Government’s aim to decouple renewable generation from a wholesale price linked to the marginal cost, usually fossil fuel generation or gas. A static export price could also dampen price signals needed in the system, for example, in the use of intraday batteries.

History suggests that such a support scheme would have only a minimal impact on deployment. For example, deployment of community energy projects over the final five years of the much more generous feed-in tariff subsidy scheme was still very low. These projects are also typically more expensive than larger utility-scale renewable projects, with small solar and onshore wind projects between 50% and 70% more expensive. The proposal would be mandatory for suppliers with more than 150,000 consumers, and would therefore introduce a huge new administrative burden. Suppliers would face the additional one-off costs of putting in place process and IT infrastructure, as well as ongoing costs of managing the scheme, which would be passed on to consumers in higher bills. It is likely that it will disproportionately impact smaller suppliers, sitting just above the 150,000 customer threshold.

Similarly, on clause 273 it is the Government’s view that a local tariff is unlikely to result in a better price for consumers. Suppliers would incur potentially significant costs in setting up and delivering the scheme. They would also have to recoup the additional costs, which we anticipate would be via the service fee and would therefore be recoverable only from local consumers. A small-scale low-carbon generator is also unlikely to guarantee a supply of electricity to local consumers at all times. Suppliers would have to buy additional wholesale energy to cover all local consumer demand, while continuing to charge for all other supply costs incurred. The local tariff would also need to reflect the export price paid to the generator. Presumably that is intended to ensure that local consumers benefit from cheaper export prices, but it would create an unintended outcome whereby higher export prices benefit the generator and increase the tariff price.

I hope that I have explained at length why I, as the Member for West Aberdeenshire and Kincardine, am espousing this position. I reassure the Committee that I am working with my officials to explore what other credible options are available to support the community energy sector. Indeed, work continues as we speak. We are taking these issues seriously, but for the reasons that I have provided I will oppose the clauses.

Energy Bill [ Lords ] (Eleventh sitting)

Kerry McCarthy Excerpts

Committee stage
Thursday 15th June 2023 Public Bill Committees

[Dr Whitehead]

Okay. What I was trying to convey—perhaps I did not do so in quite the pellucid way I might have—was what we want to achieve with offshore wind development. As I have said, the Opposition are committed, along with the Government, to a huge increase in offshore wind, which we think can be achieved, most importantly, while taking proper note of the environmental considerations that surround those sites. As the hon. Member for South Ribble says, in the right places and under the right circumstances offshore wind can be, in the end, a substantial enhancement of the underwater habitat and environment.

[Kerry McCarthy (Bristol East) (Lab)]

I think my hon. Friend made it perfectly clear that some places are appropriate for offshore wind and some are not because of the nature of the marine environment. Does he share my concerns about existing protections? A lot of marine protected areas are described as little more than “paper parks” because they are not achieving what they are meant to. We need to enhance the protections for those designated areas. Just as in some places it is appropriate to fish and in others not, we ought to respect the fact that in some areas, marine protection has to be the No. 1 priority.

[Dr Whitehead]

My hon. Friend is quite right. She will no doubt be thinking back to the Marine and Coastal Access Act 2009, which started to develop exactly the concept that she sets out—that there are right and wrong places for development. There are places that we should seriously ensure are protected as much as possible—marine conservation zones—and it would be really quite a sin to put development on those. There are also places where there are known marine traffic routes, and siting an offshore wind farm right in the middle of a major offshore traffic route would not be a good idea either. There are other areas where the communications required for offshore wind farms could themselves be subject to environmental considerations, and those need to be taken into account too.

After the 2009 Act was passed, a number of marine conservation areas were supposed to be set up. Many of them have not been, and those that were have not had the level of policing and enforcement that they should have had.

[Kerry McCarthy]

As Labour left government, we had plans for an ecologically coherent network of, I think, 113 marine conservation zones. Does my hon. Friend share my disappointment that we are now 13 years on and still far from achieving that? It is important that we do not go backwards on the issues that we are discussing today. Obviously, we need to go forwards, but going backwards would be even worse than remaining in the same place.

[Dr Whitehead]

My hon. Friend is right again, and she recalls the exact number of conservation zones, which had escaped my memory. We might say that if we had those marine conservation zones in place now, we would be much clearer today about exactly what we will be doing as far as planning in the North sea and Celtic sea is concerned.

