Great British Energy Bill (First sitting)

Olivia Blake Excerpts

Committee stage
Tuesday 8th October 2024 Public Bill Committees

[The Chair]

We are now sitting in public again and the proceedings are being broadcast. Before we hear from the witnesses, does any Member wish to make a declaration of interest in connection with the Bill?

[Olivia Blake (Sheffield Hallam) (Lab)]

My husband is company secretary of Sheffield Renewables, a community energy project in Sheffield that generates energy.

[Andrew Pakes (Peterborough) (Lab)]

This is registered, but I have been told to say it out loud: I am a member of the GMB, which is appearing before us later, and before the election I was the deputy general secretary of Prospect, which is also speaking to us this morning.

--- Later in debate ---

[Uma Kumaran (Stratford and Bow) (Lab)]

I am also a member of the GMB.

[Olivia Blake]

I am also a member of the GMB.

[Josh MacAlister (Whitehaven and Workington) (Lab)]

I am also a member of the GMB.

--- Later in debate ---

[The Chair]

Order. I do not think there is anything in the Bill about jobs, shadow Minister, so I am being steered by the Clerk to get you off the subject. Let us go to Olivia Blake.

[Olivia Blake]

Q My point follows on slightly. Do you think the Bill will help to ensure a just transition for UK workers? You hinted at that, but I wonder whether Mike Clancy has a comment.

Mike Clancy: Following on from what Mika said, and as we are focusing on the content of the Bill, we welcome the creation of GB Energy but our concern is that for some time energy policy has been long on rhetoric but short on delivery. By that we mean that, in the context of a just transition, the losses of jobs—

[The Chair]

Order. The Whips are saying there is something wrong with the mics—nobody can hear me either. You need to speak into the mic because nobody can hear what anyone is saying.

Mike Clancy: It is unusual for a trade union official to be asked to increase their volume; none the less, I will run counter to type and try to do that.

We welcome the creation of GB Energy and we welcome the Bill, but the reality is that communities are facing job losses now. The promise of jobs tomorrow is where the challenge lies. As we are talking about the Bill, I should say that we certainly want to see GB Energy created as an exemplar in terms of social partnership, job creation and turning the promise of quality green jobs into a reality. That is the pathway that the Bill has to provide for communities that are directly affected by technological and other changes. I guess that in other questions we will bring out further things about organisational design, because we certainly have some views on whether the Bill leads to an organisational design that will enable that.

Mika Minio-Paluello: You asked, “Will it ensure?” We very much welcome the Bill, but will it, in itself, ensure a just transition? No. Does it provide a mechanism and a tool that the Secretary of State and the Government can then use to help to deliver that? Yes. We also think the Bill is good because it creates a basis for GB Energy to grow. Ultimately, if we are going to see that successful transition, and all the jobs and the prosperity that we need to see in the UK, GB Energy needs to be on a par with the equivalent companies that we see in other countries, such as Ørsted, Statoil or Equinor, Vattenfall, or EDF. That is a long-term process, and over time, it can be good for workers and it can make the whole country richer.

--- Later in debate ---

[The Chair]

I am being reminded again that we should focus on what is in the Bill; I know we can extrapolate what might happen. Next we go to Olivia Blake.

[Olivia Blake]

Q I have a question about the fact that this is a public company, and it is really important that it is accountable to the public. Do you think that the Bill has sufficient detail about that accountability against its objectives and effectiveness?

Shaun Spiers: We have concerns about the huge powers given to the Secretary of State in the Bill. Clause 5(2) says:

“The Secretary of State may revise or replace the statement.”

A subsequent Secretary of State could significantly revise the aims of GB Energy. We think that the statement should be consulted on. We would propose an addition or amendment to say that the Secretary of State must consult anybody likely to be affected by the statement, or such bodies as considered appropriate by the Secretary of State— something like that, just to say that there should be more scrutiny so that the Secretary of State cannot simply change the aims of GB Energy in the way it is currently set out.

Ravi Gurumurthy: I run an innovation organisation, and the hallmark of good innovation, or of good companies, is that they pivot and adapt. I know that it is sometimes challenging to set up an institution like GB Energy and not lock down all the parameters, but actually that is critical. There are issues and barriers that we do not even know yet, and I think it is important that this organisation can do whatever it takes to achieve the mission, even if we cannot right now identify exactly every single aspect of its role.

Marc Hedin: I would echo that message that the role of Great British Energy is very broad and is being defined as we speak. That is what we in this room, but also the people working for Great British Energy, are doing at the moment. It could also change in the future as the challenges of energy administration evolve. I therefore think it makes sense for the Bill to provide present and future flexibility in scope.

That being said, there are two points or questions that should potentially be answered. First, what are the governance arrangements to ensure that Great British Energy carries out its duties and focuses on its remit? Part of the answer could be that it should be ensured that Great British Energy provides additionality and works with stakeholders, which is what Shaun Spiers mentioned. Secondly, since Great British Energy’s role is primarily to fill gaps in the market, it would be useful to assess its effectiveness there. Clause 7 only mentions an annual rendition of financial accounts, and there is no mention of effectiveness or impact. Reflecting on the possible roles of Great British Energy, some, such as speeding up project delivery, will lead to value added for the whole system but not necessarily additional revenues for Great British Energy. Financial accounts may only tell part of the story, and there is a need for more comprehensive reporting, in my view.

Shaun Spiers: If I may, just quickly: to require consultation on the strategic priorities if they are going to change radically should not be too onerous.

[Pippa Heylings]

Q My question was exactly on that point. Thank you all for coming here to present your evidence.

Can you explain a little more your concerns? First, given that innovation needs to pivot, but also given that we are being asked to allow for the objects to be so broad to allow for flexibility within them, Shaun, can you explain a little more why you think there should be consultation on such broad objects? Secondly, can you discuss any concerns you may have around environmental requirements for what GB Energy is going to do? That is also absent at the moment from the objects of the Bill.

