Great British Energy Bill

Lord Howell of Guildford Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I approach this amendment, and many others that are coming, broadly with sympathy and understanding about the enormous complexities of what we are dealing with. Obviously, I also wish to see us succeed, in the sense that a nation with a bad, interrupted or poor energy supply will be a nation drained of blood. It will be an absolute catastrophe if we do not somehow get all this right; whether in five, 10, 15 or 28 years remains to be seen, but right we must get it, because the dangers are overwhelming.

I also declare my interests in the register as connected to energy-related firms. Also, at one stage in the not very distant past, I attempted to do the same two jobs as the Minister is trying to do now, which is, first, in his department, to begin to piece together in very precarious and dangerous world conditions all the necessary equipment and organisations for energy policy success and, secondly, to explain it all to the House of Lords. That is a double job, which I am sure he will try to do with all his abilities, but this is very tough going in a very dangerous area.

We now come also to a third vast task that lies behind these amendments in particular, which is: do we need entirely new relations, far away from the old polarities of left and right in politics, between the state, with all its overload and difficulties in the digital age, and the role of the markets and the private corporations in achieving the energy transition that we somehow have to achieve? That question hangs in the air. One can see these questions about the relationship between GBE and other bodies and whether it should collaborate and have minority stakes, and so on, as the shower of questions that come out of that task. I hope that somewhere, in government and indeed in the politics of all parties, that is being worked on. We have to develop a whole new generation of co-operation, particularly in the energy field and in infrastructure, to replace the difficulties and problems that we and Labour ran into with PFI 10 or 15 years ago, which was a good idea but it did not work, and unless we understand why it did not work, we will not get it right this time.

The amendments in the name of the noble Lord, Lord Vaux, are of course probing but are very interesting. I beg the Labour Government of today, who want a national reset, a renaissance and all that, not to fall for the old socialist Adam, which is that you can solve problems by creating more and more institutions, bodies and bureaucracies. That is not the way—we have to be cleverer than that. That is the old socialisation pattern, which always goes too far and never works.

So I am in considerable sympathy with these amendments and I hope that, when the Minister answers, he will show some sympathy for the importance of flexibility and the importance in the energy field of not making too many rigid definitions and delineations. The trouble, as we will find as we debate, is that everything is connected to everything else. We are trying to rule out nuclear in debates on later amendments, but in fact you cannot—nuclear is intimately connected with all other public investment decisions. We are trying to work out about the National Wealth Fund, which is very interesting. It is having a show here in Parliament tomorrow and I am looking forward to hearing its views in detail on its relationship with GBE.

We had the famous letter from the Minister, describing some of the connections and linkages that he wants to see developing, telling us how all these things are going to be linked together. He lists straight off six or seven organisations that have to work together: the National Wealth Fund, Great British Nuclear, the Crown Estate, the National Energy System Operator, the Climate Change Committee—and of course there are dozens of others beyond those. There is the office of energy resilience; there are regional co-operation planning organisations—dozens of them. I can hardly read my writing, but there is a list that practically goes off the page of organisations that think they are in the business of investing in either the supply chains or the actual projects related to energy transition.

This is the biggest thing since—in fact, it is far bigger than—the Industrial Revolution. It is the most enormous project ever undertaken in the modern world and certainly in this nation. There is a huge amount of co-ordination and tidying up to do before we have even started. Yet, in examining this one further new organisation, far from tidying up, we are tidying down—we are untidying—the pattern of the future. So these are very important amendments and I look forward very much to some clear answers on how we can go forward towards a greater effectiveness and focus in this whole area, rather than scattering assignments, arrangements and responsibilities in every direction, always with great complications and always at great cost.

[Lord Hamilton of Epsom (Con)]

My Lords, I support my noble friend Lord Offord in his amendment but, funnily enough, not for the same reasons that he does. He says that Great British Energy should become a subsidiary of the National Wealth Fund. I am very worried—I do not know whether anybody else is—about the enormous powers that Great British Energy will give to the Secretary of State. It strikes me that we are right back to Ministers choosing winners, when on the whole the role of government in choosing winners has been pretty abysmal.