Lyme Bay fairly near me, which should be a marine conservation zone—I am not sure that it is—has cold-water coral features, and it would be quite lethal to those formations were we to develop offshore activities there. That is why that zone should be protected. Other areas further down—

Energy Bill [ Lords ] (Tenth sitting)

Kerry McCarthy Excerpts

Committee stage
Thursday 15th June 2023 Public Bill Committees

[Dr Whitehead]

Oh, all right. We can have a debate about whether Tom Cruise makes good films or not, but I think the general consensus would be no. The point about that film is that he was, as I recall, a detective who had to go round anticipating crimes before they were committed. Indeed, he did not just anticipate crimes—I think my hon. Friend the Member for Bristol East is looking this up on her iPad—

[Kerry McCarthy (Bristol East) (Lab)]

I have no idea what you are talking about. I am not sure I have ever seen it.

[Dr Whitehead]

In that film, people were profiled in case they might commit crimes in later life, and they were arrested well before they could commit a crime, or because their profile suggested that they might do so in the future. That is the problem that we may come across with these clauses.

As we will unpack when we come to later clauses, the way the Bill is drafted puts the onus on suppliers and the owners of undertakings that relate to possible disruptions to do “anything”—that is the word in the Bill —to secure core sector resilience. As we will see, if the people in those sectors fail or fall short of doing “anything”, there are penalties: they can be imprisoned, and they can be fined at the discretion of the Secretary of State.

I am interested to hear what the Minister has to say about that, but it seems to me that that gets rather close to the “Minority Report” line about anticipating offences and, as it were, taking people out before they have committed an offence. Furthermore, it puts an enormous onus on the people carrying out those activities to do things that perhaps ought to be for the Government to undertake and enforce, as the Minister said earlier, at the time that a disruption takes place. It could be said that these clauses are about anticipatory activity. The Government quite properly have powers under previous environmental legislation to deal with disruption.

Clause 222 sets out the general objective for core fuel sector resilience and states that the Secretary of State’s functions must be exercised with a view to

“ensuring that economic activity in the United Kingdom is not adversely affected by disruptions to core fuel sector activities, and…reducing the risk of emergencies affecting fuel supplies.”

That is a very wide brief.

--- Later in debate ---

[Andrew Bowie]

The powers in the clause are important to ensure resilience and address disruption in the core fuel sector. I thank the hon. Member for Southampton, Test for his amendment and reassure him, and the hon. Member for Sheffield, Hallam, that the powers are not intended to interfere with any rights to industrial action or any other employee rights. The Government have maintained a good working relationship with the industry over the years and aim to be aware of proposed industrial actions and to work collaboratively, as we have in the past, to understand the impact and potential mitigations for the risks that might arise.

Clause 224 enables directions to be issued for particular purposes only: to improve and maintain resilience, to restore continuity of supply or to reduce the risk or impact of a disruption. In a situation in which a proposed industrial action is assessed to cause a significant risk of disruption, the direction power could be used to ask core fuel sector participants to make contingency plans to mitigate the risk. It is not intended to cut across the rights in the legislation that the hon. Members have highlighted.

I emphasise that the Government will always seek a voluntary solution in the first instance before issuing a direction and, of course, we believe that industry participants will have a chance to make representations before a direction is made and to appeal a direction when issued. I therefore ask that the hon. Member withdraw his amendment.

[Kerry McCarthy]

Will the Minister clarify what he means by “industry participants”?

[Andrew Bowie]

Industry participants would be companies, the industry as a whole, trade union bodies and so on. They are absolutely part of the entire process and, of course, if any of them had an issue with the direction being issued, they would have the right to appeal such a decision.

Clause 224 gives the Secretary of State the power to issue directions for the purpose of maintaining or improving core fuel resilience or to recover from or reduce the risk of a disruption to continuity of core fuel supplies. The past few years have demonstrated that the resilience of the core fuel sector needs to improve significantly. We have seen queues at pumps and stock-outs at petrol stations more often than we should. The supply of fuel remains critical to the operation of the country’s economy and essential services.