Shaun Spiers: On the concern about the ability of subsequent Secretaries of State simply to change the strategic direction of the organisation, you can look at recent history to know that there can be radical changes. It does not seem to me to be too demanding; it is just good governance to suggest that that should be consulted on, and that you do not give absolute powers to a Secretary of State to do that. I do not see that as a particular constraint on innovation; I just think of that as good governance.

The Chair is keen that we do not lever in lots of other things on the Bill, but there is a concern. Clearly, 2030 power decarbonisation is an imperative and we need to achieve net zero, but we also have a nature crisis and there are concerns about whether GB Energy will seek to enhance nature or whether nature will take second place. Both the Secretary of State and Chris Stark, the head of mission control, have emphasised that there will be a role for considerations of nature in energy planning. But, again, that is not in the Bill, and it would be nice to see it there or to see some statement to that effect from the Dispatch Box to ensure that it is central to how GB Energy will behave. There are lots of public companies that do not prioritise nature—they prioritise bills or the delivery of their main objective—and we see the consequence of that, for instance, in the water industry.

--- Later in debate ---

[Andrew Bowie]

Q Do you think there is enough provision in the Bill to allow for the Secretary of State to be publicly accountable for the decisions that he or she may take in the future, in regard to the concerns you have just raised?

Adam Berman: I do not think there is a deficit in terms of accountability, and I do not think there are 500 bodies that should be consulted before any decision is made by GB Energy; if you look at things like the planning system and statutory consultees, you can see how that is an issue. That being said, there is a list of organisations that any Secretary of State should consult, through their due diligence, which is everyone from the National Energy System Operator to the Climate Change Committee to industry to devolved Administrations. We would very much assume that the Secretary of State and the Department would do that due diligence themselves. However, I do not think shackling GB Energy through the legislation to having to do that to make every decision is necessarily the right approach.

Dan McGrail: I fully agree with that.

[Olivia Blake]

Q I wanted to ask about the definition in the Bill on clean energy. Do either of you have any thoughts on whether that definition is clear enough?

Dan McGrail: From my perspective, the definition is probably good enough. It is quite tricky to go too narrow and say renewable energy only, because there are certain areas, such as long duration storage, where the sector would like GB Energy to participate in, or at least to have the freedom to participate in, which, if it is too narrowly constrained or defined, may prove problematic later down the line.

One thing I think would be advantageous in the definition, or in the objects, is to clearly set out the guard rails, such as ensuring the carbon budgets are referenced. If we reference the carbon budgets, future Secretaries of State would need to make sure that any investments that were made were in line with the delivery of the carbon budgets. That is comparable to what was done with the set-up of the Green Investment Bank, where there were specific references to what the Secretary of State would need to go back to primary legislation to change, and what would be foreseeable within secondary legislation—not directing the Green Investment Bank to invest in fossil fuels, for example, would have required a complete change of mandate. I think some similar thinking, therefore, would be helpful here.

Adam Berman: I do not completely agree. I do not think there is a big problem of definition, but I would say that we need to ensure it is consistent with the CCC’s existing language and with the technologies that it thinks are consistent with the sixth carbon budget. Clean energy may encapsulate all of them, but I think we would have to make sure that it includes established mature renewables, nuclear, carbon capture, utilisation and storage and hydrogen, just to leave those options on the table. I do not disagree with Dan that there needs to be a focus, but GB Energy needs to at least be given the option to engage in the technologies where it thinks there may be additionality in terms of bringing in GBE’s involvement.

[Pippa Heylings]

Q To go back to the few organisations that you mentioned in connection with consultation, you got to devolved Administrations but I did not hear about local government. The Local Government Association has been pushing very hard and is keen for the place-makers—those who understand what demand will be, what the spatial strategies are and what land is available—to be part of the planning very early on. Do you agree that they should be included in the shortened consultation list?

Adam Berman: Clearly I agree that they are of incredible importance when it comes to planning the energy system and that the dialogue with them about the local communities that they know better than anyone else is pivotal. The challenge is that for GB Energy, as far as I understand it, a major part of it is local power plans, which will already have involved close consultation with local authorities and communities in lots of different ways.

From an industry perspective, I would be hesitant about placing that as a condition on GB Energy’s investment. That is not to diminish its importance; it is just to ensure that we are allowing GB Energy to be successful and that we are not holding it back. There is a very good argument that that should be included in the legislation, and that the national energy system operator and the Climate Change Committee should be included in the legislation, but once we have gone through all those bodies, it starts to become prohibitive for the investment process, which we want to be free and fair for GB Energy. We are therefore slightly hesitant about saying that we necessarily have to look to any particular body for consultation.

Great British Energy Bill (Second sitting)

Olivia Blake Excerpts

Committee stage
Tuesday 8th October 2024 Public Bill Committees

[Andrew Bowie]

Q Thank you very much for joining us, Mr Buckland. Obviously you come from the perspective of a company that is investing—alongside others that are investing—in the future technologies that will guide us towards net zero and a clean future. One of the objects of Great British Energy, as clause 3 states, is that it should be involved in

“the production, distribution, storage and supply of clean energy”.

Do you see the Bill and the creation of GBE as an assistance in unlocking private capital and the investment that we need in the new technologies, or are you worried, as some are, that this might be a blockage and get in the way of the private sector?

Josh Buckland: I think that that is the right question to ask. Ultimately, the amount of capital we need to invest in the energy transition is so significant that we will have to deploy and leverage in private finance at a scale that has not really been seen before, and any intervention from Government needs to play a role in unlocking that private capital. The Government have set out that Great British Energy will be mobilised with £8.3 billion of public capital. On the surface, that is a significant amount of money, but in comparison with the hundreds of billions that we will need to deploy through the overall transition, the way that it crowds in greater levels of private investment will be the key test of its success.

