Electricity and Gas Transmission (Compensation) Bill

Liam Fox Excerpts

Friday 25th November 2022 Commons Chamber

[Dr Liam Fox (North Somerset) (Con)]

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

Electricity transmission is something on which we all depend and, simultaneously, tend to take for granted. The upgrading of the network is necessary to ensure that we improve the efficiency and resilience of our system. It will enable us to improve our energy security by bringing in new capacity, such as in the nuclear field, and our renewable capacity by increasing the use of elements such as offshore wind. On that much, all hon. Members will agree.

At the same time, farmers, homeowners, local communities and individuals should expect to have their rights and interests protected while that programme unfolds, and to be treated fairly and equitably when disputes arise. It is the failure of those elements that necessitates today’s Bill. In the UK, National Grid owns and operates our electricity and natural gas transmission networks. It is one of the largest investor-owned utility companies in the world: in the United States, as well as operating transmission networks, the company produces and supplies electricity and gas, and provides both to customers in New York and Massachusetts.

Let me be clear to the shareholders of National Grid that it is the intransigence, abrasiveness and downright disrespect of elements of the company’s management that has led me to introduce the Bill, on behalf of not only my constituents who are currently affected but those of many other representatives in this House who will be affected in future. Where disputes arise between one of the world’s most powerful companies and our constituents, it is essential that we have a means of resolving them in a way that is clear, affordable, fair and enforceable.

I believe that the Government share those objectives, so the Bill, as with the Down Syndrome Act 2022 that I introduced last year, has been kept deliberately simple at this stage to enable us to reach agreement on the specific mechanisms that can be incorporated at later stages as the Bill progresses through Parliament. It is true that a range of dispute resolution mechanisms exist, but it is clear from experience that they are not capable of dealing in an acceptable way with disputes that arise. If they were, there would be no need for the Bill.

[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

I congratulate my right hon. Friend on his impassioned speech. Does he agree that we in this place should always encourage people to do the right thing, as the Bill hopefully will? I am concerned that it sounds, from his introduction, as though that company is not doing the right thing.

[Dr Fox]

I am not questioning whether the company wishes to do the right thing, but in practice it has not behaved in a way that is acceptable to me as a representative of the people of North Somerset. I therefore suggest that we need new mechanisms to ensure that what I regard as genuinely fair practice is enforceable. That is one of the problems with the current system. I shall now illustrate the generic case with some specific examples from the experiences of my constituents.

For those who are unfamiliar with the background, in preparation for the Hinkley C nuclear power station coming online, the Hinkley connection project is a new high-voltage electricity connection between Bridgwater and Seabank, near Avonmouth. The new connection will be 57 km long, consisting of 48.5 km of overhead lines and 8.5 km of underground cables, mainly through the Mendip hills area of outstanding natural beauty. The existing 132 kV power lines will be replaced, as they will be across the country, by new 400 kV overhead lines using very much larger T-pylons, with the removal of most of the existing pylon system, which we are used to seeing in our towns and countryside.

It is not my intention in the Bill to argue the pros and cons of the new pylon system, controversial though that it is, or to argue for the relative merits of pylons or undergrounding of new cables. My intention is to ensure that where the interests of our constituents are materially affected they are given due protection. A number of my constituents in North Somerset have been battling with National Grid for over 10 years now to try to protect their homes and livelihoods.

My first constituent’s circumstance has resulted in the value of their property being materially impacted by the project, which is perhaps an unavoidable consequence of this type of infrastructure upgrade. My second constituent is a farmer whose livelihood is being destroyed by the same scheme. In both cases, National Grid seems to believe that it has no responsibility to take due regard of the emotional, social or economic consequences facing my constituents, whose only redress is therefore through the courts at the Upper Tribunal. In the case of my first constituent, who was forced to pursue that route, that ended up costing them a staggering £200,000 in legal fees.

In that first case, the family bought their home in January 2008, with the intention of knocking down the old house and building a new one. They carried out all possible searches from a conveyancing perspective, as the project was their magnum opus that was going to use their life savings and ultimately provide their pension in years to come. The Hinkley scheme never showed up on any searches undertaken and, by its own admission, National Grid accepted that the Hinkley connection project would not have been visible in any searches undertaken at that point in time.