The individual companies in the supply chain are flexible and manage their own risks. In extreme cases that are out of these companies’ control, it is likely that they can declare force majeure, meaning that because of the extenuating circumstance, they will not be held liable for their failure to perform contractual obligations. It is therefore crucial that the Government have the power to direct key players in the sector to take actions necessary to manage the risk of disruption to fuel supply that could arise.

The clause gives the Secretary of State the power to issue a person carrying on core fuel sector activities, or a facility owner in the core fuel supply sector, with a direction in three different circumstances. The first is to maintain or improve resilience. It is important to note that this power can be used only if the Secretary of State considers that insufficient progress has been made by the proposed recipient to take the steps necessary to address the issue.

A direction can also be issued to restore continuity of supply or to reduce a significant risk of disruption to supplies. Such directions can be issued without waiting for the sector to make progress voluntarily, given the impact that a disruption or significant risk might have on the public. A direction will be issued only if circumstances mean that it is not practicable to make regulations. That could be because of the urgency of the issue or because of the number of cases—if they are not sufficiently numerous to justify making regulations.

A direction can be issued only to persons carrying on core fuel sector activities in the course of a business with capacity in excess of 500,000 tonnes or to a facility owner if the facility has capacity in excess of 20,000 tonnes. That will cover refineries, terminals, pipeline operators and hauliers when a disruption associated with an individual company could have a significant impact on the continuity of supply of core fuels in our United Kingdom. The direction might be to take an action or to stop the recipient doing something that could have an adverse impact on the resilience of the sector. There is a requirement to provide written notice to the recipient and the reason for the direction, so the sector should be reassured that the recipient will be duly informed and will have the opportunity to make representations regarding such a decision.

The power is designed to cover a broad range of scenarios, because the range of conceivable risks is wide and inevitably uncertain. For that reason, we are unable to provide guidance as to the circumstances in which the power will be used. However, I emphasise that His Majesty’s Government intend to work with industry on a voluntary basis whenever possible and that the power can be considered as only a backstop power where a voluntary approach is not effective.

Clause 225 sets out the procedure to be followed before issuing a direction. The recipient of the direction must be given a written notice that sets out the proposed direction, the reason why the direction is being issued and when the direction is intended to come into effect. They will also get an opportunity to make written representations in respect of the proposed direction.

Given that directions will relate to sites covered by regulations for the control of major accident hazards, it is also appropriate that the relevant competent authorities —such as, in England, the Health and Safety Executive and the Environment Agency—are consulted to ensure that the direction does not inadvertently compromise safety. There is also provision to consult other persons whom the Secretary of State deems appropriate. The Secretary of State will consider any representations from the recipients, or those authorities, when deciding whether to issue the direction.

Clause 226 sets out the consequences for failing to comply with a direction. There could be severe impacts to the security of supply if there is non-compliance. It is therefore essential that there are criminal as well as civil sanctions to deter businesses from failing to comply. The offences set out in this clause are criminal offences and they serve as a deterrent measure so that they can provide credibility to the direction power.

The clause sets out both summary and indictable offences for either imprisonment or a fine, or both. The severity of the offence will determine whether it will be a summary conviction or a conviction on indictment. There has always been a history of compliance in the sector. Our hope is that the provisions will be a strong deterrent to future non-compliance and that businesses will realise that it is cheaper and more responsible to comply.

Energy Bill [ Lords ] (Ninth sitting)

Kerry McCarthy Excerpts

Committee stage
Tuesday 13th June 2023 Public Bill Committees

[Olivia Blake]

Absolutely, and I will come to that point. This issue is so significant: it is important that we find the funding for these sorts of interventions because almost 9,000 neighbourhoods in England and Wales have very low incomes but higher than average energy costs because of poor insulation. That requires Government action, and I fully support Labour’s plans, which I believe would cost £12 billion a year—I might be wrong about that.

[Kerry McCarthy (Bristol East) (Lab)]

It is £6 billion.

Energy Bill [ Lords ] (Fourth sitting)

Kerry McCarthy Excerpts

Committee stage
Tuesday 6th June 2023 Public Bill Committees

[Olivia Blake]

Possibly a record. Who knows?