The Bill sets out a range of roles that Great British Energy could play, some of which could have a bigger impact on mobilising capital than others, and a range of different mechanisms that it could deploy. It is probably too early to tell whether the structure and the decisions it makes will mobilise capital at the scale that the Government intend, but the framework set out in the Bill will definitely give it the potential to do so.

[Olivia Blake (Sheffield Hallam) (Lab)]

Q I am interested to know whether there are any conditions that you would like to see put on the financial assistance provisions and their scope under clause 4, given your unique placement within the system.

Josh Buckland: The financial assistance statements set out in clause 4 are relatively broad; they give Great British Energy the ability to invest in a variety of ways. It comes back to the question of how you create value through Great British Energy. One of the key tests will be whether it can drive additionality, so whether it can deploy capital in a way the private sector cannot. That usually rests on two issues. One is whether it can invest earlier in the development curve when private investment at scale is tricky, so where there is technology risk or development risk. An alternative is whether it can invest on a sub-par basis, so effectively whether it can create catalytic capital—that is the terminology often used—in a way the private sector would not be able to.

Clause 4 could potentially do those things, and there is no restriction on its ability to do them, but obviously the Government have not yet said much about exactly what format these investments will take. That is not necessarily an issue from a legislative perspective. I have looked back at the legislation that underpinned the UK Infrastructure Bank and the Green Investment Bank, which I was involved with when I was in government, and both those Acts are relatively high-level in terms of the interventions and mechanisms that they can deploy. On the surface, there is nothing that restricts that. As the Government think about the deployment of Great British Energy, I imagine that they will want to set out how it will give more clarity to the private market on the sorts of interventions and mechanisms that it will look to deploy at scale.

[Olivia Blake]

Q Is there anything that you feel is missing from the Bill that would provide clarity, or do you think it will be covered in subsequent documentation?

Josh Buckland: My personal view on financial assistance is that it is fine to keep it relatively broad. Having been a civil servant in government for a long time, I know that primary legislation, if it is relatively broad, gives you the ability to think commercially, and clearly the energy transition will be set out with a range of different technologies. Innovation will come through, and the ability for the Bill to be flexible will assist that.

There are other questions about things that are referenced less in the Bill—let’s put it that way. In some of the previous legislation—for example, the Enterprise and Regulatory Reform Act 2013, which set out the Green Investment Bank—the Government talked about the need for operational independence undertakings and gave more clarity on the importance of creating an independent institution that can act in a way that ensures it can partner with the private sector and can take investment decisions that mobilise private investment and do not distort the market. Although that is not necessarily linked to clause 4, there are some interesting questions around whether the independence framework set out goes far enough to give that reassurance to the private market.

[Harriet Cross]

Q The Bill, as we have discussed, is pretty light on detail at the moment, which means it could be all things to all people or not offer enough answers to give any reassurance to anyone. From your clients’ point of view, is there a different mechanism that they would prefer? How could this public investment be used in a different manner to actually help drive and retain the private investment coming in at the moment? In other words, is this the best mechanism for keeping and driving investment?

Josh Buckland: On the surface, a range of different countries have publicly owned energy companies of different sizes and scales. Therefore, I do not agree with the concept that private investors are either unfamiliar or concerned at a general level. It will all come down to your point around the design of the actual institution and how it operates with the private market.

I think you are right to say that the Bill is relatively high-level. Looking back at some of the precedents that exist, I would mention the Green Investment Bank again. That was operational for a number of years and was established and grown while the legislation was then taken later down the line. It was easier, if you were a private investor, to understand the role that the Green Investment Bank would play and then have the legislation to effectively inform and solidify that.

The challenge in this context is that the Government have obviously proceeded with the legislation early on, as the institution is being established. That does not mean to say that it cannot be created as an institution that is independent and galvanises private investment but, clearly, the current level of uncertainty around the design and the mechanisms that it will deploy will add to that challenge.

Therefore, the Government have said that alongside the Bill they will look to publish more detail on a framework agreement with Government, and how they will set that out and consult with private industry. That, in tandem with the Bill, is critical at this formation stage. That is not to say that it necessarily leads to all that detail being in the Bill itself, but it is critical that it goes alongside it.

--- Later in debate ---

[Stephen Flynn]

Q We have heard a great deal today, and rightly so, about the potential investment that GB Energy could make, whether that is in production, storage or generation and so on and so forth. I am particularly interested in the innovation space and in your experience with the Net Zero Technology Centre. Do you think that GB Energy’s focus should be on that, given the relatively small quantum that is available, or do you think that it should be broader and more focused on the de-risking of projects that might already be in the pipeline but might require assistance in relation to consent, planning or further capital investment?

Myrtle Dawes: I suppose it would have to be towards the impact. Naturally, the budget we are looking at is well suited to innovation. The crowding in of money that we could get around that from investors—the impact that we could have by moving on a lot of projects—is quite significant.

To take the example of floating offshore wind, we have some of the best wind resources in Europe and actually the world. We are sitting with one of the best supply chains for subsea in the world, because the North sea has been the harshest place in the world to do business. If we are ever going to get an effective floating wind business, with technology and jobs here in the UK, we need to start and move on it now. Not only is there an opportunity to get electricity here in the UK, but we are very close to the heartland of Europe, which is also looking for electricity and for hydrogen. We can do lots of things where the impact, if we were to move now, would be great.

I have also worked on de-risking in major projects. They do need de-risking. I do not think that those in the supply chain are necessarily looking for a handout; they are looking for clarity, for investable business cases and for things where they can do the commercial work that they normally do. I can tell you that at the heart of this is technology that has to be sufficiently robust and reliable, and cheap enough that the product is cheap for the customer, who in this case is those who are using our energy.

