Lord Whitty
Main Page: Lord Whitty (Labour - Life peer)Energy Bill [HL]
Lord Whitty Excerpts
Baroness Parminter
On behalf of these Benches and in the absence of the noble Lord, Lord Teverson, who is serving the House in another place today, I add our thanks for the way the Minister and his team have handled this Bill and the co-operation we have had from officials. It has been much appreciated. In particular, on Amendment 1, the way that the Minister has listened to the comments from across this House on the issue of moving from “may” to “must” well reflects the concerns that many of us have had about the need to upgrade consumer protection, if we are to make a reality of the Green Deal and all the aspirations that the Government rightly have for delivering our targets on lowering carbon emissions. It is an extremely welcome step and is an indication that the Minister is listening on this issue, as indeed he has on many others.
I remain disappointed that I was unable—either through lack of eloquence or other means—to persuade the Minister that provision for a consumer ombudsman was needed in this legislation. However, I accept what he has said and what his officials have confirmed, that the legislation is enabling in such a way that, should the Secretary of State feel that is desirable, that option remains open. I believe that an ombudsman for the general public is going to be essential in this important area and that this will be something that will come forward, if not in another place, then certainly in the future.
Amendment 1 is a welcome indication that the Minister is listening and confirms that he has been paying attention to the many useful points of clarification that have come from Members who all support ensuring that this Green Deal works.
Lord Whitty
My Lords, until the noble Baroness made her last point, I was not going to intervene on this amendment, but I would like to associate myself with the words of both my noble friend Baroness Smith and the noble Baroness, Lady Parminter, regarding the way the Committee and Report stages of this Bill have been conducted. I appreciate that the Minister has come some considerable way towards meeting a number of concerns although on this particular one I think the noble Lord, Lord Best, is correct about the need for minimum standards and the noble Baroness, Lady Parminter, is right about the need for consumer protection.
It is important that the Government and the House recognise that, in supporting the provisions of this Bill on the Green Deal, we all recognise that there is still a substantial amount of work to be done in putting the deal together and thereby inspiring confidence in householders and landlords, on the one hand, and in the various different parts of the supply chain, on the other, which will need to act together to deliver the Green Deal.
At several points—I will return to this on a further amendment—during the discussion in Committee and on Report, the Minister said we may need to make a number of amendments in another place. I think the Government will find that there are some anxieties both in industry and on the part of consumers about how exactly the Green Deal is going to be sold and how it is going to be delivered. I suspect therefore the Government need to remain open to the possibility of amending the Bill in another place. I think everybody who was involved in the Committee wish the Green Deal good speed. However, we also know that there are some problems ahead and the Government would be wise to be flexible.
Lord Marland
Again, I value very much the comments made by noble Lords. These comments have been made on several occasions and I am grateful for the compliments that have been made. The noble Baroness, Lady Parminter, was the most complimentary so she is top of my class. Seriously, I am grateful to everyone for their kind words.
The noble Lord, Lord Best, made a very good point about PRS properties and with that in mind we have brought forward the idea of a review in 2013. It is fundamental that we make great inroads into the private rented sector—particularly the F and G categories my noble friend Baroness Maddock mentioned and raising them to the minimum standards of category E —and the Government are extremely committed to that. However, we should allow the sector to lead by example to start with and if it does not take that opportunity then we must help it on its way. The Government are committed to taking people out of fuel poverty. That is part of the reason for the Green Deal building on other initiatives that have taken place; it is fundamental and we owe it to the country to get people out of fuel poverty.
The noble Baroness, Lady Smith of Basildon, asked me whether things that I said on Report stand now. I can confirm that they were on the record and I meant what I said. She can take heart from what I said then and the disappointment that she had with these amendments will be carried through into another place and will be left for them to debate. I am sorry to hear there is a little bit of disappointment, but we have, I hope, persuaded and also given way on a vast number of amendments. It would nice every now and then if everyone carried me rejoicing from these Chambers saying how marvellous it was—I do not think I am going to get that—but in any case I hope I have responded to the questions.