I rise to defend the amendments made in the Lords and to speak against Government amendment 12, predominantly because of the aims of the Bill that the Secretary of State outlined when it was brought forward. Those aims were about security, but also about tackling fuel poverty. The facts about fuel poverty in the UK at the moment are very telling. I will cite the End Fuel Poverty Coalition’s numbers: 1,000 people died in 2022 as a result of living in cold, damp homes, unable to heat them because of costs. We also know that 7 million people in the UK last winter were living in fuel poverty. Taken together, those are staggering numbers, and it is important that they are at the forefront of our minds when we discuss the levy.

It is telling that there seem to be unified voices against the policy. The figure of £118 that the shadow Minister mentioned came from Onward, which is a Conservative think-tank. The discussion is also about who has the broadest shoulders to help with the changes that desperately need to be made to our energy system. I completely agree with the shadow Minister that the Bill gives the public all the risk and potentially none of the benefits.

There are 37 independently published reports that set out that they do not believe that the UK will move fully to hydrogen for home heating. Obviously there are massive benefits for steel—Sheffield is the city of steel—that could be unlocked through hydrogen, and there are many benefits for industry, but it seems wrong for Government amendment 12 to remove the protections given in the other place to the levy to prevent that cost from falling so dramatically on households. As the right hon. Member for Elmet and Rothwell set out, it is really important that we bring the public with us.

Government amendment 12 is almost a wrecking motion for net zero, because the opposition to this will be huge. I ask the Minister to think hard about whether the Government want to champion such a burden on households when it is not clear whether the benefit will ever fall on households. We do not yet know the questions about hydrogen, let alone the answers, or what the benefits to home heating will be, if that is the path we go down as a nation when there are many alternatives growing at speed, as we have discussed. I think the Government’s amendment is very challenging. I urge them to think again for the benefit of all those who struggle to pay their energy bills now and for those who may struggle in future if the levy comes in.

[Kerry McCarthy (Bristol East) (Lab)]

I want to add to what has been said on both sides of the Committee Room today about how unwise it is for the Government to go down this path. I do not agree with what the right hon. Member for Elmet and Rothwell said about how we should not conflate public feeling about net zero with public concern about energy bills; the green transition and the move towards renewables will bring in cheaper energy and enhance our energy security, so I do not accept his arguments. However, if I were to argue that point with him, you would quite rightly say that I was broadening the debate beyond the parameters of the Bill, Mr Gray, so I will save my remarks for this afternoon’s Westminster Hall debate on the Government’s approach to net zero.

At the heart of the issue is what the shadow Minister, my hon. Friend the Member for Southampton, Test, said: consumers want to know how this will come to us. I share the concerns—my hon. Friend listed the other green levies in legislation, but the difference is that we can see a benefit from investment in such fields—but the hydrogen levy will mostly be to the benefit of energy-intensive, hard-to-decarbonise industries, and consumers will rightly feel that they are paying for something from which they will not receive the benefit.

We know that there is huge concern. The right hon. Member for Elmet and Rothwell said that there is fear in people’s eyes about how they will meet their energy bills. There is—I have seen that concern. In my public communications about how energy bills were predicted to rise, I was very worried about making constituents even more scared. It was a balance: I wanted to warn people about what is to come, but given the stress that they were under, I felt that it was important not to be alarmist. It is a difficult position to hold. As has been said, it could put about £118 on bills. Documents from the Department state that after 2030, the impact on consumer bills will ramp up even further:

“Once introduced, we expect its impacts will ramp up as we look to deliver our 2030 hydrogen ambitions to improve energy security.”

This is a deeply regressive move.

I do feel a bit of sympathy for the Minister, because he has to defend to the hilt something on which, given the reaction on Second Reading, he will end up having to U-turn. He will get all the flak, and his boss will get all the credit for having listened to people and changed his mind.

Somebody mentioned the think-tank Onward, which has contributed a piece to “ConservativeHome”. Onward has also said:

“The Government is walking into a trap with the hydrogen levy. It would be a mistake that risks stalling the development of a British hydrogen economy. It would also be unfair to ask households that won’t benefit from hydrogen directly to pay for it. The Government should think again. And the Treasury should get off the fence and back the role hydrogen can play in the economy.”

Clearly this is not an anti-hydrogen move. It is about ensuring that the people who will benefit bear the majority of the cost.