Olivia Powis: I support everything that has been said. I think GB Energy offers the potential for targeted investment and support in areas of the value chain, for new innovations and across the supply chain. In particular, we look at some capture technologies with lower TRLs that would benefit from some investment, enabling them to move forward from what we refer to as the valley of death, to be able to compete on the open market. There are many opportunities within the innovation space.

Jack Norquoy: A big part of what GB Energy will do is the local power plan, to which a sizeable contribution of that £8 billion allocation has been made. You raised a point about how the rest of it will be spent; I echo the comments that have been made about innovation.

There will be a need for GB Energy to have a balance. That has been outlined in what we have seen so far, in that there will be a need to generate revenue in order for there to be a public return, but it is important that that money be targeted at high-risk areas where we need the longer-term strategic view to support innovation. Sectors in Scotland such as the marine energy sector would very much welcome that targeted support. So we have a balance between GB Energy being willing to take more risk than perhaps we have seen so far and some investment going towards the local power plan, developing the stable revenue that we will want to see coming through.

[Olivia Blake]

Q I have two questions for Ms Powis. The first goes back to the definition. Before you arrived, Ms Dawes mentioned that she felt that it was covered in clause 3(2)(b). May I ask why you do not think that that sentence is sufficient to cover CCUS?

Olivia Powis: We have proposed instead that the statement must provide that Great British Energy’s objects are restricted to facilitating and encouraging investment in, and participating in, one or more of the production, distribution, storage and supply of clean energy, and the reduction, directly or indirectly, of greenhouse gas emissions from energy derived from fossil fuels, where that clean energy definition means energy and molecules produced from sources other than unabated fossil fuels. It is just about being clear about that clean energy definition. We have been told that, as drafted, it would exclude those with fossil fuels.

[Olivia Blake]

Q On CCUS, we want Great British Energy to have a broader portfolio once it is established—lots of witnesses today have said that. Where would you place CCUS, from a risky to a non-risky investment, for the £1.6 billion?

Olivia Powis: CCUS, as an industry, very much welcomes the announcements from Government last week and the further detail provided yesterday. There is lots of private sector investment helping to drive forward these projects. The funding commitment from Government is for projects once they are operational. Obviously there are still first-of-a-kind projects here, so I would not classify it as a very high risk. This is not a new technology; it is an industry that has been deployed elsewhere, and there is an understanding of how it will work.

There will be first-of-a-kind projects in the UK, and there could therefore be areas in which GB Energy could play a critical role. We have yet to really explore the extent—we would welcome further discussion on that—but there could be a role in enabling infrastructure, oversizing pipes, import terminals and port infrastructure. There is a role it could play in driving forward that enabling infrastructure investment.

[The Chair]

Ms Dawes and Mr Norquoy, have you anything to add?

Myrtle Dawes: I am glad to get the clarification. We also invest in CCUS; it is really important technology for industrial decarbonisation. As an engineer, I will tell you that there is risk involved in that, because we are used to steady state, and we will want to stop and start things. It is a refrigerant, so it will not like it.

There is quite a lot to do to reduce costs. The monitoring and verification of the stores is super-important. If we can turn a waste stream going to store into a product stream that is being utilised, that will be fantastic. That has to be the way we need to go. There is lots of technology to look at, both on the capture of emissions—direct air capture has its role, especially if we are going to look at some kinds of synthetic fuel—and on some of the emerging technologies around capturing carbon dioxide from seawater. Apart from the fact that we might also be able to mine some minerals from doing that, these are things that we should be looking at. It is all about getting the security of doing these things closer to home.

--- Later in debate ---

[Stephen Flynn]

It was about the quantum that is available. You referred to IRA and the EU’s corresponding investment. The quantum for GB Energy is £8.3 billion over the course of five years, or £1.6 billion per year. Do you think that is sufficient to meet the objectives laid out in the Bill?

Andy Prendergast: I think it is sufficient to make some of them and sufficient to make a difference; it is not sufficient to make as much of a difference as we would like it to, but compared with what we had beforehand, it is light years ahead of where we have been.

[Olivia Blake]

Q I have two questions. First, how important do you think it is to have clause 3(2)(d)—

“measures for ensuring the security of the supply of energy”—

in the Bill for your members, given the global situation in which we find ourselves? Secondly, which of the objects in the Bill will have the most impact, or in what ways will the Bill have an impact on your members?

Andy Prendergast: The first point about energy supply was really brought home around the start of the Ukraine war, which exposed how unprepared we were. Whereas your average European country had months of gas supplies, we had a matter of weeks. We went into that war with the largest gas supply place in the world, Rough, unused. One thing we must understand, with the evolving nature of Government, is what is the very minimum that we expect Government to do. I think the very minimum people expect Government to do now is to keep the lights on and keep us secure. That is how important energy is. Sometimes, when you speak to some politicians, there is almost a view that energy is an optional extra, but I do not think that that has been the case for about 150 years. God forbid we go back to that.

When we talk about energy supply and security, it is about two things—[Interruption.]

[The Chair]

Order.

--- Later in debate ---

[The Chair]

Mr Prendergast, I am sorry that you were interrupted. It was very good of you to stay. I believe I am right in saying that Ms Blake had a second question.

[Olivia Blake]

Q Before we were interrupted, my second question was about what the biggest impact of the Bill will be on your members. I do not think we have covered that.

Andy Prendergast: Both in terms of shoring up the jobs we currently have and potentially creating the jobs we so desperately need, one of our real concerns about net zero is the fact that, in a lot of countries, there is a perception that net zero is something being done to people, not with them. Look at the response in America, which is very much typified by “Drill, baby, drill”; look at Germany, where, bizarrely, Alternative für Deutschland is organising around heat pumps. We already have Reform UK talking about fighting the next election on the basis of net zero.