Lord Whitty
“Smart metering strategy
(1) The Secretary of State shall, following consultation with energy consumers and other interested parties, prepare and publish a strategy to deliver the intended benefits of smart meters to consumers, including in particular low income and vulnerable consumers.
(2) It is the duty of the Secretary of State to report to Parliament on the progress of smart meter roll out every year starting from six months after the coming into force of this Part.
(3) In preparing the strategy the Secretary of State must set out how the smart meter roll out will—
(a) deliver to consumers the benefits identified in the impact assessment of July 2010;(b) ensure adherence to an independent code of practice for installation;(c) contribute to the carbon targets specified in the Climate Change Act 2008;(d) contribute to the elimination of fuel poverty as specified in the Warm Homes and Energy Conservation Act 2000;(e) improve competition in the energy retail market, including in particular in relation to prepayment customers;(f) provide for the interoperability of smart meters;(g) work alongside wider Government programmes such as the Green Deal and water metering roll out.(4) The report should cover progress on the delivery of smart meters, including—
(a) the number of smart meters installed in the United Kingdom, defined as per the Ofgem definition of a completed installation;(b) the costs and savings of the smart meter roll out;(c) the estimated benefits to consumers and taxpayers of the smart meter roll out, with particular reference to low income and vulnerable consumers;(d) estimated effects on the levels of fuel poverty;(e) the estimated energy and carbon reduction from the smart meter roll out;(f) the degree to which interoperability of smart meters has been achieved;(g) customer satisfaction indicators, including levels of complaint;(h) security of smart meters and smart grids in relation to privacy and commercial confidentiality.”
Lord Whitty
This is in a sense left-over business from Report stage. Again, I am not looking to the Minister to accept the amendment as it stands but to recognise that some of the issues that it brings up need to be addressed by the Government during the Bill’s stages in the Commons, one hopes, or possibly in secondary legislation.
The amendment deals with smart meters. We have had substantial discussions on smart meters in Committee; it is a very small part of the Bill but a very big part of the whole strategy for tackling energy efficiency in buildings, fuel poverty and the price of bills for everybody. Smart meters will therefore be key in improving energy efficiency, changing the behaviour of householders, reducing bills and providing the basis for introducing rather smarter grids into our electricity supply system. However, there are issues relating to smart meters. Unlike the Green Deal, which is voluntary for the householder or landlord, the smart meter is mandatory on the supply company and therefore, in effect, mandatory on the consumer, in that at some point the supply company will have to enter the house and replace existing meters and wiring with ones susceptible to smart metering.
I strongly favour this process and think that it will make a big contribution to energy efficiency; I think that at least some consumers will be able to alter their behaviour significantly and that we should therefore all support the strategy. However, there are some clear anxieties among consumers about the whole prospect of smart meters, some confusion about how they are to be delivered and in particular some concern about the lack of standardised and interoperable meters. I realise that on that front the Government are attempting to bring together the companies, and we are making some progress, but those concerns exist. There are also serious concerns, which noble Lords may regard as irrational, about privacy and what use may be made of the records of energy use. We must recognise those problems and recognise the possibility of serious consumer resistance that needs to be built in to how the rollout is delivered. It was an opportunity in this Bill to give a clearer framework to the totality of the smart meters’ rollout. We are three years on from the 2008 Act and, clearly, there have been developments and slight changes in approach. The clause that would immediately precede the new clause that I propose is, in effect, simply to extend the possibility of altering licences to transmission licences. That may or may not be necessary, but it will probably be necessary in some circumstances—and I certainly support that change. Given that smart meters are such a major part of the provisions and we rely so strongly on them to reduce household energy use, we should perhaps have used the Bill for a slightly wider purpose.
Lord Marland
My Lords, may I say how delighted I am to see the noble Lord, Lord O’Neill of Clackmannan, in his place? He watched at first hand the horrific events in Japan, where I spoke to him. What an awful time that must have been for him. We are delighted to see him back and, as usual, making some very interesting points.