Net Zero: 2050 Target

Kerry McCarthy Excerpts

Tuesday 6th June 2023 Westminster Hall

[Kerry McCarthy (Bristol East) (Lab)]

It is a pleasure to see you in the Chair, Sir Christopher.

I congratulate the right hon. Member for Spelthorne (Kwasi Kwarteng) on securing this debate. I am pleased to see that he is still pursuing an interest in net zero. I agree with some of what he said, but there were some points I would have liked him to cover. For example, when he talked about the grid, as the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) has just said, the biggest problem is not the question where the pylons go in east Anglia, but the lack of grid connectivity, which is a massive obstacle to economic growth. That is something we need to solve as we move towards greater use of electricity in our industrial sector.

Three former Business Secretaries, from the Lib Dems, Conservatives and Labour, have all come together today to bemoan the lack of an industrial strategy, so I do not agree with the right hon. Member for Spelthorne on that. He talked about retrofitting homes, which is obviously important, but it would help if we stopped building homes that do not meet energy performance certificate C standard. We are compounding the problem, having built more than 1 million homes since the zero carbon homes pledge was dropped that do not meet that standard.

The right hon. Member for Spelthorne mentioned green levies and incentives for decarbonisation. It would have been interesting to hear his thoughts on the hydrogen levy. We were in the Energy Bill Committee earlier today and it must be said that, based on Second Reading of that Bill, there is a lot of unhappiness on both sides of the House. We will oppose the hydrogen levy on bills, and I would welcome his support on that, because I do not think we should be putting the burden on consumers when it is mostly industry that will benefit.

[Kwasi Kwarteng]

Just to clarify, is Labour opposing the hydrogen levy on bills, or its removal?

[Kerry McCarthy]

The House of Lords voted against the hydrogen levy

on bills on the basis that it is a regressive measure and we should not be adding to the burden on consumers. We support that position; the Government think that it should go on bills, where it is the industry that benefits. There have been reports that the Secretary of State is due to U-turn on that position very soon, so the right hon. Member might want to be ahead of the curve and jump the right way before the Secretary of State does.

[Kwasi Kwarteng]

I am sure that the Secretary of State does not need my encouragement, or otherwise, to come to the right decision.

[Kerry McCarthy]

I am sure that the right hon. Member would be a very persuasive voice.

The Government’s commitment to a net zero target is to be welcomed, but a target for a date set far into the future—2050—is pretty meaningless unless it is backed up by a comprehensive road map as to how we are going to get there. We know that the majority of that journey needs to be done in the very early years, with just the hard-to-decarbonise sectors following at the end, so we need to know how much ground we are going to cover and when. The Government were taken to court on this issue last year, with the High Court ruling that they had provided insufficient detail. There was a big hype about “green day” at the end of March; eventually, the Government decided that it was not quite green enough and changed its name to something else, but what we got was a plan that—even in terms of our 2030 nationally determined contribution—only sets out how we would deliver 92% of that. We are still way off track.

Net zero is not a slogan or a mere box-ticking exercise: it is a whole paradigm shift that we must instigate, as a country and as a global community. Scientists are warning that we are likely to breach the 1.5° threshold in the next four years. We are running out of time, and we need to do everything as fast as we can. There has been a lot of negativity in recent days about net zero, with people pushing back against Labour’s announcement that we would not support any new oil and gas licences. Again, people have been repeating that old trope that it is too expensive to reach net zero, when we know that renewables are far cheaper now.

The Government do not seem to grasp that this is a huge challenge for the country, but as has been said, it is also an enormous opportunity. The right hon. Member for Kingswood (Chris Skidmore), who authored the recent net zero review, said that it is

“the economic opportunity of the decade—if not the century”

to create a new economy. As the right hon. Member for Spelthorne mentioned, President Biden has not only recognised that opportunity, but seized it with the Inflation Reduction Act, and the EU has responded with its green deal industrial plan. The Chancellor has said that he will come up with a response in the autumn, which is at least better than the response from the Energy Secretary, who tells us that the UK is already decades ahead of the USA. The Minister has said that the rest of the world is “playing catch-up” with us. We do have 22% of the world’s offshore wind installations, as I suspect the Minister will tell us, but we have only 2% of global wind industry jobs—that is just one example. A country such as Denmark, which recognises the export opportunities, has over eight times as many jobs as the UK for the equivalent wind energy capacity.