Once the project was formerly announced in 2010, my constituent made representations at every possible hearing, to both National Grid and the inspectorate, asking factual questions around pylon location and impact. For years, no one was able or willing to provide any specific answers or assurances on whether and to what degree the project would have a material impact on the value of their house. As hon. Members can appreciate, that caused, and is still causing, an unimaginable amount of stress for the family. The feeling of being effectively powerless in a stand-off with one of the world’s most powerful multinationals has left them with a level of fear and anxiety that I leave the House to imagine.

The detail of the scheme was to put two 132 kV lines under their drive, which includes their garage come office, and a 400 kV T-pylon close enough to the property that, were it to fall, would fall right to the edge of the house itself. That is in addition to building an access road that now abuts their property. Where once there were only fields and sheep, there will now be a massive new pylon outside their home.

Additionally, they have been served with restrictions around permitted development rights of their property and National Grid and supplying parties have been granted access rights to their property, which would allow them to break down their gate or knock down their garage and office in order to carry out any necessary reparations to the undergrounded line. Perhaps those are necessary rights, but they have a detrimental effect on the sale price of the property.

Although my constituents were constantly engaged with National Grid, all conversations were completely ineffectual as National Grid did not have to listen or provide any answers to their questions because it was able to point to the development consent order—the DCO—that seemingly gave it carte blanche to do what it wanted. Unlike other large infrastructure schemes such as High Speed 2 or Crossrail, no discretionary compensation scheme was established for the project, so National Grid has simply focused on what it has been legally allowed to do, with little regard for the impact on individuals’ existing properties, and irrespective of the personal or financial impact. Hon. Members may want to think about that in respect of future potential cases. Consequently, the only route left open for my constituent to protect their home and life savings was to pursue a blight claim through the Upper Tribunal—which for reasons that are readily apparent they did not want to do.

Given the rarity of statutory blight claims, my constituents recognised the enormous risk in undertaking such an action, and they did not take it lightly. However, since they had no other avenues to pursue, they were compelled to do something to avoid financial ruin. To be clear, all they were trying to protect was their right to sell their house at a fair market value at a time of their choosing. I would like to think that hon. Members on both sides of the House would regard that as a basic right.

The odds are stacked against individuals in such cases. Even the small win that my constituent made in the judgment—the recognition that there would be a 5% diminution in the value of their property—was pointless, because National Grid will no longer accept and pay compensation as it says that the rights that it now requires over the property have changed. A constant moving of the goalposts as well as a refusal to accept responsibility for its actions—or decisions that go against it—have been constant features in National Grid’s behaviour. Its response is all too typically to challenge individuals to take it to the Upper Tribunal, with a potentially huge new tranche of expense.

[Jerome Mayhew (Broadland) (Con)]

As the country moves to decarbonise and away from fossil fuels, a conservative estimate is that the requirement for electricity will double—it may triple—in the next 20 to 30 years, and an inevitable consequence is that we will need many more pylon routes. Does my right hon. Friend agree that this is therefore a particularly opportune Bill and that it is important for hon. Members who perhaps do not think it applies to them yet?

[Dr Fox]

I am extremely grateful to my hon. Friend for making that point so clearly. At the moment, it is a relatively small geographical problem that affects a relatively small number of us, but it is going to be a much bigger problem in the future, affecting many more constituencies across the country. As so often happens, we are able today to anticipate a problem and do something about it. What I hope will not happen—all too often it does—is that we try to kick it into the long grass. It is far better that we find a solution to the problem now that is fair, reasonable, enforceable and equitable and bring that forward with Government action. We otherwise face long fights on behalf of our constituents in the House and potentially through the legal system. The current system of forcing constituents to the Upper Tribunal is neither fair nor affordable, and access to justice is not possible where one side can use its financial and therefore legal might in effect to intimidate those who stand in their way. That is exactly the point that my hon. Friend was making.