The amendment of the noble Lord, Lord Whitty, is extremely valuable. He makes, as always, some very good points. Fundamental to this debate has been public confidence: the public must have confidence about the rollout of smart meters. As a department, we are committing a substantial amount of resources to smart meters, as we must get this right. I am not sure that all operators will be as good as the one who came to the home of the noble Lord, Lord Oxburgh; I suspect that, because of his great scientific knowledge, the noble Lord was telling the operator how to install it. Twelve minutes sounds like a very good target for anyone to try to achieve. The training of technicians is fundamental, as the noble Lord, Lord Jenkin, said; there must be great vigilance in this area so that the consumer can have confidence.
The noble Lord, Lord Whitty, made two specific points on the strategy for consumer benefits. We have been carrying out consultation since July on the wide-ranging subject of smart meters. A principal consideration has been a strategy for consumer benefits. We will publish our findings by the end of this month, and I hope that the other place will have the opportunity to debate them.
The Government are sympathetic when it comes to transparency regarding information about and the progress of smart meters. I can assure the noble Lord, Lord Whitty, that we will be developing arrangements for reporting the benefits of smart meters, the progress of the rollout and the delivery resulting from the benefits. That is fundamental not only to the public but to the Government, as we need to know what progress we are making. I hope that I have given the noble Lord confidence that we will take this matter forward in the other place and that he will therefore withdraw the amendment.
Lord Whitty
My Lords, I thank the Minister for that explanation and the other speakers in this debate, particularly my noble friend Lord O’Neill. The noble Lords, Lord Oxburgh and Lord Jenkin, made important points that will need to be borne in mind during the rollout. Technical training in fitting meters and explaining to consumers how to use them will be an important part of the rollout, so customer service training as well as straightforward technical training will be necessary.
With a bit of willpower, these issues can be overcome. When we shifted to requiring A or B boilers a few years ago, the industry threw up its hands in horror and said that it did not have enough people to do that. However, we rapidly got a programme in place which enabled us to do it. It required a little bit of cross-Whitehall arm-twisting; I expect that the Minister is adept at that, and he may need to use that skill.
I am particularly pleased to hear that the assessment of consumer reaction, which I was aware the Government were undertaking, will be available to our colleagues in another place before they reach their final conclusions. The Minister will know that Consumer Focus, which I formerly chaired, has conducted a fair amount of research on this issue. It will be regrettable, if the Public Bodies Bill is passed, that it will not be in a position to do so on future occasions. It certainly threw up a number of incipient difficulties which are not insuperable but they are significant.
As noble Lords have said, we have to provide confidence. One problem is that the industry has a fairly low rating among consumers, and trust in energy supply companies, which will have to ensure that smart meters are installed, is pretty low. They have made some significant improvements in recent years but they have a poor history to overcome. I am afraid that that still informs a lot of customers’ attitudes towards those companies and causes them to make inferences about the reason for introducing these new machines into their houses. There is some suspicion surrounding the use to which the energy companies may put the data, whereas we can see that the data could be used to provide electricity in a smarter, more intelligent and more cost-effective way. From the other end of the telescope, people are wondering why their supplier needs to know whether they have the kettle on at four o’clock in the afternoon. That is an exaggeration; nevertheless, it is a fear that needs to be addressed in the Bill and in the regulations that come under the Bill, as well as in the way that the Government oversee the whole operation. I think that, from what the Minister has said, our colleagues in another place will have sufficient information on which to base their discussion on this matter. In the light of that, I beg leave to withdraw the amendment.