Businesses I meet now are describing the Inflation Reduction Act as a game changer, and are warning that they will transfer investments to the US. There have been occasional success stories—the news that Jaguar Land Rover is set to establish a gigafactory in the south-west, in Bridgwater, is very welcome—but that comes with a sense of relief that that company has made that announcement, rather than real confidence that there is a coherent industrial strategy that will deliver the 10 gigafactories that the Faraday Institution predicts we need. I would dispute the Minister’s suggestion that we are decades ahead: we need to have a coherent industrial strategy, a response to the Inflation Reduction Act sooner rather than later, and a revised net zero strategy that shows that we really are on course to meet that goal.

Reaching Net Zero: Local Government Role

Kerry McCarthy Excerpts

Monday 5th June 2023 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

We know that the Government’s plan to reach net zero is totally inadequate; that is the context for today’s debate. Thirteen years of failure has left us exposed to higher bills, energy insecurity, lost jobs and climate delay. As the Chair of the Climate Change Committee—a former Conservative Cabinet Minister—has said,

“This has been a lost decade in preparing for and adapting to the known risks that we face from climate change.”

The right hon. Member for Kingswood (Chris Skidmore) —another Conservative—found in his net zero review that the Conservatives had failed on nearly every aspect of net zero policy. How are the Government responding? They have doubled down on fossil fuels, with billions in taxpayer cash being handed out to oil and gas giants. They are blocking the cheap renewable power that Britain needs; there is a de facto onshore wind ban, and war-torn Ukraine has built more onshore turbines in the past year than the UK. There is still no response to Joe Biden’s Inflation Reduction Act. There is dither and delay. There is no ambition and no urgency.

Thankfully, as we have heard today, local councils across the country are doing their best, albeit with scarce resources. The hon. Member for Brighton, Pavilion (Caroline Lucas), my hon. Friend the Member for Manchester, Gorton (Afzal Khan), the hon. Member for St Albans (Daisy Cooper) and my hon. Friend the Member for York Central (Rachael Maskell) talked about the need for greater certainty and continuity of funding, and an end to the piecemeal, competitive approach that sets one council against another, and that can be unduly restrictive when it comes to how money can be spent. The hon. Member for Strangford (Jim Shannon) gave a wide-ranging speech, as usual, which covered everything from electric vehicle charging points to lobsters. My hon. Friend the Member for Lewisham East (Janet Daby) talked in very strong terms about the need to tackle air pollution, and set out what the Mayor of London is doing on that front.

I thank the hon. Member for Bath (Wera Hobhouse) for securing the debate. I share her pain when it comes to the cuts to bus services in our region. I would imagine that she is having the same conversations with the Mayor for the West of England as I am, about how we can subsidise non-commercial routes. It is interesting that she mentioned only Liberal Democrat councils when talking about the positive contribution that local authorities can make. I will make up for that by talking a bit about what Labour councils are doing. I do not need to say more about Wakefield, because my hon. Friend the Member for Wakefield (Simon Lightwood) did a sterling job in speaking about it.

[Wera Hobhouse]

I celebrate all local councils’ work to reach net zero. I appreciate that the hon. Lady is going to make up for my not mentioning Labour councils. I am sure that there are many good councils across the political divide that are making good progress on net zero.

[Kerry McCarthy]

I thank the hon. Lady for that, although she has eaten into about 30 seconds-worth of my saying nice things about Labour councils. In Bristol, the Labour council set up a 20-year city leap project in partnership with Ameresco—a £424 million public-private investment in green infrastructure. It is groundbreaking. It is helping Bristol to go carbon neutral by 2030—the same ambition as Wakefield. Bristol will retrofit all our housing stock by 2030, reduce our CO₂ output by 140,000 tonnes, and create over 1,000 green jobs in the process. England’s biggest wind turbine will open shortly in the constituency of my hon. Friend the Member for Bristol North West (Darren Jones). It is community-owned, will provide low-carbon electricity to 3,500 homes, and save nearly 2,000 tonnes of CO₂ per year. It will mean that energy can be sold back to the grid, and the money can be reinvested in local communities.