My second constituent is a local North Somerset farmer who has some of his land adjacent to my first constituent. His family have been farming in the area for generations. As with so many of our farmers, they love and care for their land and the local environment, and they focus on farming in an environmentally friendly and regenerative manner. The preservation of soil is key to the whole business model. As a consequence of the scheme and the flagrant disregard for that preservation, his land has been ruined for generations to come. Haul roads have been constructed over peat bogs, and they have caused material drainage issues. National Grid has consistently refused to agree a workable drainage strategy. This will impact future yields and render it less productive and less valuable as farmable land, not just for a couple of years but for generations. What is worse is that a compensation scheme agreed with National Grid’s land agent at the start of the scheme has now been reneged on, as National Grid is now questioning the formula agreed by its own land agent. When my constituent challenged that approach, he was faced with a bullying and abrasive response, and is constantly told that he could pursue the matter through the courts, which, quite obviously, he is not in a position to do.

In addition, as a consequence of the company’s inadequate and seemingly ignorant and ill-thought-out approach towards the resettling of badgers, setts have been blocked off. That forced badgers on to his land and infected his herd—something he told the company could happen, but it chose not to listen. As someone who had never had a single case of TB on his farm for 30 years, he was forced to cull 110 cattle out of a herd of 350. Seventy of those were in calf, so not only did he lose a huge proportion of his stock but his stock has been massively affected for the next three years. In turn, that has cost him tens of thousands of pounds. And that is without taking on board the suffering farmers endure when they witness the suffering and slaughter of their own animals.

A third case involves another farmer across whose land an access road was driven. Promises were made to return the land to its previous condition, which was, incidentally, part of the best quality farming land in the area. When I visited the farm recently, I was horrified at the condition of the fields. Building debris was so widely scattered that it would be impossible to utilise a range of farming vehicles without undue damage. Yet again, the response from National Grid, or at least its local agents, was that it had done what was required of it and that if my constituent was not satisfied it would see them in court—a very regular chorus being developed in this particular song.

A fourth case involved an elderly constituent who has a single piece of land, which is her chief financial asset. This has effectively been taken out of use for the next seven years by National Grid perfectly legally as part of the access programme for the installation of the new pylons and underground cables. Again, there has been a callous disregard for the fact that this effectively renders her biggest source of potential income inaccessible. Here again, the response has been that if she is not happy, she can pursue the matter through the courts. The disregard for individual interests and natural justice appals me.

Members across the House will be able to see from these relatively simple examples a clear pattern of behaviour developing. Some might say that from the point of view of National Grid shareholders, the approach is not irrational, as they will be able to proceed with their electricity transmission project at minimal discretionary financial cost. The rest of us, however, will surely believe that we have to put in place measures to fulfil the four tests I set out earlier, giving our constituents a system of dispute resolution that is clear, affordable, fair and enforceable.

I am grateful to Ministers for the discussions that we have had thus far on the subject and their understanding that there is a clear problem that needs to be addressed. The current dispute resolution mechanisms are not adequate. That cannot be allowed to stand as the solution to the problem. A range of options is available which I hope we can continue to explore as we move towards the Committee stage and subsequent stages of the Bill. I have noticed in recent weeks a growing awareness from Members representing constituencies across the country who recognise that this will become a problem for them if we do not find adequate solutions now.

As I said at the beginning, we all understand the need for an effective, efficient and resilient electricity transmission system, but it cannot be built at the expense of our constituents and the natural justice to which they are undoubtedly entitled. We cannot allow large multinationals to bully those who have legitimate interests and grievances, and to use their financial, and therefore legal, might to crush resistance underfoot.

Today, my North Somerset constituents are, largely, the most affected, but many more constituencies will be affected in the future. We in this House have a duty to protect, in any situation, those who are weak from the excesses of those who are stronger, and to ensure that decency, social responsibility, rights of property owners and environmental protection are given their proper place. Last year, in the passing the Down Syndrome Act 2022, this House showed that it understood that it could unite for the common good. I ask colleagues to do the same today.

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[Dr Fox]

Does my hon. Friend agree that there is something strange in how there are built-in compensation mechanisms for projects such as HS2 and Crossrail, which tend to affect more urban populations, but there is little protection, if any, for projects such as those he describes, which affect more rural locations?

[Sir Bill Wiggin]

That is the reason I am here today: the system is skewed to disadvantage rural populations, who carry quite a lot of the burden of energy distribution. What we are looking for is fairness.