What we have recognised is that we have to make net zero work for people, and we think the best way of making that happen is to ensure that net zero comes with jobs and opportunities. The simple reality is that, if we get it right, those jobs and opportunities are going to be in the post-industrial areas. We have seen the maps put forward by people in the hydrogen lobby and from carbon capture and storage. These are jobs in places that desperately need them. If we are going to be serious about levelling up and making sure that prosperity is spread in Britain, we need to rebuild those industrial heartlands with proper, decent technologies that we can start exporting.

[Andrew Pakes]

Q It is good to have you in, Andy. Do you think there should be anything in the Bill and its priorities on workforce development? Having worked in the sector alongside GMB colleagues, my experience is that lots of these new companies set up, but do not recognise trade unions and do not have the quality of work that we have seen previously in the power and industry sectors, particularly in renewables and others. Indeed, some of the renewables companies, despite being divisions of existing larger companies that do recognise unions, have set up without recognition. What do you think the role is of the Bill, or its strategic priorities, in ensuring we get the right terms and conditions for the new workforce, as we have for existing workforces?

Andy Prendergast: That is a very good question. We have been really pleased to see that the role of trade unions is incorporated in the Bill, although we do need to flesh out exactly how that works.

Your criticism of the renewables industry, particularly for members of the GMB, is absolutely critical. When people talk about our role in industry, what they are often talking about is the white-collar jobs—the ones in universities, getting the technology. They are not talking about the blue-collar jobs, which, at the moment, are the ones in the energy sector that are very well unionised, with good rates of pay and excellent terms and conditions, and which give the security that families and communities need for the long term.

What really concerns us about the renewables industry so far is that it came with the promise of mass jobs that simply have not materialised. Alex Salmond promised 30,000 jobs in offshore wind; 10 years later, fewer than 10,000 have been delivered. Particularly when you are looking at maintenance jobs, you are talking about jobs that are subcontracted with terrible terms and conditions and that are anti-union. When we look at the success that places like America or Europe have had in renewables, trade unions are at the heart of that.

What we have seen so far is a real willingness from the Government to work with both ourselves and employers. One of the bizarre things about it is that those coalitions really have an impact. One of the most surprising days in my job was attending a meeting here and being praised by a Tory MP, which I never thought would happen—it was one of those pinch-yourself moments. It was in relation to Hinkley Point: it was recognised that we had a huge role there in helping to develop the workforce and to manage the process of ensuring both that they benefited and that we got things done quickly and properly.

If we get that right, this is an opportunity to bring not just jobs but good jobs. In a lot of the areas that we are talking about, we have this constant debate about “red wall” and about “post-industrial”. It is not that there are no jobs there; it is just that the jobs being brought in are not very good ones. They are not jobs that offer permanent contracts. They are not jobs that offer good pensions, sick pay or opportunities for advancement. They are zero-hours contracts—got here today, gone tomorrow—that give people very little pride. This is an opportunity to reverse that 40-year decline in our industrial base and do something positive about it.

--- Later in debate ---

[Harriet Cross]

Q We have heard from various witnesses, particularly Ravi Gurumurthy, about the risk management of private investment and how that will sort of coincide within GB Energy. I am just wondering how the Bill is expected to ensure that GB Energy does not just effectively end up as a sink for risky investments, or is that okay? Is the prospect for GB Energy that it provides that full buffer? If not, how will we prevent that situation? Otherwise, we are effectively just making taxpayers’ money the risk management for private investment. I do not have a “yes or no, which side of that fence do I sit on?” answer; I am just wondering what is acceptable within the context of the Bill.

Michael Shanks: That is a really fair question. The question of risk appetite is important; that is partly why setting up GB Energy as a company, regulated by the Companies Act and with a fiduciary board made up of financial experts who have a responsibility as a board of directors for the direction of the company and for its financial results, is so important.

There has to be some risk appetite, and one of the earlier witnesses made a point that I would agree with—if there are absolutely no projects that do not have any risk at all, GB Energy is not really filling the gap. It is really important that GB Energy can move in the spaces where the current investors are not necessarily finding those opportunities. Crucially, however, GB Energy is obviously owned by the taxpayer and therefore, as a backstop, there is a real conviction that it will only invest in things that have a likelihood of producing a return for the taxpayer.

Of course, when we get into making individual decisions, that is partly why it is important the Bill does not go into a granular level of detail on every single thing that GB Energy will do, because it is really important that we give that board, those experts and everyone they bring in to advise them, the space to move into opportunities as they emerge.

If we were to go back five or 10 years, we would not have thought that we were about to have the world’s biggest floating offshore wind farm off the coast of the UK. That would not be on the face of a Bill like this, but actually it is a huge potential opportunity for us and we would like those kinds of opportunities to be open to GB Energy to explore.

[Olivia Blake]

Q If we are to learn the lessons of coal and the 1980s, South Yorkshire would be a perfect location for a satellite office—just to put that on your agenda, Minister.

[Josh MacAlister]

He has had this from every Scottish MP for the past six months.

[Olivia Blake]

Well, we have not heard enough about God’s own county here today.

There has been a lot of positivity from witnesses; some of them seemed quite excited about the Bill. I want to understand, from your perspective, why it has taken a change of Government to see this sort of Bill come forward, and what your ambition is for it.

Michael Shanks: That is really important. Last week, I visited Ratcliffe-on-Soar power station, the last coal-powered station in the UK, and it was a good example of the just transition in practice. It was the right thing that we phased out coal; the TUC itself confirmed that that was exactly how to deal with workers in such a difficult situation where you are moving people from one industry and transitioning them into something else. It was a properly planned process, which is what we want to see in industry.