I am old enough—I am reluctant to admit how old I am in case somebody suggests I should retire—to remember Ted Heath, who started out as being the “Selsdon Man”, supposed to believe in free trade and free enterprise, and then bailed out Upper Clyde Shipbuilders. I do not think he did that because he thought he was choosing a winner—I think he knew he was choosing a loser—but he was, of course, faced by critical political embarrassment at the fact that this shipbuilding company was going bust, and he had the thought that he would use taxpayers’ money to try to bail it out.

I have been reading that the fund will be have £8.5 billion of taxpayers’ money put into it and it will be sitting there and there will be the temptation for Government Ministers to say, “Oh well, we’ll bail out this or that company, or we’ll take a punt on the fact that we do not have a battery maker” and perhaps the reason for that is that the market will not support that; or, with electric cars, for instance, we are having great difficulty making enough of them. So we will see taxpayers’ money being put into ventures which the private sector would never support. But it will be done for good political reasons. No doubt, rather like DeLorean, we will find that the enterprise will be pitched in some part of the country where there is high unemployment and not enough activity and the Government might think that they will be able to buy themselves a few votes in those areas or whatever. But, for all the wrong commercial reasons, we will end up using taxpayers’ money on ventures that will never succeed and would have been picked up by the private sector if they were profitable.

This is what worries me about energy generally. We rather fancy that people who put up wind turbines are really concerned with renewable energy. I have to tell your Lordships that they are not; they are financiers. What they do, long before they put up any wind turbine, is put up an experimental one to find out how much wind is blowing over a long period, and then they work the feed-in tariffs and, by the time they have done all that, they then have a cash flow on which they can then borrow money and put up the wind turbines. So it is a financial venture which is basically controlled by government in terms of all the criteria that matter and I do not really see that venture capital using taxpayers’ money has any great role to play in this. So I support my noble friend’s amendment and hope that he puts it to a vote.

--- Later in debate ---

I am no expert in constitutional law, but my understanding is that Crown status carries with it some exemptions from planning law and immunity from some prosecutions. I am not arguing for Great British Energy to have Crown status, because I think it should have as few freedoms as possible, but I seek in this short debate to find out the practical effect of not having Crown status, given that two of the closest partners that appear critical to the early success of Great British Energy have, or may well have, Crown status.

[Lord Howell of Guildford (Con)]

My Lords, I support my noble friend Lady Noakes. We cannot let this clause float by with a nod of the head, because it omits vital developments—as our debates have done—in the whole pattern of energy supply and energy-environmental compatibility across the planet. They are developing fast in other countries but get no mention here, confirming that this piece of legislation, while sounding fine and fitting into the jigsaw of the past, is already out of date and being bypassed by major developments in the global politics of energy and the environment.

I will give the Committee two examples. The first is zonality. The thinking in many circles, certainly in America and increasingly here, is that energy security, which we discussed in relation to the amendment from the noble Lord, Lord Frost, will have to be considered in zonal rather than national terms; in other words, national, centralised organisations, even National Grid, do not fit into the pattern of a future that will deliver security, clean energy and affordability. If one applies a zonal lens to this scene—I listened to senior officials from the National Energy System Operator talking strongly about this the other night—many of the arguments we are having around Clause 1 fall to bits.

Secondly, US corporations, big corporations in other countries and some in this country are beginning to recognise that grid thinking and the centralised patterns of energy delivery compatible with net zero and our other objectives are never going to happen. We will have increased climate violence and it is too late to prevent the growth in carbon emissions which is going on now and continuing faster than ever. Methane, which is 80 times as lethal as carbon dioxide, is also growing very fast, according to the latest figures. Despite all our efforts, climate violence is coming and many feel that it is here already. Big corporations in America and some here are losing faith in the capacity of our system—a transformed, completely renovated grid system of transmission of power and a necessary pattern of generation which is reliable and does not stop when the wind stops—to supply their needs.