Lord Whitty
“Compensation where the Secretary of State requests termination of offshore lease or agreement to lease
(1) The Secretary of State shall make a scheme (in this section, an “early termination compensation scheme”) to have effect where—
(a) a lease granted or agreement to lease has been made by the Crown Estates for the purpose of construction and operation of a generating station powered by wind, wave or tidal energy, or of equipment for transmission of electricity at a site in United Kingdom territorial waters or the REZ;(b) that lease or agreement to lease gives the landlord power to determine the lease or agreement where the Secretary of State so requests on the basis that the whole site, or any part of it, is required in connection with oil or gas works or rights; and(c) the landlord proposes to determine the lease or agreement, as regards the whole site or any part of it, as a result of such a request.(2) An early termination compensation scheme—
(a) must require the owner of, or person seeking to exploit, the oil or gas works or rights in question to pay compensation to the full extent of the loss which is likely to be incurred including the recovery of any wasted expenditure, loss of profits and any consequential loss suffered as a result of such works, by the lessee or holder of the agreement to lease as a result of the determination;(b) may, subject to paragraph (a), make such provision as the Secretary of State considers appropriate for the computation of compensation;(c) must make provision for the procedure applicable to the making and determination of claims, including provision for resolution of matters, in the event of disagreement, by an independent body;(d) must provide for the Secretary of State, when satisfied that compensation as required by the scheme has been agreed or resolved, so to certify in writing; and(e) may contain such other provision as the Secretary of State considers appropriate.(3) The landlord must not determine the lease or agreement to lease until the Secretary of State has certified the determination in accordance with subsection (2)(d).
(4) Subsections (1), (2), (5), (6), (7)(b) and (10) of section 36 apply, with the necessary modifications, to an early termination compensation scheme.”
Lord Whitty
I put down a similar amendment at Report which we were unable to debate. I am grateful to the Minister and his staff for talking to my noble friend Lord Grantchester in my absence. That makes me more confident that the Government understand that there is still a problem.
The amendment relates to the situation where a renewable energy enterprise has invested, at least as far as getting a lease from the Crown Estate, in offshore wind energy—it could be tidal or wave energy—and subsequently there is an oil discovery which would interfere with that site. This could result in a direct conflict, so my original attempt was to ensure that the Secretary of State could prevent such an oil licence being given unless the two sides negotiated an agreement. However, the noble Baroness, Lady Northover, persuasively indicated that the Government have this in hand, that there are negotiations going on and that they are talking to the industries and trade associations. That is indeed true, but the problem is that they have been talking to those two sides for six years and as yet we have no agreement on how to deal with it.
It was clear from what Baroness Northover said that the Government would not be minded to provide for such an override. In my view, an override would restore the balance between the two sides, but nevertheless the Government were not prepared to go down that road. I have therefore reverted to my third choice. My first choice is to have an agreement, my second choice is that the Government should have the means to prevent the oil or gas development happening unless there was an agreement and my third choice is that, if the oil or gas development goes ahead, compensation should be paid. That should be set out in statute.
One of the reasons why I felt it necessary to return to this is that the noble Baroness, having made some reassuring noises, added another comment, which I did not pick up at the time in Committee, when she said that,
“if the oil company is not prepared to offer appropriate compensation, there is no question of the Secretary of State intervening to override what is happening there”.—[Official Report, 8 February 2011; col. GC52.]
I was not entirely sure what that meant, because it seems to me that where there is no agreement and the Secretary of State, having tried to get the two sides to reach an agreement, judges it to be in the public interest that the oil exploration goes ahead, there ought to be some compensation involved. It is important that we register this as an ongoing concern both for the offshore wind-energy companies and, potentially, for tidal and wave installations. Because the clause in the Crown Estate’s lease enables this to happen, some intervention by the state or through the contractual provisions is required to even up the balance between the two sides.
I recognise that this is a complex area and it would be better for all of us if the Government and the two sides could reach agreement, but six years without agreement does not give me huge confidence that we will solve this before the passage of the Bill through both Houses of Parliament. I therefore tabled the amendment to register that with the Government and possibly to persuade colleagues in another place that this is an important issue. If investment in offshore, wind and other renewable technologies could effectively be overridden by a new oil exploration taking place in a site that had already been allocated and for which a lease had been agreed, some compensation is required if we are to encourage investment.
What lies behind this is that making a major investment in offshore wind and other renewable technologies requires significant private capital. For the most part, that will need to be raised from the markets. Although some large companies are investing in alternative technologies, we are mostly looking at finance through the City or the markets in one way or another. As long as potential investors can see not only that an investment could in effect be lost but that there is no legislative provision for compensation, clearly that will deter investment. That is what the offshore wind companies claim and it seems a valid point on which public policy should clearly give an indication.