You are right: we absolutely want to avoid what happened with coalmining in the 1980s. It goes back to what I was saying earlier: this Government are not agnostic about the future of jobs and manufacturing in our industrial communities right across the country. It is important that we invest in them not only because, frankly, we are in a race against the world for all the parts we need to deliver the future of energy, and we will need to produce some of them in this country, but because good, well-paid, skilled jobs are how we will manage the transition in a fair and prosperous way. It is critical for us.

I think it matches other policies. Yes, GB Energy will be a key part, but the industrial strategy will also be important. The national wealth fund and a whole range of levers will be important. The office for clean energy jobs is all about saying that, as a Government, we are committed to the future of this workforce and to creating tens of thousands of new jobs that do not currently exist.

[Wera Hobhouse]

Q We have heard a lot of evidence from lots of people with lots of hopes, who understood that in the end the Bill could be all things to all people. I understand that it is not great to put too much detail in it, but I worry that it is very general and that we will end up with nobody being quite clear what GB Energy is ultimately for. For example, because the witness representing EDF came from a country with a different culture of ownership, they talked about public ownership. If we are going very wide, is something like GB Energy ultimately a vehicle to create more public ownership? In that context, are we talking about just community energy products, which we obviously understand are under some form of public ownership, or are we talking about a completely different ownership landscape that we will see in future?

Michael Shanks: I think it is a combination of things. I urge you to read the Great British Energy founding statement document alongside the Bill, because it is important. The Bill is about setting up a company, and what we do not want to do is hamstring that company by putting in so much detail that it cannot move into the right places that give good investment opportunities for the taxpayer and deliver good energy projects.

The statement makes it clear that community energy, for example, is a key part of our local power plan. We want to see many more community-owned energy projects, for a combination of reasons. They have real social and economic benefits for communities. For us, there is the belief that communities having a stake in those projects is important: communities having ownership and feeling part of the mission will help us with some of the arguments for the amount of infrastructure that we will have to build in the next few years. Also, in certain areas we want small-scale generation projects to have access to connections that bigger projects cannot have. Frankly, in a lot of cases, building the power generation near the population is where we have issues with spatial energy planning across the country.

There are huge opportunities. We are committed to increasing community ownership. We have also said in the local power plan that it could look like municipal ownership of certain generation projects, or it could look like local authorities or combined authorities. We are quite open about what it looks like, but we want to create a landscape where Great British Energy can invest and also provide some capacity to help organisations to get over the line. We all know that local government is struggling and is on its knees right across the country, after years of underfunding. The capacity to deliver a lot of the projects is not there, so GB Energy can fill that gap.

Great British Energy Bill (Third sitting)

Olivia Blake Excerpts

Committee stage
Thursday 10th October 2024 Public Bill Committees

[Pippa Heylings]

The objects of Great British Energy need to be wide-ranging and flexible so that it can be innovative and pivot where necessary. But one issue, which the Liberal Democrats also raised during the oral evidence sessions, is community energy: that which is owned, managed and generated by, and brings benefits directly to, the community. We propose this amendment for the Government’s serious consideration because the founding statement for Great British Energy says that local communities will derive benefits. That is not just in the five functions but part of the purpose of Great British Energy. Juergen Maier says in his foreword to the founding statement that Great British Energy will actively co-invest and support communities to generate energy. That is fundamental. As most of the rest of the provision is for large-scale clean energy projects, it is critical to include the amendment in the objects, given that communities are included in the five functions in the foundational statement.

[Olivia Blake (Sheffield Hallam) (Lab)]

I thank the hon. Lady for her opening remarks on the amendment. Is there anything in the Bill that would preclude the kind of support for community energy projects that we have discussed in Committee so far?

[Pippa Heylings]

The debate so far has all been about the ability to delimit what limits Great British Energy, but that allows for everything else that has not been mentioned. However, it is critical to reassure everybody that Great British Energy is about both large-scale clean energy projects and community projects. I do not think the amendment would change or limit Great British Energy any further; it would add to the understanding of the objects. I do not think it would in any way pervert the flexibility in the wide-ranging objects; it would bring the necessary emphasis and balance between large-scale and community energy projects.

--- Later in debate ---

[Olivia Blake]

This is a really valuable discussion, even if the amendment does not make it into the Bill. In the last Parliament, I served on the Energy Bill Committee. Conservative Members will remember the hours and hours of debate—it felt like days, months, years—about wider energy policy, and unfortunately there was nothing on reducing home energy use through insulation. I pay tribute to the wonderful Alan Whitehead, who kept us all entertained as the shadow Minister on that Committee. [Hon. Members: “Hear, hear!”] He was a very good man and gave a lot to this subject in particular.

Although I understand why the amendment has been tabled, this discussion is related more to wider energy policy than to the setting up of GB Energy. I understand why it has come up and it is good that we are discussing it, because it is a matter not just of energy efficiency but of human health. Sir Michael Marmot published a paper this year, reiterating the very human cost of poor-quality housing and the fact that so many homes in the UK have an energy performance certificate under level C. That is why I am pleased that in the run-up to the election we were championing the warm homes plan. I very much look forward to that, and I think it will cover the concerns of the hon. Member for South Cambridgeshire.

The Bill focuses not only on reducing emissions, but on reducing the use of energy within the objects. We have covered the issue with the words “energy efficiency” in clause 3(2)(c). I know that that sounds quite limited, but there is much more to energy efficiency than loss within our homes; it is also about loss of energy within the system, so it is right to have a broader framing of energy efficiency within the Bill.

[Andrew Bowie]

I will not detain the Committee long, but I want to express the Conservatives’ support for the Liberal Democrat amendment, primarily because of our concern about the impact of the removal of the winter fuel allowance from so many pensioners this winter, and the fact that the warm homes plan, as welcome as it is, will not be up and running until next spring, which leaves considerable concern over what might happen in and around this winter.