Such corporations are investing, or planning to invest, and finding out from National Grid that they have to wait 15 years to get any electricity, to adjust from gas to electricity, or whatever it is, and, in doing so, realising that they are on a futile course unless they can get their own assured, dedicated source of electricity. That is why we are reading in the papers about ideas for converting old coal stations to mini-nuclear power stations, and other technologies. All these things are racing ahead but none is mentioned in Clause 2. It is, in fact, if we are frank with ourselves, a completely unrelated and irrelevant clause.

Therefore, one’s inclination is to shrug one’s shoulders. I hope that when we come back to these things in detail at a later stage, we will have a rather more focused image of what is really happening in the world of energy supply, carbon dioxide and methane growth, climate violence, or anything else of which there is not much of a sign in this clause.

[Lord Offord of Garvel (Con)]

My Lords, I rise to speak in favour of my noble friend Lady Noakes’s stand part notice. This clause deals with the Crown status—or more accurately, the lack of Crown status—of Great British Energy, and it is imperative that we probe the Government’s reasoning and consider the implications of this approach.

Clause 2 states clearly:

“Great British Energy is not to be regarded as a servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown”.


Additionally, it specifies that the property of Great British Energy

“is not to be regarded as property of, or property held on behalf of, the Crown”.

Let us pause and consider what this means. Great British Energy is envisaged as a significant player in the energy sector, with the Government making it central to our net-zero ambitions and national energy security. It may well handle substantial public funds, represent the UK’s interests domestically and internationally, and carry out critical projects on behalf of the Government. Yet the Government have deliberately chosen to sever this body from the legal, financial and symbolic framework provided by Crown status.

I pose the question: why? Why has this decision been taken, and what are the potential consequences? There are three areas of concern I wish to highlight; the first is accountability and oversight. Without Crown status, Great British Energy sits outside the constitutional framework that traditionally governs Crown bodies. Will this weaken Parliament’s ability to scrutinise its actions? Will the Comptroller and Auditor-General have clear access to audit its books? In an age of heightened public interest in corporate governance and transparency, these questions should be considered.

Secondly, on legal implications, by denying Crown status, Great British Energy forfeits the legal immunities and privileges that might ordinarily protect a public body in its dealings. Does this leave it more vulnerable to litigation? Could it become ensnared in disputes that detract from its primary mission?

Thirdly, this is a public body intended to work for the public good. Denying it Crown status might send a message—rightly or wrongly—that it is not fully embedded within the public sector, raising questions about its mission and accountability to the public interest. I do not suggest that Crown status is a necessity in all circumstances. Indeed, there may be good reasons for taking this route, such as granting Great British Energy greater operational flexibility or shielding the Government from certain liabilities—but these reasons have not been clearly articulated by the Government, and they deserve to be.

As we face unprecedented challenges in energy policy, the creation of Great British Energy is a momentous step. Its structure and status must instil public confidence, ensure robust accountability, and align seamlessly with the broader aims of our national strategy. Clause 2, as it stands, leaves too many unanswered questions.

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On nuclear power, I say to the noble Earl, Lord Russell, that the Budget provided additional funding for Sizewell C for the next financial year, and we are engaged in the final investment decision over the next few months. We have the SMR programme—money has been allocated to Great British Nuclear—and then potentially AMRs ahead. Clearly, that is an identified spending stream for the future. It would be unnecessarily constraining to say that GBE could not go into the nuclear field at all, but I take the point he raised about CCUS and nuclear energy. I would not want to preclude GBE from going there if it thought that was a wise thing to do.

[Lord Howell of Guildford (Con)]

My Lords, I am sorry to interrupt again—the Minister has been very patient—but can we be very clear on what he just said? Is he saying that GBE can involve itself and will be involved one way or another in part of the nuclear sector or not? This is very important: we need about 500 SMRs or AMRs to have the slightest hope of getting anywhere near net zero. At the moment we are plodding along, not very fast at all, and it requires all hands to the helm. So far, I understand that GBE is supposed to stand quite clear of nuclear. That does not make sense, because it is all one ball of wax, frankly. We have to get nuclear right, and only then will we get any hope of net zero.