I praise the work that Western Power does in my constituency to supply homes with the energy that they need. I listened to my right hon. Friend’s speech about National Grid; I could not feel more differently about Western Power, a fantastic company that goes the extra mile for my constituents every time. I hope it is listening to this effusive praise, because I really love these guys—they are fantastic. However, the principle behind our debate is the need for compensation. Although Western Power has been fair in its dealings with me, I agree with my right hon. Friend that those who are subject to acquisitions of rights or land deserve fair compensation.

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[Peter Gibson (Darlington) (Con)]

I congratulate my right hon. Friend the Member for North Somerset (Dr Fox) on bringing forward this Bill, and for his incredible luck in the private Members’ ballot in two consecutive parliamentary sessions. I know only too well what a privilege it is to guide a Bill through its legislative journey to the statute book. As has been mentioned, my right hon. Friend’s Down Syndrome Act was a hugely important piece of legislation. I am pleased to see that in his Bill for this Session, he is taking the opportunity to raise another important issue that impacts his constituents.

Following the declaration of interest by my hon. Friend the Member for North Herefordshire (Sir Bill Wiggin) in respect of his wayleave agreement, I will mention that I was once lucky enough to receive a one-off payment from National Grid for a cable that crossed the end of my garden.

An unprecedented level of new power generation is planned over the next decade to meet the demand for electricity, and to meet our CO2 reduction targets. The national grid must therefore have sufficient capacity. As the cost of transmitting electricity ultimately passes to customers, it is important for National Grid to find the best way of connecting new sources of power generation consistent with its duty to maintain an efficient, co-ordinated and economical system of electricity transmission.

The national grid is a nationally significant piece of infrastructure, and as such, I know National Grid will seek to obtain from the outset, by negotiation, permanent land rights for all new electricity transmission assets. That is consistent with National Grid’s approach for new underground electricity cables and gas transmission pipelines, where permanent land rights are also sought and obtained. Once National Grid has identified a final route alignment for proposed new electricity transmission assets, it will seek to enter into an agreement to grant an easement with owners and tenants of the land across and within which the new electricity transmission assets may be constructed.

The agreement enables National Grid to take entry on to the land, with notice and following the grant of the development consent order, to construct the new electricity transmission assets. The agreements also provide for changes in the final route alignment within a specified corridor as a consequence of public consultation, and during construction as a consequence of engineering requirements, surveys, and other routing factors. One construction is completed, the agreements permit National Grid to call for an easement in respect of the new, as-built electricity transmission assets.

The payment schedule for new electricity transmission assets sets out the amounts that will be paid for an easement. In return for a signed agreement to grant an easement, National Grid will pay 50% of the easement consideration to the landowner. On entry for construction, a further 25% of the easement consideration is paid, and the final 25% will be paid if and when the easement is completed by National Grid. National Grid also offers incentive payments for the early return of signed agreements. Those incentives are set out in the payment schedule for new electricity transmission assets. They are available only during an 18-week period after a notified date, once agreements are issued by National Grid to landowners for their approval and signature.

After the agreement has been signed, up to either completion of the easement or expiry of the agreement itself, landowners, tenants and occupiers are restricted from doing anything that would adversely affect National Grid’s ability to take and benefit from the easement should it need to do so. If landowners transfer their interest in the affected land, they must oblige the incoming owners to enter into a new agreement with National Grid on exactly the same terms.

Where National Grid is unable to obtain a voluntary agreement from a third party following the grant of a development consent order for new electricity transmission assets, it will seek to acquire the relevant land, or land rights over the land, through the compulsory acquisition powers granted to it through the development consent order. A copy of the order and a compulsory acquisition notice will be served by National Grid on the relevant third party and the notice will be posted on, or near to, the relevant land. Compensation will then be calculated and, if due, payable to the relevant third party in accordance with the relevant provisions of the land compensation legislation.

[Dr Fox]

There is a dispute system in place, but where cases go to the Upper Tribunal, high legal costs are paid by not only our constituents but National Grid—costs that, as my hon. Friend has said, are ultimately passed on to electricity payers. Would it not therefore be in the interests of all parties to have a clear, efficient and affordable dispute resolution system, rather than cases going to the Upper Tribunal and ultimately costing those of us who pay our electricity bills, as with this system?