Those pensioners should be at the forefront of our mind as we look towards winter and as we are discussing an increase in the number of well-insulated homes in this country—on which, by the way, we had quite a good record when we were in government; we increased markedly the number of homes at EPC level C or above. For those reasons, we will support the amendment if it is pressed to a vote.

--- Later in debate ---

[Andrew Bowie]

It was created as a result of the invasion of Ukraine by Vladimir Putin, as everybody in this room knows. I know that out there in the country, constituents would like clarification that that remains an express aim of GB Energy, especially the cutting of £300 from their energy bills and particularly for the pensioners out there who are having that exact amount removed from them by this Government, as one of their first acts having got into power.

The Secretary of State has reiterated that clean energy will deliver cheaper energy; it has been repeated in the House, on the campaign trail, in videos and in leaflets. I believe it is important to enshrine accountability to that ambition in this Bill, which will create the institution of Great British Energy. We must introduce a mechanism by which the Secretary of State and GB Energy are accountable to households.

[Olivia Blake]

Surely the shadow Minister agrees that Great British Energy will reduce the costs of energy, because the types of energy projects in which it will be investing will be of lower-cost energy production and we will be less reliant on foreign fuel markets, which have been very volatile for a range of reasons. I accept what he says about what he did as Minister in the last Parliament, but this Government, in our first piece of legislation, are acting to create a vehicle that will enable us to get much further.

We have had a very successful auction, compared with the absolute farce of an auction at the back end of the last Parliament, for clean energy projects that are cheaper and will hopefully deliver on a scale never seen before in this country. I am proud to stand here and say that I think the amendment is not necessary. It is playing quite cute with the rhetoric around this question; it should be withdrawn, because it is playing politics rather than tackling the substance of what the Bill is intended for, which is very serious, as we face a climate and nature emergency.

[Andrew Bowie]

I do not disagree entirely with the hon. Lady. I think we should be aiming to reduce the cost to taxpayers, and that investing in new cleaner technologies, including nuclear, will see energy bills fall in the long run—so why not have that as one of the objects of the company in the Bill? The Bill states that the objects of Great British Energy will be

“the production, distribution, storage and supply of clean energy…the reduction of greenhouse gas emissions from energy produced from 15 fossil fuels…improvements in energy efficiency, and…measures for ensuring the security of the supply of energy.”

There is not one mention of reducing consumers’ bills. Surely we want to enshrine that in the legislation, if that is indeed one of the aims of the creation of this company.

My amendment 12 would include the necessity to present

“a projection of how Great British Energy’s activities are likely to affect consumer energy bills over the following five years.”

Transparency and accountability should be key to the operation of GB Energy, particularly when the investments and activities that the organisation undertakes have a potential impact on household bills for every family in this country. Thank you for allowing me to speak to the amendment, Dr Huq; I do so to ensure that the Bill makes provision for GB Energy to be held accountable on its aim to reduce energy bills for households.

It is in the best interests of GB Energy and of the British public that the company have a clear directive to ensure, through investment in clean energy technology, that the cost of household energy is reduced. Labour MPs made clear the intention of GB Energy to reduce bills—indeed, they campaigned extensively on the £300 reduction—so I hope that they will support amendment 12, which would support them in achieving that goal, along with including provisions on accountability and transparency to the public on the overall impact of GB Energy’s investments on consumer bills.

[Stephen Flynn]

I rise to support amendment 24, which is broadly similar to the shadow Minister’s amendment 11. I am intrigued by the discussion that we have had, various aspects of which appeared to disagree with evidence we have heard.

First, the hon. Member for Sheffield Hallam, if I picked her up correctly, made great play of the fact that GB Energy will reduce costs. Yet just a couple of days ago, each and every one of us was in the room with the chair of GB Energy, who was very clear that reducing bills

“is not the scope of Great British Energy”.––[Official Report, Great British Energy Public Bill Committee, 8 October 2024; c. 6, Q5.]

We can all watch the footage online, and we can all read Hansard.

Secondly, the hon. Member for Na h-Eileanan an Iar made the argument that the £300 promise was not actually a promise. Which is it? Will it or will it not reduce costs?

[Olivia Blake]

I think the right hon. Member is purposely misunderstanding my comments. It is obvious: is the cost of cheap, green energy lower or higher than the costs that we have seen in the oil, gas and coal markets? It is as simple as that. Is it cheaper? Yes, it is. Doing things like Great British Energy will help produce more cheaper, cleaner, greener energy.

[Stephen Flynn]

The hon. Lady misunderstands my point. I do not disagree with that; in fact, I would like to see the Government go further and separate the price of electricity from the price of gas as they promised. That is one of the reasons why the Tories allowed people’s energy costs to soar, irrespective of their narrative about extenuating circumstances far outwith all our control. The point that the hon. Member for Sheffield Hallam made, quite clearly, was that GB Energy would reduce costs. Juergen Maier, the chair, said that that was not the scope of GB Energy. Which is it? The two things cannot be true at exactly the same time. We cannot say that something is going to happen and then say that GB Energy is not going to do it.

The crux of all this is that the public have expectations that GB Energy will reduce their energy bills by £300. Government Members can argue that that was not the promise; if that was not the promise, they were very quiet about it when they let the public believe that during the election campaign. If the public believe that, the Government need to deliver on the commitment that they made, and they should learn a lesson. The Conservatives made promise after promise after promise, and they failed to deliver when it came to energy. [Interruption.] Does the Minister wish to intervene?