[Lord Hunt of Kings Heath (Lab)]

Yes, I want to be absolutely clear: nuclear clearly falls within the definition of clean power, so it would be within the competence of Great British Energy to invest and do the other things in the Bill in relation to nuclear. However, we have Great British Nuclear, which I believe will continue. We are still finalising discussions, but GBN is focusing at the moment on small modular reactors. The department is involved in major funding of the nuclear developments, but GBE could also invest in nuclear energy. I hope that is clear.

I turn to oil and gas. Amendment 25 from the noble Earl, Lord Russell—and the noble Lord, Lord Bruce, who was not able to be present—would require Great British Energy to consider oil and gas supply chains and a reduction in and decarbonisation of oil and gas production. I say to the noble Earl that I understand the need for a just transition and acknowledge the skills of people working in oil and gas in the North Sea.

The Bill is focused on making the minimum necessary provisions to enable the establishment of this operationally independent company. Clause 3 provides the framework for Great British Energy’s functions and limits the areas where it can act, but it does not say how Great British Energy should deliver its functions or objectives. One of the worries about the noble Earl’s amendment is that it would widen the intention of this clause, perhaps unnecessarily. I say to him that, as we invest in the UK’s energy potential, we want to rebuild supply chains at home, of course. In relation to oil and gas, we want to help the transition and use the skilled workers in the most effective way possible. Oil and gas production in the North Sea will be with us for decades to come, so we want to manage the North Sea in a way that ensures continued support for that sector but enables some of the workers there to transition to other sectors, particularly in energy where they have such expertise.

Amendments 30 and 33 in the name of the noble Baroness, Lady Boycott, wish the Government to confirm or state that biomass is not included in the definition of clean energy in the Bill. Although I understand that many noble Lords share her viewpoint, as was clear from the Oral Question we had a few weeks ago, the Government believe that biomass plays a role in balancing the energy grid when intermittent renewables are not available. It is well evidenced that sustainably sourced biomass can provide a low-carbon and renewable energy source. That view is supported by both the Inter- governmental Panel on Climate Change and the Climate Change Committee.

Biomass sourced in line with strict sustainability criteria can be used as a low-carbon source of energy. Woody biomass that is sustainably sourced from well-managed forests is a renewable, low-carbon source of energy, as carbon dioxide emissions released during combustion are absorbed continuously by new forest growth.

The noble Baroness mentioned the Ofgem investigation, which she will know was about incorrect data being provided. It would be fair to say that Ofgem did not find the process at fault; it was the data provided. She asked me what visits officials in my department had made to the US. Officials have been in contact with US regulators but I would be happy to provide her with more details on what we have been doing.

The noble Baroness also mentioned BECCS, as it is known, or bioenergy with carbon capture and storage. Again, the Committee on Climate Change and the International Energy Agency recognise that BECCS can play a significant role in supporting net-zero targets through the delivery of negative carbon emissions with the co-benefit of producing low-carbon energy.

The noble Lord, Lord Alton, spoke eloquently and passionately to Amendment 91 on tidal barrages. I listened to the noble Lord, Lord Cameron, too, who suggested that tidal barrage and, in particular, lagoons play to the UK’s strength. The noble Lord, Lord Wigley, also spoke. The National Energy System Operator—NESO—is leading a network innovation allowance project aimed at establishing a holistic knowledge base on the potential development and impacts of tidal barrage in Great Britain within the context of grid operability. That is a very important development that I hope picks up the point that noble Lords have raised—the situation may have changed over the past 10 or 20 years.

I look forward to discussing the Mersey barrage with the noble Lord, Lord Alton. When I did this job at the Department of Energy and Climate Change from 2008 to 2010, I chaired a forum that we established on the Severn estuary potential, so I would certainly be interested in taking discussions forward on the Mersey barrage.

I hope that I have reassured most noble Lords that the energy technologies they wish to see supported can be covered in the Bill, but Great British Energy must be allowed to make its own decisions within the context of the objectives and strategic priorities the Secretary of State will set.