[Peter Gibson]

I am grateful for that intervention. My right hon. Friend makes an important point. My right hon. Friend’s Bill is born out of issues that his constituents have faced whereby they have been unable to get fair compensation for distributions to their property or business in cases where land will be, or has been, subject to the acquisition of rights or land, through compulsion or by agreement, for the purposes of electricity and gas transmission.

This is an important issue and I completely agree with my right hon. Friend that we need to see improvement in this area. The Bill seeks to establish an independent mechanism to determine claims for compensation in cases such as the ones that have been outlined, where people or businesses feel that they have been unfairly treated.

I know that the Minister will have listened closely to all of the contributions from Members across the House, and I look forward to hearing her response on the various points raised. I know, too, that my right hon. Friend the Member for North Somerset will be seeking members for his Bill Committee in due course, and I happily put my name forward.

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[Jonathan Reynolds]

I am grateful for the right hon. Gentleman’s intervention, because if it were clear that this was the way in which to resolve issues and speed the process up, that, for me, would be the deal-breaker. In the 12 years for which I have been in Parliament— I think the right hon. Gentleman will forgive me for saying this—I have often heard Conservative colleagues express strong opposition to housing developments, energy infrastructure, HS2 and other rail projects. It is important for us to get to the crux of the matter, which is whether this is about resolving things more quickly for people or whether it would delay the system further. If we are to meet the ambitions that Members on both sides of the House have held dear, we will all have to recognise the problems that are involved.

[Dr Fox]

I may be able to help the hon. Gentleman. The purpose of drafting the Bill in this way—without specific legal recommendations, and asking the Government to come up with a solution to the problem—is not to encumber us with further legislation but to open the way for the Government, for example, to introduce, under previous legislation, mechanisms that would enable disputes to be resolved more quickly. Let me say, for the avoidance of doubt, that the way to kill a private Member’s Bill is to include too many specific measures on Second Reading. Requiring the Government to come forward with a solution offers us options that will not necessarily impose on our constituents legislative burdens that are enforceable only through the courts.

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[Dr Fox]

With the leave of the House, I thank my hon. Friends the Member for North Herefordshire (Sir Bill Wiggin), for Meon Valley (Mrs Drummond), for North Devon (Selaine Saxby), for Newcastle-under-Lyme (Aaron Bell), for Darlington (Peter Gibson) and for Bury North (James Daly) for being ahead of the curve in recognising the problems that may be coming to their constituents at some point in the future and that now is the time to deal with the problem.

I also thank the shadow Minister, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), for his broadly supportive approach and, especially, my hon. Friend the Minister for recognising that we have taken a consensual approach in the formation and writing of the Bill to give the Government maximum flexibility to meet the anxieties that have been expressed in the debate. I am afraid that I cannot give my hon. Friend the Member for Newcastle-under-Lyme any advice on how it is possible to come top of the ballot for two consecutive years. Had I such a mechanism, I assure him that having won every lottery available, I would be hardly likely to be here on a Friday morning.

I hope that the House will recognise that I am unlikely ever to be categorised as a class warrior in this place, and I recognise that we need to have development and renewal of the infrastructure in our country if we are to become the competitive, green, efficient and energy-independent nation that we all want to see. This debate is not about those things, however. It is about natural justice. Where disputes arise, powerful multinationals cannot be the judge and jury of the compensation that our constituents may or may not get in a dispute.

The current system that my hon. Friend the Minister described is not good enough. It is not working adequately, so we need a different system that is, as I set out, clear, so that people unequivocally know what their rights are; fair, so there is a balance between the public good and individual interest; affordable, because it cannot be right for the powerful to use their financial and therefore legal might to bully others into submission; and, above all, enforceable, because, as we discussed at length during the passage of the Down Syndrome Act 2022, there is no point having rights in this country if they are not enforceable. We have today identified a problem that exists and is likely to become more widespread if we do nothing about it. We can act now to deal with an injustice and put it right. Ultimately, what else are we in Parliament for?

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).