Great British Energy Bill (Fourth sitting)

Olivia Blake Excerpts

Committee stage
Thursday 10th October 2024 Public Bill Committees

[Andrew Bowie]

You might have other ideas, Sir Roger. The legacy is the creation of Great British Nuclear; the beginning of the small modular reactor down-selection programme; the development consent order move in respect of Sizewell C; £200 million invested into high-assay low-enriched uranium fuels to be developed here in the United Kingdom; moving forward at pace with Hinkley Point C; and a commitment to build a third gigawatt-scale reactor at Wylfa—something that this Government have abandoned. It is not the Conservative party that the nuclear industry has a problem with; the industry is now worried about the go-slow on nuclear being implemented in this country by the new Labour Government, because of their obsession with putting all their eggs in one basket of renewables and not looking to the wider benefits of investing in nuclear as well.

On the hon. Gentleman’s point about the onshore wind ban, we delivered everything that I have listed while respecting the rights of communities in this country not to have the countryside where they live, and that they respect and enjoy, industrialised. That is why we had stipulations on communities having a right over what was built in them. I stand by that. It was a good policy and we still halved our emissions faster than any other G7 nation.

When we were in government, we established the nuclear skills taskforce to address the skills gap of 250,000 people that the nuclear industry alone would have were we to deliver all the projects we seek to deliver in defence and energy. We all know that clean energy technology brings employment with it. Estimates for job creation in the transition range from 136,000 jobs to 725,000 jobs by 2030. We all know how beneficial clean energy technology can be for local communities when it comes to employment. Projects such as Sizewell C drive investment—it will bring as many as 25,000 new jobs to Suffolk, and there are already 1,000 apprenticeships in the area. These are high-paid, high-skilled jobs that deliver for the community.

We have heard from the Labour Government that GB Energy will create 650,000 new jobs. On Tuesday, when I asked the chairman, Juergen Maier, about the number of jobs to be based in Aberdeen, he told us that it would be hundreds or even 1,000. I hope that Aberdeen will benefit significantly from being the base for the HQ of GB Energy and that that is not merely paying lip service to a community that is losing out in investment, prosperity and employment opportunities as a result of the energy profits levy increases, the lack of investment allowances, the disinclination to offer new licences in the North sea and the impact that that will have on investment in the transition.

I represent a constituency near Aberdeen, where a significant proportion of constituents are employed in the oil and gas industry directly, or indirectly in the supply chain. The potential for new jobs and the preservation of existing jobs are deeply personal to me and other MPs in the room. In fact, 65,000 people in Aberdeen and Aberdeenshire are employed in that industry and in the supply chain, so I know how impactful on communities those jobs are. I therefore move that we include the creation of 650,000 new jobs as a strategic priority for GB Energy, as well as including the requirement to report on the progress made towards that ambition. If we do not deliver the new jobs and do not ensure that as we move through the transition, those working in the oil and gas industry will have jobs secured into the future—as well as creating the new jobs by delivering the projects we were seeking to, as I know the Labour Government seek to—we will have failed in all our shared ambitions.

[Olivia Blake (Sheffield Hallam) (Lab)]

The shadow Minister’s amendment seems to be a bit of a fig leaf over the failure of the previous Government to secure good, high-quality, unionised jobs in the green energy sector. We need only look at offshore wind. I have cited these statistics before, but in 2010 some 70,000 jobs were promised from the UK offshore wind sector. Unfortunately, 10 years later, it had delivered only 11,900, which is only 5,600 more than were achieved by 2014.

The capacity of offshore wind went up by a huge percentage under the previous Government, for which they should be commended, but their strategy in the past 14 years meant that while they were building offshore wind, they were also offshoring all the jobs that went with it. There was no strategy to cultivate labour-intensive sections of the supply chain; the majority of jobs went abroad. Not enough went into supporting the creation of servicing jobs in the UK. Furthermore, in another element of policy, the embarrassment and failure of the green homes grant truly laid bare the fact that we did not have the right industrial strategy—we had no industrial strategy to support the creation of jobs in those industries or to support a Government intervention such as the green homes grant.

A lot can be said about the opportunities that GB Energy offers. On Tuesday, the TUC agreed that GB Energy would be an enabler for a just transition for those currently working, but it is also my belief that this is a real opportunity for new jobs for the next generation. We have real potential to lever in a huge opportunity going forward to be a main player internationally in some of our emerging technologies.

I am proud to represent a constituency in Sheffield, where we have a lot of research capacity in many different areas related to energy, from battery storage to hydrogen and new nuclear. A lot of research is happening. Such innovation is important to allow for manufacturing jobs to spin off from the primary research.

The amendment is all well and good, but I think it is a little bit rich coming from the Conservative shadow Minister, given the abject failure to deliver on the jobs that we were promised under the previous Government.

[Andrew Bowie]

I have said publicly on the Floor of the House and in other places that we did not see the creation of the jobs that we wanted as a result of our revolution in energy production here in the United Kingdom. As I said, we have the first, second, third, fourth and fifth largest offshore wind farms in the world, which is a source of great pride, but the jobs onshore created as a result of that simply did not come about, hence why we were moving towards the creation of the sustainable industry rewards and were encouraging companies to invest and create the jobs. If the hon. Lady agrees that we should have done more to create jobs, surely she also agrees with the purpose of the amendment, which is to ensure that GB Energy will have as one of its stated aims the creation of 650,000 jobs in new and emerging technologies.

[Olivia Blake]

I would not want to limit the possibilities of GB Energy with a number. It is a big number that the hon. Gentleman has put here but, to be honest, there are huge opportunities in all the energy areas—especially in the supply chain within the UK, but also in the transition of jobs. It is really important that we take it in the round and allow GB Energy to play its role. Not all jobs will come from GB Energy; they will come from the much broader investments that we will see over the next decade. We have had a lost decade in this regard, and there is a lot of skills work that needs to come.