I turn to Hull. There was a recent event in Parliament with the aptly named “Oh Yes! Net Zero” campaign. It is a really good example of collaborative local working; it involves 150 local organisations that support the city’s efforts to reach net zero. In Oxford, the Labour-led authority has been leading the way with innovative solutions, particularly on battery technology. Redbridge is home to Europe’s most powerful electric vehicle charging hub, and a project called Energy Superhub Oxford launched in July last year with the wider aim of decarbonising the city, uses the latest in battery technology, and, for the first time in the UK, infrastructure that links directly to the national grid’s high-voltage network. I echo what was said about the need to ensure that the grid has capacity to support local innovative projects. To give one last example, in Liverpool, there is a groundbreaking project: an agreement between the Liverpool City Region Combined Authority and the Korea Water Resources Corporation to create what could be the world’s largest tidal power scheme in the Mersey.

Taking a placed-based approach to net zero is vital in ensuring that the opportunities from the transition start to finally level up the towns and cities of the UK, as opposed to letting them down as this Government have done. Around 95% of Britain’s population lives in areas where the local authorities have declared a climate emergency but, as has been said, councils and combined authorities must be given the resources and powers they need to act. As one contributor to the right hon. Member for Kingswood’s net zero review put it:

“Net Zero achievements at local government level are in spite of government, not because of it”.

That would change under a Labour Government, which would recognise and value the role local authorities can play and the immense difference local action can make. We would work in tandem with local authorities to deliver our green prosperity plan of capital investment. That would support the creation of hundreds of thousands of jobs in every corner of the UK, doubling our onshore wind capacity, tripling solar capacity and quadrupling offshore wind capacity. It would be financed by Labour’s national wealth fund, ensuring that, when investment flows into new industries, in partnership with business, the British people will own a share of that wealth, as happens in other countries.

Surprisingly, we did not talk much in the debate about retrofitting homes. We have the least energy-efficient housing in Europe. Millions of homes are going cold and premium-priced heat is escaping through roofs, windows and walls. Labour’s warm homes plan would upgrade the 19 million homes that need it, cutting bills and creating thousands of good jobs for electricians, engineers and construction workers across the country. It is important to stress that this is about economic growth. It is about a future industrial strategy. It is about jobs for the future. It is about the prosperity of our local communities. And it is about saving the planet at the same time. Local government has a key role to play in that. I just hope the Government step up and help it.

Energy Bill [ Lords ] (Second sitting)

Kerry McCarthy Excerpts

Committee stage
Tuesday 23rd May 2023 Public Bill Committees

[Andrew Bowie]

I thank the hon. Member for Southampton, Test and share his optimism that in a few years’ time we will be in a position to continue with appointments in relation to what we are legislating for today.

Amendment 1 corrects a drafting error in relation to the statutory basis on which the devolved Administrations are to be consulted in relation to regulations that may be made under the powers in part 1. The amendment ensures that the statutory basis for consultation is consistent across the drafting of the relevant clauses.

I turn to clause 9. The Government’s CCUS cluster sequencing programme is under way to identify the first CCUS clusters eligible for Government support. The first transport and storage licences will be granted through that process. The enduring regulatory regime will need a licence application process, and clause 9 provides for such a process to be set out in regulations. The process includes the procedure for licence applications, the conditions under which the applications may be made and the procedure for objecting to licence applications.

[Kerry McCarthy (Bristol East) (Lab)]

I was waiting for the Minister to mention the word “fee”, and he did not. I apologise for coming in right at the last moment, but clause 9 says that a fee would be payable. I know that the Minister spoke earlier about the need to avoid unnecessary burdens on some of the smaller companies that might come forwards. Does he envisage that the fee would be proportional to the size of the enterprise or would a fixed amount apply to everybody? Is that being considered?

--- Later in debate ---

[Andrew Bowie]

The Government are always open to suggestions and ideas about how we can improve legislation. As I said earlier, it is important for the industry, nascent as it is, that there is as much clarity as possible about how it is governed and about the regulatory process that it must follow. We must also understand that, as the market and the technology grow, evolve and develop, we will need to keep that under review. However, I am happy to give a commitment to the hon. Member that we will consider whether it is possible to tighten up the language so that exactly what is meant is made clear to industry.