I hope therefore that the Government will recognise that the third-choice option of providing in statute for some form of compensation is probably the least they can do in the circumstances. I hope that they will accept the amendment. If they cannot do so today, perhaps a similar amendment could be moved in another place and they could accept that. I beg to move.
Lord Oxburgh
My Lords, the amendment certainly addresses an extremely important point. I conclude from the points made by the noble Lord, Lord Whitty, that the issue involves three separate elements: the Government's North Sea renewable strategy; investor confidence; and the behaviour of the Crown Estate. Unless the problem is addressed, we may be dealing with simply a matter of encouraging investment in the North Sea but of making it possible. Now is not a good time to raise money for renewables or anything else, and this could be the last straw when it comes to investment companies looking for where to put their money.
Anyone observing the behaviour of the Crown Estate in recent years cannot be anything other than impressed by the vigour with which it is pursuing the objectives that must have been imposed by its master the Treasury. To describe the Crown Estate as hard-nosed might be an understatement. Indeed, it does not have responsibility for delivering the Government’s renewable North Sea strategy. Without some clear statement, ideally in the form of a statutory instrument of some kind as suggested by the noble Lord, Lord Whitty, or some comparably sure investable assurance, we will not see this going ahead.
Lord Marland
My Lords, I am very grateful to the noble Lord, Lord Whitty, for pointing out this particular area. We find ourselves perhaps in the crossfire between two interested bodies: RenewableUK and Oil & Gas UK, both of which are fighting for their own corners.
I am afraid I am attracted by the second option—I think it was the second option—to carry on the dialogue. We do not believe that the issue has been going on for six years, but I am very grateful for the historical information, which officials had not imparted to me. I think it is attractive for us to carry on the dialogue and, I might say, knock heads together, because it is important that we get these boundaries clearly defined. As the noble Lord, Lord Oxburgh, and the noble Baroness, Lady Parminter, both said, this is a complex thing that cannot be done quickly and needs negotiation. It needs both parties to come to the table to help us find the correct solution. The Government are immensely committed to it because it is important and therefore I am extremely grateful that this matter has been raised, but noble Lords have our assurance that we are pressing on with the negotiation. We intend to have a resolution, particularly as the renewables industry develops, as soon as possible, but we are in earnest.
I want to clarify something from Hansard that the noble Lord, Lord Whitty, said my noble friend Lady Northover said. Let me read out—another rare event for me—what the statement, in case he hears it incorrectly, should have said: I am happy to repeat the assurances we gave in Committee that where the oil company is not prepared to offer appropriate compensation, the Secretary of State will not intervene, on behalf of oil companies, and therefore the oil and gas development will not be permitted. I hope that clarifies that fundamental point.
With that, I hope the noble Lord will withdraw his amendment.
Lord Whitty
My Lords, I am very grateful to the Minister for clarifying that because that is not the way the original Hansard report read. As I say, I did not pick that up in Committee itself but only subsequently.
I think we all agree that we need diversity of supply and that we need oil and gas and offshore wind as a part of our energy mix. We also have a public policy objective of a certain level of renewables to which offshore wind will be the major contributor. Therefore there is another incentive for Government to get this right. Clearly, a general coexistence and co-operation agreement between the two sides would be highly desirable, and I am certainly happy to support the Government’s attempts to get that. I think he will find that this has been on the agenda for some considerable time. It might be five years and not six, but I think it is six years since I was a Minister and it was on the agenda within the former DTI, which sought comments from my department, which was Defra. So it has gone back that far. It may not have been a continuous negotiation, but the issue needs facing up to.
The renewables industry certainly feels, particularly in the present tight market, as the noble Lord, Lord Oxburgh, indicated, that this is a serious deterrent to getting the kind of funds needed to deliver what are, after all, the Government’s own objectives. He is certainly also right that—let us put it kindly—the nature of the legal advice that the Crown Estate appears to be getting does not help the situation either. It is a complex issue.
I am happy for today to accept the Minister’s assurance that we will continue to try to get an agreement. I suspect that the timescale of this Bill is not sufficient to get this agreement and the Government at some stage of the process may well consider they need a little bit of leverage here and may come back to something like this agreement. However, for today I withdraw the amendment.