[Kerry McCarthy]

As we have heard, there could be subjective interpretations regarding the importance and urgency of an impact assessment, and questions raised over whether one is appropriate or impracticable. I think the Minister will share my concern that the broadly worded clause could result in people seeking judicial review if they feel that the economic regulator should have carried out an impact assessment. I do not know what the process would be for bringing such a review, but does he share my concern that the vaguer the language, the more open it is to challenge?

[Andrew Bowie]

I also do not know the exact procedure that would lead to a judicial review in this instance, but I agree that we need to be clear and give certainty to the industry. Where we can, we should look at what we can do to tidy up the language so as to ensure that we do not end up in that situation.

Question put and agreed to.

Clause 28 accordingly ordered to stand part of the Bill.

Clauses 29 to 31 ordered to stand part of the Bill.

Energy Bill [ Lords ] (First sitting)

Kerry McCarthy Excerpts

Committee stage
Tuesday 23rd May 2023 Public Bill Committees

The Minister says that at a future date we may wish to bring things that we exempt now under licensing arrangements. I am not immediately assured that that will be the case if an exemption is granted indefinitely in the regulations. Nor am I particularly assured by the fact that the Bill provides enormous leeway for a future Secretary of State to interpret the idea of exemption very widely or very narrowly. It does not give any examples of where exemptions might be agreed; it merely provides a mechanism to allow the Secretary of State to think about exemptions, and relies on the secondary legislation to either curtail or expand them as the Secretary of State sees fit.

[Kerry McCarthy (Bristol East) (Lab)]

I know that this is a lengthy Bill, and there is a lot to get through, but I slightly had trouble keeping up with the breakneck speed at which the Minister introduced the clauses, so I am glad to have an opportunity to question him. He said that although there will be instances where licences are not needed, the situation might change and a licence may be needed. It would be helpful to have some examples of those scenarios to illustrate when the Secretary of State might invoke these powers. Does my hon. Friend agree?

[Dr Whitehead]

Yes, indeed. My hon. Friend has read my mind, as she often does.

This clause is procedural, as I have illustrated, and essentially says: “There may be exemptions. We don’t know what they are or what they might consist of, but don’t worry about it. The Secretary of State will think about that in due course and produce regulation that we hope—but we don’t know—might set that out in greater detail.” It is important that the Minister sets out today what might be in his mind when he makes those regulations, as far as exemptions are concerned. Is he a wide exemption Minister or a narrow exemption Minister? If he is a wide exemption Minister, what is the scope of the exemptions that he will be thinking about? If he is a narrow scope Minister, how does he interpret subsection (7), which states that an exemption may be granted indefinitely, given what he just said about how things may change in the future?

I know that there are things that we thought were indefinite in legislation that have turned out not to be—most importantly because Parliament cannot decide what the previous Parliament thought. However, it seems to be a hostage to fortune to put the word “indefinitely” in this legislation in the way that we see in clause 5(7).

I would be grateful if the Minister could provide us with some thoughts on what exemptions might look like and what his intentions are as far as regulation is concerned. I have not looked yet at the end of the Bill to see how any regulations might be considered by Parliament, but when the Secretary of State makes regulations on exemptions, I would expect those to be put forward under the affirmative rather than the negative procedure so that we have an opportunity to examine what they consist of.

[Kerry McCarthy]

Clause 5(6) refers to “Notice of an exemption” being given. It would be helpful to have clarity on the reference to

“Other persons who may be affected by it.”

I am not sure how that would be decided. It is really important that we have transparency and accountability in these processes. Does my hon. Friend agree?

[Dr Whitehead]

Yes, I do agree. Again, I appreciate that the wording of this Bill might be regarded as necessarily fairly vague, because of the fact that—in the words of Donald Rumsfeld—there are known knowns, known unknowns, unknown knowns and unknown unknowns about the future. However, it is important at least to have on the record something that guides us in a more positive way on who might be the “other” people affected and on indefinite exemptions and so on. It would be a good idea if that could at least be included in the discussion of the Bill.

By the way, our proceedings in Committee are of course recorded, and they are used on occasion in law to determine what the purpose of particular clauses was and what was thought to be in the mind of legislators when they introduced them. So it would be helpful, not just for our discussions today but perhaps for the future record, if the Minister was able to clarify these matters in a suitable way.